When asked why he robbed banks, Willie Sutton replied, “Because that's where the money is.”
It’s even easier to rob when you’re making the money.
The Federal Reserve System is one of the most powerful economic forces in the world, and a key institution for the industrial/financial elite of the US ruling class.
How it started: In the late 19th Century, industrial capitalism was spreading and manufacturers increasingly adopted the corporate form of organization to obtain the large pools of funds needed to buy the machinery of mass production, whose economic consequence was debt-financed boom and then over-extended bust. After repeated economic collapses, the largest capitalists saw the need for an independent, centralized banking system that would provide a steady flow of money with a consistent value for their long-term investments. After the panic of 1907, leading financiers began to push for a central clearinghouse to manage the amount of money in circulation and bank reserves and provide short-term business loans through a market in business debts). The result in 1913 was the Federal Reserve System—the central bank of the United States.
How it’s going: the Federal Reserve is the sole supplier of the national currency, regulating the amount of money in circulation (the money supply), providing cash flow for everyday transactions, savings, and lending without causing inflation, i.e. impairing the value of stored wealth—money.
By varying the money supply, a central bank exerts control over interest rates, manipulating credit, the building-block of capitalism. It is also the lender/dealer of last resort, responsible for maintaining the stability of the entire financial system, which means providing security for the largest ‘money center’ banks which deal directly with the institution, and today it serves the needs of the largest businesses, governments, and banks.
Besides financial stability, it is supposed to promote ‘full employment’ by providing cheap credit for business expansion, but not so cheap that it fails to ‘control inflation.’
It is also corrupt, like the US judiciary, which judges cases in which it has a financial interest, and US representatives who are paid off by the highest bidders financing their campaigns. Officially, corruption is fine, but there are ‘rules of the road’ so the system doesn’t collapse in a grab-all oligarchic anarchy, like after the fall of the USSR.
Case in point: Federal Reserve Vice Chairman Richard Clarida said he would resign from the central bank on Friday, two weeks before his term on the central bank’s board is set to end.
His resignation follows questions raised over financial transactions he conducted at the onset of the coronavirus pandemic. The Fed announced Mr. Clarida’s resignation on Monday afternoon, on the eve of Fed Chairman Jerome Powell’s Senate confirmation hearing.
News reports revealed last week that Mr. Clarida had amended his financial disclosures to show he sold a stock fund three days before he purchased the same investment in late February 2020.
When the initial disclosures first received public scrutiny last year, Mr. Clarida said three financial investment transactions that he executed on Feb. 27, 2020, were part of a preplanned portfolio rebalancing.
The amended disclosures filed last month raised questions over his initial explanation because they showed that three days earlier, on Feb. 24, 2020, Mr. Clarida had sold shares in three stock funds, including the same one he would purchase shares of on Feb. 27 for a similar amount. Stocks fell during those three days amid news reports about the novel coronavirus’s global spread.
Embarrassing!