In 5 myths debunked about the Federal Reserve, Mark Hamrick, Washington Bureau Chief for Bankrate, asserts that Myth #2 about the Fed is that The Fed isn’t part of the US government. As is typical of “Fed defenders,” Hamrick does not tell the whole story, and he confuses by using the words “part of.”
I know of no serious Fed critics who say the Fed isn’t “part” of the US government financial apparatus. However, the Fed is “central” to the government’s financial apparatus by standing ready to expand the money supply when the government wants to spend without raising taxes or borrowing in the open market.
What the serious critics say is that the Fed is not “owned” by the federal government, which Hamrick concedes when he says that “Each member bank owns a share in its regional Fed. . .” But, it doesn’t matter to the federal government who “owns” the Fed because the Fed performs a function that greatly benefits the government.
To further support his position that the Fed is “part of” the US government, he quotes a former Fed economist who says that the “Board of Governors of the Federal Reserve System is a government entity.” And then to support that assertion, he notes (accurately) that “Members of the Fed board are appointed by the president with the advice and consent of the Senate. . .”
To get the legislation through Congress (1913) to create what is the third central bank for the United States, the bankers allowed the ruse of “the president appointing and the Senate confirming.” It’s a ruse because the persons appointed are always friendly to the banking industry. That’s why there’s a “revolving door” between the Fed, the Treasury and the big banks.
The government does not own the Fed, but the Fed is an integral part of the government’s financial apparatus. Who owns the Fed is important in that control comes with ownership. The Fed is immensely important to the federal government and to the banks.