The Fed is a Fascist Cartel

12/22/2009 - by Nelson Hultberg

 No one in the freedom movement today disputes that the Federal Reserve is the source of many of our economic woes. Where disagreement arises is in defining the precise nature of the Fed and the source of its capacity to create the harm it does. Many who support gold money and free enterprise claim that the Federal Reserve is a "private corporation" run by capitalist mega-financiers. This I believe to be mistaken.
The Federal Reserve, in my opinion, should not be classified as a private corporation. It should be termed a government-run fascist cartel. There are several important reasons for this. For example, all nationally chartered banks in the Federal Reserve system are forced by the government to join the cartel. Bernanke and his board of governors are appointed by the President and approved by the Senate. The Federal Reserve came into being because of an act of Congress, and it can be altered or legislated out of being at anytime by Congress. These factors are not how private corporations are created or operated. The Fed entails government involvement in a massive way. Without the special monopoly privileges legislated by Congress that sustain the Fed, it disappears.
Moreover, the great bulk of the profits of the Reserve Banks are turned over to the federal treasury. As John McCormack explains in a Liberty magazine article: "[H]olding shares in the Fed is not a very profitable activity. Dividends to member shareholders are limited to 6% of nominal capital (hardly a great rate of return) and all Fed revenues above this amount (invariably vastly greater sums) are returned to the U.S. Treasury. In 1994, for example, total dividends to member banks amounted to $212 million while the Treasury received $20.5 billion, 97 times as much." [Liberty, March 1996.]
Government is thus a full partner in the Federal Reserve System. And a business entity with the government as a full partner is not a private corporation.

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