The United States prides itself on being a federal democracy with a government led by elected officials accountable to the people. Nevertheless, the Federal Reserve—established in 1913 to manage the country's money supply and ensure financial stability—is not a federal institution but a private bank catering to a small group of affluent individuals.
In the early 1800s, the controversy surrounding the Bank of America (previously known as the Bank of the United States) led President Andrew Jackson to shut it down in 1832 as it granted too much power to wealthy elites and threatened American sovereignty.He refered to the group as a Hydra Headed Monster and a Den of Vipers.
Despite Jackson's efforts, central banks persisted; hence, in 1913, on Christmas Eve while most Congressional members were at home for the holiday a small group of members stayed and with President Woodrow Wilson signature the Federal Reserve emerged. Many believed that it would serve similar functions as its predecessor but with increased oversight and transparency.
Most Americans are unaware that the Fed is not a government entity but rather a privately-owned bank that can print money at will—leading to inflation and economic instability.
In 1963, Kennedy signed Executive Order 11110, which authorized the U.S. Treasury to issue silver certificates instead of Federal Reserve notes. This move was seen by many as a direct challenge to the Federal Reserve's monopoly on the creation of currency. Kennedy's goal was to increase the amount of money in circulation without having to borrow it from the Federal Reserve.
However, Kennedy's efforts to challenge the Federal Reserve were short-lived. On November 22, 1963, Kennedy was assassinated, and his plans to reform the Federal Reserve were never realized. The silver certificates that were issued under Executive Order 11110 were eventually taken out of circulation.
After Kennedy's death, Lyndon B. Johnson became president of the United States. Like Kennedy, Johnson was also critical of the Federal Reserve and its role in the U.S. economy. Johnson believed that the Federal Reserve was responsible for the high levels of inflation that the country was experiencing at the time.
In 1965, Johnson proposed a tax increase to reduce the government's dependence on borrowing from the Federal Reserve. Johnson believed that if the government could reduce its borrowing from the Federal Reserve, it would be able to reduce inflation and stimulate economic growth.
However, Johnson's efforts to reduce the government's dependence on the Federal Reserve were also unsuccessful. The tax increase that he proposed was met with resistance from Congress, and it was eventually watered down to a point where it had little effect on the government's borrowing from the Federal Reserve.
The Federal Reserve's role in the 2008 financial crisis caused doubt about its motives and authority, with some people suspecting that it favored the wealthy over ordinary citizens. Looking back at history, President Jackson had valid worries about the impact of central banks.
Perhaps one day, another president will possess the courage to challenge the prevailing system and work towards a fairer financial landscape for all Americans.
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