Rambling over coffee: Did you know the Federal Reserve Bank is not actually part of the federal government? I didn't.

It's just the coffee talking again....

The Federal Reserve Banks are not a part of the federal government...

So, I have to admit that I've never given all that much thought to the federal reserve... I've read about it numerous times in financial news, mentioned in books, etc. but it was not until I was reading a book (Interest (Final State Book 1 - which happens to be free on Kindle through Amazon as of this posting date... https://amzn.to/2MME4ou) that I got schooled in the history of the Federal Reserve Bank.

Now, granted it was in the context of one of the characters of the book explaining the Federal Reserve Bank to another character and it's all in the greater context of what those characters are trying to accomplish... but this is the part of the book that piqued my interest enough to make me stop, bookmark that page, and go on an internet search for the history of our Federal Reserve Bank.

And that is how i found out that although they use the word 'federal' in their name (leading me and probably a lot of others to think it was somehow a government backed entity), it's not.

From the book - which I will link to at the bottom of this post:

“Do you know what the Federal Reserve System is?”
“Yeah. It’s a government bank—”
“No! It’s a private bank. A private bank, by bankers and for bankers, beyond the rule of law. The government has no control over it, no oversight. There’s an old expression: the Federal Reserve is about as federal as Federal Express. It controls us, we cannot control it.”

Len found it odd that the first time Neith had shown anything like emotion, the conversation was about banking.
“Are you familiar with the history of central banking, Mr. Savitz?”
“Refresh me.”

“Central banking is centuries old. European countries like England had central banks since the 1600s, but America was unique in that it had no permanent central bank for its first 137 years. The founding fathers believed central banks were evil incarnate and did their best to resist any form of central banking during the early part of this country’s history.”

“So why do we have one now?”

“Before the Federal Reserve System was created, there were regular economic panics in the United States. Using retrospective forensic accounting, I have determined that it is likely that these panics were caused intentionally by major Wall Street investment bankers. In 1907, there occurred a crash so profound that the entire nation was on the verge of financial ruin. In an act of desperation, President Theodore Roosevelt pleaded with the banking tycoons of the day to bail the country out. Think about that for a second: the president had to openly beg wealthy bankers to save the nation.”

“I have to say, that doesn’t seem weird to me, Neith. Every president since has sucked their dicks, too.”

“To stall the crisis, the bankers lent money out at interest to failing businesses. Once the panic was over and out of the public’s mind, the bankers agreed to meet covertly to discuss how to further their profits. The meeting took place in abject secrecy at an exclusive hunting club on Jekyll Island on the Georgia coast. To avoid the attention of the newspapers,the bankers traveled to the meeting in a secret unmarked train under fake names. Also in attendance were an assistant Secretary of the United States Treasury and one Senator Nelson Aldrich, a close friend of J.P. Morgan’s, whose daughter had married into the Rockefeller family. Together, working in seclusion for ten straight days, they conspired to create a banking cartel and a system of moneylending so pervasive and insidious that the entire nation could be controlled through debt without anyone realizing it. Their brainchild was an ingenious conspiracy known as the Federal Reserve System. Even the name was brilliant, as it seemed to suggest some sort of government stockpile, when the truth was the complete opposite: it was a private IOU-printing machine.”
“Why on earth did people go along with it?”
“They had no choice. When a debt-averse American voting populace wouldn’t buy into it, the banking coterie exerted tremendous political pressure to get it through Congress. Behind closed doors, the bankers threatened to destroy the US economy if the scheme wasn’t passed into law. However, the backbone of Congress hadn’t yet been broken in those days, so they resisted it. A number of Congressmen, such as Arsène Pujo and Charles Lindbergh, refused to bow to the pressure. The bankers made good on their promise in 1913 when they decided to stop lending money. The country immediately went into financial chaos. The coercion worked. Congress authorized the Federal Reserve System later that year and simultaneously signed over its money-printing powers to the new central bank. In essence, the US government used to create its own US dollars for free, but in 1913 it was strong-armed into giving that authority away to a powerful banking cartel.”
“Unreal. Neith, have you considered bombing Wall Street for a change?”
 “That same year, Mr. Savitz, 1913, is when the sixteenth amendment to the Constitution was ratified. The exact same people were behind that change, too. The amendment gave Congress, for the first time in our history, the permanent power to collect income tax. Why? Because without an income tax, the banking cartel’s scheme wouldn’t work. In other words, their banks could lend the money to the United States, but until there was a large revenue stream, the United States would not be able to pay interest.”

“OK, so what? I happen to know the Federal Reserve isn’t allowed to keep profits. The profits are public.”
“That is where it gets tricky, and I need you to follow closely. If I lent you money at 1 percent interest, would it be profitable for you to turn around and lend it to someone else at 5 percent interest?”
“I guess so, sure.”

“You’d be collecting the interest in the middle. Imagine now that the person you lent the money to was the US government. In order to pay you 5 percent interest, what must the government do?”
“Collect taxes?”
“Exactly. That’s exactly what’s happening. The Federal Reserve, the institution that creates money in this country, creates it out of thin air, then lends it to for-profit banks at extremely low interest rates, at a far lower rate than would be available to you or me. This is called the discount rate, and it’s only available to those in the banking cartel. The discount rate is no fluke— it was the central issue of the clandestine Jekyll Island meeting. After borrowing at the discount rate, those for-profit banks turn around and lend it back to our own government at higher interest rates by buying treasury instruments like bonds and notes. The taxpayers are paying the interest on this money— money that was created for free and borrowed at a discount!”
“It sounds like a Ponzi, almost.”
“That’s exactly what it is, Mr. Savitz, a pyramid scheme. And this occurs not just here in America, but all over the world. There are over a hundred central banks just like the Federal Reserve, all of which are controlled by Dranthyx. The central banks create funny money and lend it to large corporate banks, also run by the Dranthyx. To make matters worse, these banks aren’t just robbing you through taxes, they are also stealing from you with inflation. If I put 100 dollars in your bank account, but inflation is 3 percent annually, then the money in the account will only be worth 97 dollars next year.”
“I thought inflation was supposed to be a good thing. Isn’t that what the economists are always saying?”
“I have a working hypothesis that financial illiteracy is genetically predetermined, deliberately coded into the human genome by the Dranthyx. If my hypothesis is correct, it would explain why such a large percentage of the world’s population is unable to make ends meet and why few people understand the time value of money. The only humans who seem to understand money implicitly are the Tchogols, who are overrepresented in the world of investing and high finance. If the average human understood money the way the Dranthyx do, the scheme wouldn’t work.”

Gaughen, Kevin (2015-05-06). Interest (Final State Book 1) (pp. 127-132). Kindle Edition.

And that part of the book is the reason I finally, after all these years looked up the history of our Federal Reserve Bank.


It’s all the news channels can talk about: the White House has been bombed, there's chaos in the streets, and the United States has found itself in the throes of a violent revolution.

Surrounded by panicked people, washed-up journalist Len Savitz takes the crisis in stride. It’s nothing that a stiff drink won’t cure. After all, bad news only hurts optimists.

But when the mysterious leader of the rebels cherry-picks him to acquire certain information for her, Len is forced to go on an investigative mission where he uncovers millennia-old secrets and unwittingly triggers a chain of disturbing events that will determine the future of humankind.

Author Kevin Gaughen’s dynamic debut novel, Interest, creates a seamless alternate reality behind real-world political tensions while keeping pace with its page-turning plot. Interest is as riveting as it is thought-provoking.

Who really runs the world we live in? The further Len digs, the darker the answers appear to be…