I noticed recently an uptick in traffic on searches such as "Is the Fed private?" Further research suggests this has to do with the publication of Brad Thor's novel Hidden Order: A Thriller,
which my impromptu investigation reveals to be aimed at cramming every lurid, anti-Federal Reserve conspiracy theory into an easy-read format. I can't speak to whether this novel is thrilling, but I can tell you it's not a reliable information source. Excerpt:
A lot of staples of anti-Fed literature are in the above passage, making it rife with error and exaggeration. The notion that the Fed is "private" reflects a confusion that stems from the fact that the Fed's regional banks are nominally privately owned. Banks own shares in the regional Fed banks, but these shares are not tradable, and the profits mainly go to the U.S. Treasury. Essentially, what this means is banks are required to park some money with the Fed, rather than "owning" the Fed in any sense that gives effective control. Moreover, it is the Fed's Board of Governors, not the regional banks, that has the last word on policy; and the Board of Governors, the members of which are appointed by the president with the consent of Congress, is clearly a federal agency.
As for audits, the word "thorough" does a lot of work in Thor's passage. The Fed is subject to various audits but I guess none "thorough" enough for the purpose of abolishing it. The Fed does not operate in "total secrecy" but rather publishes minutes of its meetings after the fact. The Fed is designed to have "independence," which is to say a degree of insulation from short-term political pressures. The goal is that Fed policymakers should be focused on the longer term and the national interest, not what monetary policies are most conducive to getting incumbent politicians reelected.
The supposed 96% decline in the dollar's purchasing power is a misleading abstraction, as I discussed here. The alleged stability of the 19th century economy when there was no central bank overlooks the many severe crises during that time. The elimination of America's first central banks had various negative consequences; what stemmed from abolishing the First Bank of the United States I discussed here, and elimination of the Second Bank is in many ways an even grimmer story.
Now, of course, it's only a novel. Sadly, though, it will reinforce much misguided thinking. Consider, for instance, this breathless account in Glenn Beck's The Blaze. Excerpt:
On Glenn Beck’s radio program Tuesday, coinciding with the book’s release date, Thor revealed the agency behind “Hidden Order”: the Federal Reserve.Wow. Thanks for the revelation, Thor. For further reading, besides the links above, I recommend my piece "The Fed and Its Enemies."
