Stocks Tank 500 Points Following Fed Rate Hike – Just Who Is This Federal Reserve?

by Mustang and Bunk
Fed’s ‘freshmen’ are in focus as markets brace for a interest rate decision – so goes the story line in yesterday’s CNBC piece. Just who are the freshmen? We have new folks involved in the Federal Reserve and these aren’t your bankers and old white men. Oh no. They are woke as we learned last week.
We hear a lot about Jerome H. Powell as chair and that he is a consensus type guy so let’s know more about these other players who are involved in taking care of our banks and money. One thing we learned is that a .25 percent rate hike got us a 500 point drop in the stock market yesterday.
A short review first if you missed this last week.

Mary C. Daly | Center on Finance, Law & Policy

Mary Daly’s career trajectory: drops out of High School, works at a donut shop, gets GED, goes to college, becomes enamored with leftist prof teaching Marxian economics, becomes San Fran Federal labor researcher, ingratiates herself with Janet Yellen, who keeps promoting her first openly gay Fed/ prez/CEO.  Her background is in the study of economic equality.

Now that we have an idea of who they might be, back to the story.

The Federal Reserve decision, CNBC’s Steve Liesman highlights a wild card in the process: the high number of freshmen FOMC voters. The Federal Open Market Committee (FOMC) consists of twelve members–the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents



Our intrepid Mustang will give the Federal Reserve more of a spin. 

The Federal Reserve 

by Mustang


The twenty-first century has brought us many changes. So many that, to some, they seem overwhelming. Some of these changes involve our monetary system.  

Previous discussions at Bunkerville include the possibility of shifting to some variation of an electronic monetary system — and, of course, people who do not react well to changes are having a tough time with the proposition.

Failure of Banks Sets the Stage for Digital Currency

It would help if the United States had adults in Congress, but we don’t. And it would be nice if our president (and his closest advisors) cared more about the American people than they do about their ideological agenda. That’s not going to happen, either. The Chairperson of the Federal Reserve is one of those “presidential advisors” I mentioned a moment ago. 

What do most of us know about the American banking system? Most of us have no more than a rudimentary understanding. Let’s fix that right now — 

The Federal Reserve System (F.R.S.) 

A central bank is a financial institution granted privileged control over the production and distribution of money and credit for a nation or a group of countries. In modern economies, the central bank is usually responsible for formulating monetary policy and regulating member banks. The Federal Reserve (also called, The Fed) comprises 12 regional F.S.R. Banks accountable for a specific geographic area of the United States. 

The Fed was established by the Federal Reserve Act (1913) under the administration of President Woodrow Wilson — a response to the financial panic of 1907. Before that, the U.S. was the only significant financial power without a central bank. Its creation was precipitated by repeated financial panics that afflicted the U.S. economy over the previous century, which led to severe economic disruptions caused by bank failures and business bankruptcies. The 1907 crisis led to calls for an institution that prevented panic and disorders. Unfortunately, those calling for such an institution didn’t get one in the F.R.S. 

Still, the Fed has broad power to act to ensure financial stability. It is the primary regulator of U.S. banks retaining membership in the F.S.R. The Fed also serves as the lender of last resort to member institutions with no other place to borrow money. F.S.R. district banks are in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

Special Considerations 

The Fed’s primary income source is the interest charged on a range of U.S. government securities it has acquired through its Open Market Operations (also knowns as O.M.O.). Other income sources include interest on foreign currency investments, interest on loans to depository institutions, and fees for services — such as check clearing and fund transfers — provided to these institutions. After paying its expenses, the Fed transfers the rest of its earnings to the United States Treasury. 

The Federal Reserve payments system, commonly known as Fedwire, moves trillions of dollars daily between banks throughout the United States. Transactions are for same-day settlement. In the aftermath of the 2008 financial crisis, the Fed has paid increased attention to risks created by the time lag between when payments are made early in the day and when they are settled and reconciled. Currently, the Fed is pressuring large financial institutions to improve real-time monitoring of payments and credit risk, which was previously available only on an end-of-day basis.  

The F.R.S. Mandates and Duties  

The monetary policy goals are twofold: first, to foster economic conditions that achieve stable prices and second, to maximum sustainable employment. The Fed’s duties can be further categorized into four general areas: (1) Conducting national monetary policy by influencing economic and credit conditions in the U.S. economy to ensure maximum employment, stable prices, and moderate long-term interest rates. (2) Supervising and regulating banking institutions to ensure the U.S. banking and financial system’s safety and protect consumers’ credit rights. (3) Maintaining financial system stability and containing systemic risks, and (4) Providing financial services, including a pivotal role in operating the national payments system, depository institutions, the U.S. government, and foreign official institutions.  

Some Interesting History 

The foundation of the Federal Reserve System was crafted in near total secrecy in 1910 at a Jekyll Island (Georgia) resort by several powerful men with close ties to the Rockefellers — including J. P. Morgan and the Rothschilds. A version of this scheme was eventually passed into law in 1913 (over the objections of many financiers who feared turning over control of the nation’s money supply to a consortium of private bankers — giving them a competitive advantage over everyone else.  Even now, the F.E.D. remains highly secretive. 

In addition to the secrecy issues, the F.E.D. attracted much criticism from European economists who believed that a Federal Reserve was unnecessary, counterproductive, and an obstacle to a vibrant economy. Europeans also didn’t understand why the Americans would relinquish the gold standard — or their penchant for secrecy. Added to this was the generally held notion that confidentiality was part of a scheme to enrich a few wealthy bankers at the expense of the public — which was probably true. 

Ludwig von Mises (of the Austrian School) argued that the F.E.D.’s interference in monetary policy is the cause of the boom/bust business cycle that has occurred since 1913. Beyond Mises, libertarians resented economic manipulation, believing that the F.E.D.’s activities to “stop gold flight” from England either caused or was instrumental in driving the Great Depression. 

Finally, Nobel Lauriat Milt Friedman championed dismantling it altogether, which prompted the Fed Chairman to admit that it was true, the F.E.D. did cause the Great Depression — but they were all sorry and wouldn’t do it again. Given the amount of suffering caused by the depression, Ben Bernanke’s statement was incredible. 

But the F.R.S. is NOT a Federal Agency 

While the American banking system is called the Federal Reserve, it is not owned or directly controlled by the U.S. government. And yet, the following words appear on every single U.S. bank note that comes out of the U.S. Treasury Department: united states federal reserve system. Thus, any confusion seems perfectly understandable. 

So, who owns it? This is a question asked many times and answered by the Supreme Court of the United States (S.C.O.T.U.S.). Although categorized as an independent agency, the Court stated that instrumentalities (such as national banks) in which private interests are not federal government departments. They are private corporations in which the government has an interest. To complicate the issue further, the Court decided that “the commercial banks own each federal reserve bank within its district.” you can read/download the Supreme Court’s case by following this link: 406 F. 3rd 532: Scott v. Federal Reserve Bank of Kansas City, 2006. 

So, we know now that even though the F.E.D.’s board members are presidential appointees, and the U.S. Senate confirms their positions, the F.E.D. is privately owned and controlled by large (powerful and influential) private banks. Once the U.S. Senate confirms the appointment of a board member, the U.S. government exercises no control over its decisions — other than the president’s ability to remove a board member, and Congress does not influence this incredibly powerful institution — that holds no reserves. 

Mustang also has blogs called  Fix Bayonets and Thoughts From Afar

To be continued … the very best of the swamp.


34 Responses to “Stocks Tank 500 Points Following Fed Rate Hike – Just Who Is This Federal Reserve?”

  1. Baysider Says:

    The Fed is another example of how elections have consequences. Those pushing for a Fed (not yet created) backed Teddy Roosevelt in his run against his former VP, Taft and the Democrat Wilson. They calculated TR would draw votes off Taft and put Wilson in office. Then Wilson would grease the skids for a Fed to be formed. That’s how it happened, too.

    Liked by 2 people

    • Mustang Says:

      Well said, Baysider. There is also a good lesson there for the lack of wisdom in creating a third party. It didn’t work out for T.R., and it didn’t work out for G.H.W.B.’s second run, either. The Bush family’s background might explain why Ross Perot hated G.H.W.B. as much as he did — and managed to keep him away from a second term.

      Liked by 1 person

  2. Baysider Says:

    A more inclusive economy?
    TRANSLATION: we’re spreading the misery around and collecting our fee.

    Liked by 1 person

    • Baysider Says:

      Love that book. A magnum opus. And Griffin is still speaking out.

      I could not find the variation of this I looked for. IT SAYS “the fed” in the image. But you get the idea.

      Liked by 3 people

  3. Mustang Says:

    In 1838, long before winning the presidency, Abraham Lincoln publicly observed, ““At what point then is the approach of danger to be expected? I answer, if it ever reaches us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time or die by suicide.

    We are moving in that direction, though, mimicking Rome’s 1,100 years — but only after 234 years. Such as:

    1. Rome suffered from barbarian invasions; ours involves illegal aliens.
    2. With a scant industrial sector of 12%, the U.S. doesn’t produce anything worthwhile.
    3. Americans are steadfast in electing idiots to the presidency.
    4. In this century alone, the U.S. has wasted $8 Trillion on wars.
    5. America, like Rome, has been corrupt since its beginning.
    6. American society has become mediocre and “entitled.”
    7. American military leaders are incompetent, political, and untrustworthy.

    Liked by 2 people

    • bunkerville Says:

      I would not have guess that years ago when the nascent “Global warming” words were spoken, and when that didn’t work, Climate change which has happened since Adam and Eve, would be the Trojan Horse that would lead us to the finishing line.


    • Ed Bonderenka Says:

      “5. America, like Rome, has been corrupt since its beginning.”
      Please elaborate. That’s a mighty wide brush.


    • Baysider Says:

      To #7 I would note that the military came to depend on what amounted to ‘foreign’ mercenaries, legionnaires drawn from the edges of the empire but led by upper ranks of Romans. For example, the 12th legion that was virtually destroyed by the Bar Kochba Revolt in Judea was not a bunch of Romans, but Syrians under a Roman legate. Romans did not enlist. Others did to get citizenship. It’s fair. But does it sound familiar?

      Liked by 3 people

    • Mustang Says:

      Okay, Ed. A few clues, and then you can do your own research. Check out the traitor Major General James Wilkinson, Thomas Jefferson’s conspiracy against President Washington, the escapades of Aaron Burr, who conspired with Wilkinson, and Henry Clay’s corrupt bargain. Baysider dropped a few clues, too.
      Then, you also might find interesting Prescott S. Bush’s attempt to overthrow the government of the United States and place in the White House a military dictator. You remember Prescott, don’t you? The banker who aided and abetted the Nazis in the mid-1930s. Broad brush? I don’t think so, but since you’ve already made up your mind, live your dream.


      • Baysider Says:

        I’m going to defend Ed here. I think we’ve all had to ‘recover’ from our expectations of our country which were set in our eyes by patriotic elders when we were in single digit ages. Unfulfilled expectations lead to unhappiness and/or a warped perception of reality we can’t let go of. It fuels much anger of the left.

        The first lesson to remember is that our founders were the original realists here. They had real expectations of human nature. That drove them to create the system they did – the famous “checks and balances” that are there to slow down the avaricious pursuit of power by sinful, power hungry men by putting other sinful power hungry men with competing interests in their way with everybody jealously guarding their own turf. Now who learned it that way in school or from patriotic parents that loved (and fought for) their country? We should have. That cannot last forever. Indeed, all 3 branches are pretty much conspiring together against the people who pay their wages to take their money and freedoms.

        All along the way imperfect and sinful men whose ‘god’ is their own power step in and make messes. But for a long, long time the bulk of us could lead peaceable, productive lives with freer choices than most of people in most of history. I like that part. I think it was real. And you know I’ve criticized plenty here. Indian removal under color of treaties with a nation within a nation (this never works). Then we turned around and broke one treaty after another – a far worse sin than slavery in my book. (Joshua made a foolish treaty with the Gideonites who tricked him, but still honored it to not stain God’s name. Maybe there’s a lesson there.) One of the big proponents of Indian removal (Jackson) also stood firm against central banks – so a mixed bag. Then we had Lincoln who railed more against the bankers than against slavery, and he hated their agent House (whose son became Wilson’s trusted aide committing all sorts of mischief Lincoln stood against, and which – in my view – got him killed). So many less famous incidents like these, and you’ve covered many of them in your fine blogs, including on the revolution, or the restoration of the Glorious Revolution of 1688 as I call it.

        So yes, we have been corrupt. But not since OUR beginning. It’s been since the fall of man. And fallen man devised a pretty damn fine system here that worked to further the landed and commercial classes, yes, but also worked for most everyone. And everyone after 1865 and 1964. Our problem is taking that for granted, blinded to the reality of human behavior our founders clearly saw, and then joining the ranks of nations in international busybodyisms. BTW, I concur with Chuck Missler, naval academy grad, who loved America but cautioned “don’t let it become an idol.” Now, I hope both you and Ed aren’t mad at me. Rant over.

        Liked by 1 person

      • Ed Bonderenka Says:

        That’s it? America was corrupt from the beginning and you use Prescott Bush?
        You are a sad man sir.
        Does everybody else here agree with Mustang that America was corrupt from the beginning? Are you afraid to say so?

        Liked by 1 person

      • bunkerville Says:

        I will repeat the comment I left before at Ed’s
        I am waiting to hear about the better government that is out there…the better country.. We have had the best of the best of times and we need/should to be grateful.
        Imperfect yes…
        Its the same with the attacks on Trump…. there is much about his personality that is disturbing. Does anyone think he is truly a criminal? I came across a video with Putin and him smiling, talking… does anyone really believe we would be in the same pickle on the world stage if he had won re-election?
        In two short years the world laughs at us. Yet there is unmitigated hatred against Trimp that knows no bounds.

        Better, let us have another the name of DeSantis whose bff forever is Paul Ryan… that will work.

        Only minutes after Donald Trump hosted China’s president, Xi Jinping, Tomahawk missiles were flying toward targets in Syria. Peace through strength… that sort of thing.

        Give me the Red White and Blue any day.


  4. bunkerville Says:

    Icing on the cake

    The Fed is sending “confidential, not-for-distribution research” to select members of the House Financial Services Committee espousing money as a means of social control.

    The confidential Fed research express concerns over income inequality and fears of Bitcoin.

    The link above was published in October of 2019, but it just came my way today.

    The rest is confidential, sent no doubt to select Marxists on the House Financial Services Committee who want to address income inequality by income redistribution.
    What we don’t know is how much further progress has been made towards income redistribution and social control. Nor do we know what other ideas regarding money are hidden in the papers.


  5. Silverfiddle Says:

    Thank you for the information. It was a good reminder on the Fed and a nice update on what’s going on now.

    Boom bust cycles are as old as humankind, and we continue having them even after the creation of the fed and hundreds of years before that, central banks.

    Anti-capitalists point to crashes and shout “See! Captialism doesn’t work! Look at the Tulip market runup and crash in the 1600s in Holland!”

    Well, that was not a flaw in free market capitalism; it was a feature called ‘consequences.’ Any system that allows actors to reap the consequences of their actions (good or bad) is a healthy one. That is what our economic/banking system lacks today. The moneyed class always gets a government bailout, while working people experience consequences every day.

    A system is not free market capitalist at all when the moneyed class plays brave Ayn Rand rugged individualist cowboy capitalist, but then cries for government welfare when he soils his diaper and loses all his money.

    That is what’s wrong with our Not Free Market Crapitalism coddled by government welfare.

    Liked by 3 people

    • bunkerville Says:

      Bunk here… It looks that it could be the usual recoil reaction now with the planting of Progressives/Marxists in key positions within the Fed. One can see how precarious the Fed system is in… the U.S. President nominate members and apparently fires members.
      A majority of Fed members similar to the San Fran gal lets us know how fast and far we can go off the rails with our monetary system.
      Powell still has to go out and round up the votes for whatever change is made.
      Mustang did is usual great work on the subject.


    • Ed Bonderenka Says:

      I can’t resist:
      Capitalism hasn’t been done right yet.

      Liked by 2 people

      • bunkerville Says:

        I am waiting to hear about the better government that is out there… We have had the best of the best of times and we need to be grateful that we have enjoyed those who have gone before…
        Give me the Red White and Blue any day.


  6. peter3nj Says:

    Hey Xi,
    It’s me Joe…Lunchpail, yeah. I just had the Fed raise rates another quarter…yeah a quarter point. Listen, the garage door is open so have your guy put the envelope under the red toolbox…yeah the one on the workbench. …another quarter point sure but not until June first. Later man…

    Liked by 2 people

  7. markone1blog Says:

    Not to be a total critic, but if he wants an “inclusive economy,” shouldn’t it mirror the makeup of the population? As of the last time I looked (probably about 2019), gays made up about 2+% of the population. Transgenders (really, gender disphoric) about 0.1%.

    So now, to be “fair,” an improportionatly large number of these people are going to be assigned to leadership roles just because?

    Liked by 1 person

  8. markone1blog Says:

    So is this supposed to get our eyes off of the destruction that the ESG investing that Biden forced on us by vetoing the bipartisan bill? Does Biden really think we are thrilled to support his:
    1. Baseless climate change agenda
    2. More LGBTQ (and it seems to be mostly the T and radical Q coming to the fore)
    3. More government with our investments??

    Liked by 2 people

  9. peter3nj Says:

    Thanks for the primer on the FRS. In short there are more than a few reasons to have reservations about the system and those running the damn thing. Although having caught a clip of Yellen reassuring “the American People,” that’s us, everything is groovy with the economy and the groovy people in charge I couldn’t help but be distracted from the message by her voice sounding like she was chewing on the grizzle on the end of a pork chop; but she is Jewish isn’t she? If not she still sounded like someone chewing on pork chop grizzle. It brings to mind the old Allstate insurance TV commercial featuring Ed Reimers with his hands cupped in front of his belly saying “ You’re in good hands with Allstate” which may have been true till you filed a claim. While Allstate raised your premium they unlike the pinkos running the FED weren’t trying their best to crash the economy.

    Liked by 1 person

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