The Federal Reserve System was created in 1913 as a tool for the US Government to help prevent bank runs and public panic. Despite that intention, some financial experts blame The Fed for the The Great Depression, saying it was the source of speculation and economic bubbles that led to the great stock market crash of 1929. While its overall success as an institution is debatable, there is no question that since its inception The Fed has been wrapped in secrecy. The official explanation for this is that secrecy helps keep its actions from inciting public panic and minimizes short term political influence on longer term economic decisions. Because of its lack of transparency, people from diverse sides of the political spectrum have been calling for The Fed to be held more accountable to its actions. Progressives and Democrats point to the fact that The Fed serves the banking industry and bails out big companies. Libertarians criticise The Fed for devaluing the purchasing power of money and bailing out risky behaviour of all sorts, including the Federal Governments excessive spending. As some financial experts point out, sometimes the actions of The Fed are blatantly fraudulent. Complaints against the Federal Reserve system are numerous and diverse. Solutions are fewer and less clear. Some extreme proposals include dismantling The Fed and going back to the Gold Standard (the solution of Ron Paul and Peter Schiff). Others propose a thorough auditing of the Fed’s actions and strong oversight by the Congress. Here’s an infographic that explores the controversy over The Federal Reserve system, as well some interesting economic facts (i.e. the value of money was stable or increasing for the 100 years prior to creation of The Fed).
Infographic via bestaccountingschools.net
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