The Federal Reserve recently released its 2021 Annual Report for Congress. This 200+ page document aims to encapsulate the annual financial and operating affairs of America’s Central Bank. One must wonder, like all bills passed through Congress, how many state representatives actually read these documents and what pertinent information is contained therein?
It begins almost with a disclaimer:
The Federal Reserve was created by an act of Congress on December 23, 1913, to provide the nation with a safer, more flexible, and more stable monetary and financial system. In establishing the Federal Reserve System, the United States was divided geographically into 12 Districts, each with a separately incorporated Reserve Bank.
Having 12 districts is as questionable as the belief that the Fed created a safe, flexible and stable monetary system. Yet, over 100 years after Congress granted the Fed a monopoly on the US dollar, and failure after failure, the Fed is stronger than ever.
There are “five functional areas” the Fed is responsible for, per the bulk of the report. The first: Conducting monetary policy and monitoring economic developments. This section covers common concerns, the dual mandate, inflation, employment, consequences of their easy money policies, of course, without acknowledging their culpability:
Supply chain bottlenecks have plagued the economy for much of the past year. Against a backdrop of robust demand for goods, global distribution networks have been strained…
Unfortunately they fail to attribute the increase in money supply to the “robust demand for goods,” so, it omits crucial economic theory.
The second functional area: Promoting financial system stability. Various vulnerabilities and financial concerns, such as overvalued assets and excessive leverage, are mentioned as being monitored. They also included:
…climate change as an emerging and increasing threat to financial stability in the United States.
Other than reducing regulation and the regulatory burden, consideration as to just how much a central bank can do to fight climate change should be given. Since the Fed’s power largely boils down to its ability to decrease rates and increase the money supply, the positive influence this would have on climate change is questionable.
Supervising and regulating financial institutions and their activities is the third area. This deals with examinations, enforcement and related activities to ensure everyone is abiding by the law. Unless buried in the notes, nothing regarding insider trading at the Fed was noted.
Area four: Fostering payment and settlement system safety and efficiency deals with the mechanics and logistics behind the monetary system. The inevitability of Central Bank Digital Currency (CBDC) can be seen through various projections the Fed is currently working on such as “Project Hamilton,” a collaboration with the Federal Reserve Bank of Boston and MIT to form a:
…multiyear research project to research retail CBDC designs and gain a hands-on understanding of a CBDC’s technical challenges and opportunities.
Last, area five: Promoting consumer protection and community development, also deals with examinations of financial institutions but looks at fairness, inclusion, equality, etc… It handles complaints, of which 5,814 were made in 2021. Of these, 93% are now considered closed. The stats are as follows:
In 44 percent of investigated complaints against Federal Reserve regulated entities, evidence reviewed did not reveal an error or violation. Of the remaining 56 percent of investigated complaints, 12 percent were identified errors that were corrected by the bank; 5 percent were deemed violations of law…
Ultimately, it’s clear this central bank system is designed not for the prosperity of “the People,” but for the prosperity of “the State.” The apparatus is entrenched within society, with a complicated history and deep vested interests at hand, forming the foundation of Wall Street. If the annual report is useful to anyone on Main Street, it’s to serve as a reminder just how little those on Main Street matter to those at the top.
