His stand on the Federal Reserve is what clues me in that he does understand what is at stake, as most would agree it changed this country into a tool for private interests.
That's a popular legend among conservatives that has no basis in reality. First of all, the US economy has always been predicated upon private interests. While there was still room for settler expansion in the West the social tensions of capitalism had a release valve. If you didn't like your boss in the east you went out west and took a calculated business risk, hoping that you wouldn't be scalped by an Indian before the build-up of new settler populations in the west caused tensions to explode in a new war which resulted in US expansion and new opportunties for economic development.
During this time-period the concept of a money system was in a total flux. Every new state that was occupied opened up territory where traditional banks were reluctant to enter initially. The result was that people would open up banks in the West using reserves that amounted to 1 in 20,000 or so of what they were asserting as credit. During this time the US Congress pretty much did nothing. A myth has evolved which portrays the US Congress as somehow supervising the money process up until 1913. If anything the reverse comes closer to the truth.
The establishment of the Federal Reserve set up a monetary system controlled by the Board of Governors which is appointed and approved by the President and the Senate. Whatever the flaws in the current system, it has much more the makings of a finance system subject to official overview than what was practiced in the Free Banking Era.
The myth of the Federal Reserve as a "private bank" stems from the varying usages of the term "shareholder." In conventional usage, "shares" refer to something which can be freely sold at anytime on the stock market. If a company whose shares are bought and sold freely on the stock exchange commits the error of upsetting one of its major shareholders then that shareholder can sell their own privately held shares on the stock exchange. When this occurs it may be taken as a signal by people watching the stock exchange that the company is going under and this can set off a chain of sellouts among all shareholders and thereby drive the company into bankruptcy. Under such circumstances the management of the company needs to make certain that none of its large shareholders becomes so upset as to do this.
None of that has any relation to the occasional misusage of the term "shareholder" as it is sometimes applied to the Federal Reserve. This term seems to be used on occasion in reference to the member banks (which by law includes all national banks) in any of the different Federal Reserve banks. No one from any of these member banks has any regulatory authority over the Board of Governors which the President and Senate appoint and approve. Even if a regional bank which was not required by law to belong to one of the Federal Reserve banks decided that it wished to withdraw from the Federal Reserve System, they do not possess any option of "selling private shares on the stock exchange" or anything else that is implied by the term "shareholder."
People who know nothing about Federal Reserve auditings might benefit from reviewing the auditing report of 2006 at:
http://www.federalreserve.gov/boarddocs/rptcongres...
People may also find it useful to review some of the statistics for 2006.
http://www.federalreserve.gov/boarddocs/rptcongres...
In particular, one should note that $29,051,678 were rebated to the US Treasury by the Federal Reserve. You'll notice that the initial income for 2006 of the Federal Reserve was at $38,410,427. Then we have:
Net Expenses: $3,263,844
Net Deductions: $158,846
Board Expenditures: $301,014
Costs of Currency: $491,962
This leaves us then with a net income of about $34,194,761 of which about 85% was rebated to the Treasury. Now maybe one can charge that the costs should have been further reduced so as to return a higher percentage to the Treasury. Fine. But this is not the principal cause of the US national debt. Anyone who tries telling you that it is playing a hoax.
The roaring national debt of the United States which took off to the sky with Ronald Reagan is not a consequence of the Federal Reserve charging anyone any interest. It is a consequence of the US Government going off on mad spending sprees for the Pentagon and similar agencies while the productive activity in the US economy slides and taxation on the wealthy is cut. This can only be done by taking out loans, though not in general from the Federal Reserve, and no doubt such loans do include interest charges as well. But the Federal Reserve System is not the cause of those rising debts and any other system would have to generate huge debts for a government which behaves as the US Government has for these last several decades.
The US debt has almost nothing to do with the Federal Reserve. The major portion of Federal Reserve earnings are restored to the US Treasury. The US debt has mushroomed simply because the US economy has steadily turned away from productive activity, taxes on the rich have been steadily cut, and all of this has gone on while the US Government has rung up huge expenditures on foreign intervention over several decades. Nothing can change the fact that such policies do run up enormous debt. The Federal Reserve can't change that.
The Federal Reserve System already does give back most of its interest profits to the US Treasury. It's been that way from the beginning when the Federal Reserve was first founded. It's a hokey myth which denies the fact that the Federal Reserve has always operated according to the pattern of deducting a certain portion of operating costs and then returning its major portion of profit to the public treasury. The national debt does not come from Federal Reserve interest collections, that's a fact. The wasteful expenses run up by US interventionism also have nothing to do with the Federal Reserve or any interest which it makes off of its bonds. Those expenses come from the fact that US interventionism has been carried out to protect capitalist interests based in the USA just as the arms race was also used as a way of generating business for the airplane industry. Very little of this has much bearing on banks per se and almost none of it has anything to do with the Federal Reserve.
