What is the Federal Reserve system?

[BenVitale]

I thought it was a government agency.

So, is it a government agency? No.

Is it a private banking corporation?

According to G Edward Griffin it is a hybrid, a banking cartel.

Here's G Edward Griffin in this video: http://megamata.com/forum/viewtopic.php?f=4&t=42#p497

Look at the bottom of the webpage where it reads: Creature From Jekyll Island A Second Look at the Federal Reserve

 

[hamster143]

Unfortunately, there is a lot of misinformation on the subject, much of it by people who deeply misunderstand modern economics.

My best description would be that, like most cenbanks, the Federal Reserve is an academic nonprofit.

 

[Al68]

I thought it was a government agency.

So, is it a government agency? No.

Is it a private banking corporation?

The short answer is that it is a bank which serves as an agent of the federal government, so as a practical matter, it's equivalent to a federal agency.

 

[Galteeth]

Although Griffin is prone to conspiracy mongering, his basic descriptions of the federal reserve are correct.

In order to better understand the federal reserve system, it might be useful to look at how it is different then what came before (i.e., private banking and direct government central banking) and also understand the idea of banking and money in general.

There is also some confusion as to the term federal reserve. All american banks are part of the federal reserve system, but when people refer to the "fed" they are usually talking about the board of governors and the central branch banks.

These are not for profit, although there is some complication, as the people who lead the board of governors and the branch banks come from the world of for profit banking, and hypothetically their decisions could benefit them, although direct benefit is not legal. Then again, much of what the board of governors decides to do is "secret" in several senses. The motivation for this has to do with keeping central banking decisions independent from short term political concerns.