I was in a brief political argument last night with some friends when a couple alleged that the Federal Reserve is not a government institution. While I know that it is autonomous to an extent from the three branches of government, I don’t see how it isn’t a government institution. Nixon took us off the gold standard, president’s appoint chairmen of the Fed, etc. Could anyone shed light on the subject and explain the relationship between the Fed and the Government?
Yes, of course it’s a government institution. It’s funded by taxation and has a government-enforced monopoly.
I’m not so sure it is funded by Congress.
This might be splitting hairs but I think you only got 1 out of 2 right. It has a government enforced monopoly (so to that extent it is “funded” by taxation - it wouldn’t exist without this monopoly). However its revenues actually come from the interest it charges on the various loans that it makes or the yield that is paid on the various bonds that it purchases… so to that extent it is “self funded”.
It’s kind of a quasi public institution. It’s primary shareholders are all private entities (mostly commercial banks) but it is governed by laws that stipulate that those shareholders can’t run the Fed like any other company. They’re only allowed to pay out 6% of the profits that the Fed makes each year to shareholders, for example. So I guess it’s basically run like any other government outfit - upheld and enforced though government coercion (and the use of tax payer’s money) for the benefit of minority special interest groups. The lines are simply a bit more blurred where the Fed is concerned.