In the United States, the Federal Reserve (Fed), a long-established and powerful institution, has recently been the focus of public discussion again. It all started with a simple question from Tesla CEO Elon Musk on social media: "How exactly does the Fed work?" As soon as this remark came out, it immediately caused an uproar, not only sparked widespread discussion on the Internet, but also directly prompted 20 Republican congressmen to jointly submit a bill to repeal the Federal Reserve. This incident not only highlights the central position of the Federal Reserve in the US economic system, but also once again brings to the forefront the controversy over its operating mechanism, independence and impact on the country's economy.
The birth of the Fed was not without its challenges. The United States has historically been cautious about the establishment of central banks, especially in the early days, when the founding fathers of the United States, represented by Thomas Jefferson, feared that central banks might threaten the country's fiscal autonomy and the spirit of the Constitution, so the United States did not establish a long-term stable central bank in the early days of its establishment. However, with the growth of domestic financial demand and the pressure of international financial competition, the two short-lived central banks (a total of 40 years) laid the groundwork for the establishment of the Federal Reserve.
In 1913, the Federal Reserve was created in a complex financial and political context, and it was designed as a special institution that was half public and half private, consisting of 12 regional Federal Reserve Banks to stabilize the economy, supervise banks, and set monetary policy. Although the Fed's board of directors is nominated by the president and confirmed by the Senate, its structure and decision-making process have long been controversial, especially its relationship with private banks, which is often seen as a symbol of elite economic manipulation rather than a true representation of the public interest.
One of the Fed's most striking features is its independence, which means that it enjoys a high degree of autonomy in setting monetary policy, unaffected by short-term political pressures. This feature is theoretically conducive to maintaining the continuity and stability of monetary policy, but in practice it has also attracted a lot of criticism. For example, the Federal Reserve's monetary policy decisions, such as interest rate adjustments and quantitative easing, are often blamed for exacerbating wealth inequality and for bailing out financial institutions during financial crises while ignoring the well-being of ordinary people.
In recent years, the global financial crisis, the economic shock caused by the COVID-19 pandemic, and rising economic inequality in the United States have called into question the Federal Reserve's monetary policy and role as never before. During the pandemic, the Federal Reserve implemented a massive asset purchase program that injected trillions of dollars of liquidity into the market, which helped avoid an economic collapse but also raised inflation concerns. There is growing public debate about whether the Fed's "helicopter dumping" approach is appropriate and whether it has the ability or willingness to effectively manage inflation.
According to an online poll, 86% of respondents support the abolition of the Federal Reserve, while only a minority (less than 3%) support its repeal, while the rest are neutral or have not made a clear statement, reflecting the public's deep concern about the current financial system and its desire for change. Representative Thomas Massie, Republican of Kentucky, was a key figure in proposing and pushing for the Federal Reserve Repeal Act, and he joined at least 20 other members of the House of Representatives in working on the bill. In addition, well-known economists such as Llewellyn have called for an end to the existence of the Fed and a return to the gold standard, suggesting that there are also voices in academia for the Fed's abolition.
Against this backdrop, the call to abolish the Fed is once again sounding out not only of dissatisfaction with the current state of the economy, but also of an outburst of dissatisfaction with the long-accumulated financial system. However, this proposal is extremely difficult to implement. The Federal Reserve is not only the cornerstone of the U.S. financial system, but also a key pillar of the global financial order. Its repeal not only involves complex legal procedures and political games, but also touches on a deep-seated pattern of economic interests. The influence of Jewish capital in the U.S. financial system, while a long-standing social perception, undoubtedly oversimplifies the complexity of the issue by presenting it as a major obstacle to the Fed's abolition.
In fact, reforming the Fed to make it more transparent, accountable, and democratically oversight, perhaps a more feasible path forward, even without considering its abolition. In the history of the United States, there has been no shortage of attempts to reform the Federal Reserve, such as strengthening congressional oversight and improving the framework of monetary policy objectives. These efforts aim to balance independence with the public interest, and to ensure that monetary policy better serves the long-term development of the country and the well-being of all.
While potential ethnic dynamics within the U.S. financial community have not been publicly mainstreamed in recent years, observers have noted the complexity and variety of interactions between Anglo-Saxons and Jewish-Americans in this area. On the one hand, the Jewish community has long demonstrated strong financial clout, thanks to its deep roots in investment banking, hedge funds, and private equity. Names such as Soros and Goldman Sachs have become synonymous with success and reflect the prominence of Jewish Americans in the financial world.
On the other hand, there is competition and cooperation between established financial institutions, traditionally dominated by Anglo-Saxons, and emerging Jewish capital. This relationship is particularly delicate in the face of technological innovation, market volatility and the challenges of globalization, where the two sides are both cooperative and confrontational in policy lobbying, resource allocation, and market strategy to preserve or expand their own interests. It is worth noting that, despite the competition, the networks of elites on both sides, such as joint philanthropy and think tank support, also show a cross-ethnic side of cooperation that is shaping the direction of the U.S. and global economy. These interactions reflect the constant adjustment and balance of power structures in America's pluralistic society.
To sum up, while Musk's question and subsequent repeal proposal put the Fed in the spotlight, this proposal reflects more of the public's dissatisfaction with the current economic woes and the eagerness to reform the financial system. Abolishing the Fed may be a radical and unrealistic idea, but the value of this discussion in itself lies in promoting a deep rethinking of the existing financial system and an exploration of how to build a more fair, transparent, and accountable monetary management system in the future. In this process, how to balance power, efficiency, and democracy will be a major issue that the United States and even the global financial governance must face.