How The Federal Reserve Works (And Who Really Owns It)

The Federal Reserve: the cornerstone of the
American economy. For just over a century the Fed has overseen
the financial system of the US, but its track record has been far from perfect.
Worse yet, it has such a unique and convoluted structure that it’s very difficult for people
to really understand it, which is why unsurprisingly the Fed has been subject to various conspiracy
theories, from being owned by the Rothschilds to being operated by lizard people.
Today, we’re going back to the dawn of American finance to see how the Fed was created, how
it works and who really owns it. This video is brought to you by Skillshare,
where you can find a ton of different classes including my own series of videos on how the
stock market works. You can watch them for free by registering
with the link in the description. America during the late 19th century was a
nation in turmoil and not just in the literal sense.
The Civil War was no doubt devastating, but even during the peace that followed America
was plagued by frequent and deep economic depressions.
The underlying cause was simple: America just lacked a proper financial system and more
importantly, it didn’t have a central bank to save the day when things turned bad.
Now, keep in mind, central banking wasn’t a new concept.
The Dutch were the first to come up with a central bank in 1609 and it was instrumental
in transforming the Netherlands from a swampy backwater into a global economic empire.
Following the example of the Dutch, the English created the Bank of England in 1694, which
of course became the backbone of the British Empire.
But it’s exactly this association with the British that made the Founding Fathers reluctant
to use the same model in the United States. There were two attempts at establishing a
central bank even despite public opposition: Alexander Hamilton himself led the first movement
in 1791. But in both cases the systems lasted under
20 years and did little to stabilize the situation. And by all accounts the situation was very
very bad. Back then even a single local bank failing
could result in nationwide panics. People knew that no one could save their bank
if it went bust, so as soon as rumors of insolvency started spreading, everyone frantically started
withdrawing whatever they had, bankrupting otherwise healthy and solvent banks simply
out of fear. Such bank runs happened with frightening regularity
and the depressions that followed were long and painful.
Of course, American bankers realized very well just how bad their industry was doing.
Paul Warburg, one of the great American bankers of his day, said in 1907 that the American
banking system then was at about the same point as 15th century Italy or Babylon in
2,000 BC. Just a few months after Warburg made that
statement, the country suffered the Panic of 1907 and it was particularly severe.
To start things off, in 1906 a devastating earthquake destroyed 80% of San Francisco.
With reconstruction efforts underway, capital was very tight and because all the money back
then was in paper form it was much more difficult to reallocate it across the country.
One banker tried to abuse that by manipulating the stock price of the United Copper company
back on Wall Street. He hoped to see his shares rise exponentially
in value, but instead they crashed, dragging down the entire stock market with them.
That banker was involved in 10 different banks across the East Coast and one after another
these banks failed as people assumed they were insolvent and withdrew all their money.
Pretty soon even banks that had nothing to do with that guy were going under, and so
the fearful bankers of America turned to the only man with the power to save them: J. P.
Morgan. Back then, John Morgan was the king of Wall
Street, and even today the bank he created is the largest one in America.
He wasn’t the wealthiest man at the time, that title belonged to John Rockefeller, but
Morgan was certainly the man everyone turned to when things got bad.
In October 1907 Morgan summoned the great bankers of the day to his office at 23 Wall
Street. With the collective capital of America’s
big banks, Morgan arranged for the rescue of the healthy banks that were nevertheless
near bankruptcy due to irrational fears. Virtually the same thing would happen a century
later in 2008 when the government bailed out the banks, but this time it was happening
entirely thanks to private individuals like John Morgan.
Once the panic was contained, it became clear to everyone that a central bank was necessary
and Congress immediately passed legislation to create one.
However, that was pretty much the only thing everyone agreed on: the actual details of
how it would work sparked long and fierce debates that halted any progress.
The agricultural South, for example, was afraid that a powerful central bank would give Washington
and Wall Street too much power over them. The bankers meanwhile wanted to make sure
that the central bank would not be manipulated by political interests: they wanted it to
be as independent as possible from Washington. The sheer number of competing parties made
creating a central bank extremely difficult and negotiations would in fact take over 5
years to finalize. What’s interesting though, is that these
negotiations weren’t happening on Capitol Hill.
Instead, they were held 600 miles south of Washington on Jekyll Island in Georgia.
That resort was home to an exclusive club of over a hundred of the wealthiest men at
the time, including John Morgan. Of course, only a select few would help draft
the actual plan for the central bank and it wouldn’t be until 1913 that legislation
would actually come to pass. The newly created Federal Reserve was truly
a miracle of compromise. To accommodate all the various interests of
the diverse United States, the Fed became a central bank unlike any other in the world.
To begin with, it wasn’t even a single bank, instead it was a network of twelve regional
banks each governed by local bankers and businessmen. Some of these banks were in obvious places,
like New York and Chicago, but many of the other locations came down to politics.
The Senator from Missouri, for example, was a key vote needed to pass legislation, which
why today Missouri is the only state to have two federal reserve banks within its borders.
To appease Washington, these twelve regional banks would have a single governing body,
comprised of seven people appointed by the president and confirmed by the Senate.
To limit the president’s power, he can only appoint one governor every two years with
a 14-year term. But the really unique part of the Fed’s
structure, and you can thank John Morgan for that, is the fact that each regional bank
is actually structured as a private corporation that has its own stock.
Here’s how it works: every nationally-chartered bank in America is required by law to keep
6% of its capital in its regional reserve bank.
In exchange, that private bank receives an equivalent amount of shares in the regional
reserve bank. These shares, however, are quite different
from the shares of public companies. Their price is fixed at $100 per share and
they cannot be sold or traded. They carry voting rights to about two-thirds
of the Board of Directors for that regional reserve bank, but as we know the real power
is in the Board of Governors appointed by the President.
What these shares do have, however, is a fixed 6% dividend per year.
It’s worth noting that this dividend doesn’t entitle the banks to any the Fed’s profits.
Instead, everything the Fed earns above that 6% payout goes directly into the Treasury.
And keep in mind, the Fed is very profitable: in 2017 it sent $80 billion to the Treasury,
while only paying out $14 billion to the regular banks that hold its stock.
So who are the shareholders of the Federal Reserve?
Well, basically every big bank in America. The full list is 150 pages long, but pretty
much every name you know appears on it. But here’s the beautiful thing: most of
America’s big banks are public corporations. In other words, if you want to benefit and
make money off of the unique structure of the Federal Reserve you can do that by purchasing
stock in American banks. Since ownership in the Fed depends on capital,
the bigger the bank, the bigger its ownership stake.
Therefore, it would be wisest to start from the top of the list.
And speaking of the stock market, in case you somehow missed it last month I released
a 20-minute animated series of videos on how the stock market works on Skillshare.
I cover topics like how dividends get paid out or how ETFs work and if you want to watch
the full class you can register for a 2-month free trial of Skillshare using the link in
the description. Once you’ve registered, search for “investing
101” or follow the link I’ve left in the comments below.
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It has thousands of different classes on a wide variety of topics, including business
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who already watched my class: you’ve helped make it the most popular stock market class
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I’ll let you know when that course goes live, but until then make sure you’ve checked
out Skillshare and my one course on it. Anyway, thanks for watching.
If you’re new to Business Causal make sure to subscribe and also consider liking this
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and until then, stay smart.

Comments 100

  • Video on jp morgan?

  • The details are correct but the ownership is completely off..

  • It’s obviously owned by lizard people, what other conclusion could be drawn?

  • This is a trash explanation the real money is made devaluing the dollar, fluctuating the interest rate and profiting of the control of the stock market boom bust cycle.

  • A disinformation propaganda video, about the banking scam of all time. Even the name is a scam.

  • 5:22 The Creature from Jekyll Island

  • remember Jacob Astor….who owned White Star Lines anyways?

  • The Rothschilds are the lizard people. They can shapeshift.
    Do some proper research next time.

  • FED created this rigged game and Bernanke is one of the biggest criminal
    FED is the biggest Ponzi scheme ever in US history

  • No mention of Amschel. "Give me control of a nation's money supply, I care not who makes its laws" This guy went to the wrong college. Not to mention that fateful day Woodrow Wilson signed the "bill" penned by those genius thugs on Christmas Eve, when the rest of representatives were on holiday, and weren't there to vote!

  • Fractional Reserve banking leads to panics. Panics require a Central Bank that can create national currency out of thin air. Without Fractional Reserve banking, we wouldn't need a Central Bank, or an elastic currency. We could have an inelastic currency issued by the Treasury, and zero inflation, year after year.

  • Totally misleading.

  • Federal Reserve is a scam.

    They print money out of thin air, and the dollar is backed by nothing. The Rothschilds are the lizard people. They can shapeshift.

    END THE FED!!!!!!!

  • Federal Reserve print money out of thin air and then charge the citizens
    of America interest on the money they created out of nothing.
    The Fed is the first Deep State, owned by foreign banks, European
    Elites and billionaire Americans. It's purpose is to not only profit them
    but also to control the people of the USA. The Fed should be nationalized
    and then eliminated. The Fed is the 'piggy bank' for the Elites paid
    for by the sweat and blood of US citizens.

  • It's not often you get to hear the structure of a criminal cartel profiting from fraudulent activity described as "beautiful".

  • It’s pretty painful to think that people believe in this idea that banking is a world wide conspiracy. If it weren’t for financial controllers and unified wealth systems…we would be in mud huts

  • Fraud

  • JP Morgan a fraudster

  • 6:06 did I just saw an anime girl ???

  • You're misquoting what Paul Warburg said in the 1st 2 minutes of the video.
    Who was the guy that sabotaged the copper? You went right into Jp Morgan and Rockefeller

  • Research what andrew Jackson said about the federal reserve.

  • Yeah let's give private banks the sole ability to print our money lol the federal reserve has been robbing the American people since it's conception

  • Didn't hear the part about who owns it. I will help out with that: their last name rhymes with ChothsRild.

  • This is a sham!

  • This video is dishonest propaganda for the banksters. Rubbish

  • "To keep the economy stable" Yeah, right. Dow went down whole 3% today thanks to the games played by the financial world.

  • The Federal Reserve is a CRIMINAL organization that needs to be disbanded!!
    They are siphoning the taxpayers money and getting filthy rich!!
    It's a SCAM!!
    President Kennedy was ASSASSINATED because he was going to end it's grip on the UNITED STATES!!

  • I watched this. Still don't know who really owns it.

  • 2033 or prior expect collapse my friends.

  • I like lizard people. Most live in Boca.

  • most of this video is a huge lie. do yourself a favor ,do your own research. JP morgan is an evil scumbag. he arranged for the deaths of many millions and most people don't even know it.

  • A dumb foreigner narrating this. Haha

  • I like how this video makes the greedy bankers look like heroes when in reality they are thugs stealing from the working people while they don't pay their fair share of taxes. Look at the debt we're in. Who got bailed out in 2008? Definitely not the people.

  • Fiat currencies have a 100% fail rate. What people don’t understand is that all the other currencies were tied to the dollar and the dollar was tied to gold. When the other nations realized the US didn’t have as much gold as they claimed they started cashing in, trying to get what’s rightfully theirs before it was too late. Then Nixon took the US off the gold standard so that the other countries couldn’t take their gold back. So now everyone’s anchored to the dollar and the dollar is backed by nothing but credit.

    It’s a great deal for America. They’re allowed to print trillions of dollars for free and the other countries have to accept these dollars. The problem is when the same thing that happened repeats itself ( the nations realize the dollar is worthless and start cashing in like they were doing before 1971) all those trillions of dollars are sent back to the US which causes hyperinflation. If you don’t understand what’s bad about that then research hyperinflation.

    The good thing about gold is that for 5000+ years it has been accepted as legitimate money. People say gold is just rocks and sure they’re right but as humans we’ve always valued these rocks. These rocks can’t be manipulated either because gold is created when stars explode so unless the government tries to ‘blow up the sun’ they can’t keep making more like with the dollar. If you still think this doesn’t matter just look at history. The value of gold used to be $35 an ounce until the US started to print the dollar excessively. To keep up with the dollar gold didn’t magically multiply itself, the value just increased with the quantity of the dollar which is why an ounce today is like $1350+. When the dollar inevitably crashes and the chickens come home to roost gold will still be valuable, in fact it will be even more valuable. Which is why countries like China are mining and buying up as much gold as possible.

  • The federal reserve are an evil corporation. People say the system is broken but the system works perfectly. It was meant to financially enslave the people and make the owners of the fed richer. The government tells you taxes are for schools healthcare and roads but that’s a lie. Taxes are to pay the fed interest on the loans the government took from them. The thing is that the fed literally just create money and lend it out with interest. If normal people try to buy something with no money in their account the transaction doesn’t go through but if the fed tries to loan money with no money in their account it’s perfectly fine. So literally everything is profit.

    The fed also isn’t owned by the government because it has shareholders. No one knows who exactly owns the majority of the fed but it’s a few of the big banks. The whole system is super fucked up. Look into it

  • The fed is based in expeculations, manipulations, convenience and lies; that only benefits a group of elite families.

  • Wheres the corbett report video?

  • The truth is much more evil and corrupt that this lousy video is trying to tell us !!

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  • You are a deep state shill lying for the evil bankers. Do you think you will ever own enough shares in chase or any bank to rob the united states likes those conspirators who killed their opponents in the titanic? Yeah look in to the truth. Your channel is disgusting.

  • Look at all the conspiracy theorists in the comment section. Any flat earthers and sovereign citizens in this deluded mess?

  • The Fed and everything world wide is controlled and owned by the Zionist Jews. America is no longer America. It is called Jewmerica. The Jew's own America and all countries. Trump just increased funding to Israel from 8 billion annually to 14.5 billion. Israel is Rothschild's headquarters. Oh. American taxpayer dollar pays Israel annually. So everything you all work for and have taxes taken out of your pay goes to Israel Also the IRS is owned by the Zionist Jew's. Got news for the Jew's. The world is owned by everyone Zionist Jew Rothschild's, Rockefeller's, DuPont's. etc. God created earth for everyone and you did not so go back and tell your evil Satan you all worship.

  • Who really owns Business Casual?

  • evil. its as simple as that.

  • How The Federal Reserve Works: Millions of people working for and believing in Worthless Paper ……….. Thee ENSLAVEMENT of a Freedom Loving Constitutional Republic to a Tyrannical Shadow Government.

  • How The Federal Reserve Works: Millions of people working for and believing in Worthless Paper ……….. Thee ENSLAVEMENT of a Freedom Loving Constitutional Republic to a Tyrannical Shadow Government.

  • im the one true owner of the federal reserve and everyone is trying to steal it from me and no one will help me in even a slightest of ways

  • If a run on the bank can banckrupt "even solvent banks" then the bank wasnt actually solvent. You really spent time on a youtube video and didnt realize you were saying something so stupid?

  • The “Federal” Reserve Bank is a private central bank. Throughout the majority of its existence, it has been headed by Zionists. This bank prints all the money. It can’t be taxed. It can’t be audited. It was created the same year the IRS was created and income tax became law. These gangsters make Al Capone look like a lemonade stand thief. Every year the dollar in your pocket is worth less and less and less. Yet they keep pulling that print lever as we binge on trash TV.

  • fixcreditsolutions is awesome was able handle my collections removed 12 hard inquiries with very affordable price, they are excellent. Via mail fixcreditsolutions @outlookcom

  • Banksters have controlled our country since 1913 they killed JFK for taking away their monopoly on our money he started to print United States Notes instead of Federal Reserve Notes and two days after he was killed LBJ revoked the US Notes executive order. JFK realized 50 years of bankster control was enough and no other President has dared challenge them. Any President who might want to print US Notes knows what will happen to him.

  • Just look at Wikipedia and see that 1/4 if not 1/2 of the ‘advisors’ and ‘directors’ are Jews.

  • Did he call the fed a miracle?

  • A serious question. What would take place If the Fed was abolished?

  • Serious question. What was happening before the Fed, would the difficulties that brought the FED have corrected themselves with time?

  • The jews

  • Money Masters documentary makes more sense

  • its not the question as to why central banks are there, in fact they are important like a well meaning' PEO":) to pick up tab or get things straightened out when they get way bad. But its working ought to be for everybody and putting things right for all , human beings should not suffer just because there is not sufficient work outlet for everybody to work in, in this case what are they suppose to do… Die? along with their families… as it is in most of 3rd world countries happening… NO! you need to see that human life is not to be equated with some legitimate paper money making them suffer and need to step in to see things get right , make sure population stays under control.. work training outlets are on par with working population… better economic financial systems from wages to fraudulent insurance business's, because only very small group is in money manipulation market… rest are hard working families into various working groups of world from tech engineering, medical social education all sorts of fields… retail, big business's oils what not…. but at the end it all boils down to uniformity of distribution of economics, funds to people and there every single Nation in this world has problems which doesn't seems to be getting solved. while on one side Governments are busy pumping fed monies into building huge infrastructures from going into space to what not but basics of looking after every social section is being left … from your faulty medical systems education, housing wages these are most important things to be upgraded while building your trillion dollar space programs and playing in world Arena as we are the supremos.

  • What can be learned from the past’s mistakes and the pasts past success that can be worked into a strategy based on today are most common needs and interests?  Big think.

  • Business Casual is obviously one of the “insiders” that doesn’t tell the whole inside story. Indeed, touting being able to purchase stock from the criminals who enable the Fed. Reserve!

  • This video was brought to you by the lizzard People.

  • Permit me to issue and control the money of a nation, and I care not who makes its laws! "
    – M.A.Rothschild

  • La reserva federal imprime dinero Fiat es decir sin respaldo solo goza de la confianza del gobierno, obteniendo los verdaderos bienes de la gente eso se llama estafa

  • 31 USC 5115: Corporate Secretary out of but not from the U.S. Treasury, may issue Signature Dollars in United States Currency Notes in Blank or Properly Endorsed, that may possibly not be held in reserve, which the Federal Reserve Note are issued from Signature Dollars in United States Currency at a 90% Discount, loaned back to Depositors as Customer to Commercial Net Profit Banks, who are shell Corporations for the Fiscal Agent, Federal Reserve System.

  • Who controls the dollar? The name begins with J and ends in s. And no, it's not the shark.

  • This video was made by a jew

  • 3 card monte – what happened to the pea?

  • They made it illegal to see who owns it in the 80s….at last check…..13 families owned over 50%……it's the same suspects….. Morgan…. Rockefeller…Schiff… Warburg… Lazarus…. Lehman… Schaefer……etc..a…. forgot Rothschild….as soon as they were in place…..ww1……great depression….WW2…..stole Americans gold….etc….2008 meltdown….. taxpayers had to borrow trillions from the Federal Reserve and foreign countries….to pay back the same banks that own the Federal Reserve….. nobody prosecuted….. instead they got deregulated even more to gamble with our money with no consequences……..this video leaves that out

  • Illuminati Satanic controlled reserve bank of America! End the Federal reserve and give our dam money back to the people of the United States of America!

  • every body knows trump owns it! just ask him. hell he`s making more money now then he ever did . its good to be a crook and the President and the fact that no one cares.
    well he did give the filthy rich a huge bonus from the lower classes. so that shut them all up . he will leave the white house a few billion dollars richer.

  • The 9k like on this video seems very fake considering the comments. Statistically incoherent with thousands of other videos.

  • Propaganda for the blind freedom hating followers

  • Read all you can about the rothschilds You will learn more then this crap

  • So who owns it? Never said in this video.

  • Total BS! FED is no more Federal than Federal Express! Privately owned & operated…totally controls our economy & the Busts & Booms in US…tighten credit (high interest rates) & economy struggles…loosen credit (low interest rates) the economy booms! All the while the Bankers & their owners as well as the Senators & Congressmen who have been bought off (90%)
    through political contributions to re-election funds or employment of family members keep the $$$ flowing. The US Treasury can print its own money for use in paying debts & purchases…Unfortunately no matter which political party is in power…it just simply goes on & on & on…

  • This is only a promo for the fed reserve… how much did they pay you?

  • After the panic of 1907, it was clear a central bank was needed? Actually, it seems after the panic of 1907, private industry found a way to fix these issues.. so in turn, they did not really need a central bank then, but we sure do not need one now.

  • 1913 was the end of the United States of America! These people own you!

  • Greatest ponzi scam in world history!

  • Who wrote this? The Rockefeller's?
    This is so bullshit, wrong, false, fake, lies…
    Why should the US pay interest on it's own money? It's a ponzie scheme…

  • You completely & totally ruined skillshares credibly with this video…

  • Read the monster at jekkell island ie rothchild and Rockefellers and a couple other people.

  • The FED is a private bank owned by the richest Jews in the world this is a fact it's not a conspiracy theory

  • Everyone knows that the Jews invented modern banking or what they used to call ussery

  • The Fed was started by the Jekyll Island conspiracy if they have it completely took that off YouTube put it down the memory hole Google hadn't scrubbed it off the internet

  • You'll see Rothschild knew that Wellington won the Battle of Waterloo before anyone else in England did and he started spreading rumors that Wellington lost the battle so they sell and sale and sell and he was buying and he basically bought up the entire British economy for pennies on the dollar that's how the Rothschilds and their descendants and the Jewish Elite control European financing American Finance to this day Jekyll Island conspiracy

  • Which legislation was not above board and legitimate it was a crooked conspiracy called the Jekyll Island conspiracy

  • If the banks were “healthy” then Morgan and his mafia wouldn’t have needed to rescue them. The banks were all near bankruptcy as they had been lending money out that was not theirs and charging people interest for it. The scheme caught up to them when the American public discovered their ploy went to get their money that they deposited into the bank. It wasn’t there though because like I said they had been over- investing with funds that were not theirs. The fractional Banking system makes money off of issuing worthless markers and charging interest on them (printing our dollar bills and then charging us large interest for printing them. Now we pay them to issue out invisible electronic credits that we call “money”)

    This video is nothing but a propaganda piece excusing the RothsChilds from being the main conspirators and their connection to Jekyll Island, the Rockefellers, JP Morgan, etc.

    The federal reserve is neither federal nor a reserve. 1914 marked the day that the Rothschilds committed treason and subjugated our government to their will and agendas.

  • Out of "controlled crisis" they get Order.
    US President Andrew Jackson was able to suppress the Rothschild's central bank system until 1913

  • To paraphrase Henry Ford, it is well enough that the American People don’t understand the financial system because if they did there would be a revolution by morning.

  • The Rothschilds are the lizard people.

  • Did I miss the part where he tells us who the shareholders of the fed res are?

  • Make Federal Reserve Government owned.

  • LOL you really church that up. You forgot to mention that they can loan money from nothing also there's no one outside of the Federal Reserve that can monitor any of the transactions and if you fail to pay your debt the collectors can either take property or services , I wonder what that means

  • Lol they threw this together to counter 'century of enslavement.'

  • What a bunch of crap. Morgan was an agent of the Rothchilds and was a pauper in comparison. The panic of 1907 was engineered by them to provide a vehicle for the Rothchilds and their cronies to rip off the American people.

  • Federal – there's nothing federal about it, its a private owned bank
    Reserve – there is no reserve, its making money out of thin air, magic

  • And now these central banks cause our crashes.

  • Money must be used to bless people and good work. Money must be used to do good work that honors God. God blesses good work. Invest money in good people they will do good work and make a good return. Do not give money to liars extortioners greedy people they will lose your money.

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