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.
If you don’t know, Skillshare is the best online learning platform out there.
It has thousands of different classes on a wide variety of topics, including business
and the stock market. By the way, I want to thank all 2,000 of you
who already watched my class: you’ve helped make it the most popular stock market class
on Skillshare and I’m thankful for that. In fact I’m already working on a second
series of videos that goes deeper into how companies work, including valuations, buybacks,
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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
video if you enjoyed it. As always, a big shoutout to my patrons on
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and until then, stay smart.

100 Replies to “How The Federal Reserve Works (And Who Really Owns It)

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

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  3. 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.

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

  5. 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.

  6. 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.

  7. 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.

  8. 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

  9. 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?

  10. 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.

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  12. 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.

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

  14. 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.

  15. 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.

  16. 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!

  17. 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

  18. 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.

  19. 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

  20. 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!

  21. 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.

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

  23. 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…

  24. 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.

  25. 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…

  26. 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

  27. 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

  28. 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.

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

  30. 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.

  31. 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

  32. 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.

  33. 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

  34. If your barely looking into the history of the Federal Reserve please keep researching. This video makes it seem like the Feds was created to save Americans and have a stable fair economy… The federal reserve is anything but fair. One thing that it is, its extremely corrupt keeping the world in debt and keeps the wealthy secure as the elite.

  35. @Business Casual I would really like to know where did you get the information for this video? Where are the parts about the banks own the federal reserve?

  36. I like bullshit stories. How much did the FED pay you? Nothing mentioned about how Andrew Jackson kicked that same savior the FED out?

  37. Isn't it amazing how you can take a topic and hear two opposite opinions. One opinion is that the Federal Reserve is a Godsend. Another is that it is pure evil. The mechanism that enslaves us. Seeing that we are no longer on a gold standard and how this allows those with the power to create money out of nothing, never ending limits to that power… Yea I'd have to go with the latter opinion. How about you?

  38. So far I think the money and economic destructive issues will not be resolved. Looking through the comments you realize that very few know the real parts of those systems and how they relate to each other, so I wonder if the same goes for the experts in both systems.

    Coincidentally after so many crashes no lesson has emerged from that that would help the brain for both systems, whoever they are, to change what needs to be so there are no crashes, people can have certainty on savings and be able to plan for bad times because the money value is fixed at a minimum equivalence, or within a fixed range that may link to those parts required for the viability of non 'crashable' system.

    It looks like a plan B is needed, and beyond soup lines or charity.

    Plan B should be going on as amendments are done that take into account the present conditions of the world society. How about legal banks to store valuable goods for the population? all the needed resources are available for that, like abandoned buildings and towns, defense personnel and equipment for 24/7, enough food, and people in need of work in exchange for goods and services for them and their families.

    I think something tangible like that will have a better outcome effect on those systems than threats, because at this point they have everything needed to survive and comeback to implement the same system.

  39. So basically the wealthiest families who own majority shares in all the big banks control the FED. Stop trying to sugar coat this satanic system.

  40. The Federal Reserve is not federal and there is no reserve. It is a network of 12 private banks with the power to print USD almost at will among other authorities and regulatory powers over finance. Essentially, the fed is the big brother bank that serves as overwatch for other smaller local banks. The Fed is primarily "owned" or better stated "invested in" primarily by world banks and is exclusive in nature and in terms of actual "ownership"… Technically, it isn't really "owned" by anyone.
    Smaller banks who want to be part of the Federal Reserve System (The New World Order/Insurance/Overwatch) must own shares in the Fed but those shared are really more like derivatives and do not constitue any significant ownership or say in regulatory practices. Larger investments in the fed are rather unfairly allocated based on biased rules that exclude many potential investors for, seemingly, rather aritrary reasons. However, it is common practice of those who which to control others to create a system in order to capture and maintain that control and then close the door for others to do the same via rules and regulations.
    It is all high level insider trading… the type of inside deals no one every gets in trouble for because the people making the deals are also the regulators! The key role of the Fed is to help preserve the strength and integrity of USD as well as the global monetary system as well as to preserve the wealth and power of roughly 6-8 of the most wealthy families in the world. Essentially, the fed exists to promote banking stability and help insure the indentured servitude of the working class while provided a sense of financial security to people who do not understand the intricacies of the global monetary system.
    The Fed is the result of a financial coup set in motion in the early 1900s but US and European money changers… Investment bankers. In short… a scam. A scam bankers used to tie themselves to the US and global government and miltary structure. Once again… A coup but rather than seizing power via brute force banks seized the opportunity to take over the financial activities of global powers which, by extention, is tantamount to total control of finance; government regulation and military. Everything is controlled by money and a narrative. If you believe the most powerful man in the world is the US President then you are not paying attention!

  41. Private banks own the money press. Well that works out well 😊 they have been making money out of thin air for a long time. It'll all catch up to us…again, and again….the American taxpayer will lose all their savings while the banks make record profits. While the 99 percent suffer for the 1 percent it sucks

  42. The fed should only be activated on hard times. America made a huge mistake by letting the fdr control to such extent after the great depression. Authority is the dream of lust

  43. Sugar coated it in and put all the spoiled stuff in there hoping that no one catches it so the Federal Reserve it's just a title to the elite Capital list that promote socialist interesting

  44. Anyone not a central banker supporting the existence of a central bank SHOULD BE SHOT.

    Guess what my position is if you ARE a central banker?

  45. Aww, your teaching the ponzi scheme stock market…
    Please explain when and what the presidential leader at the time was quoted saying when the federal reserve was created

  46. To fully understand this scam (FED RESERVE) I urge people to read. THE CREATURE FROM JEKYLL ISLAND" by G. Edward Griffin.  You might be amazed and DISGUSTED to learn how the FED has ruined so many lives!

  47. Slick propaganda video on the Federal Reserve. Sugar coated it's premise and evoution. If one had to simplify the Federal Reserve in two words, it's very easy : Banking Cartel .

  48. Either you do not know the full truth or you are purposely holding back the entire story of the truth.
    It's hard to explain the truth of money.
    The root to all evil is from money.

  49. What a wonderful job of circumventing how nefarious and unconstitutional the creation of the federal reserve was!

  50. The Fed was instituted to prevent major economic disruptions. The Great Depression too place after 1929, about twenty-five years afterwards. How did the Fed succeed in its stated goal?

  51. Instead of watching this sham…read the PDF book, "Secrets of the Federal Reserve" by Eustace Mullins in 1952. His work will provide you with a far more accurate account of the FR genesis.

  52. I’m no expert nor do I play one on Television..🧐 but I’m going with LIZARD PEOPLE.🤷🏻‍♂️ Just trust Politicians what could go wrong?

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