Commentary It was born on Christmas eve in 1913—with barely a quorum in attendance. And it grew to be the greatest engineer of unintended consequences ever. That night, Congress passed the Federal Reserve Act and gave birth to this country’s third (there were two before that didn’t work out so well) central bank. The “Fed” was established to stabilize the economy. It was claimed it would “benefit commerce, the public, and the nation; it would lower interest rates, provide funding for needed industrial projects, and prevent panics in the economy.” At least that’s the story they wanted you to believe. Its proponents cited the crash of 1907 as absolute proof of the need for a central bank. The reality was less magnanimous. The bankers who created the Fed were looking for a means to cover their own backsides when one of them got out of line. It was designed to …
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