Welcome To 2013 - The Centennial Year For The IRS And The Fed - Seeking Alpha

Welcome To 2013 - The Centennial Year For The IRS And The Fed - Seeking Alpha

In a parallel track, the Federal Reserve was conceived and born a century ago this year. On March 31, 1913, J.P. Morgan, America's unofficial one-man central bank, died in his sleep in Rome.
The Federal Reserve took shape in stages, throughout 1914, with an official launch date of November 16, 1914. Ironically, the Fed was formed for the express purpose of avoiding the financial panics so painful in recent memory - 1893 and 1907 - but the Fed merely continued the same kind of boom-bust cycle of panics, ranging from a short, sharp shock in 1920-21, to the long-term Great Depression of 1929 to 1941.
The early Fed was quite clear in its mission. In its 1923 Annual Report, the Federal Reserve described its role clearly:
The Federal Reserve banks are…the source to which the member banks turn when the demands of the business community have outrun their own unaided resources.
This is why the Fed increased credit 61% in the 1920s, from $45.3 billion on June 30, 1921 to over $73 billion in July 1929.
The Fed's inflationary monetary policies led to a nearly 99% decline in the purchasing power of the U.S. dollar in gold terms. In 1913, gold traded for $20.67 per ounce vs. around $1,690 today. Our official cost of living increase since 1913 is +2,261%, meaning that an item costing $1 in 1913 costs $23.61 now. The Fed's policies have also led to a series of stock market booms and busts over the century, begging the question of whether the Fed has been any more effective than J.P. Morgan and his big-banker syndicate.