So the five presidents who constitute the non-Governor voting members of the FOMC are chosen by the directors of the associated regional banks, and a substantial majority of the directors are chosen by the member banks (regardless of the silly claim that Class B directors represent interests other than the banks'), and the member banks are just private corporations with interlocking directorships and the like - in New York, the big players are Chase Manhattan (Rockefeller), Citibank, etc. Note that member voting is weighted by proportion of ownership, which is directly proportional to member size.
In other words, in the final analysis control of the money supply is firmly under the control of the elite private banks, and is not subject to audit. The Fed claims all earnings, after "expenses," are "turned over" to the Treasury. There are three loopholes here, the first two big enough to sail a carrier group through. First, since the FOMC is not audited, they can say whatever they want. No one can check their veracity. Second, "expenses" could include various dividend-type arrangements (as certainly exist with the regionals), which could be completely secret arrangements between the unauditable FOMC and private banks. Third, "turned over" might really just mean deposit - not donation, but reversible deposit. The first two are real loopholes, the last one is really just spurious since I'm sure they mean for us to understand that the net earnings are added to the general fund, but the first two are more than sufficient! The Federal Reserve is the ultimate money laundry.
If the Fed is honestly turning earnings over to the Treasury, then this is simply a system in which the major private banks are capable of confiscating wealth from the people by inflation (inflating the money supply is directly inflational), and assigning the confiscations to the state. This obviously gives them substantial control over the state. And note that this is the best case scenario interpretation of the Fed's published statements and policies.
The capacity to create inflation at will is of course of immense utility to the private bankers. If currency itself is a poor investment, then people will feel obliged to deposit their currency in interest-bearing bank accounts or mutual funds (delegating control over the wealth to the bankers), or to invest the currency in the stock market (delegating control over the wealth to corporations which are often controlled by bankers in the final analysis, and inflating the price of the stock - thereby increasing the value of the banks' investments).
More generally, the capacity to manipulate the money supply is one of the foremost levers of macroeconomic control.
Alan Greenspan, the Chairman of the Federal Reserve and of the FOMC, was a disciple of Ayn Rand, the grande dame of Objectivism, and he contributed an essay titled "Gold and Economic Freedom." that appeared in Rand's Capitalism: The Unknown Ideal.
What's the deal with such a character occupying such a position? Three things. (1) Greenspan is devoted to the principle of currency nailed to monetary metals - the type of currency issued by the Bank of England, and emphatically not the type issued by the Fed. (2) Greenspan believes in laissez faire capitalism on principle. He refuses to understand that laissez faire capitalism invariably progresses toward, and eventually arrives at, totalitarian dictatorship. (3) Greenspan is a well-meaning and competent macroeconomist.
Visiting each motive in turn: (1) the Rothschilds are master metal accretionists. They have been manipulating the gold market for a long time to keep the price of gold at or below $300/oz; this has made gold appear to be a dumbass investment outperformed by everything else, and has seriously discouraged mining activities (a group of mining industry interests is bringing a class action suit against them - read more at <http://www.gata.org/>). The Rothschilds then sweep up all the gold the short-sighted dump in response to the short-term market reality. Once currency is again nailed to monetary metals, the Rothschilds become even more powerful than they are now, singlehandedly owning legal tender metal more valuable than e.g. the entire US currency supply.
2) The Rothschilds (and obviously, the Rockefellers) are monopolists. Laissez faire capitalism - which is *certainly not* economic anarchism - is a policy infrastructure that facilitates the accretion of monopolies and the organization and maintenance of trusts.
(3) Greenspan was put in the position he's in because the nuclear elite wanted monetary stability and economic prosperity over that interval. Greenspan had essentially announced he will retire in 2000 - a threat he obviously did not deliver on - but there are probably no plans to continue the "prosperity" beyond the year 2000.
A bizarre aspect of modern monetary religion is the false premise that interest rates and monetary inflation are related inversely, so that central banks can inhibit inflation by raising the interest rates they control. Of course, the opposite is true. It is mathematically inherent that interest rates and inflation must track each other. Moreover, a move by a central authority that raises interest rates inherently makes wealth held as cash or fixed rate deposits less valuable, which is the definition of inflation. Pressure is created that moves wealth from that form to responsive forms such as non-bond securities. The redistribution of demand to securities causes second order inflation, reflected in increased prices on non-bond securities. When inflation prevails, bond yields rise, of course, since bonds are really just monetary loans whose interest rates move in the same direction as those of ordinary bank loans.
The bogus interest-hikes-fight-inflation mantra allows central banks to implement a policy designed to exacerbate inflation with a redistributionist (e.g. Keynesian) objective, while selling and maintaining the policy as just the opposite.
I should briefly mention something that is perhaps obvious. The activities of investment bankers span a spectrum that ranges from passive to active. All investment banking decisions are based on predictive models of the economy (or portions thereof, and integrating sociological context to varying degrees). In purely passive investment banking, the banker's investment has no effect on the model. In the most active investment banking, the banker's investment results in a new socio-economic circumstance, requiring the replacement of existing models with new ones. As the magnitude of the investment increases, and as the economic leverage of the investment rises, there is an unavoidable shift from passive to active. A microloan to a shopkeeper in a small town in Africa can be very close to purely passive banking; the currency and commodity manipulations of the Rothschilds and their operatives (e.g. George Soros) involve highly active investments. The most active investments are in revolutionary technologies and longitudinal programs of socio-economic engineering. The social control potential of investment banking is obvious, since even in its most basic form it constitutes a system of economic subsidy and censorship.