SOME CONSPIRACY THEORIES ARE TRUE: CREATING THE FED TO SOCIALIZE LOSSES OF BANKS

SOME CONSPIRACY THEORIES ARE TRUE: CREATING THE FED TO SOCIALIZE LOSSES OF BANKS.

by Michael Churchill

A conspiracy theory is defined by four characteristics: (1) a group (2) acting in secret (3) to alter institutions, usurp power, avoid blame, obscure truth, or gain utility (4) at the expense of the common good.

One event that meets all four criteria is the creation of the Fed — particularly the secret meeting in 1913 at Jekyll Island of representatives of all the big banking interests, who went down there under the guise of going on a hunting trip, in order to form an entity to socialize risk in the banking system, thereby allow banks to run with lower capital ratios.