The Federal Reserve Bank (FED) is the central banking system of the United States. It controls the money supply, interest rates and looks after the banking system. The FED is responsible for many important banking decisions affecting the U.S. economy. The organization affects the value of the dollar each year — through the money supply -– and individuals and organizations seeking new loans and refinancing existing loans -– through interest rates.
The FED issues fiat money, paper money, which has value only because a government maintains its value, or parties engaging in exchange agree on its value. Paper money was introduced as an alternative to commodity money created from a good, often a precious metal, like gold or silver, which has uses other than as a medium of exchange. Commodity represents a claim on a commodity and fiat money has no intrinsic value.
People don’t understand gold and why or how it functions as money. Why is gold money? What else could be money? You do not want something radioactive or soluble in water; you want a scarce commodity but not too scarce.
Currency is not backed by gold? In 1971, the United States closed the “Gold Redemption Window” and ended the practice of issuing sound money, instead deciding to join the ranks of most other nations that shifted to fiat currency with only implied value.
All currencies which values are not pinned by physical assets are categorized as fiat. It is usually used to deal with inflation, giving a government of a country a good control over its economy. The US was once a country that used gold currency but shifted to printed money to deal with economic depression.
The ability to print money out of thin air has consequences, including the diminishing value of the US dollar, and even harm the economy of a nation. Other governments entities could also manipulate their money currencies which could lead to an economic disaster.
The FED is independent of the US Government, which plans to restructure the economic system to replace the paper currency with gold backed currency, and to close the FED. The video deals with preparations for restructing the US economic system, including stores stockpiling for the transition.