What is the Federal Reserve System? The answer may surprise you. It is not federal and there are no reserves. Furthermore, the Federal Reserve Banks are not even banks. The key to this riddle is to be found, not at the beginning of the story, but in the middle… let us start where the action is.

It has been said that those who are ignorant of history are doomed to repeat its mistakes. It may come as a surprise to learn that the Federal Reserve System is America’s fourth central bank, not its first.

It has become a modern act of faith that economic life simply could not go on without it. But the time for theory is past.