Monetary policy and bank regulation are two sides of the same coin. Since private banks create money through lending, any regulatory action (like changing capital requirements) directly influences the money supply. Giving the executive branch control over regulation would undermine an independent monetary policy.

Stuffing banks with reserves via Quantitative Easing doesn't spur lending if there's no real economy demand. The current shift is driven by a genuine "pull" for credit from sectors like AI and onshoring, making banks willing to lend, which is a far more powerful economic force.

Only the Fed and commercial banks can create new, spendable money out of thin air. In contrast, credit creation, like in shadow banking, simply reallocates existing money from a saver to a spender. This distinction is crucial for understanding economic stimulus and risk.

Current central banking models are designed for demand management (neo-Keynesianism) and are ineffective against structural supply shocks like the Hormuz crisis. Institutions like the Fed lack the tools and intellectual framework to respond appropriately, like 'a fish understanding a bicycle'.

For the past decade, the Fed was the primary driver of liquidity. Now, the focus shifts to commercial banks' willingness and ability to create credit to fund major initiatives like AI and onshoring. Investors fixated on Fed policy are missing this crucial transition.

When a bank loan is repaid, the money created for that loan ceases to exist; it isn't just transferred. Widespread debt paydown, often seen as financially responsible, reduces the overall money supply. This directly shrinks GDP and can trigger recessions.

Economist Steve Keen's model suggests GDP is a function of money supply and its velocity. Since banks create money through private loans, the rise and fall of private debt directly dictates GDP growth and employment levels, a factor mainstream economics largely ignores.

The vast majority of global trade is funded by US dollars that exist outside the US, known as Eurodollars. This system operates beyond the Fed's direct control and relies entirely on trust. Money is created when banks extend credit and destroyed when they don't, making the global economy inherently fragile.

While many point to ending the gold standard in 1971, the true catalyst for modern economic problems was the 1913 creation of the central bank. This act laid the foundation for the systemic debt creation and currency debasement that fuel today's inflation and inequality.