The Federal Reserve’s Wrecking Ball: How Central Banking Strangled Main Street
JUNE 28, 2025
The Federal Reserve’s Wrecking Ball: How Central Banking Strangled Main Street
By Julie Wade, Managing Member, J Auto Trading Strategies, LLC - June 28, 2025
In the heart of America’s postwar prosperity, from the 1960s to the early 1980s, the U.S. economy hummed like a well-oiled machine. The S&P 500 delivered annualized returns of roughly 12%, fueled by relentless innovation, robust capital formation, and a thriving ecosystem of small businesses. Families could buy homes, entrepreneurs could secure loans, and the American Dream felt within reach. But that era is a distant memory. Today, the Federal Reserve presides over a financial system that suffocates Main Street while enriching Wall Street’s elite. This is the story of how central banking, once a stabilizing force, became an instrument of economic strangulation—and why it’s time to reclaim monetary sovereignty.
A Boomer’s Memory, A Nation’s Decline
For those who remember the mid-20th century, the economy was a source of pride. Factories churned, small businesses flourished, and community banks were the lifeblood of local commerce. But the rise of financialization—a shift from productive investment to speculative finance—changed everything. By the 1980s, a slow-motion coup was underway, orchestrated by central banks and their allies in the financial sector. The Federal Reserve, under a revolving door of technocrats, began reshaping the economy to prioritize megabanks and corporate giants over ordinary Americans.
Today, the Fed’s fingerprints are everywhere: credit card interest rates above 22%, small business loans evaporating, and a national debt burden that threatens to bankrupt the Treasury. Under Chairman Jerome Powell, appointed in 2018, this sabotage has reached new heights. His policies have not only failed the public but have hollowed out the monetary system, leaving a fractured economy where wealth concentrates at the top and opportunity withers below.
The Road to Collapse: Financialization and the Great Financial Crisis
The Origins of MBS Securitization
The seeds of today’s crisis were sown in the 1980s and 1990s, when Wall Street’s focus shifted from lending to securitization. Investment banks, enabled by pliant rating agencies and deregulated markets, began bundling home mortgages into complex mortgage-backed securities (MBS). Marketed as a way to diversify risk, these securities were anything but safe. Banks, eager to offload loans from their balance sheets, abandoned due diligence, while rating agencies stamped AAA ratings on toxic assets. Fannie Mae and Freddie Mac, backed by implicit government guarantees, supercharged this frenzy, creating a market for mortgage debt that would soon implode.
The Fed’s Role in Inflating the Bubble
The Federal Reserve was no bystander. Under Chairmen Alan Greenspan and Ben Bernanke, the Fed kept interest rates artificially low after the 2001 dot-com bust and again post-2003, flooding markets with cheap money. This liquidity fueled a housing bubble, as speculators and homeowners alike took on unsustainable debt. Meanwhile, the Fed turned a blind eye to rampant excesses: shadow banking, unregulated derivatives like credit default swaps (CDS) tied to MBS, and investment bank leverage ratios that climbed as high as 33:1 at Lehman Brothers. Oversight of bank capital adequacy and off-balance-sheet vehicles was virtually nonexistent, setting the stage for catastrophe.
2008: The House of Cards Collapses
By 2007, cracks appeared as mortgage defaults surged. By 2008, the MBS market collapsed, triggering a liquidity crisis that obliterated interbank trust. The Fed’s response was revealing: it bailed out Wall Street titans like Goldman Sachs, Citigroup, and AIG, while letting Lehman Brothers fail and Main Street businesses and homeowners drown. Under Treasury Secretary Hank Paulson and Fed Member/future Treasury Secretary Timothy Geithner, losses were socialized—borne by taxpayers—while gains remained privatized. No meaningful reforms followed; too-big-to-fail banks grew larger, and the stage was set for further distortions.
Post-Crisis: QE, ZIRP, and the Hollowing of the Real Economy
Quantitative Easing: A Windfall for the Elite
In the wake of the 2008 crisis, the Fed unleashed Quantitative Easing (QE), purchasing trillions in Treasuries and MBS to stabilize markets. But this “trickle-down” liquidity never reached the real economy. Instead, it inflated asset prices—stocks, bonds, and real estate—enriching the top 1%. The S&P 500 roared back, corporate stock buybacks soared, and luxury real estate boomed. Meanwhile, real wages stagnated, small business lending dried up, and community banks, squeezed by regulatory burdens, began to vanish. The Fed’s money machine was working—but only for those already at the top.
Zero Interest Rate Policy: A Trap for Main Street
The Fed’s Zero Interest Rate Policy (ZIRP) compounded the damage. While megabanks borrowed at near-zero rates, ordinary Americans faced credit card APRs above 18%, student loan debt that ballooned past $1.7 trillion, and small business credit lines that required personal collateral—if they were available at all. By 2020, the U.S. economy had split in two: a gilded world of leveraged billionaires and zombie corporations, and a struggling realm of indebted households and starving entrepreneurs. The Fed’s policies didn’t bridge this divide; they widened it.
The Powell Doctrine: Failure by Design
Jerome Powell’s tenure as Fed Chairman has been a masterclass in monetary mismanagement. His record is a chronological indictment:
2018: Powell raised rates aggressively into a slowing economy, triggering a Q4 market crash and forcing an emergency policy reversal.
2019: He ignored repo market instability until it collapsed in September, requiring hundreds of billions in stealth QE to stabilize markets.
2020: During Covid lockdowns, Powell flooded the system with QE, propping up megacorporations while Main Street businesses shuttered.
2021: He dismissed inflation as “transitory,” missing clear signals and delaying necessary tightening.
2022: Powell’s historic rate hikes and quantitative tightening crushed the bond market and pushed mortgage rates to 8%.
2023: He refused to cut rates despite regional bank failures, contributing to the collapses of Silicon Valley Bank, Signature Bank, and First Republic.
2024: Powell starved community banks of capital under stringent Basel III/IV regulations, accelerating their consolidation into megabanks.
2025: Despite falling inflation and rising delinquencies, he kept rates high, pushing U.S. government interest payments to a staggering $1 trillion annually.
These aren’t mere errors; they reflect a systemic bias toward financial institutions over the public interest. Powell’s Fed has consistently prioritized Wall Street’s profits over Main Street’s survival.
The High-Rate Fallout: A Nation on Its Knees
Credit Card Usury
The Fed’s high interest rates have pushed average credit card APRs to 22.5%, the highest in decades. Delinquencies are rising at the fastest pace since 2008, as families struggle under the weight of usurious debt. By maintaining elevated overnight rates, the Fed implicitly endorses this predatory lending, squeezing consumers while banks rake in profits.
Small Business Starvation
Community banks, which once provided over 50% of small business loans, are disappearing under the Fed’s quantitative tightening and Basel III/IV capital requirements. Without local lending, small businesses—the backbone of job creation—are suffocating. The result is a hollowed-out Main Street, where entrepreneurial dreams are replaced by corporate consolidation.
Taxpayer Insolvency
The federal government is not immune. In FY2025, U.S. debt interest payments exceed $900 billion, surpassing the budgets for Defense or Medicare. These payments flow to bondholders, not citizens, draining public resources. Powell’s refusal to lower rates has turned the Fed into a direct adversary of the government it claims to serve, raising questions about its unchecked power.
The MMF Liquidity Trap: Preserving a Treasury Mirage
While Jerome Powell’s interest rate policies have visibly battered consumers and small businesses, a subtler yet more insidious mechanism is quietly draining the U.S. economy: the Reverse Repo Facility (RRP) and its expanding alliance with Money Market Funds (MMFs).
Once modest instruments of cash management, MMFs have evolved into a critical cog in the Fed’s synthetic Treasury demand machine. Asset managers such as BlackRock, Vanguard, and Fidelity now park over $1.6 trillion in overnight liquidity at the Fed, earning a risk-free 5.3% yield via the RRP. That yield—funded by U.S. taxpayers through withheld Fed remittances—diverts public resources away from innovation, infrastructure, and debt reduction, enriching passive capital pools instead.
This arrangement is not passive monetary plumbing—it is a policy strategy. Powell has structured it as a substitute for vanishing foreign demand for Treasuries. From 2008 to 2019, nations like China, Japan, and Eurozone banks reliably absorbed U.S. debt. But in the wake of geopolitical realignment, de-dollarization trends, and sanctions risk, those buyers have stepped back. In their absence, the Fed now leans on MMFs as domestic placeholders, artificially suppressing Treasury yields and masking the structural collapse in global demand.
The economic toll is staggering:
MMFs siphon capital from regional banks, starving local lending
The real economy is deprived of credit, while passive funds reap risk-free returns
Equity markets falter, as productive risk-taking is penalized and idle capital is rewarded
Powell’s refusal to unwind this distortion constitutes a form of monetary sabotage
This setup is a balance sheet illusion, engineered to perpetuate an unfinanceable Treasury issuance cycle without confronting the reality of its eroding buyer base. It enriches the largest asset managers and the central bank itself—at the direct expense of equity investors, small businesses, and the productive economy. Until this system is dismantled, America will remain trapped in stagnation—locked in a liquidity apartheid designed by unelected central bankers and sustained by a false pretense of stability.
The Globalist Endgame: Central Bank Digital Currencies
The BIS Blueprint
Behind closed doors, the Bank for International Settlements (BIS), the “central bank for central banks,” has spent a decade designing Central Bank Digital Currencies (CBDCs). Through projects like Helvetia and mBridge, the BIS aims to replace cash and bank reserves with programmable digital tokens, controlled by unelected central bankers. This isn’t about innovation; it’s about dismantling private community banks and national treasuries, centralizing monetary power beyond democratic oversight.
The Fed’s CBDC Ambitions
The Federal Reserve is complicit. Since 2022, it has conducted CBDC pilots, including Project Cedar with the New York Fed and MIT’s Digital Currency Initiative. A U.S. CBDC would allow the Fed to issue money directly to the public, bypassing commercial banks and the Treasury. This violates the Constitution, which grants Congress—not the Fed—the power to coin money. By pursuing CBDCs without Congressional approval, the Fed is staging a monetary coup, subordinating elected governance to technocratic control.
The CFPB’s Power Grab
In May 2024, the Consumer Financial Protection Bureau (CFPB) quietly reshaped the financial landscape. Under the pretext of “stability,” it transferred oversight of systemic compliance, credit issuance, and capital buffers from Congressional agencies like the OCC and FDIC to a Fed-controlled framework. This makes the Fed the sole arbiter of capital availability for “systemically important” institutions, stripping elected lawmakers of authority over credit and community banking. The CFPB’s rule is a stepping stone to a CBDC-dominated system, where the Fed reigns supreme.
A Constitutional Crisis
The CFPB, once pitched as a consumer advocate, has morphed into the Fed’s enforcement arm, consolidating power in megabanks, crushing community banking, and defying the Constitution. Article I, Section 8 of the U.S. Constitution grants Congress—and by extension, the Treasury—the power to coin money and regulate its value. Congress must dismantle the CFPB and reassert its Article I powers to coin money, regulate its value, and oversee banking. The Treasury, as the only constitutionally authorized institution for money issuance, must take back control to restore monetary democracy.
A Path Forward: End the Fed’s Reign
The Federal Reserve no longer serves the public. It fuels asset bubbles, widens inequality, and concentrates credit in the hands of a few while starving the real economy. To reverse this, Congress must act decisively:
Strip the Fed of its rate-setting authority.
Transfer monetary policy to the Treasury.
Revive local banking and small business lending.
Ban Treasury-Fed asset swaps that mask debt monetization.
Audit all QE and interest payments since 2008.
End foreign banks’ access to Fed swap lines and repo facilities.
These steps are not radical; they are a return to constitutional principles and economic sovereignty.
Final Words: A Fight for Monetary Freedom
The Federal Reserve is no longer a neutral actor. It has overstepped its mandate, concentrated credit power, and engineered a framework that will leave American citizens under perpetual digital surveillance, economic throttling, and non-elected control.
The time has come.
End the Fed’s rate-setting authority.
Block the rollout of any CBDC without a Congressional vote.
Dismantle the CFPB and return its oversight powers to Congress.
Restore Treasury-led money issuance under constitutional frameworks.
Reinstate local, sovereign banking to serve real Americans—not Davos bankers.
Only by transferring authority back to the U.S. Treasury—the only constitutionally valid institution for money issuance—can we restore monetary democracy. This isn’t radical. This is republican government. America was never meant to be run by unelected central planners. Congress must act. The people must demand it. And the Fed must be put back into its box—or abolished altogether.
Call to Action
The fight for America’s economic future is urgent. For real-time updates on this financial transition, institutional-grade market analysis, and actionable insights, subscribe to JATS PT Points & Levels. Join a growing alliance of traders, policymakers, and citizens demanding sovereign monetary control.
The clock is ticking. Let’s take back control—before control is taken from us.
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