Occam’s principle has been reformulated many times before and after Occam himself presented it, beginning with Aristotle (“Nature operates in the shortest way possible”), but the value of parsimonious explanations in some form has been preserved up to the present as an invaluable tool of explanation. Einstein is credited with expressing it as “Everything should be made as simple as possible, but no simpler.” Da Vinci recommended mimicking Nature in whose works “nothing is wanting, and nothing is superfluous.” And, since WWII—in keeping with the principle itself—KISS (“Keep it simple, stupid”) has become the modern world’s acronym for it.

The theory describes a desirable goal in any undertaking—everything necessary, nothing superfluous. With this in mind, how should we evaluate the Federal Reserve System? Is it a streamlined agency purporting to provide the American economy with all its monetary needs? Did it replace a flawed system that was causing havoc? Was it an improvement over anything the economy has ever had? Since an economy includes people who work and trade, was there a public outcry for monetary reform?

To answer these questions we need to look at the Fed’s goals, and for those we find on its slick website a straightforward statement: The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. If we dig a little we find under “The Fed Explained” the 11th edition of its purposes and functions, though it’s no longer called that. Also, for those who are upset over the Fed’s private character, note that the top level domain is .gov, not .org, .com, or .net.

Ironically, it was Keynes who had shown only a few years earlier a highly perceptive understanding of banking fraud in the Economic Consequences of the Peace, Chapter Six:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.

The racket he describes is infinitely easier with fiat money in the hands of a central bank like the Fed. Keynes, incidentally, was highly leveraged in the stock market when he changed his mind about “the process of inflation.”