Contrary to what many Americans might think, the Federal Reserve System ("the Fed") is not a branch of the U.S. Government. It is a hybrid mix of public and private interests: the U.S. President appoints the Fed's board of governors and some of the Federal Open Market Committee, which consists of the seven members of the Board of Governors and presidents of the twelve regional Federal Reserve Banks. Also, nationally chartered commercial banks hold stock in their region's Federal Reserve Bank, and are entitled to elect some of the board members.
The Fed's original charter in 1913 was to maximize employment, stabilize prices, and moderate long-term interest rates. "Its duties have expanded over the years, and as of 2009 also include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions" (Wikipedia).
So basically, an unelected and secretive financial system controls the amount and flow of money in the U.S. and much of the world. Its mandate has grown and grown, so that it essentially finances the U.S. government. How does this work? The Fed tells the U.S. Treasury to print and issue more money, which the Treasury then "lends" to the U.S. government and banks. Next, the U.S. government pays salaries to the U.S. President, Senators, Representatives, their staffs, the military, and other government employees. Thus the government doesn't need to raise taxes in order to pay all these people. But then each unit of currency becomes cheapened. This is the same sort of sin that the Old Testament decries as an unequal shekel and an unequal basket, uscrupulously switching units of exchange (weights in the scales) in order to take advantage of the unsuspecting.
Here's an example: Let's imagine a very small country 50 years ago with a population of just 500 citizens, or 100 households. These 100 earning-and-spending households produce a Gross Domestic Product of $1,000,000 per year, or $10,000 per household on average. That doesn't seem like much these days, but in 1967 when I graduated from university that was a very good personal income. The president, Simon Lavrenty Chase Wilson, and the banker, George Randolph Simon Chase (they're relatives), make a deal to "maximize employment" and "moderate long-term interest rates" by issuing another $100,000. And they promise "No new taxes!"
Then president S.L.C. "Slick Willy" Wilson promptly pays himself and G.R.S. "Greasy" Chase $22,500 each, and they hire five new government employees, paying them $11,000 apiece, an above-average income. But gradually the other citizens begin to notice that prices and interest rates are increasing, because there is now $1,100,000 in the money supply, and the GDP output that was $1,000,000 per year has fallen to $950,000 because those new government employees aren't producing anything except paperwork. The rest of the people eventually demand and get pay raises to $11,000, so they're happy now ...but this puts them in a higher income tax bracket. No new taxes? Hah! Then the goverment statistics office proclaims - "The economy is booming, the GDP has grown to $1,100,000. We're doing great!" And the vast majority of the people believe it.
This sleight-of-hand has been going on for over a hundred years. And it's the government and the bankers who get their hands on this "new money" first, when most people believe it's worth just as much as the "old money" and before prices rise. Here's a great article that describes this: The Federal Reserve's Shell Game. Fifty years ago you could buy a nice new car for $3,000 or a new three-bedroom house for $12,000. But today, after fifty years of "fiscal easing," you can expect to pay $30,000 and $120,000 for those same items. Approximately every 10-12 years the value of the U.S. Dollar is cut in half by this issuing of fiat currency, so about 50 years ago one U.S. Dollar could buy ten times as much as today. If a private corporation were to secretly print and sell more stock certificates at the same price as the current stock certificates without declaring a stock split or that new shares were being issued, they could be convicted of stock fraud. But the Fed and the U.S. government have gotten away with it for over a hundred years. Now you understand how the Fed works, who makes money from it, and what to do about it: Eliminate the Fed!