This prediction market addresses whether the United States Federal Reserve, the nation's central bank, will be formally abolished by the end of 2026. The Federal Reserve, established in 1913, is responsible for monetary policy, regulating banks, maintaining financial stability, and providing banking services to the government. Its potential abolition represents an extreme political and economic scenario that would fundamentally reshape the American financial system. The question taps into long-standing political debates about the Fed's independence, its role in the economy, and broader ideological movements advocating for a return to alternative monetary systems, such as a gold standard or competing private currencies. Recent years have seen increased political scrutiny of the Fed's actions, particularly following its aggressive monetary policy responses to the 2008 financial crisis and the COVID-19 pandemic, which expanded its balance sheet and role in the economy. Interest in this topic stems from a confluence of factors, including populist political movements critical of centralized financial power, academic arguments about monetary policy effectiveness, and legislative proposals from some members of Congress aimed at auditing or restructuring the Federal Reserve. While outright abolition remains a low-probability event, the market serves as a barometer for the intensity of anti-Fed sentiment and the potential for significant institutional reform.

Historical Context

The movement to abolish or radically reform the Federal Reserve has deep historical roots, often resurfacing during periods of economic distress. The Fed itself was created by the Federal Reserve Act of 1913 in response to a series of banking panics, most notably the Panic of 1907. Its creation was controversial, with critics then, as now, warning of excessive centralized financial power. The first major political challenge came in the 1930s, when Senator Carter Glass co-sponsored the Banking Act of 1935, which significantly reformed and strengthened the Fed's structure in response to the Great Depression. The next significant wave of criticism emerged in the 1970s during the era of stagflation, which undermined confidence in the Fed's ability to manage the economy. This period saw the rise of monetarist economics, championed by Milton Friedman, who argued for a rules-based monetary system to replace discretionary Fed policy. The modern abolition movement gained substantial traction after the 2008 financial crisis. The Fed's unprecedented interventions, including massive asset purchases (quantitative easing) and emergency lending facilities, were viewed by critics as overreach and a primary cause of economic inequality. This sentiment fueled the grassroots support for Ron Paul's 2012 presidential campaign and has since been reflected in recurring legislative proposals in Congress.

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