The Federal Reserve is a monopoly over currency creation, owned by private wall street banks.
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The Federal Reserve issues dollar bills, which are loans, and function as money. Bills are derivatives of federal government debt, created by open market operations. They are essentially a share of the national debt.
The holder of the bill is expected to repay the bill plus some interest, the rate of interest is called the Fed Funds Rate and is set by the Federal Reserve.
2007 Crisis[]
The Financal crisis starting in 2007 was exploited by the Treasury Secretary Hank Paulson to justify increasing the role of the Federal Reserve in the economy.
Paulson decided that the Fed should start guaranteeing protection to large corporations as well as to member banks and put forward these proposals in the Paulson Plan. This new role for the fed would be refered to as 'Capital Market Stability.'
Forbes celebrated these ideas in an article entitled "Keeping U.S. Financial Markets Competitve" describing it as "as broad and sweeping as it is overdue."