The Fed is very much an arm of our government. It marks the line between government and private sectors that is critical to accounting and tracking of payments for Treasury and the money supply. Think of it as the clearing bank for Treasury payments and collections, which is all it is.

In any dual entry accounting system, each debit must balance with credit in another sector. Treasury holds the "debt" side of that and the Fed holds the credit side. The debt of the Treasury is the "net" money supply of the private sector. The only way to "pay off" that debt is to remove money from the private sector via taxation, leaving no money to denominate our commerce or net save as a store of value.

In that capacity it must provide oversight for its licensed agents in the banking system. The Fed creates no actual money. It only follows the instructions provided by Congress in marking accounts up or down within the banking system.

The Fed and Treasury share a common bottom line balance sheet, meaning any profit made by the Fed is returned to Treasury at its bottom line and is applied to the debt. Those who believe the Fed is a separate entity from the government don't accept this information easily.

There is an intentional latitude given to the Reserve board by Congress and the Executive in monetary policy to avoid over-politicizing its processes, but the Fed is subservient to Congress in money creation.