US Federal Reserve Bank

[vurt]

Federal Reserve System - Wikipedia, the free encyclopedia

I do not understand how and why this works. I vaguely comprehend how this promotes stability, but I can't picture when and where the money actually moves.

From what I gather, the Federal Reserve Bank lends money to the U.S. Treasury (that then prints it). Which is fine, if not a little awkward; but I've seen mentioned that the Fed. charges the government interest on these transactions. What happens to this interest? Where does the actual money go? I understand that it's held by the Federal Reserve Bank in one way or another, but I'm sure that at the end of the day, someone involved is coming home with a big pay cheque. In effect, these people are making money, tons of money, off of interest accrued from charging the government a fee to print its own money.

I'm pretty sure I have this wrong, but my googling is making me increasingly suspicious. I'm not suggesting that there's some big conspiracy at work here, but it sure looks like some rich jerks are ripping people off of a lot of money. Although, the fact that all the serving members of the Board of Governers are Jewish is a little funny. Who knew there really is a global Jewish conspiracy??

If someone could call me an idiot and explain, step by step, why the Fed. is on the up-and-up, I'd be happily satisfied.

[Drave]

I believe the Federal Reserve Bank is more of a private institution rather than part of the U.S. Government.
(The fancy names sounds official, like "Federal Express".)

As Congress approves to ask for money from the Fed (a loan), the more interest has to get paid back to the Fed, via taxes.

The interest (that is paid for by taxes) is theirs to keep.

Edit: You might find this interesting [ Modern Money Mechanics ]

[prescient63]

"The Fed" operates with three main goals in mind, full employment, economic growth and stable prices (low inflation). There are actually more goals but this keeps it simple. To achieve these ends the fed tries to guide the growth of the economy by altering the money supply. If you can control the amount of money you can also control interest rates and inflation, because you can't have inflation in a meaningful way without more money. To do this the fed either sells government securities through open market operations (fomc committee), taking money out of circulation in a larger amount that it would seem due to reserve requirements and the money multiplier, or by injecting money (liquidity) into the economy and thus lowering interest rates. The fed would seek to lower interest rates when the economy is not doing so well. This will help spur investment as the returns or NPV of your investments do not need a high hurdle to overcome the amount of interest you are paying on the money borrowed. The Fed would want to raise interest rates as it has for 17? straight sessions to help cool the economy. The fed can do this buy selling more government securities which effectively takes money out of the economy and raises interest rates. That is the super quick and dirty of it.

When the fed sells government securities they are doing so on behalf of the US government who then has to pay out interest on those securities. When the securities mature typically the government will just sell another security and pay off the mature security with the money it just received from the new security sold. It acts like a 9 trillion dollar case of credit card debt. Except it doesn't work quite as bad as you would at first believe because we are paying other countries off with our increasing money supply. This in turn drives down the relative value of our currency and increases the relative value of their currency and assets which we are holding. I posted a big long article about it in the general discussion titled "the us the worlds largest hedge fund".

I'm a little confused as to what money you believe is being paid to the fed other than perhaps the federal funds rate, which is banks who have reserves at the fed making short and usually overnight loans to other banks at the federal funds rate. I think part of the money you are seeing is one government agency owing another money. They typically just rob social security as it operates with a surplus. The fed does tend to earn money from open market operations however. I don't know how much though. As far as the Mint making new money, it can actually make all the money it wants. However, the fed is the institution who releases that money into the economy. It is yet another way to control inflation and make sure the government can't just print themselves more money whenever they want because it has to go through the board of governors + 5 more bank presidents before it hits the economy.


Edit: I think at the end of the day the point you are missing is the Fed is there to try and stop the politicians from doing idiotic things like just printing more money. That would devalue the dollar greatly and drive up inflation even more. The people who run the fed really don't make all that much money compared to what they could make in the private sector if that is your concern. Its not like we are paying interest on that 9 trillion in debt to the fed. Most of it is going to American individuals and government agencies, and a couple trillion to foreign governments and individuals who subsidize our spending.

[Kugbok_Fennin]

I'm telling you right now this is long. Don't comment unless you read all this shit I spent time typing up.

The first misconception that most people have is that the Federal Reserve Bank is a branch of the US government. IT IS NOT. THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY. Most people believe it is as American as the Constitution. THE FACT IS THE CONSTITUTION FORBIDS IT'S EXISTENCE. Article 1, Section 8 of the Constitution states that Congress shall have the power to create money and regulate the value thereof, NOT A BUNCH OF INTERNATIONAL BANKERS! Today the FED controls and profits by printing WORTHLESS PAPER, called money, through the Treasury, regulating its value, AND THE BIGGEST OUTRAGE OF ALL, COLLECTING INTEREST ON IT! (THE SO-CALLED NATIONAL DEBT). The FED began with approximately 300 people or banks that became owners, stockholders purchasing stock at $100 per share - the stock is not publicly traded) in the Federal Reserve Banking System. They make up an international banking cartel of wealth beyond comparison. The FED banking system collects billions of dollars in interest annually and distributes the profits to its shareholders. The Congress illegally gave the FED the right to print money through the Treasury at no interest to the FED.

The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud. Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed: 1. Rothschild Bank of London 2. Warburg Bank of Hamburg 3. Rothschild Bank of Berlin 4. Lehman Brothers of New York 5. Lazard Brothers of Paris 6. Kuhn Loeb Bank of New York 7. Israel Moses Seif Banks of Italy 8. Goldman, Sachs of New York 9. Warburg Bank of Amsterdam 10. Chase Manhattan Bank of New York.

These bankers are connected to London Banking Houses which ultimately control the FED. When England lost the Revolutionary War with America where our forefathers were fighting their own government, they planned to control us by controlling our banking system, the printing of our money, and our debt. The individuals listed below owned banks which in turn owned shares in the FED. The banks listed below have significant control over the New York FED District, which controls the other 11 FED Districts. These banks also are partly foreign owned and control the New York FED District Bank: First National Bank of New York, James Stillman National City Bank, New York, Mary W. Harnman, National Bank of Commerce, New York, A.D. Jiullard Hanover, National Bank, New York, Jacob Schiff, Chase National Bank, New York, Thomas F. Ryan, Paul Warburg, William Rockefeller, Levi P. Morton, M.T. Pyne, George F. Baker, Percy Pyne, Mrs. G.F. St. George, J.W. Sterling, Katherine St. George, H.P. Davidson, J.P. Morgan (Equitable Life/Mutual Life), Edith Brevour, T. Baker.

How did it happen? After previous attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign this act. In 1913, a Senator, Nelson Aldrich, maternal grandfather to the Rockefellers, pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation. When elected, Wilson passed the FED. Later, Wilson remorsefully replied, referring to the FED, "I have unwittingly ruined my country". Now the banks financially back sympathetic candidates. Not surprisingly, most of these candidates are elected.

The bankers employ members of the Congress on weekends (nickname T&T club -out Thursday...in Tuesday with lucrative salaries. Additionally, the FED started buying up the media in the 1930's and now owns or significantly influences most of it. Presidents Lincoln, Jackson, and Kennedy tried to stop this family of bankers by printing U.S. dollars without charging the taxpayers interest. Today, if the government runs a deficit, the FED prints dollars through the U.S. Treasury, buys the debt, and the dollars are circulated into the economy. In 1992, taxpayers paid the FED banking system $286 billion in interest on debt the FED purchased by printing money virtually cost free. Forty percent of our personal federal income taxes goes to pay this interest. The FED's books are not open to the public. Congress has yet to audit it. Congressman Wright Patman was Chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913. Congressman Henry Gonzales, Chairman of a banking committee, introduced legislation to repeal the Federal Reserve Banking Act of 1913 almost every year. It's always defeated, the media remains silent, and the public never learns the truth. The same bankers who own the FED control the media and give huge political contributions to sympathetic members of Congress.

THE FED FEARS THE POPULATION WILL BECOME AWARE OF THIS FRAUD AND DEMAND CHANGE. We, the People, are at fault for being passive and allowing this to continue. THE FEDERAL RESERVE BOARD, A GOVERNMENT BOARD, HAS CHEATED THE GOVERNMENT OF THE UNITED STATES AND THE PEOPLE OF THE UNITED STATES OUT OF ENOUGH MONEY TO PAY THE NATIONAL DEBT SEVERAL TIMES OVER. The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country dearly.

They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; the rich and predatory money lenders. This is an era of economic misery and for the reasons that caused that misery, the Federal Reserve Board and the Federal Reserve banks are fully liable. Half a million dollars was spent on one part of propaganda organized by those same European bankers for the purpose of misleading public opinion in regard to the Federal Reserve Bank.

Every effort has been made by the Federal Reserve Board to conceal its power but the truth is the Federal Reserve Board has USURPED THE GOVERNMENT OF THE UNITED STATES. IT CONTROLS EVERYTHING HERE AND IT CONTROLS ALL OUR FOREIGN RELATIONS. IT MAKES AND BREAKS GOVERNMENTS AT WILL. No man and no body of men is more entrenched in power than the arrogant credit monopoly which operates the Federal Reserve Board and the Federal Reserve banks. These evil-doers have robbed this country. What the Government has permitted the Federal Reserve Board to steal from the people should now be restored to the people.

Our people's money to the extent of $1,200,000,000 has within the last few months been shipped abroad to redeem Federal Reserve Notes and to pay other gambling debts of the traitorous Federal Reserve Board and the Federal Reserve banks. The greater part of our monetary stock has been shipped to foreigners. Why should we promise to pay the debts of foreigners to foreigners? Why should American Farmers and wage earners add millions of foreigners to the number of their dependents? Why should the Federal Reserve Board and the Federal Reserve banks be permitted to finance our competitors in all parts of the world? The Federal Reserve Act should be repealed and the Federal Reserve banks, having violated their charters, should be liquidated immediately. FAITHLESS GOVERNMENT OFFICERS WHO HAVE VIOLATED THEIR OATHS SHOULD BE IMPEACHED AND BROUGHT TO TRIAL.

If the media is unbiased, independent and completely thorough, why haven't they discussed the FED? Currently, half the states have at least a grass roots movement in action to abolish the FED, but there's no press coverage. In July, 1968, the House Banking Subcommittee reported that Rockefeller, through Chase Manhattan Bank, controlled 5.9% of the stock in CBS. Furthermore, the bank had gained interlocking directorates with ABC.

In 1974, Congress issued a report stating that the Chase Manhattan Bank's stake in CBS rose to 14.1% and NBC to 4.5%. The same report said that the Chase Manhattan Bank held stock in 28 broadcasting firms. After this report, the Chase Manhattan Bank obtained 6.7% of ABC, and today the percentage is most likely much greater. It only requires 5% ownership to significantly influence the media . This is only one of 300 wealthy shareholders of the FED. It is believed other FED owners have similar holdings in the media. To control the media, FED bankers call in their loans if the media disagrees with them.

Rockefeller also controls the Council on Foreign Relations (CFR), the sole purpose of which is to aid in stimulating greater interest in foreign affairs and a one world government. Nearly every major newscaster belongs to the Council on Foreign Relations. The Council on Foreign Relations controls many major newspapers and magazines. Additionally, major corporations owned by FED shareholders are the source of huge advertising revenues which surely would influence the media.

Every day I hear people complaining about what they don't like about our government and media, but not one of them are willing to put forth an effort to try and change it, especially when it comes to their personal lives. We are as much a slave on a personal level, as our government is to the international bankers. We keep right on using the tool they put out here to control us, credit cards, and we are imprisoned by it. We are no longer willing to save up to buy something, we have to have it right now, so the Government has made it easy to have what you want without the having to save for it, (CREDIT). Don't you think it funny that in a land with so much wealth, only 2 PERCENT of the people own their homes? (CREDIT). Do you know 60 PERCENT of Americans have at least 3 Credit cards used to it's maximum? (CREDIT). Do you know that only 1 PERCENT of the people have their car paid for? (CREDIT). To be free, you must throw away your credit cards, and NEVER buy anything that you cannot afford at the moment of purchase. We will never be a free people until we rid ourselves of the burden placed here to control us, and when we stop renting from the powers, the power will cease to exist.

I will close with Thomas Jefferson's Warning To America : "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Written by Jefferson in a letter to the Secretary of the Treasury Albert Gallatin (1802).

[rinthea]

Its bad manners not to quote the wackjob conspiracy theorist website you stole that from. Its worse manners to claim it as your own.

Yeah, it would be so much better if the government was setting fed policies. They're a hybrid government/private company deliberately designed that way. Board apoointments made by congress, profit limits (6% iirc, rest paid in tax), etc.

[Menoz]

Originally Posted by Kugbok_Fennin

Words

Your little anecdote there would be about 100% more believable if it hadn't been filled with CAPS LOCK SENTENCES and STATISTICS WITHOUT CREDIBLE SOURCES. But yeah, it's a pretty big corporate sham.

[Darus Grey]

I think even calling it a conspiracy is harsh.

Most of its true, people just don't care about it.

[vurt]

I guess my question is this:

Is the Federal Reserve's power real or illusory? I realize that's incredibly difficult to answer, but it's the crux of my problem. If the Fed's role is really just instrumental, with no capacity to operate on its own behalf and, in practice, wholly subject to the will of the US government and its people, then the power is illusory.

Unfortunately, I'm pretty sure that the above question can honestly be answered either way. Even if the preceeding instrumental explanation is true, one could easily argue that the private shareholders of the central banks are (in large part) the US government and its people, because their disproportionate wealth features them much more prominently in its "will". While they ostensibly operate for the benefit of the people, it's difficult to believe that this privately owned enterprise would puts its own interests (and those of its shareholders) after "the people's". I know, the Fed has become so intwined with the day-to-day operations of the federal government that its "private" designation is nearly meaningless, but that may speak more to the cozy relationship forged between these two institutions than anything else.

If the Fed is nothing more than just another tier of bureaucracy that somehow keeps the American juggernaut moving, I'm okay with that. But it's hard to shake the notion that these people (not just the Board of Governors, but whoever else is in charge of these banks) are in a position of great power. I understand that they operate as a stabilizing force and all of their power is geared towards steering the American economy in the right direction; this benefits them, the people, the government, and everyone's happy. In this case, the power is largely illusory, because while the Fed theoretically bears the capacity for actual change, they can't act on it.

But, still, I'm left with the lingering question. Could they, hypothetically, do something? If all these bank owners got together and came up with some grand scheme, could they make it happen? Yeah, I'll take the tinfoil hat off in a minute, but I'm genuinely curious.

Oh, and I'm still having trouble with how the interest off of the money loaned to the government works. This interest eventually finds its way into the pockets of the central banks' shareholders, but I'm wondering why? Why exactly are these people making money off of this? It's not exactly an investment. Why are they making money? From my understanding, this is many billions (if not trillions) of dollars worth of interest accrued for... what, exactly?

/tinfoil hat off.

[Havelock]

Originally Posted by vurt

Is the Federal Reserve's power real or illusory? I realize that's incredibly difficult to answer, but it's the crux of my problem. If the Fed's role is really just instrumental, with no capacity to operate on its own behalf and, in practice, wholly subject to the will of the US government and its people, then the power is illusory.

The same could be said for the Supreme Court.

[BurnemWizfyre]

Funny thing is, you can point and laugh all day long that hes wearing a tinfoil hat and spouting off about some conspiracy theory that he read on the net but it doesnt make you right. The man is right, hes not bullshitting you about what he said.

YouTube - Ron Paul on Federal Reserve, banking and economy

[Darus Grey]

But, still, I'm left with the lingering question. Could they, hypothetically, do something? If all these bank owners got together and came up with some grand scheme, could they make it happen? Yeah, I'll take the tinfoil hat off in a minute, but I'm genuinely curious.

I think the fact that this system even exists answers your question.

[prescient63]

Holy shit, Ron Paul is a fucking insane, and you people need to take off your tin foil hats.

But, still, I'm left with the lingering question. Could they, hypothetically, do something? If all these bank owners got together and came up with some grand scheme, could they make it happen? Yeah, I'll take the tinfoil hat off in a minute, but I'm genuinely curious.

I fail to see why they would do something. You would need a motivation to take action. How would destabilizing the economy be in the best interest of anybody? Sure maybe you could get all 7 governors to vote on releasing billions upon billions of dollars into the economy, but what would they gain? The power of fiat money is the faith people have in it as a store of value. If all of a sudden one day we went to trade with japan and they told us well the US dollar isn't worth anything here, and everyone else told us the same then it is essentially worthless. I fail to see what scenario anyone could imagine where it would be in the best interest of ANYONE to destroy the economy, and that includes other nations. A destabilization of the US dollar would have far reaching effects. There are literally trillions of dollars tied to the US dollar through derivatives. There would be a cascade effect that I couldn't even begin to imagine. It would benefit no one. It would not benefit the rich or the poor. At any rate it isn't like the fed is not without limits. A simple emergency session of congress and thats it. There is no more Fed.

[Teger]

Ron Paul is the same man who wants to return to a gold standard and replace our government with a giant integrated church system. I wouldn't look to him for commentary on the merits of the federal reserve.

[Soriak]

Originally Posted by vurt

I guess my question is this:

Is the Federal Reserve's power real or illusory? I realize that's incredibly difficult to answer, but it's the crux of my problem. If the Fed's role is really just instrumental, with no capacity to operate on its own behalf and, in practice, wholly subject to the will of the US government and its people, then the power is illusory.

Through their actions they have a very real effect on the economy, so yes - their power is real.

I've said it in another thread, but it can't be repeated often enough: You do NOT want any elected person deciding how much money should flow into the economy - the only way they could get elected would be to severely harm the economy.

Person A tells you the economy is doing great, that's why the money supply has to be tightened. It's going to slow growth and make you off worse than if it were kept the same, but he prefers stable growth over very fast growth.

Person B tells you how you deserve more money and the whole boom thing is great. Not only is he not going to tighten the money supply, he's going to release more money to banks. Bigger paycheck, more jobs, more investment - what's not to love?

The fact that person A would never win an election is exactly why these positions need to be appointed. If Congress or the President could make these types of decision, you'd only have an expansive monetary policy (person B) and that'd end very badly very quickly.


I don't know where all those conspiracy theories come from, but I can only imagine it's because most people don't know much about monetary policy. This is just one of those subjects where you can't jump in and have an opinion, you really do need some knowledge just to get the terminology.

It's also important to realize that current monetary policy is a relatively new field (major advances in the past 50 years or so) and now that people can easily order stuff from other countries, in other currencies, over the internet, things change again.

It doesn't take an import company to take advantage of a lower currency value anymore - a simple example explains this:


feel free to skip this if you don't care about currency exchange Just started typing and instead of deleting it (although the fed affects this too, it's not really part of the discussion), I'll leave it in case someone may find it informative.
--------------------------------
Books on Amazon tend to cost the same amount in Germany and the US - ie $100 on .com sells for 100 Euro on .de. Currently, the Euro is higher valued than the dollar, so Europeans ordering from amazon.de pay more. So it's cheaper for someone to order his book on amazon.com and pay conveniently through his credit card. (which is what I do - I currently save about 20% that way, a little less because I don't get free shipping)

Amazon.com, however, is a US company and wants to be paid in US Dollars. So someone, somewhere, has to take his Euros and exchange them for dollars. That means "Dollars" are demanded, while Euros are given - the value of the dollar increases, that of the Euro decreases. (not from one person, of course, but a lot of people do this as more have access to the internet and credit cards. In a perfect world, everyone could order from anywhere)

If the value of the Euro decreases and that of the dollar increases, it'll eventually become cheaper to order from amazon.de instead - now Americans will buy from Germany, and the whole thing goes in the other direction.
---------------------------------------

This is a fairly simple concept (supply and demand, after all) until you take a daily routine from real life: steel ordered from china manufactured into cars in Germany, (along with electronics from Japan) shipped to US customers by a british company, insured by a Swiss company and the bookkeeping handled in India - wee, 7 currencies, influenced by 7 central banks whose job it is to keep that circle going. If you go and abolish the fed, the dollar may be influenced by 50 state banks. (or whatever other thing they come up with)

No surprise, then, that stability is very important and having a central bank provides that better than anything else. I'd rather not risk this because someone from Idaho thinks the fed is a huge Jewish conspiracy meant to keep him down.

[Kaosu]

I had a long write up from all the research one of my economy teachers did and some of the research I did as well..

But fuck it.

The main problems, that I see, with the federal reserve system is that while what its there for is clear cut, what it actually does is shrouded in secrets. Its part-government part-private, with the benefits of both and the cons of none. Its complex, because its a indirect central banking system that no one understands or cares about because everyone thinks that the government handles shit, when really, its part government appointed part civilians. Its usually always closed doors on what they do and when something does happen, you rarely hear about it.

Even if the Federal Reserve is drivng our economy into the ground, we don't even know its them or if they are trying to do something about it. Alan Greenspan is perhaps one of them men I really respect, as the man had a hard on for the economy.