Need Help - Calling all FED experts!

[MrAustin]

I want to make a good/powerful/simple infographic about the Federal Reserve to try to intellectually slap people into consiousness. I have searched and searched and I can't find a good one that is already made (If you can show me one, even better).

I have found that people just have no clue when it comes to the FED, and they aren't motivated to go research it. It is amazingly non-issue for most people. I want to create something that can be spread around on social networking sites that can be glanced over quickly that will make people say, "WHATTT???? REALLY?"

My hope is that people will start to think about it and maybe read a book or something. Most explanations I have found about the federal reserve are way to complicated from most people's patience threshold (and I admittedly get lost/confused with some of the details). I am looking for quick facutal zingers - one short sentence for each. I don't know the FED well enough to do this on my own. Here are a few I came up with, but I am not sure if they are 100% accurate. Maybe you all can check them for accuracy/completeness????

-The Federal Reserve bank is privately owned and operated. It might as well be Wells Fargo.
-This commercial bank has been given the exclusive power to create US paper money.
-It is illegal for us to use anything other than this paper money.
-The Federal Reserve bank stores gold though.
-The only way this currency ever gets into circulation is if it is borrowed from the Federal Reserve Bank.
-The only way we can pay the interest is by borrowing more money from them.
-Every time this bank prints itself more money, your money is worth less. This is the cause of inflation. (this would go with the dollar graph)
-The Feral reserve is not accountable to the government and does not need authorization from the president or congress for anything it does.
-The Federal Reserve operates completely in secret. It's books have never been opened to the public or the federal government.
-The only audit of the Federal Reserve in it's 100 year history revealed $15 trillion in secret bailouts that took place between 2008 and 2010.
-This was only a one-time, partial audit.

What did I get wrong? What did I miss?

 

[MrAustin]

Bump....

 

[rblgenius]

lot of experts on these forums i see

 

[swissaustrian]

1. Put in the amount of loans they gave in the 2008 crash
2. Put in a chart with the value of the dollar from 1913 to 2012
3. They were responsible for regulating the housing market and did NOTHING during the bubble.
4. America had two central banks before the FED, both were abolished.

 

[Constitutional Paulicy]

Here is a Top Ten Reasons to End the Fed pdf........

http://www.freedomworks.org/files/Top10ReasonstoEndFederalReserve.pdf

 

[seapilot]

This was posted in the Economics subforum a couple of days ago and I thought it was great for explaining to people that do not have a clue about the Fed and sound money. It is in cartoon form, very easy to follow and created in the late 60s by a guy that wrote for Disney and produced cartoons.It is a little bit dated but relevant even for today. You can download the short booklet for free and print copies to give to people.
http://www.garynorth.com/public/9035.cfm

 

[centure7]

I want to start a website focused on the Federal Reserve topics and welcome anyone to help by PMing me. So far there is one person who has volunteered to help but I'd prefer to have five to start.

 

[PaulStandsTall]

I would say if this graphic doesn't make them want to learn more, nothing will.

 

[Orwell]

This video has some pretty good graphics in it. Problem is how the fed and money supply work takes some explaining in order to really let the ultimate outcome sink in.

 

[MrAustin]

Thanks everybody!! Keep them coming....

 

[mahnab]

Can anyone explain how the treasury prints the actual paper dollars the FED doesn't print the money yet the FED is the one that increases the money supply? Is it just that the FED increases credit into the economy in exchange for debt?

 

[emazur]

By his 5th year in office, George W. Bush had appointed all 7 members of the "independent" Federal Reserve Board

 

[socal]

Rather than go through every point in the OP, I recommend you start reading Modern Money Mechanics, put out by the Federal Reserve Bank of Chicago in 1961 and revised in 1992. It's only 38 pages,

http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf

Or maybe you should start with this simpler book, but it's much longer,

The Mystery of Banking
Murray Rothbard
http://mises.org/books/mysteryofbanking.pdf

 

[Orwell]

Can anyone explain how the treasury prints the actual paper dollars the FED doesn't print the money yet the FED is the one that increases the money supply? Is it just that the FED increases credit into the economy in exchange for debt?

Watch that video I posted. Good explanation in 10 minutes.

 

[MrAustin]

Rather than go through every point in the OP, I recommend you start reading Modern Money Mechanics, put out by the Federal Reserve Bank of Chicago in 1961 and revised in 1992. It's only 38 pages,

http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf

Or maybe you should start with this simpler book, but it's much longer,

The Mystery of Banking
Murray Rothbard
http://mises.org/books/mysteryofbanking.pdf

Thank you!

 

[Barrex]

This is what FED (and rest of national banks) is doing:

It doesnt get much simpler.

 

[rpwi]

Maybe you all can check them for accuracy/completeness????

-The Federal Reserve bank is privately owned and operated. It might as well be Wells Fargo.

Yes and no. In all practicality it serves private interest and has some quirks that make it appear like a private business...but it is probably most accurate to say is a public/private hybrid (or abomination). The board of governors is publicly appointed, but the regional fed presidents are mostly privately appointed (private banks have 2/3rds the vote). The public/private angle you probably want to push is...why should our Federal Reserve regional presidents be largely elected by private banks (who in turn get regulated by them)? Why should these privately elected presidents (mostly) have chairs on the FOMC (a system in which private banks churn the fed through the flawed primary dealer system). Then ask why should banks be guaranteed their 6% dividend? We lowly peons don't get the option of a guaranteed 6% dividend!

-This commercial bank has been given the exclusive power to create US paper money.

Not directly. Banks can only really fabricate checking deposits (a form of inflation very sinister and fraudulent that even dwarfs Fed counterfeiting). In an almost direct way, the banks can induce the Fed to create the monetary base by churning the open market...but the big picture is that the Fed is constantly bailing out greedy banks who fabricate the money supply, by constantly expanding the monetary base because our debt based money system needs more money constantly created otherwise principal + interest is greater than the money supply. The angle you probably want to push is how the Fed lets private banks expand deposit money (albeit not currency). Monetary base and M1, M2 graphs from shadow stats are great references to use: http://www.shadowstats.com/charts/monetary-base-money-supply

-It is illegal for us to use anything other than this paper money.

Think you're referring to legal tender laws. Am not 100% sure but believe you can use trade and use non-dollar currencies just fine in most transactions (the taxes would still apply on the value of the trades). What legal tender mostly means is that if you are sued and offer dollars as a payment, the other party must accept. Or if you have a public debt (like taxes) it must be paid in dollars. The problem with legal tender isn't that you can't use euro's or bus tokens or paypal money, etc in the US...it's that the might of the US tax and court system enforcing contracts forces us to use dollars and this is a significant factor in propping up the dollar. I assume under a Ron Paul presidency we could pay our taxes in say gold for example.

-The Federal Reserve bank stores gold though.

Yep...well claim slips on gold. They have about 11 billion dollars worth that listed on their balance statement...a holdover from the days the dollar was fractionally backed by gold.

-The only way this currency ever gets into circulation is if it is borrowed from the Federal Reserve Bank.

Currency is a misleading term because for many it denotes paper...monetary base is more accurate as much of the governments money supply exists in electronic form only. There are different ways the MB can enter the money supply. The open market is the main way (basically government buys sells t-bills from primary dealers and destroys/creates money in the process). They also do so through the discount window at well (lending to banks at below market rates). They're are also sneakier and more creative ways the Fed can justify creating money as well. The treasury can also expand the monetary base...but only though creating additional coinage.

-The only way we can pay the interest is by borrowing more money from them.

Government interest? There is about a trillion dollars in the monetary base and about 2.3 trillion in fed assets...but much the government owes to itself, so I'm not sure. With bank money...yes. Only debt based deposits can pay off private debts because that the only way the monetary base expands to M1...yet private debt quite dwarfs MB.

-Every time this bank prints itself more money, your money is worth less. This is the cause of inflation. (this would go with the dollar graph)

Banks don't print money (well perhaps in a round-about way). The Fed is the main direct culprit when it comes to expanding the MB. Banks are the main culprit in expanding/fabricating bank deposits. All things being equal, yeah they both cause inflation. In reality, the dollar is a reserve currency, so we haven't realized the true effects of our counterfeiting (yet). When the chickens come home to roost and we stop sending worthless pieces of paper to Asia for quality electronic goods...that's when we have to worry. Now counterfeited money can often actually result in job losses instead of inflation. This is because the new money creates economic distortions that creates mal-investment that creates (eventually) job-losses. The private sector can be inflationary/deflationary while the Fed the opposite. It may seem contradictory, but it can happen. This is why it is stupid to argue...inflation hasn't been too bad...therefore what the Fed is doing is probably ok.

-The Feral reserve is not accountable to the government and does not need authorization from the president or congress for anything it does.

Mostly correct. Congress could pass a statue to correct the matter but outside of that and presidential appointments to the board of governors...yeah the Fed is pretty unaccountable. In theory they have to abide by their charter, but if they aren't audited this is worthless.

-The Federal Reserve operates completely in secret. It's books have never been opened to the public or the federal government.
-The only audit of the Federal Reserve in it's 100 year history revealed $15 trillion in secret bailouts that took place between 2008 and 2010.
-This was only a one-time, partial audit.

Am not sure.

What did I get wrong? What did I miss?

Like the idea of what you're doing...thought about doing a bullet point truth bomb on the Fed myself. Don't take some of my advice too literally. If you want to say the Fed is privately owned...that is close enough and will open up people's eyes and that's what's needed.

Key points IMO (that I would stress if I were doing a fact sheet) would be:

* How private banks benefit unfairly from the discount window
* How private banks create money (with quotes from Thomas Jefferson, Madison and others on this matter)
* How the Fed ensure private banks can create money
* How the Fed is largely unaccountable
* How the dollar being a reserve currency disguises our true inflation
* How fake money can cause unemployment rather than inflation
* How Primary Dealers have unfair exclusive privileged access to the open market and how it is creating churning
* How private banks have unfair exclusive ability to have deposits at the Fed (you or I can't)
* How the banks are guaranteed their 6% dividend
* How private banks unfairly are able to elect the fed presidents...and some of these presidents control the 'open market'
* How the Fed has made a mess of things with the bailouts...(size of the bailouts / number of households is quite eye opening...we could have had massive citizen dividends!)
* How the Fed swapped good debt for bad in the recent bailout was economic malpractice
* How the Fed creates a moral hazard through it's implied status as 'lender of last resort'
* How the Fed lacks transparency
* How the Fed trying to set interest rates create malinvestment and churning in the open market
* That debt can't be used to repay debt (more of an argument against the private banking system which the Fed props up by constantly expanding money through open market signals so the banks always have new debt money to pay off old debt money.
* How the Fed has been doing stealth bailouts (like their 0% interest rate trick)

...all I can think of for now. There other minor tricks the fed pulls like with float...but above are the biggies.

 

[RickyJ]

There is a very good one out there called "The Money Masters" made in 1995 that predicted everything that is now happening today.

 

[rpwi]

Can anyone explain how the treasury prints the actual paper dollars the FED doesn't print the money yet the FED is the one that increases the money supply? Is it just that the FED increases credit into the economy in exchange for debt?

Sure...

When the Fed fabricates the money supply they do so electronically or only in accounting form to start with. So say they buy 1B worth of T-bills from the open market. They purchase these t-bills by creating a liability on their balance sheet that the t-bill's seller's bank can then use.

So after the deal, the Fed's balance sheet looks like this:

Liabilities: +1 billion in 'deposits at the Federal Reserve'
Assets: +1 billion in treasury bills

The government has absolutely expanded the money supply and this is inflationary. In theory this direct deposit at the Fed (not to be confused with a customer deposit at their private bank) can traded around the economy from bank to bank like any form of money.

Now say that individual who just sold those t-bills...wants that 50% of that billion dollar deposit in cash (banks sometimes can put up a fight over this but that is a separate story). Say the bank has zero paper dollars on hand. They can go to the Fed and say...hey...I want this in paper format. The Fed will comply and send an armored truck from a local fed branch to provide them that money (although it is more indirect than that). The Fed accomplishes this by changing their balance sheet. They subtract 500 million from the 'deposit' liabilities and credit 500 million to their dollar bill liabilities. They then have the treasury department actually produce the paper money they need.

So the treasury is quite powerless in this matter. They are just a manufacturer of money...although the Fed does pay the treasury a small operating fee from their equity to finance the physical process of creating money. It should be said that the Treasury does have actual monetary power...when it comes to coinage (but that is a different story).

So basically the Fed (at the whim of private banks) converts the MB back and forth from electronic to paper form as needed. Banks mostly convert between the two forms as customers need. The big problem is not whether the MB exists as paper or as an accounting entry...but that it was created, how was it created, what happened with the assets purchased with the created MB and a whole host of other problems. This is all different from how banks create money (separate story...also interesting).

Questions...let me know.

 

[Cleaner44]

http://www.youtube.com/watch?v=ZPWH5TlbloU