The fed is a hypocrite

[gutteck]

Tell me if I am nuts but here is my analysis.

The recession is mostly because of our high debt and the fact that banks are not loaning much these days. This creates a shortage of money because the money in circulation is being used to pay for old debts and therefore the money supply is being contracted.

The fed’s solution is to lower interest rates. Therefore people will ask more for more loans and get more in debt. This is a temporary relive because sooner than later those debts will have to be paid back and the money supply will be contracted and people will have more debt than when the recession began.
If the fed cared even a little they would take other measures to help the country. For example:

1) The national debt is at about 69 trillion. Instead of demanding obligations the fed could give the country a break and not demand obligation for sometime while the country breaths a little.

2) It could lower (or eliminate) interest rates on the loans it has given to the government.

3) It could demand that banks have a 100% reserve for the loans it gives out. Meaning no more creating money out of thin air and therefore no inflation.

4) It could create (print bills) a few billion interest free and get people to work.

5) I mean the list goes on.

The fed does not care about this country. It only cares about making profit and making sure its tentacles (the smaller banks) make profit as well.

 

[liberty_Forever]

Hi

1) sort of. The national debt for government is $9.2 trillion with around $57 trillion in unfunded obligations.

2) correct, they could forgive interest

3) Excellent point, but a little off. The math for banking is complicated, but there is the fractional reserve multiplier . . . Right now, banks only need to have around 10% reserves, so reserve requirements are already pretty low. The Fed can and probably will lower reserve requirements even more as the crisis grows.

4) The Fed can't exactly print the bills... the government does that part... but no one can give them away to the public (at least not yet).


The Fed certainly doesn't care about this country. The bank is controlled by the Rothschilds and the Rockerfellers. The best bet is to organize politically to rid the United States of the Federal Reserve once and for all.

That way the government will not have to pay interest on this funny money.

 

[gutteck]

3) Excellent point, but a little off. The math for banking is complicated, but there is the fractional reserve multiplier . . . Right now, banks only need to have around 10% reserves, so reserve requirements are already pretty low. The Fed can and probably will lower reserve requirements even more as the crisis grows..

The crisis as you put it is because of fractional lending. If reserve requirements get lower then more money can be inflated. We don’t need more bills. We need more value.

4) The Fed can't exactly print the bills... the government does that part... but no one can give them away to the public (at least not yet).

I know the treasury prints them but inking paper is not the issue.

 

[Jagwarr]

What I don't understand is why does the U.S pay any interest or borrow any money from the federal reserve at all. It doesn't make any sense to me.

Couldn't our government do this themselves? What benefit is it to allow private banks to do this?

 

[gutteck]

What I don't understand is why does the U.S pay any interest or borrow any money from the federal reserve at all. It doesn't make any sense to me.

Couldn't our government do this themselves? What benefit is it to allow private banks to do this?

You are going to love this movie:

http://video.google.com/videoplay?docid=-515319560256183936

It is called "Money masters"

Wars have been fought, presidents killed, and many lives lost trying to kill the central bank. But every few years it comes back with another name.

 

[liberty_Forever]

There is no benefit to this arrangement . I find it outrageous, personally. The private banks secretly hijacked our government money supply in 1913 during a holiday session of Congress.

Watch America: Freedom to Fascism
http://video.google.com/videoplay?d...741&start=0&num=10&so=0&type=search&plindex=0

 

[pinkmandy]

What I don't understand is why does the U.S pay any interest or borrow any money from the federal reserve at all. It doesn't make any sense to me.

Couldn't our government do this themselves? What benefit is it to allow private banks to do this?

And therein lies the big question, the question most Americans don't ask because they don't know to ask it. I'd wager most Americans think the Fed IS the govt. Enjoy the movie.

 

[Tom228]

What I don't understand is why does the U.S pay any interest or borrow any money from the federal reserve at all. It doesn't make any sense to me.

Couldn't our government do this themselves? What benefit is it to allow private banks to do this?

The Government (Congress/ President) borrows from the people through bonds. The Government pays interest to foreign holders of US bonds/ Securities and domestic holders of bonds/ securities.

The Fed is almost like a private bank. It's referred to as "the bank's bank." Commercial banks can borrow money from Federal Reserve Banks. For example, if Bank of America needed X million dollars, it can borrow from the Federal Bank from that particular region. Of course the Commercial bank does pay interest called the Federal Funds Rate. Which was lowered today from 4.25% to 3.50%. Or Commercial banks can borrow from other commercial banks.

The fed does not care about this country. It only cares about making profit and making sure its tentacles (the smaller banks) make profit as well.

The Federal Reserve gains nothing if the economy crumbles. They don't make money, the Board of Governors and the Chairman make salaries but that's about it. The idea that some people think that the Fed makes money is ridiculous. Commerical banks, ie: CITI, Bank of America, and Wells Fargo, they make money, the Fed does not.

And therein lies the big question, the question most Americans don't ask because they don't know to ask it. I'd wager most Americans think the Fed IS the govt. Enjoy the movie.

The Fed was created by the Government, the Board of Governors are chosen BY THE SENATE, and the Chairman is CHOSEN BY THE PRESIDENT, and approved by the SENATE.

 

[gutteck]

The Government (Congress/ President) borrows from the people through bonds. The Government pays interest to foreign holders of US bonds/ Securities and domestic holders of bonds/ securities.

The Fed is almost like a private bank. It's referred to as "the bank's bank." Commercial banks can borrow money from Federal Reserve Banks. For example, if Bank of America needed X million dollars, it can borrow from the Federal Bank from that particular region. Of course the Commercial bank does pay interest called the Federal Funds Rate. Which was lowered today from 4.25% to 3.50%. Or Commercial banks can borrow from other commercial banks.



The Federal Reserve gains nothing if the economy crumbles. They don't make money, the Board of Governors and the Chairman make salaries but that's about it. The idea that some people think that the Fed makes money is ridiculous. Commerical banks, ie: CITI, Bank of America, and Wells Fargo, they make money, the Fed does not.



The Fed was created by the Government, the Board of Governors are chosen BY THE SENATE, and the Chairman is CHOSEN BY THE PRESIDENT, and approved by the SENATE.

If I had a penny for every time I hear this song.
Watch the movie and you’ll complete your half truths and learn some more.

 

[shocker315]

What I don't understand is why does the U.S pay any interest or borrow any money from the federal reserve at all. It doesn't make any sense to me.

Couldn't our government do this themselves? What benefit is it to allow private banks to do this?

It is to give the appearance of legitimacy to a public who generally doesn't understand the basic fact the government is simply printing new money to pay its government expenditures...such as wars, welfare, etc. If there where no Fed and the government simply printed money itself to pay its bills.... the scam would be out in the open for all to see, and it would be rightly questioned by the public as a kind of counterfeiting. By obscuring the whole money creating process with bonds, securities, a Fed, and borrowing.... the whole scam is shrouded in all sorts of an economic mumbo jumbo. All of which is beyond the average citizens' understanding and hidden from view.

You see here is the scam....the government needs money (more than it takes in in taxes)...so it prints bonds ( otherwise known as IOU's...other pieces of paper made out of nothing). It offers them to the public first. If the public doesn't want to buy them...the Fed will take them. These bonds are used as collateral for the Fed to loan newly created money to the government for its expenditures....these loans of new money by the Fed are created out of thin air.... (simply the same as turning on a printing press). But this new money is said to be backed by bonds or government securities. Thereby making it legitimate. But remember these bonds where earlier just printed up on whim by the government.

Anyway, now the government has what its needs to pay its bills without having to raise taxes. That's what the government gets out of this process and why it likes to have a Fed. Instant access to cash (newly created money) without having to go to the taxpayer to get it. If the goverment had to go to the taxpayer for all their money... they wouldn't be able to fund their programs..such as wars in the Middle East. :o

 

[Devil_rules_in_extremes]

I say we dump the Federal Reserve System all together and bring back sound money.

 

[AceNZ]

First, the Fed is a banking cartel. It's not interested in helping the American people. It's interested in helping big banks.

Second, unfortunately several of the posts in this thread reflect a misunderstanding of how the Fed works, what it's abilities are, how money is created and extinguished and what the effects of inflation are. It's a big subject -- too much to correct in one post.

 

[gutteck]

Second, unfortunately several of the posts in this thread reflect a misunderstanding of how the Fed works, what it's abilities are, how money is created and extinguished and what the effects of inflation are. It's a big subject -- too much to correct in one post.

True.

That's why I always recommend these videos:

1) America freedom to fascism
http://video.google.com/videoplay?docid=-1656880303867390173

2) Money masters
http://video.google.com/videoplay?docid=-515319560256183936

3) Money as Debt
http://video.google.com/videoplay?docid=-9050474362583451279

 

[jon_perez]

Don't blame the Fed, the blame goes all the way back to Keynes, he said it was ok for government to spend more than it has by borrowing and engaging in deficit spending. If a country were on a gold standard though, there would literally be no way the government could get away with this. Hence, the resort to fiat money and a central bank system.

[ Notice that the gold standard is always suspended during wars, this is because there is no way governments could fund the exorbitant cost of modern warfare without fiat money. ]

Historically, Keynesianism is generally credited with spurring the post-war boom and lifting the world out of depression. Austrian economists will not agree with this view/explanation but it is kind of hard to argue with historical reality.

The Chicago school (Friedman, monetarists) rejects or moderates the Keynesian view of relying on government "pump-priming" and planning of big industries, although it still largely agrees with the framework of having central banks, deficit spending and fiat money. The Chicago school of economic thought was what was practiced during the Reagan/Thatcher era and considered responsible defeating stagflation and engendering the prosperity of the late 80s/90s.

The book "Commanding Heights" (free movie version also found at pbs.org) gives a fascinating account of 20th century economic history and along with Keynes and Friedman, also features Friedrich Hayek, one of the primary figures behind the Austrian economics.

 

[AceNZ]

1) The national debt is at about 69 trillion. Instead of demanding obligations the fed could give the country a break and not demand obligation for sometime while the country breaths a little.

Setting aside the exact number for now, this wouldn't work:
1. The Fed doesn't own anywhere near all of the national debt
2. The money used to pay the national debt is just created out of thin air
3. The majority stakeholders of the national debt are the US public and foreign countries. If the US stopped paying interest on the debt, that means they would be defaulting on those loans, and would not be able to borrow anything afterwards.

2) It could lower (or eliminate) interest rates on the loans it has given to the government.

All profits made by the Fed are paid back to the government every year. So lowering the interest rate on just the debt that they hold would have a minimal financial impact (less inflation).

3) It could demand that banks have a 100% reserve for the loans it gives out. Meaning no more creating money out of thin air and therefore no inflation.

Most money in circulation is created by banks, not by the Fed. Suddenly raising the reserve requirements would cause most banks to go out of business, and would also contract the money supply by more than 90% -- instant depression.

4) It could create (print bills) a few billion interest free and get people to work.

More inflation? Give everyone free money for doing nothing? That's Keynesian economics at its worst. Bad, bad idea.

 

[gutteck]

Setting aside the exact number for now, this wouldn't work:
1. The Fed doesn't own anywhere near all of the national debt
2. The money used to pay the national debt is just created out of thin air
3. The majority stakeholders of the national debt are the US public and foreign countries. If the US stopped paying interest on the debt, that means they would be defaulting on those loans, and would not be able to borrow anything afterwards.

Yeah, lets pay the old loans so that we can borrow some more. Because we are so stupid that we can't turn on the press ourselves.

All profits made by the Fed are paid back to the government every year. So lowering the interest rate on just the debt that they hold would have a minimal financial impact (less inflation).

Lowering the interest rates on the loans the fed has given(printed) to the government would eventually leave some income tax left to do some other things. Because if you didn't know all of our income tax goes to the fed for payments on the INTEREST only for the loans it has gives to the government.

Most money in circulation is created by banks, not by the Fed. Suddenly raising the reserve requirements would cause most banks to go out of business, and would also contract the money supply by more than 90% -- instant depression.

Raising the reserve requirements would prohibit these people to lend money they don't have. It would immediately almost stop inflation and yes banks would not make as much money but I can live with that.

More inflation? Give everyone free money for doing nothing? That's Keynesian economics at its worst. Bad, bad idea.

Did you miss the word "work"? Because I remember typing it. It is the same system but with the difference that nobody needs to pay back the money. If controlled this system has been proven to work in may different occasions
.

 

[tsetsefly]

Tell me if I am nuts but here is my analysis.

The recession is mostly because of our high debt and the fact that banks are not loaning much these days. This creates a shortage of money because the money in circulation is being used to pay for old debts and therefore the money supply is being contracted.

The fed’s solution is to lower interest rates. Therefore people will ask more for more loans and get more in debt. This is a temporary relive because sooner than later those debts will have to be paid back and the money supply will be contracted and people will have more debt than when the recession began.
If the fed cared even a little they would take other measures to help the country. For example:

1) The national debt is at about 69 trillion. Instead of demanding obligations the fed could give the country a break and not demand obligation for sometime while the country breaths a little.

2) It could lower (or eliminate) interest rates on the loans it has given to the government.

3) It could demand that banks have a 100% reserve for the loans it gives out. Meaning no more creating money out of thin air and therefore no inflation.

4) It could create (print bills) a few billion interest free and get people to work.

5) I mean the list goes on.

The fed does not care about this country. It only cares about making profit and making sure its tentacles (the smaller banks) make profit as well.

#3 woudl really crash the economy... very bad move and we would still get inflation because the money is already out there....

 

[gutteck]

#3 woudl really crash the economy... very bad move and we would still get inflation because the money is already out there....

Can you explain.