Federal Reserve

nevagil

I've always considered the financial system like a chain letter that can exist as long as everybody acts like it is a valid competent true system.
Printing up money, selling stock by corporations, geez. Our country usually runs a deficit like every year like every other country. It's funny but ridiculous.
Colleges teach economics and business but need government money and grants to survive. It's silly.
I always carry a hundred dollar bill in my pocket just in case, Gil of surrealcity.com

Jimmy Snyder

The intent of Congress in shaping the Federal Reserve Act was to keep politics out of monetary policy. That seems like a good idea to me, especially after reading some of the posts in this thread.

The private interests in the Federal Reserve System are money lenders, not money changers. The term money changers has been a pejorative for some 2000 years.

Skyhunter

Congratulations LYN on your new status.

Long overdue IMO.

Jonny_trigonometry

I don't know what I was thinking exactly; the fractional reserve banking can't be taken away in one swoop, but the fact that there is a bunch of extra money in use due to it's practice, and that money would now come from the issuance of the government without an interest burden would mean that there is exponentially more money in use. With this extra money, perhaps we could make the economy more stable by chaning the reserve ratio by law or something (if it serves a best interest of economic stability).

Since there'd be no obligation of the government to pay off interest to a federal reserve, we wouldn't need to pay as much in taxes, and the extra money which would've gone to the money lenders/changers could go towards providing more competition between banks, thereby better services for the people such as lower interest rates for loans. This would of course expand the growth and quality of jobs among the least of things.

Jonny_trigonometry

This is an excellent illustration. thanks Burnsys!

Jimmy Snyder

Jonny_trigonometry,

Is your beef with government borrowing, or with the institution that facilitates that borrowing? The decision on whether to borrow and how much to borrow is with congress, not the Federal Reserve. The Fed just organizes the borrowing process.

TheStatutoryApe

Something that some people posting here probably ought to read...
The Fed 101

The "profit" made by the fed goes to fund the operations of the fed and any excess "profit" goes directly into the U.S. Treasury. Doesn't exactly sound like a privately owned operation to me.

Jonny_trigonometry

"The income gathered from these activities is used to finance day to day operations, including information gathering and economic research."

So the day to day operations include these things. they also include many other things. This is what made you think that the Fed is not privately owned? When you get down to how they decide to spend thier money, things become very complicated very quickly.

http://www.richmondfed.org/publicati...s/er690201.pdf

notice on page 9, after "expenses" and payment of dividends, 1/2 of the rest of the money goes to a surplus fund, and the other goes to the treasury.

" The Treasury department sells T-bills at weekly auctions every Monday at New York City's Federal Reserve Bank. The Federal Reserve Board acts as the fiscal agent and conducts the auction, called a yield auction. The bills are sold at discounts from their face values. The investors in attendance bid on how much the bills are worth to them today, using bids based on annualized discount yields. The winning bidders pay on the following Thursday." - http://www.ameritrade.com/education/...al3/t3_s6.html

and then the treasury sells extra securities that the fed paid to them.

there are many ways the Fed can make purchases look legitimate. I bet most of the money they spend will look like it is a valid thing to do. I haven't been able to find much about wether or not the fed spends money that goes into the economy as a whole, or just thier buddies. Many things can be written off as a business expense.


"A major responsibility of the Federal Reserve System is to provide the total amount of reserves consistent with the needs of the economy at reasonably stable prices. Changes in the volume of reserves influence the money supply, the availability of credit, interest rates, and as a result, the volume of spending. Depository institutions feel the impact of changes initially, but the effects quickly spread to the entire domestic economy, and often to the international economy as well." - http://www.richmondfed.org/publicati...day/policy.cfm

This shows an idea of how many options a person has if they have inside information. If you know what desicisions will be initiated, you know better ways to invest in the economy and pull money out of it. It's not just all in the profits the Fed makes, but also the abilities the people in the know about the fed's dealings have in investing correctly. When you are as powerful as people in the board of directors of the fed, you have ways of getting around being accused of insider info. Of course I can't back up this claim with evidence, but you can't discount it either. The flow of money can be masked too, if it takes many twists and turns through complicated language and policies. There is no doubt an international influence of the fed also, those in the know don't have to just make money in the us.

russ_watters

Besides being argument-from-authority, the authority you prefer (Edison) isn't an authority at all!: Edison was an inventer, not an economist. The posture you have taken is not conducive to a reasonable discussion.

Anyways, I guess I'm not sure what your main beef is here - is it just in the fact that the Fed is privately owned or is there some specific way it is operating that you think is bad? Some of what you say seems to imply that you think the Fed is actually stealing money from the economy - do you believe that?

Personally, I think the economy is working rather well and I don't see a compelling reasn to change it.

It should also be pointed out that comparisons between economics and the principles of freedom are not valid because the economy does evolve, for a number of reasons. Most importantly, technology, trade, and the proliferation of prosperity. Ie, the banking system needs to be different than it was 150 years ago because a much higher fraction of the population has money to burn than they used to.

EngineeredVision

Jonny_trigonometry,

I first want to say that I too agree that the Federal Reserve is one of the most corrupt and dangerous institutions on the planet. This position has been derived from my own personal research on banking with special emphasis on fractional reserve banking that I have conducted over the past six years.

That being said, if it was the intention of this thread to educate members who may be unfamiliar with fractional reserve practices and the history of events that lead up to the creation of the Federal Reserve and it's continued existence it would probably have been prudent to first of all introduce the concepts of money, currency, and fractional reserve banking. Additionally, if you are going to employ the use of quotes regarding the history of fractional reserve banking in the United States in order to show the economic and social situation prior to the Federal Reserve, that it should have been stated that this was the case before hand. There are present day opponents, arguments, and institutions that challenge the Federal Reserve, so excerpts or quotes from these sources should have been used. I'm not saying that the quotes that you used are invalid, just that they may appear dated and irrelevant for those who aren't reading them in proper historical context.

When I go home for lunch today I'll try to remember to grab one of my papers that I have written up on fractional reserve banking and the Federal Reserve so that I can attach it to a post. For anyone who is interested, I think the paper is a decent introduction and overview to these subjects. I noticed already that Art mentioned Executive Order 11,110 signed by JFK, one of the topics I briefly touch upon in my paper.

russ_watters

By the way, what Penguino meant by "confirmation bias" is here: Edison was not an economist, yet somehow you have concluded he had a "deeper understanding of mony and our country" (than whom, you don't say...). It appears you are saying that because he holds the opinion he holds, that makes him the expert. That's textbook confirmation bias.

It would be more helpful if you explain your opinion - ie, how exactly would the monetary system you envision (alluded to in your last paragraph of the op) work? How would it be better than what we have now?

EngineeredVision

I just thought I should add that expecting the average person to change their perceptions about our current financial system and the Federal Reserve without giving them the opportunity to become more thoroughly acquainted with the material will probably result in dissent and opposition. Anyone born past 1913 has grown up accepting the Federal Reserve and fractional reserve banking as the authority on financial matters in the United States. To think otherwise requires a drastic amount of personal research and inquiry into the subject independent of influence from the media, which happens to be controlled by international banking interests.

I was just thinking about this the past hour and realized that an analogy can be drawn between understanding the deceit of the Federal Reserve and the illusion of the Matrix. (For those who haven’t seen the Matrix this comparison won’t make sense, but it should be easy enough to find a summary of the story somewhere on the web.) Those who are born into the Matrix are so accustomed to it that they dare not challenge its nature. Additionally, it’s fair to say that most individuals in the Matrix are probably content with their state of existence as long as they don’t question the authority over reality that the Matrix exercises. In fact, many citizens of the Matrix are probably happy with their existence and view of reality.

In the same way, most citizens are content with the current financial system and fractional reserve banking that our nation currently operates on. It would be mind boggling for most to believe that the system is actually detrimental to our interests, and allows for the confiscation of wealth and power by a limited few. Granted, we could continue to operate as we currently do, a society based on debt and unrelenting financial obligation and we probably would be ok, at least for a while. But for those who are aware of what’s really going on with the economic and status situation in the United States “Ok” is not good enough. Surviving, shouldn’t be good enough in a modern day society that has the potential to improve the standard of living for all of its citizens and guarantee a sustainable legacy for subsequent generations.

Edit: Made some minor grammar changes.

EngineeredVision

Found it.

I ran home and grabbed my paper covering a brief history of fractional reserve banking and the Federal Reserve System. I inserted a forward in the document to help clarify my intentions and provide some basic information.

The paper begins with the history of fractional reserve banking and illustrates how events lead up to the creation of the Federal Reserve. Some of the quotes I have used in this paper have already been cited in this thread, but never the less I think that this paper may offer some new insights on the subject.

Some food for thought:

"Most people, sometime in their lives, stumble across truth. Most jump up, brush themselves off, and hurry on about their business as if nothing had happened." - Winston Churchill

Attached Files

FRBandFedHistory.doc (73.5 KB, 11 views)

Jonny_trigonometry

I'm not an economist, but you aren't either, are you? Thomas Edison wasn't an economist either, but do you not agree that he was an independant and creative thinker, able to learn and retain a lot of things especially due to the prominent people he knew, and it's certain that he knew at least one economist? I'm not presenting myself well at all. I look over my posts and it looks like they were made by a high schooler or something I'm having trouble explaining how all this stuff works because there is much to explain, and I realize all the attacks on me were initiated by my second post. When I said that, everybody knew to go after the imature guy (thats me), and they attack the arguer more than the argument.

russ_watters

Correct. So shouldn't we be consulting economists on this economic matter? Sure, but so am I!! Being a smart guy doesn't make him an economist. Probably - so why don't we hear directly from them? The problem is, you didn't really make an argument for us to debate. A number of people (myself included) asked for an explanation of what your point really is....

gravenewworld

Do some research on countries that have their monetary policy controlled by their government. You will see that countries that have governments that control monetary policy have a long history of failure with high inflation.

TheStatutoryApe

Maybe you should quote that more fully and adress the point that I actually made here....
You may also want to note this part of the source I cited...
There are several government bodies that are viewed as "independant entities" and are responsible for their own funding but this does not mean they are "privately owned". Please show and quote a source that says this and backs up the assertion with credible evidence. Unfortunately I don't have the time to comb through several pages of pdf looking for this evidence.


Actually in full it states that half goes into an account to gain interest as compensation for the services of the bank and after a certain mark has been reached that money held in the "surplus fund" does still find it's way into the US Treasury coffers. This is the way all banks make money for their services. In effect the fed is getting paid for being the bank of the US government in the same fashion that our personal banks get paid for the services they render private citizens except that in the case of the Fed this is determined by the customer(the US government) as opposed to the bank(the fed). So I still don't see how this makes the fed a private venture.

Yep, and the same goes for the FBI and the NSA and just about any government body you can name.

Yeah like you said that called insider information and is illegal. This is one of the reasons why the Fed was made an "Independant Entity" so as to make some sort of seperation between the politicians and the decisions made in regards to monetary policy to try to assuage the issues that can and do arrise with regard to conflict of interest. Considering that this is the very purpose of the fed and that the fed in the entity that influences monetary policy I am quite sure that there are measures in place to prevent those who work for the fed taking advantage of their knowledge. How effect these are I don't know and just how much this sort of thing is taken advantage of I don't know but this sort of thing can and will be a problem no matter what as long as we are using a capitalist system. The only thing we can do is make it as hard as possible for these people to do such things and keep those that we would suspect of doing such things out of those positions of power.


I have not argued at all your stance on fractional savings yet I just want to clear up one of your other major arguments, that being the idea that the fed is a private organization. So far as I can find it is not. Please show me some proof that it is if you can find any and I will be more than happy to acknowledge that and stop raising this issue.