Can I Please Have Short Tutorial On The Fed?

Madeline

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Apr 20, 2010
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Cleveland. Feel mah pain.
I have lost count of the number of times I have read of some evil or other laid at the feet of the Federal Reserve. I'll admit, I'm confused. What doe sthe Fed do, apart from handling exchanges/reconciliations between banks? How in the hell could modern banking function without a Central Clearinghouse? We can't exactly move gold by hand between banks anymore, yanno.

I know the Fed sets the Treasury rate, but I have never understood why. What gives that authority to this quasi-public agency?

If you have extreme patience and can answer my questions, thankies.
 
Here 'ya go:

From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble ..., every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

Abolish the Fed
 
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Xsited, before I get to whether the Fed does a good job, I need to better understand WTF it DOES. You advocate for its abolition? Seriously? How would banks reconcile payments between them?

Weekly closings?
 
I have lost count of the number of times I have read of some evil or other laid at the feet of the Federal Reserve. I'll admit, I'm confused. What doe sthe Fed do, apart from handling exchanges/reconciliations between banks? How in the hell could modern banking function without a Central Clearinghouse? We can't exactly move gold by hand between banks anymore, yanno.

I know the Fed sets the Treasury rate, but I have never understood why. What gives that authority to this quasi-public agency?

If you have extreme patience and can answer my questions, thankies.
There's nothing "Federal" about the Federal Reserve, it's privately owned and run. Their charter runs out soon and should not be renewed. It was enacted in 1913 by Woodrow Wilson who later said:
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men".
Read "The Creature From Jeckyll Island" to learn more.
[ame="http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212"]Amazon.com: The Creature from Jekyll Island : A Second Look at the Federal Reserve (9780912986210): G. Edward Griffin: Books[/ame]
 
Anyone with a brain would read up on the Fed... seeking both positive and negative views, as well as ascertaining factually accurate information and then apply some critical thinking and form an opinion. What does Maddie do? Asks a bunch of partisans..... I bet she doesn't see the stupidity of this.
 
Again, asking the question "what doe the Fed do"?

I see you're still not getting it. Here's some more information:

Their agenda is to turn a profit. They do this in two different ways:

  1. They manipulate interest rates to create "boom-bust" cycles which always work out to the advantage of the hidden elite "insiders". . . as they know exactly when our economy will boom . . . and when it will bust.
  2. They increase the money supply by "creating" money through the incredibly lucrative "sweet heart" deal they've had with the U.S. government, ever since the Federal Reserve Act of 1913 was signed into law.
Abolish the Federal Reserve
 
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Seems to me, xsited, the primary function of the Fed has to be to act as a central clearinghouse for US banks. I know they also set the interest rates on T-bills, but I'm not sure why.

Profit? WTF?

How would the Fed even earn income, nevemind make a profit? Where is the profit opportunity on either of these functions?
 
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Not short, but very insightful. (There are 12 segments; this is the first)

[ame=http://www.youtube.com/watch?v=7auQEXTWomA]Griffin[/ame]

Griffin wrote [ame=http://www.amazon.com/Creature-Jekyll-Island-Edward-Griffin/dp/091298645X/ref=sr_1_1?ie=UTF8&qid=1297786542&sr=8-1]Amazon.com: The Creature from Jekyll Island: (9780912986456): G. Edward Griffin: Books[/ame].

An excellent book - I highly recommend it.
 
Seems to me, xsited, the primary function of the Fed has to be to act as a central clearinghouse for US banks. I know they also set the interest rates on T-bills, but I'm not sure why.

Profit? WTF?

How would the Fed even earn income, nevemind make a profit? Where is the profit opportunity on either of these functions?

At least you're asking questions. Read on (from the link above):

When the U.S. Government needs money, they go to the Fed to borrow the money. The Fed calls the Treasury and asks them to print x amount of Federal Reserve Notes (FRN) in units of one hundred dollars. The Treasury charges the Fed 2.3 cents for each note. The Fed then lends that money to the government at face value plus interest. The government has to create a bond for the loan amount as security for the loan.

Now the government owes the private ownership of the Fed the face value of the bonds plus interest. In other words, the Fed earns interest by "loaning" that money to the U.S. government. Imagine that . . . they earn interest by loaning money which is not even theirs to loan . . .which they just created out of thin air . . .
 
How confusing. I thought a T-bill was US gov't debt. Your're saying it's Federal Reserve debt instead?

How can that be? A T-bill is backed by the US gov'ts assets and income -- not the Fed's.
 
Yep. It's sad that the TARP money was given to Mega Banks at virtually 0% interest, and they turned around and lent it back to the government at 3%.

That's about as transparent as it gets.
 
How confusing. I thought a T-bill was US gov't debt. Your're saying it's Federal Reserve debt instead?

How can that be? A T-bill is backed by the US gov'ts assets and income -- not the Fed's.


It's who buys and sells them that matters.
 
Seems to me, xsited, the primary function of the Fed has to be to act as a central clearinghouse for US banks. I know they also set the interest rates on T-bills, but I'm not sure why.

What would become the central bank of the Netherlands and the bank of England were the first two central banks. They were established to finance imperial wars. Likewise the Fed was established to finance US entry into WWI. Financing wars is the primary function of all central banks.

Profit? WTF?

How would the Fed even earn income, nevemind make a profit? Where is the profit opportunity on either of these functions?
The major function and income of banks derives from fees for tracking payments. The Fed by monopolizing much of this fee structure forces other banks further out on the risk/reward curve.
 
I have lost count of the number of times I have read of some evil or other laid at the feet of the Federal Reserve. I'll admit, I'm confused. What doe sthe Fed do, apart from handling exchanges/reconciliations between banks? How in the hell could modern banking function without a Central Clearinghouse? We can't exactly move gold by hand between banks anymore, yanno.

I know the Fed sets the Treasury rate, but I have never understood why. What gives that authority to this quasi-public agency?

If you have extreme patience and can answer my questions, thankies.

The ideologues just can't help themselves - ask a simple question and you get a rant.

Here is a simple explanation about the Fed.

FRB: Federal Reserve Kids Page

Would you like to have an adult conversation, or should we just dispense with that and just get down to the partisan barbs, which is what this thread will devolve into anyways?
 
Seems to me, xsited, the primary function of the Fed has to be to act as a central clearinghouse for US banks. I know they also set the interest rates on T-bills, but I'm not sure why.

Profit? WTF?

How would the Fed even earn income, nevemind make a profit? Where is the profit opportunity on either of these functions?

The Fed does not "set the rates on t-bills". I don't know where you got that from.

They certainly can have an affect on the rates through their open market operations, but they don't directly set rates for them, or anything else for that matter.

What they do is try to influence rates as close as they can to a target they set, by buying and selling securities on the open market from other banks. When they purchase a security from a bank, the money they use is deposited in that bank's reserves which increases the supply of money to be lent. When they sell securities on the open market, money is then drained back out of bank reserves as banks purchase the securities from the Fed.

This is how they establish interest rates. When a bank's reserves are increased from selling securities to the Fed, this persuades the bank to lower its lending rates because they now have a greater supply of money with which to do business. And it is the converse of that when the Fed sells assets and a bank drains its reserves to purchase them. Now there's less money for a bank to do business with, and this causes the bank to increase its interest rates.

The kicker is that the Fed has the legal ability to artificially create a sum of money out of thin air, enter it into its balance sheet, and use it to purchase assets. This is how the overall supply of money increases.

In typical economic times, the Fed tries to maintain a reasonable balance of money creation and money extinguishment (ext. is when the fed receives money from bank reserves during an asset purchase) by buying and selling assets at least somewhat equally over time.

But since 2008 they have been only purchasing assets, and selling almost none, which has meant an increase in the creation of money to the tune of something like 2 trillion dollars, and probably more at this point.
 
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Seems to me, xsited, the primary function of the Fed has to be to act as a central clearinghouse for US banks. I know they also set the interest rates on T-bills, but I'm not sure why.

Profit? WTF?

How would the Fed even earn income, nevemind make a profit? Where is the profit opportunity on either of these functions?
They profit from the interest they get, from the "money" they print up out of thin air and lend.

Nice work, if you can get it.
 
Here 'ya go:

From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble ..., every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

Abolish the Fed

THAT NONSENSE IS NOTHING BUT A BLATANT LIE. NOT ONE BIT OF TRUTH IN ANY OF THAT which is posted above.

Rather than letting the pathological lying scum post their shit on here, I recommend that you do some research on the history of the Fed. All the pathological liars want is to see the price of Gold go up because they are invested in it or their friends are.

There is not enough Gold in the entire world to back the Dollars in the world. It is impossible to do so, but the pathological liars claim that is is possible and we should do away with the FED, thinking that in doing so, Gold will soar to an even higher price. So Crazy sons of Bitches like Ron Paul claim that we need to be on the gold standard so he can help his Gold buddies in the industry. I really wish they would try him for Treason and publicly execute him on a gallows. That scum is not loyal to America. He is only loyal to his pocketbook.

The FED is the greatest organization in the history of the world and has allowed the United States to fund our operation when we could have been as poor as Mexico (which has no FED).

I am not a great fan of Congress overspending, but when that happens, the FED is there to make certain the money is there to pay the government bills. The FED does not spend the money that Congress legislates. It just gives it to the government to make their spending bills a reality and the government spends it. The FED does not print money like Ron Paul constantly claims. The Treasury prints money to keep the right amount in circulation to meet the needs of the people as they contract business on a daily basis.

The FED has very limited POWER to control the economy. It tries to do so by raising or lowering the overnight interest rate it charges banks to borrow money for a night. The FED can also buy or sell on the open market. (Bonds, Notes, Stocks) to try to keep the economy flowing. Their charter is to serve the government of the United States.

Right now FED interest rates are at an all time low to try to spur bank investment in the economy. The FED can not force the banks to make their business decisions, either. That is the reason why the banks are all playing it safe with their investments of interest free FED money. It is not the FED's fault that the major and minor banks in America are nearly all malfeasant in their responsibilities.

Technically, the FED can buy all of our government Bonds and Notes. When they do hold government bonds, they take the interest payments and deposit them into the Treasury. The reality of that deposit of interest in the treasury is that the US goveernment gets to borrow money for free. (i.e. There is no real interest paid on it if the FED holds the note.)
Consequenty, if we were to ask the FED to buy the 800 Billion in Bonds and notes that China presently holds, the FED could and would do so and the interest we are paying we would pay to ourselves. I like that idea.

To buy the bonds and notes, the FED makes electronic money out of thin air. That "out of thin air" is very important. Not only can the FED snap their fingers and create money out of thin air, but it can also snap their fingers and make electronic money or bonds or notes disappear. We have never asked the FED to do this, but it is an integral part of their operating capacity. Remember if they snap their fingers to buy the bond, it is no problem to snap their fingers to make the bond go away.

Ron Paul can not make the bonds go away, but the FED can.
 
They profit from the interest they get, from the "money" they print up out of thin air and lend.

Nice work, if you can get it.

That is a lie. The FED does not print money, and they deposit the interest in the Treasury for the government to use.
 

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