The Federal Reserve is Bankrupt

Discussion in 'Economy' started by loosecannon, Aug 28, 2010.

  1. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    I meant that figuratively, altho it may very well be true literally if not formally in the not distant future.

    First off the Federal Reserve is the singular agency "within" the US government (they are actually owned by and pay dividends to 1700 member banks and are nearly autonomous beyond the pres appointing their chairman) tasked with the job of managing the economy.

    Tasked with maintaining constant growth sans excesses in inflation and sans any deflation whatsoever.

    The Fed assumes this task primarily because it gives them the power to target interest rates which serves nobody more than it does their own stockholder constituents, the banks. Predictable, very predictable interest rates enable banks to make money by slicing margins as thin as a razor if need be to still reap dividends. Wild and crazy interest rates inhibit lending and opportunities for bank profiteering. The Fed being owned by, and serving the banks primary need as a core part of it's mission statement is the proverbial adage of the fox guarding the hen house as much as any thing ever as.

    But back on topic. The Fed is out of ammo. They are powerless to do the task of which they were created to attend:

    Analysis: The uncomfortable mathematics of monetary policy | Reuters

    I would post much more of the article if I could, but board rules prohibit it:

    Ok, I will post this quote as well:

    The article goes on to point out that altho the Fed COULD do a lot more they won't and it wouldn't do much good if they did.

    The reason why is because all the fed can do is influence how much money people and corps borrow. That's the whole scope of their management toolbox. Tinkering with the amount of credit issued. Tinkering with the amount of new debt created.

    The system has failed. We need to divorce ourselves from an econ system that begins and ends with debt as the driver of the economy and fall head over heels in love with a new econ system that revolves around a durable currency that is not dependent on ever increasing debt, constant growth or the federal reserve running our economy on behalf of (and for the benefit of) 1700 of the nation's banks.

    We need this because the Federal Reserve is out of ammo and can no longer address the real economic woes of our nation. The Fed saved the banks, but they can't save the rest of and the real economy.

    they were never designed or intended to do so.
     
  2. marv
    Offline

    marv Resident Grandpa

    Joined:
    Aug 27, 2010
    Messages:
    28
    Thanks Received:
    6
    Trophy Points:
    1
    Location:
    Shell Knob, MO
    Ratings:
    +6
    Having worked for the Federal Reserve (Kansas City J branch from the late sixties to the early seventies) I should say this.

    The purpose of the Federal Reserve, as originally constituted, was to regulate relations between federally and state chartered banks, and monitor non-chartered, or "street" banks. This included such mundane things like interest rates of overnight loans between banks to cover demand accounts.

    The "Fed" does not print money! Only Congress can authorize the printing of specie or coinage. The Federal Reserve can only request amounts, based on the economy, to be placed in circulation. The Treasury Department disapproves the request, or approves it and passes it on to Congress.

    The Federal Reserve does not buy or sell treasuries. The Treasury Department does that through the vehicle of the Federal Reserve.

    The American economy is driven not by the Federal Reserve, but by the administration and the House of Representatives.
     
  3. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    Reinhart's Seven More Years of High Unemployment Hit Fed Today


    Reinhart's Seven More Years of High Unemployment Hit Fed Today - Bloomberg

    exceptional article. Reinhart is one of the few "respectable" economists who has a record of getting it right by studying the economy as it really is rather than as quantified data sets acting within formulaic structures.
     
  4. Jos
    Offline

    Jos BANNED

    Joined:
    Feb 6, 2010
    Messages:
    7,412
    Thanks Received:
    733
    Trophy Points:
    0
    Ratings:
    +733
     
  5. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264

     
  6. loosecannon
    Offline

    loosecannon Senior Member

    Joined:
    May 7, 2007
    Messages:
    4,888
    Thanks Received:
    263
    Trophy Points:
    48
    Ratings:
    +264
    Federal Reserve Note - Wikipedia, the free encyclopedia
     

Share This Page