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Federal Reserve Bank

Since we were already on the topic, Money ... Duh! Redux

Submitted by Roanman on Wed, 06/06/2018 - 07:53

If you take a minute to understand how our money is created, the perversity and corruption in our system will become clear. And, when I say system, I mean our monetary system to be sure, but also our entire system of government as it functions today. Oh, and not just our system, everybody's system, as you will see below.

Most of our money starts out in life as debt. When the Federal Government of the United States of America decides that it needs money that it otherwise does not have, it issues debt ….. bonds.  Those bonds are sold at auction by the Treasury Department.  Much if not most all of these bonds are purchased by a group of twenty or so large, mostly Wall Street banks designated by The Federal Reserve Bank as "Primary Dealers".

As always, click on the map above to see the source information. although because I don't know the collection date for the map, the source info from the CIA Factbook might be different.

It certainly won't be improved.

Interestingly, The Federal Reserve Bank or "The Fed" as it is commonly known is not an agency of the Federal Government of the United States of America as one would reasonably expect by virtue of it's name.  It rather is a privately held institution, owned in large part by ..... wait for it ..... the "Primary Dealers.  The Federal Reserve Bank adds or subtracts money from the economy by trading government bonds with the "Primary Dealers", mostly always at a profit to the "Primary Dealers". 

Purchasing bonds from the "Primary Dealers" injects cash into the economy as the Federal Reserve simply makes a journal entry into it’s own computer system for it's own account, and in so doing it deposits a sum of money which did not exist one instant before and thus some number of billions of dollars of new money is born out of thin air.  It only dies when the Fed subsequently sells those bonds back into the economy, thus drawing cash out of the economy, or when the government pays that money back by redeeming it's previously issued bonds.  In other words, that money is for the most part immortal. 

The Federal Government of the United States of America then pays the interest on this debt out of tax revenue.

Lately the Federal Reserve Bank has on occasion been buying the bonds back from the "Primary Dealers" the very next day following their original purchase by the "Primary Dealers" from the Treasury Department.  This enables these preferred banks to buy the next batch of new bonds and then subsequently resell them to the Federal Reserve Bank at another profit whenever the Federal Government of the United States of America again decides that it needs to spend some money that it does not have.  Usually, that would be tomorrow.

This practice is the nuts and bolts process commonly referred to as "Monetizing The Debt".

Here is where it gets real interesting ..... at least to me.  Congress is empowered by the Constitution to “coin” money without ever having to fool around with The Fed, issuing bonds, debt or making interest payments. U.S. Constitution - Article 1 Section 8 begins as follows: The Congress shall have Power To ….. some stuff you should probably take the time to read ….. Clause 5, “Coin Money, regulate the Value thereof” ….. and then some other stuff you should probably also take the time to read.”  Congress punted on that right with the passage of The Federal Reserve Act of 1913, which Act created The Federal Reserve Bank as a privately held institution.

Were the Federal Government of the United States of America or any other nation in the world for that matter, to simply make it's own entry into it’s own account at it's own bank, rather than the privately owned institution that it now banks with, there would be no debt, no sale of bonds and no need to pay any subsequent interest payments out of tax receipts.

There most certainly would be instances of inflation, which would most certainly be underreported by a legion of governmental economists kept on the payroll, in one way or another, for purposes of massaging numbers in an effort to obscure the true rate of inflation in a cynical effort to evade accountability to the American people.  BUT ..... how is any of that different from what we have today?

The hidden benefit here is of course that there would be no insider profits to be had for the "Primary Dealers”.  Which profits they are presently using for the purchase of among other things, legislation that suits their own special interests, largely to the detriment of the American people.  That last part there is just my opinion.

Were we to simply cut out the middle man by chartering a bank that is wholly owned by the American people through the Federal Government of the United States of America and let it give birth to it's own money, a lot of our problems, most notably our debt, would become a whole lot more manageable.

Doesn't that strike you as an ever so much better approach?  It certainly worked for Andrew Jackson.

It Really Is Monopoly Money

Submitted by Roanman on Tue, 02/15/2011 - 16:31

 

We've been trying to understand "The Fed"

To be perfectly honest about it, we still don't even know what we don't even know.

But as usual, this has not prevented us from having an opinion.

 

Adjusted Monetary Base is that part of the money supply that is most liquid, that which is either in the hands of the public (in circulation) or in the commercial bank deposits held within the central banks reserves.

The first chart demonstrates the growth of the Adjusted Monetary Base since 1918 or so, 5 years after the creation of The Federal Reserve Bank.

America's third central bank by the way.

More on that latter.

 

 

 The second chart represents the purchasing power of One ($1.00) Dollar since the inception of The Federal Reserve Bank in 1913.

Click the chart below for some different looks at the same issue.

 

 

The following is taken directly from the Rules of Monopoly.

Don't believe me?  Just click.

 

 

 

It really is time to lose the Fed.

 

Reading on a Saturday Morning

Submitted by Roanman on Sat, 05/08/2010 - 09:38

 

To quote Richard Russell one more time,

 

 

 

 

 

 

 

He goes on to say something about denial, the NYSE, the administration, the Fed and clueless newspapers.

It all seemed redundant.

But then ...

He hits his stride.

 

 

 

 

And since we're on the subject of jokes .....

 

The Guidotti-Greenspan Rule

Submitted by Roanman on Mon, 04/05/2010 - 10:09

 

The Guidotti-Greenspan Rule

Named for Pablo Guidotti, former deputy minister of finance for Argentina (that bastion of resposibility in national financing), and Alan Greenspan, increasingly discredited former chairman of the Federal Reserve Board of the United States (that other bastion of responsibility in national financing)

States that a countries financial reserves should equal short-term external debt (one-year or less maturity), implying a ratio of reserves-to-short term debt of 1.

The rationale here, is that countries should have enough reserves to resist a massive withdrawal of short term foreign capital.

The U.S. holds gold, oil, and foreign currencies in reserve.

The U.S. has 8,133.5 metric tonnes of gold (supposedly, ain't nobody counted it in generations).

It is the world's largest holder (supposedly, ..... ).

That's 16,267,000 pounds (at the risk of redundancy ....... ).

At about $1,100 per oz. or $17,600 per pound, it's worth just under $300 billion (you know ..... ).

The U.S. strategic petroleum reserve shows a current total position of 725 million barrels of oil.

At about $80 per barrel, that's roughly $58 billion.

And according to the IMF, the U.S. has $136 billion in foreign currency reserves.

So altogether... that's around $500 billion of reserves.

Now, consider this .............

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt.

That's not counting any additional deficit spending, maybe another $1.5 trillion ..... ish.

Add it up and you get $3.5 trillion ..... or so, a trillion here a trillion there, pretty soon you're talking about real money.

That would be about 30% of our entire GDP.

Where do you think that money is gonna come from?

They're gonna print it.

Or snatch your IRA.

If not both.

 

The above was taken almost in it's entirety (with the exception of the bitter and/or sarcastic comments usually written with type just about this big) from a Porter Stansbury article that was all over the place most of this past fall.

It appears here, here, here  and there, but originated here  (somewhere).

 

 

Reading on a Saturday Morning

Submitted by Roanman on Sat, 01/09/2010 - 10:06

 

Maybe that pesky "Global Warming " is a good thing.

"One culprit in December's disappointing jobs report was the unusually cold weather during the week that the Bureau of Labor Statistics did its counting." Phil Izzo, WSJ 1/9/09 

 

The next one is sort of new. The comment up until now has been that the Chinese are fed up and are looking at replacing the dollar as the world's reserve currency with a basket of currencies that includes Gold.

The fact that this quote comes out of the editorial section of the Wall Street Journal is pretty big.

Indeed, gold is viewed by central banks the world over as a unique reserve asset. Contrary to monetary assets denominated in national currencies, its status cannot be undermined by inflation in the issuing country, nor is it subject to repudiation or default.

Which suggests that perhaps it is time to make available to the American public the sort of insurance against dollar depreciation that monetary authorities have long sought for their own portfolios. For those citizens who've become skeptical of the Fed's ability to guarantee price stability in terms more meaningful than elementary CPI statistics—or who believe the bigger threat to their personal financial security lies in a potential repeat of the last debacle — why not provide a new class of Treasury obligations that would guarantee purchasing power of the dollar in terms of Gold?  Judy Shelton, WSJ 1/8/09

 

Two Thousand Billion?

That's Two Trillion

A trillion here, a trillion there, pretty soon you're talking about real money.

 

 

In the last decade gold has gained 292% against the US$, 181% against the Euro, 249% against the JY, 298% against the BP, 179% against the C$, and 182% against the A$

An ounce of gold today buys 62 ounces of silver.  Historically, it is 1:15.

 

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