[firestarter]

$this->bbcode_second_pass_quote('nero', ' ') Check out the budget. (table 17.4 line labled "Deposit of Earnings, Federal Reserve System") In 2006 the treasury believes it will receive 28.5 billion dollars from the Federal Reserve System. This is the federal reserve basically giving back most of the interest they earned on the government debt they hold.

Federal Budget 2006

[EnergyUnlimited]

$this->bbcode_second_pass_quote('presidentsherrill', 'I') am going to let you all in on a little secret.


The United States is a failure. The United States has been dead ever since we first declared bankruptcy at the beginning of this last century. Since that time the US government has been a corporation. A corporation so poorly run, that to compare to enron is an isult to the Memory of Ken Lay.

[Gazzatrone]

$this->bbcode_second_pass_quote('KhanCEO', ' ')I hope who ever wrote this trash gets hit by a bus.

[nero]

$this->bbcode_second_pass_quote('Firestarter', 'T')his assumes the Federal Reserve earns only, there or about, $28.5 billion in interest in 2006. Table 17.4 infers no such thing. With an $8 trillion dollar debt, and revenue accrued vis a vis bond auctions and bond holdings being fueled by a yearly deficit of half a trillion bucks, $28 billion is chump change.

[firestarter]

$this->bbcode_second_pass_quote('nero', '')$this->bbcode_second_pass_quote('Firestarter', 'T')his assumes the Federal Reserve earns only, there or about, $28.5 billion in interest in 2006. Table 17.4 infers no such thing. With an $8 trillion dollar debt, and revenue accrued vis a vis bond auctions and bond holdings being fueled by a yearly deficit of half a trillion bucks, $28 billion is chump change.

[firestarter]

BTW, The Federal Reserve has never been audited. Also, the Federal Reserve has more than a symbiotic relationship with the banking system at its highest levels. The large racket is also part of the revenue generating scheme, only it's very difficult to glean what goes to who, when and where.

[KhanCEO]

I've linked this video many times but in case anyone has yet to see it............

http://video.google.com/videoplay?docid ... ey+masters

Also it i a 3 part movie just go to google video to get the rest if you still feel like watching it.

[Carrie]

Looks like this report has made it into the mainstream press - the Telegraph is covering it now. I wonder how the markets will react (as if they don't have enough to think about already!):
$this->bbcode_second_pass_quote('', 'T')he United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

[Tyler_JC]

$this->bbcode_second_pass_quote('nero', '
')The federal reserve currently holds about 762 billion dollars in government debt(link). The other 90% of the federal debt is NOT held by the federal reserve system. The interest on these holding is the main source of their income. Doing a little math shows you that 28.5 billion dollars is not chump change. For comparison purposes its more than all the customs duties and more than the income from the estate and gift tax.

[firestarter]

One more time.

Since Bush took office, the FED profits by hundreds of billions of dollars by buying US Government Bonds (fiscal year ending in Sept 2005, the Fed's bonds were valued at $400 billion plus for that year alone). Yet it only returns, last year in particular, $28 billion to the US Treasury. The rest of the profit has been spent as "Operational Expenses".

It's a racket that sinks deep into the rearend of the tax paying American. The federal government got $28 billion circulated back to itself plus the initial $400 billion from the Fed vis a vis the Treasury. The Fed gets its $400 billion in bonds minus the expense of printing the money (3 cents per $10,000). The banking system is then subsidized by the unsuspecting tax payers to not only ante up the initial $400 billion, but the subsequent interest burden to pay off the usery charges to the banksters.


The vast majority of the $8 trillion in the national debt is clear profit for the Federal Reserve. $28 billion is essentially a rounding error.

[nero]

Firestarter, the Fed buys the bonds it owns on the open market. The treasury (the bureau of the public debt) sells bonds at auction and receives the best price they can get. The Fed like any other actor could buy bonds directly from the Treasury but typically they buy them on the secondary market because they would be such a large player in any given weekly auction.

I'm not sure what you're trying to say with the following but it sounds way off base:

$this->bbcode_second_pass_quote('', 'S')ince Bush took office, the FED profits by hundreds of billions of dollars by buying US Government Bonds (fiscal year ending in Sept 2005, the Fed's bonds were valued at $400 billion plus for that year alone). Yet it only returns, last year in particular, $28 billion to the US Treasury. The rest of the profit has been spent as "Operational Expenses".

[Liamj]

What if China used all their worthless Treasury paper to make pretty their resumption of ownership in all the western corporate owned means of production in China? Will the chickenhawks convince the army to go get their (masters) manufacturing plant back? Or will they nuke China, and then sell their worthless Treasury paper to..? and get their manufacturing done in ..?
With pollution and soil erosion in China already screwing air quality in western US your nukes would be pissing into the wind, but stupidity hasn't stopped your Lords yet.

[rwwff]

$this->bbcode_second_pass_quote('Liamj', 'W')hat if China used all their worthless Treasury paper to make pretty their resumption of ownership in all the western corporate owned means of production in China? Will the chickenhawks convince the army to go get their (masters) manufacturing plant back? Or will they nuke China,

[Kingcoal]

I think the biggest problem with the Federal Reserve System has to do with the amount of reserves. I worked at a startup company in the late '90's and we had problems raising money until a huge investor bought $10 million in stock. After that, the other $20 million we were looking for came effortlessly. As I understand it, the Fed system is the same process. The dollar bill is a stock certificate and the company is the US. The US needs to raise money, so it asks its biggest single owner; the Fed, to buy some stock. The Fed gives the stock a certain value. At that startup company, our stock went from worthless to about $10/share about one second after that big investor made their purchase. The Fed is the buyer of last resort and will prop up the dollar in a time of crisis, currency war, etc. The problem is, where is the gold? Where is the reserve? In other words, a real crisis, which we haven't seen yet, by the way, raising interest rates no longer has any effect and inflation continues. What is plan B?

The idea of a "reserve" is that plan B is as follows: dump gold for dollars, thus propping up the dollar. I don't think there is any gold though, am I correct? Maybe the modern version of plan B is use the US military to prop up the dollar. Eliminate, using covert methods, any challenge to the dollar (foreign currency oil bourse, etc.)

[firestarter]

nero,

The following is an entry from Jerry Voorhis, The Strange Case of Richard Milhous Nixon, 1973


"...the sovereign government of the United States goes hat in hand to the private banking system and asks it to create the new money that the economy needs. The government gives-the word is used advisedly-it gives to the banking system, including the Federal Reserve banks, government bonds, the debt of all the people. Interest-bearing bonds, that is, bonds bearing as high an interest rate under today's regime as the banks decide to demand. Else they won't buy the bonds. The banks "buy" the bonds with newly created demand deposit entries on their books-nothing more. It is fountain-pen money and considerably more inflationary than would be the same amount of dollar bills created by the government. The deposits the banks create with which to own the people's debt are backed by nothing except the bonds themselves! In other words, they are backed by the credit of the American people.

What the government has "borrowed" from the banks, what the people must for years pay interest on, is nothing more nor less than the credit of the nation, which obviously the nation possessed in the first place or the bonds themselves would be no good!

As a direct result of logical and relentless agitation by members of Congress, led by Congressman Wright Patman as well as by other competent monetary experts, the Federal Reserve began to pay to the U.S. Treasury a considerable part of its earnings (your $28 billion alluded too) from interest on government securities. This was done without public notice and few people, even today, know that is being done. It was done, quite obviously, as acknowledgment that the Federal Reserve Banks were acting on the one hand as a national bank of issue, creating the nation's money, but on the other hand charging the nation interest on its own credit-which no true national bank of issue could conceivably, or with any show of justice, dare to do.

But this is only part of the story. And the less discouraging part, at that. For where the commercial banks are concerned, there is no such repayment of the people's money. (the symbiotic aspect I alluded too)

When the commercial banks create money, as they do when they acquire government bonds, they levy a tax on every person in the United States. This is so because every new dollar that is created makes every dollar previously in existence worth somewhat less than it was worth before. This is the very heart of inflation.

It is also taxation without representation with a vengeance. Until this system is changed, our debt will continue to skyrocket without limit and the fixing of debt limits by the Congress will continue to be an exercise in utter futility.

What ought to be done?

Banks should lend existing money. But, as the Constitution clearly requires, the money (or credit) of the nation should never be created by any private agency, but by an agency of the nation itself. It is the duty of Congress to provide for this by a carefully drawn statute.

The stock in Federal Reserve Banks should be purchased by the government from their present private bank owners. The Federal Reserve should then become our national bank of issue. It should create reserve Bank Credit as it does now. But that credit should be credited to the United States Treasury, not charged against it and the people as debt. As much such new credit should be created each year as is needed to keep our economy running at or near capacity-and no more than that. A stable price level could result. Then and only then can we expect to overcome recessions, to put our people to work, and do this without the danger of inflation and the ever-increasing debt which are inescapable under the present monetary system. .."

[nero]

Firestarter,

I read carefully the passage you quoted. I'll note some places where it isn't as clear as it could be.

$this->bbcode_second_pass_quote('', 'T')he banks "buy" the bonds with newly created demand deposit entries on their books-nothing more.

[firestarter]

nero,

You sound very much like a Keynesian economist. Being that I'm a subscriber to the Austrian School of thought, you and I are probably not going to bridge our philosophical gaps in this venue. It's been fun though.

p.s., are you a banker or financier ?

[nero]

$this->bbcode_second_pass_quote('', 'Y')ou sound very much like a Keynesian economist. Being that I'm a subscriber to the Austrian School of thought, you and I are probably not going to bridge our philosophical gaps in this venue. It's been fun though.

[jaws]

To clear up the confusion, here's the fractional reserve banking problem in a nutshell. I open up a bank with a million in starting capital of US Federal Reserve Dollar Notes. A man comes to me and takes out a loan for 100,000 notes. I write him a cheque for that amount. The man then goes to one of his suppliers and pays for goods with the cheque. The supplier then pays someone else with the cheque, who pays someone else with the cheque. At the end of the month I, the banker, realize that I still have all of my 1,000,000 notes in the vault. Sweet, I say, I can book that loan as pure profit since it will never be called in. I issue another loan.

What happened is that the cheque I issued became money. The problem of course is that if there is ever any doubt about the solvency of my bank, all the notes will be called in for real money. Then the bank will be rupt.

Of course with the Federal Reserve capable of inventing and loaning out as much money as necessary to cover these banks, the possibility of a scenario such as this is eliminated. On the other hand there is always inflation and business cycles and eventually hyperinflation will come and civilization will go to hell.

[rogerhb]

$this->bbcode_second_pass_quote('jaws', 'O')f course with the Federal Reserve capable of inventing and loaning out as much money as necessary to cover these banks, the possibility of a scenario such as this is eliminated.