WHO OWNS THE FEDERAL RESERVE

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joe2baba
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WHO OWNS THE FEDERAL RESERVE

it is my understanding that the names we keep hearing goldman, morgan etc own the fed.

i was also under the impression that lehman also owned a share.

does anyone know who the shareholders  are and if one was lehman was there a power struggle that lehman lost because it seems they were the only ones not to get the bailout................................just curious?

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Re: WHO OWNS THE FEDERAL RESERVE

The member banks that OWN the Federal Reserve System are secret. We THINK that Goldman Sachs, JP Morgan and Bank of New York are among the several owner banks, but the Fed is a secret banking cartel, established by Congress, and not required to reveal how its membership is comprised.

 

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Re: WHO OWNS THE FEDERAL RESERVE
since they are owned by shareholders dont they have to register with the sec?
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Re: WHO OWNS THE FEDERAL RESERVE

I don't think so - they are a privately held bank.  Yes, there are shareholders, but it is not traded on a public exchange, so there is no disclosure required.

All the best.

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Re: WHO OWNS THE FEDERAL RESERVE
[quote]

it is my understanding that the names we keep hearing goldman, morgan etc own the fed.

i was also under the impression that lehman also owned a share.

does anyone know who the shareholders are and if one was lehman was there a power struggle that lehman lost because it seems they were the only ones not to get the bailout................................just curious?

[/quote]

We do. The Federal reserve system at the top level is owned by the people. All its governors are appointed by the President and then confirmed by Congress -- they have 14 year appointments in case you are wondering, so Ben will be here for a good long while unless he really pisses both the President and Congress off. Any profit generated by the Fed may be turned over to the US treasury. For the most part though, funding is rather independent.

The regional fed banks on the other hand, are "owned" by other banks (This ownership is special, and cannot be bought sold or traded). In return for this ownership they get a small and mostly meaningless dividend and infinitely more important "special privileges". One of those privileges is the ability to elect regional bank governers. The private owners get to select 6 of them, while the high level government appointees get to select 3 (Repeat each of the 12 regional banks).

Though, it is worth noting that it is the all public high level governors who are in charge of directing Fed policy. Where as the regional banks are really limited to implementing said policy. So, the public sphere has in many ways the lions share of the control.

.

.

To be frank, this is really something you ought to look up. The wikipedia has an okay article on the Fed. The one source on the Fed you shouldn't trust, is random people. There is a lot of lies, myths, and false information floating around about the Fed.

--

Steve

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Re: WHO OWNS THE FEDERAL RESERVE

We as citizens most certainly do NOT own the Federal Reserve

If you've read "The Creature from Jekyll Island" you have a good start.  It is on the top of CM's reading list and in my opinion a must read.  Go to some of the comments at Amazon about the book or listen to the approximately hour long lecture about it by Edward Griffin on ITunes at a minimum.

The Federal Reserve (which is aided and abetted by congress) is at the core of most of the problems we face today.

Here are a couple of powerful quotes:

"The bold effort the present bank had made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."   Andrew Jackson 7th US President.  Jackson closed the second Federal Bank (central bank) with these comments.

“Allow me to control the issue and the nation’s money and I care not who makes its laws!” — Amshell Rothschild

According to the Silver Bear Cafe. - Seems to be lots of useful information there..

Banks that hold the controlling stock in the Federal Reserve Corporation:
Rothschild Banks of London and Berlin, Lazard Brothers Bank of Paris, Israel Moses Sieff Banks of Italy
Warburg Bank of Hamburg and Amsterdam, Lehman Brothers Bank of New York, Kuhn Loeb Bank of New York
Chase Manhattan Bank of New York, Goldman Sachs Bank of New York.

 

Jerry

 

 

 

 

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Re: WHO OWNS THE FEDERAL RESERVE

[quote] We as citizens most certainly do NOT own the Federal Reserve[/quote]

Ha ha ha ha ha!

Stop reading propaganda, it might help.  Also, stop comparing the Federal Reserve to the Second Bank of the United States, they aren't even vaugely the same.

Here's a start, a nice debunking.

More debunking

 

A quote from the first:

[quote]The Federal Reserve System certainly makes large profits. According to the Board's 1995 Annual Report, the System had net income totaling $23.9 billion, which, if it were a single firm, would qualify it as one of the most profitable companies in the world. How were these profits distributed? By an agreement between the Board of Governors and the Treasury, nearly all of the Fed's annual profits are paid to the federal government. Accordingly, a lion's share of $23.4 billion, which represents 97.9 percent of the Federal Reserve's net income, was transferred to the Treasury. The Federal Reserve Banks kept $283 million, and the remaining $231 million was paid to its stockholders as dividends.[/quote]


So is this income claim true. Lets look at a recent statement.

 

Highlights: 2006 / 2005

Total Income : $36.8 billion / $29.2 billion

Expenses : $3.96 billion / $3.63 billion

Dividends: $0.87 billion / $0.78 billion

To the Treasury :  $29 billion / $21.4 billion

 

Hmm, thats ~3% of the sum total profit to the member banks, and 97% of the profit to the people. So ask yourself, who owns the Fed? If we were counting in common stock terms, the people would be holding a 97% stake!

Here's a good suggestion. Start aiming those conspiracy theory thoughts at those attacking the Fed, instead of the Fed itself. Someone is encouraging ignorance. Start asking yourself why.

(Don't get me wrong, I think there is plenty in the Fed that needs changed. Starting with the structure of its top level governors, the transparency of the system, and direct accountability to the people. But these ignorant accusations are dangerous and destructive.)

--

Steve

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Regional Fed Banks: Who are the members?

[quote]it is my understanding that the names we keep hearing goldman, morgan etc own the fed.

i was also under the impression that lehman also owned a share.

does anyone know who the shareholders  are and if one was lehman was there a power struggle that lehman lost because it seems they were the only ones not to get the bailout................................just curious?[/quote]

Apparently, on further study, all nationally chartered banks are required to be members of the Federal Reserve.   Many state chartered banks elect to be.   So any regional Fed bank can have hundreds or even a thousand member banks.

Each entity gets to my understanding one, and only one vote.  So big banks are less important than the swarm of typical banks which vastly outnumber them.   None of these entities get any real profit (dividends are tiny), nor have any real ability to influence Fed policy (controlled by the publically appointed top level governors).   They do have influence on how their regional bank operates though.  For the little that it is worth.   This is actually quite reasonable, since they are the only ones who have to deal with Regional Fed banking bureaucracy. 

Fed operations are therefore, primarily influenced by the recent and current president, who had control of the appointment of the to level governors.  Thus, the favoring of certain entities (Say, Goldman) come primarily from high level political motivations, ideology, and philosophy.  Not from some profit motive, or kick backs.

--

Steve 

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Re: WHO OWNS THE FEDERAL RESERVE

Steve -

Your comment that the Fed is owned by "we" is just NOT true, if you mean "ownership" as the recipient of interest payments on Federal Reserve System loans.

Ellen Brown, J.D., writes this:

******

Who owns the Federal Reserve, who actually controls it, where does it get its money, and whose interests is it serving?

Not Private and Not for Profit?

The Fed’s website insists that it is not a private corporation, is not operated for profit, and is not funded by Congress. But is that true? The Federal Reserve was set up in 1913 as a "lender of last resort" to backstop bank runs, following a particularly bad bank panic in 1907. The Fed’s mandate was then and continues to be to keep the private banking system intact; and that means keeping intact the system’s most valuable asset, a monopoly on creating the national money supply. Except for coins, every dollar in circulation is now created privately as a debt to the Federal Reserve or the banking system it heads. The Fed’s website attempts to gloss over its role as chief defender and protector of this private banking club, but let’s take a closer look. The website states:

* "The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations – possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."

* "[The Federal Reserve] is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."

* "The Federal Reserve’s income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. . . . After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury."5

So let’s review:

1. The Fed is privately owned.

Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.

2. The fact that the Fed does not get "appropriations" from Congress basically means that it gets its money from Congress without congressional approval, by engaging in "open market operations."

Here is how it works: When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. When the Fed wants to "expand the money supply" (create money), it steps in and buys bonds from these dealers with newly-issued dollars acquired by the Fed for the cost of writing them into an account on a computer screen. These maneuvers are called "open market operations" because the Fed buys the bonds on the "open market" from the bond dealers. The bonds then become the "reserves" that the banking establishment uses to back its loans. In another bit of sleight of hand known as "fractional reserve" lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan. It was this money-creating process that prompted Wright Patman, Chairman of the House Banking and Currency Committee in the 1960s, to call the Federal Reserve "a total money-making machine." He wrote:

"When the Federal Reserve writes a check for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing a check."

3. The Fed generates profits for its shareholders.

The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders. A mere 6% a year may not be considered a profit in the world of Wall Street high finance, but most businesses that manage to cover all their expenses and give their shareholders a guaranteed 6% return are considered "for profit" corporations.

In addition to this guaranteed 6%, the banks will now be getting interest from the taxpayers on their "reserves." The basic reserve requirement set by the Federal Reserve is 10%. The website of the Federal Reserve Bank of New York explains that as money is redeposited and relent throughout the banking system, this 10% held in "reserve" can be fanned into ten times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans. Federal Reserve Statistical Release H.8 puts the total "loans and leases in bank credit" as of September 24, 2008 at $7,049 billion. Ten percent of that is $700 billion. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually – this so that the banks can retain the reserves to accumulate interest on ten times that sum in loans.

The banks earn these returns from the taxpayers for the privilege of having the banks’ interests protected by an all-powerful independent private central bank, even when those interests may be opposed to the taxpayers’ -- for example, when the banks use their special status as private money creators to fund speculative derivative schemes that threaten to collapse the U.S. economy. Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. A long list of banks (but not other corporations) is also now protected from the short selling that can crash the price of other stocks.

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Re: WHO OWNS THE FEDERAL RESERVE

i am kinda slow. so why do we need a middle man to handle the issuing of bonds ? cant the treasury just do that? they are tbills right?

or cant the treasury just print the money since there is nothing backing it anyway?  and i have heard that the fed is supposed to stabilize the money supply so we dont have huge swings in the economy ---bubbles and busts. it would seem to have failed at that job. i think greenspan lowered interest rates to about 1% right? how come?

and if every dollar is lent into existence how can we ever pay off the national debt? i have heard that andrew jackson was the last president to pay off the debt. and he fought the establishment of a central bank. i guess i would like to hear chris expound on the end of money on the site.

again i am pretty slow. just looking for answers if ya gotem steve

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Re: WHO OWNS THE FEDERAL RESERVE
thank gdon it is getting a little clearer
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Re: Review

[quote]1. The Fed is privately owned.

Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.[/quote]

Highly misleading, the regional bank entities are privately owned. If the word owned can evenly be properly applied in this context, as they - the member banks - receive few of the benefits an actual owner would expect. They cannot, for instance sell their shares (or buy more), liquidate the bank, or even control policy for the most part. They don't even get the lions share of the profits.

If you say, 'owned' a bar of gold and could only look at, but never touch it, sell it, or use it for anything... do you really own it?

[quote] 2. The fact that the Fed does not get "appropriations" from Congress basically means that it gets its money from Congress without congressional approval, by engaging in "open market operations."

Here is how it works: When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. [/quote]

You neglect to note that this action requires a very specific one on the part of Congress. Allowing the Treasury to issue new bonds (and hence, spending the USA into debt). Certainly the Fed can buy these bonds for dollars though, if the government choses to create any bonds in the first place. Simply solution, don't run a debt.

I'd also note that the Fed only holds a tiny fraction of all Treasury bonds.

In any case, if the government had no debt, the Fed would merely hold its money in something else. Say, the bonds of other governments, state governments, etc... Maybe even gold and silver. It really would be silly after all, for it to hold its savings in Federal Reserve Notes...

[quote]The bonds then become the "reserves" that the banking establishment uses to back its loans. In another bit of sleight of hand known as "fractional reserve" lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan.[/quote]

Fractional reserve lending has less to do with the Fed, and more to do with regulation. It goes by another affectionate name too: Leverage. Simple solution, forbid it or reduce it.

It doesn't really expand the money supply either. Its a lot more complex than that.

[quote] "When the Federal Reserve writes a check for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing a check."[/quote]

It is more accurate to say that the Fed reserve creates a token which can then be exchanged for one of its holdings -- a Treasury Bond! (Or today, an even crappier CDO! Since the Fed has lent most of its reserves away Tongue out). Its like a gold standard, with, uh, bonds instead of gold.

... Minus, of course, any interest the Fed collected while holding that bond/asset.

Really, the Fed's assets can be anything. T-Bonds are only favored cause the Fed and the US government like each other a lot. If you want to know specifically what your dollar is backed with, look at the Fed's asset sheet.

[quote] 3. The Fed generates profits for its shareholders.[/quote]

The Fed doesn't give one wit about its shareholders. The entire system is designed so that from the top there is no real profit motive. What are the share holders going to do, glare angrily at Ben? Appoint governors who will refuse to do their legal obligation? (and subsequently get removed and possibly charged with a crime?)

A private institution is controlled by its shareholders, because its shareholders have the power to compel certain operations.

The member banks no real power.

[quote]The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders. A mere 6% a year may not be considered a profit in the world of Wall Street high finance, but most businesses that manage to cover all their expenses and give their shareholders a guaranteed 6% return are considered "for profit" corporations.[/quote]

I'd agree, there is 'profit' in it. But the total is pennies.

[quote] In addition to this guaranteed 6%, the banks will now be getting interest from the taxpayers on their "reserves."[/quote]

Yep, and it pisses me off. The whole point of the 6% dividend was to stand in for interest earned on the reserves. Essentially the Fed is now paying out a higher dividend. Personally, I'd like to see the dividends go away completely.

[quote]That means we the taxpayers will be paying interest to the banks on at least $700 billion annually – this so that the banks can retain the reserves to accumulate interest on ten times that sum in loans.[/quote]

You are confusing yourself. What starts simple, stays simple. Finance can build towers of smoke and mirrors, but in the end the world remains the same. We, as the people of the United States, pay interest on one thing and one thing only: Treasury Bonds.

And, because the Fed returns 97% of the interest on the bonds it holds to, we don't really pay any interest (3% of 4% is 0.12%) on the Fed owned bonds. Those owned by China, however...

Don't want any interest at all? Or better yet, real profits from the Fed -- for the taxpayer? Eliminate the National Debt.

[quote]Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks.[/quote]

They can't put that money into 30-year bonds, GDon. Fed lending doesn't last near long enough. But yes, the Fed should never lend at lower than the corresponding term T-Bond. If that isn't already a rule, it should be.

[quote] A long list of banks (but not other corporations) is also now protected from the short selling that can crash the price of other stocks. [/quote]

The short selling protection is stupid, and doesn't really offer any protection. But that's a complaint to level at SEC, not the Fed.

--

Steve

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Re: Purpose of the Fed

[quote]i am kinda slow. so why do we need a middle man to handle the issuing of bonds ? cant the treasury just do that? they are tbills right?[/quote]

The Fed really has little to do with Treasuries, though one might be mislead into thinking otherwise.

The Fed's job is to issue Federal Reserve Notes.  It then acts as a middle man in deviation from a simple bartering system.  Its job is to instill confidence, by ensuring that even if you can't buy anything else with your dollars, you can still buy whatever it has on its asset sheets.

Since that's mostly T-Bonds, its all good as long as you believe US government will never default on its debt...

Its rather hard to explain, without breaking out in a long explanation of what, precisely money is.

 

[quote] or cant the treasury just print the money since there is nothing backing it anyway? [/quote]

No, the Fed makes sure there is always something backing its money.   Today though, the quality of the stuff backing it has gotten shoddier.  Both because the government is at higher risk of debt problems, and because it has been accepting crap as collateral.

It isn't that it can't it is more that the Fed doesn't.   Even today, Ben wants to grab new treasuries to create his storm of liquidity.   As long as it has asset backing, the process can be reversed in the future with little pain. 

[quote] and i have heard that the fed is supposed to stabilize the money supply so we dont have huge swings in the economy ---bubbles and busts. it would seem to have failed at that job.[/quote]

Nobody ever said that Fed chairman is always competent.   Just like nobody ever said that the President is  always competent.

 

[quote]i think greenspan lowered interest rates to about 1% right? how come?[/quote] 

Same reason we dropped the rate today, because Greenspan felt that by doing so he could slay the recession.  The notion is that in a recession people are reluctant to lend, even when they should.   Therefore, by making lending cheaper and thus more profitable, more people will start.   Once the start lending again, the economy will start buzzing again.   After which, the low rates are no longer needed.

In theory, the low rates are the spark.

While various people disagree on whether Greenspan should have ever lowered the rate to 1%, most agree that leaving it there as long as he did caused a credit bubble.   That is, it worked in encouraging people to lend... it worked too well...

I won't get into the explanations of theories backing raising and lowering rates here.   Its too complex, and requires cross examining a lot information.

[quote] and if every dollar is lent into existence how can we ever pay off the national debt?[/quote]

Dollars in the end are just used as a symbol of exchange in the real economy to avoid the entirely inefficient and painful barter system.  

How can we repay debts?   The easy answer is we repay the symbolic equivalent in real assets.  For instance, we could trade $1 trillion dollars of debt for $1 trillion dollars worth of Soybeans.  

Likewise, if people failed to accept Federal Reserve Notes to pay off T-bills,  the government could instead collect physical goods as a form of tax and trade those for its existing T-bills.

(I really need to write an explanation of money sometime...)

--

Steve 

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Re: Purpose of the Fed

Steve Wrote: 

(I really need to write an explanation of money sometime...)

Explaination of Money:

Money is a commodity that is easily divisible and is a store of value.  Easy to carry helps.

Clearly Federal Reserve Notes do not meet the above explanation of money.  In fact it is true that if all debt were actually paid all 'money' other than gold and silver of course would disappear.

Steve with due respect I believe you've become a product of your Fabian training.  Talk about smoke and mirrors.   

Jerry 

 

 

 

 

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Re: Review

i am getting a clearer picture steve thanks for taking the time. i am reading a lot these days on these issues but i still dont get the need to have an entity outside of the government like the fed which has failed to meet its objectives (we have bad chairman) why cant the treasury just do everything the fed is doing? after all we did not have a federal reserve before 1913.

 i have a hard time seeing how the fed benefits me any more than no fed. we seem to keep having recessions depressions huge debt, inflation. you say we may not have a good fed chairman but is it that or is it the system?

having read the dollar crisis and it seems to me anyone could have seen what happened to japan and the rest of asia was going to happen here. create a bubble  with cheap money then pop. then do it again with cheap mortgages and pop. is this an accident?is this how the fed stabilizes the economy? i think i am with chris on this..............you let the system work off its excesses and do not try to head off a recession. in my misguided view of the world i dont see how we are any the better for all the intervention. but hey i admit i dont know a whole lot. i just look at what's happening. and from here it dont look to good. it looks like disaster capitalism.

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Reuben Bailey
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Re: WHO OWNS THE FEDERAL RESERVE

Steve, you might want to read the "debunking" a little more critically before you swallow it hook, line, and sinker.  While I am not convinced that the Fed is at the center of some big conspiricy, I am a little leary of information that is produced by a "think tank."  Such entities are not without an agenda, and the agenda might not be what is publicly stated as the mission statement. 

Quote  "Facts: The Federal Reserve rebates its net earnings to the Treasury every year. Consequently, the interest the Treasury pays to the Fed is returned, so the money borrowed from the Fed has no net interest obligation for the Treasury. The government could print its own currency independent of the Fed, but there would be no effective safeguards against abuse of this power for political gain." 

Think about it - the first part of the above statement could only be true if every penny that was paid to the Fed in interest was returned to the Treasury.  Instead, the Fed takes the interest, pays all operating expenses, pays a dividend, and then returns the balance to the Treasury.  So here we have a private entity that is entirely funded with taxpayer dollars, including it's dividend.  It sounds like a raw deal for the taxpayer to me.  As for the second part, there are currently no effective safeguards in place, so the point is moot.

 

In your post you say

" Hmm, thats ~3% of the sum total profit to the member banks, and 97% of the profit to the people. So ask yourself, who owns the Fed? If we were counting in common stock terms, the people would be holding a 97% stake!"

Who said anything about measuring in common stock terms?  Measuring in stockholder terms, as I understand them, the dividend is 6%.  The money returned to the treasury would be an operating expense, since it is mandated.  

 

These are just two points.  Se if you can spot any others.

All the best.

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Re: The Fed's profits

[quote]Think about it - the first part of the above statement could only be true if every penny that was paid to the Fed in interest was returned to the Treasury.  Instead, the Fed takes the interest, pays all operating expenses, pays a dividend, and then returns the balance to the Treasury.  So here we have a private entity that is entirely funded with taxpayer dollars, including it's dividend.  It sounds like a raw deal for the taxpayer to me.  As for the second part, there are currently no effective safeguards in place, so the point is moot.[/quote]

You are confusing yourself.   It helps if you first remove the National debt from the equation:

*waves a magic wand, and for the purposes of this discussion the US is a creditor nation like China* 

Okay, now instead of T-Bonds the The Fed's vault is filled with, say, UK government bonds.   These bonds are magically the same as T-Bonds in every way, except the American people no longer pay interest on them.

Now, how much profit does the Fed earn?   Same as before ~$30 billion dollars.   How much do the American people get?  Same as before 97% of it.   The difference?  If the government was otherwise on a balanced budget, they'd find themselves with a $29 billion dollar surplus.

In other words, these 'losses' you seem so eager to blame on the Fed, in reality have jack shit to do with the Fed.   Instead, it has everything to do with the Treasury and the American Debt spending ways.   Put blame where blame is do.

 

To put it another way,  what if someone ELSE held the T-Bonds the Fed has?   Guess what, the deficit would about $29 billion dollars larger  (The Fed, has in essence saved us $29 billion by being the proud owner of our bonds).   Again, this has little to do with the Fed, but instead the fact that US government is, and for a long time has been, spending too much money.

[quote]

Who said anything about measuring in common stock terms?  Measuring in stockholder terms, as I understand them, the dividend is 6%.  The money returned to the treasury would be an operating expense, since it is mandated.  

[/quote]

How is a legal mandate that the Fed turn over approximately 97% of its profits any different than a legal mandate that it turn over 3% to some thousand or so banking corporations?   Ah, the color of the veneer.

A rose is a rose by any other name.   Likewise a socially owned and controlled institute is still a social owned and controlled institute no matter how many layers of 'private' corporation skin it wraps itself in.   As they say, follow the money, and the money leads us straight to the people.

[quote]

These are just two points.  Se if you can spot any others.

All the best.

[/quote] 

I'll be frank.  There are a lot of accusations that can be leveled at the Fed for its haphazard experimentation on the economy.   Many of them have a leg to stand on, some have a few hundred such legs.

However, calling the Fed a private banking cartel that exists to defraud the people in favor of the financial industry (as has been implied by so many so often) is simply flat out false.   More so, it is easily disproven.

Yes, the Fed is in the pocket of big business.  But that isn't because the Fed is 'private' or 'owned'.  Its because our entire political establishment is in the pocket of big business.    Cleanup the elected officials and the Fed will follow.

Put the blame where the blame is due.  Otherwise the problems will never get properly fixed.

--

Steve 

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Re: Why the Fed? Why not the Treasury

[quote]but i still dont get the need to have an entity outside of the government like the fed which has failed to meet its objectives (we have bad chairman) why cant the treasury just do everything the fed is doing? after all we did not have a federal reserve before 1913.[/quote]

Why not the Treasury? Because as badly politicized as our monetary system is already, putting the existing portions of government in that much control will make it worse. We separated out the Fed so as to keep politics out of our money. It didn't work, but the general idea is sound.

[quote] i have a hard time seeing how the fed benefits me any more than no fed.[/quote]

Well we need some institution to produce and watch over our coinage and make sure it remains sound. It is perferable if that entity is immune or at least resistant to short term political forces and manipulations. Would it make you feel better, for instance, if Bush could secretly print cash to pay for the Iraq war, and thus hide the real cost?

In the end its all a matter of shape and form. Some individuals suggest that truely private banks should control it. Others would prefer complete elimination of all private interest in the Fed's operations. Each design has its own merits and flaws, and is really beyond the scope of this discussion.

[quote]we seem to keep having recessions depressions huge debt, inflation. you say we may not have a good fed chairman but is it that or is it the system?[/quote]

Every society from the beginning of human history has had recessions, and depressions; booms and busts. They occur for a wide variety of reasons, from weather fluctuations effecting harvests, to plagues, wars, government misspending, bad economic policy, and even plain old human stupidity.

I think that any person suggesting that we can ever realistically avoid such cycles is fooling himself. We might be able to do something to reduce their occurrence, and make them more mild. But, avoid them altogether?

As for the Fed's role in all this? I don't think they should have one. The Fed should do one thing and one thing only: protect the integrity of our coinage (the dollar). If we want some governmental entity to play with the economy and try to make things better, then let that governmental entity be entirely separate from the Fed. Combing the two is a disaster waiting to happen.

[quote]it looks like disaster capitalism.[/quote]

Capitalism hardly needs the governments help to create disasters. But, that doesn't mean we should give it a hand either. Tongue out

--

Steve

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jdownie
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Posts: 58
Re: WHO OWNS THE FEDERAL RESERVE

The problem is not that the Federal Reserve, or any Central Bank for that matter, is privately owned. The problem is that it is manipulated by the government. Only the government, by dictating what is legal tender (currently its own debt), can extend credit (yours) indefinitely, in the form of Federal Reserve Notes. That's right, if you hold Federal Reserve Notes you are actually a creditor of the government, through the Fed. Not that the government redeems its creditors any more, Federal Reserve Notes (and other countries notes) used to be redeemable in an equivalent weight in gold. Of course the government's debt is ultimately your debt, which is why your credit is losing its value.

As srbarbour mentions, the government extends (your) credit by allowing the Fed to hold government securities (debt instruments), to back the issuance of Federal Reserve Notes. The quality of the assets backing Federal Reseve Notes has indeed gotten shoddier, extremely so in the last 12 months what with overvalued mortgage backed securities etc as well. This applies to Central Banks everywhere. Debt instruments are considered assets on the balance sheet of a bank because of the income stream they provide through interest payments.

A private bank cannot indefinitely extend credit without adequate backing ie. quality assets, debt instruments of short term maturity, or that it can sell in short order to cover its short term liabilities. To do so would eventually invite a bank run. 

How can you be a creditor of the government and yet a debtor at the same time? I'd suggest only by being a slave.

ds's picture
ds
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Posts: 43
Re: Review
[quote=srbarbour]

[quote]1. The Fed is privately owned.

Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.[/quote]

Highly misleading, the regional bank entities are privately owned. If the word owned can evenly be properly applied in this context, as they - the member banks - receive few of the benefits an actual owner would expect. They cannot, for instance sell their shares (or buy more), liquidate the bank, or even control policy for the most part. They don't even get the lions share of the profits.

If you say, 'owned' a bar of gold and could only look at, but never touch it, sell it, or use it for anything... do you really own it?

Steve

[/quote]

Steve, I have to toss the hot potato (i.e., the charge of "highly misleading") back to you. Shareholders are in fact legal owners. 

Are you not familiar with restricted stock? It is quite common for shareholders to be restricted from selling stock. That restriction, or others, does not transform shareholders into something other than owners. Shareholders are owners and to say otherwise on the basis of restrictions on shares or percentages of profits is to make a very misleading statement.

Some of the advantages of ownership can be less than obvious, and that is exactly what many of the exposés point out.

My impression is that your arguments -- those that I have read so far -- have fallen short of the standards set by the writers you are attempting to debunk. However, I'll give you the benefit of the doubt and continue reading the posts. You have written a lot and I'm sure I'll learn something if I continue reading.

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srbarbour
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Posts: 148
Re: Review

[quote]Steve, I have to toss the hot potato (i.e., the charge of "highly misleading") back to you. Shareholders are in fact legal owners[/quote]

You misunderstand ds.   There are several problems with the claim of ownership:

1) Only the Regional Federal Reserve Banks are 'owned'

2) The Federal Reserve is not the Regional Federal Reserve Banks.

To put it another way.  You, ds, are not your left foot, nor your right foot.   You are not your liver, nor your heart, nor your appendix.   You, as the entity ds are the gestalt that arises from the summation of all parts.

There are parts of the Fed that are clearly public, the Board of Governors for instance.   There are also parts that are 'private' as defined by law.   When one claims the Fed is private, this is not a claim that the Federal Reserve bank in Kansas City is private.  This is a claim that the System itself, as the entire entity, is private.

To be frank this is wrong.  Most experts wouldn't back such a claim and,  indeed, even the creator of the Fed was rather intentionally striving for a Public-Private hybrid.  (Fearful of the outcomes of either private or public Central banks, the goal was to obtain the most of the best qualities, while having the least of the worst.)

More problematic though, is that calling the Fed, or even the regional banks 'private', or 'shareholder' owned carries connotations that simply do not exist in this case.   Worse, these connotations are then presumed or argued to exist by the ignorant, or those spreading ignorance.   As pointed out in depth, these claims are simply not true.   While, the Regional Banks may indeed be private by any legal definition, the Fed in nearly every way behaves far more like a public entity than a private one.

That, ds, is why calling the Fed private is highly misleading.  

Try sticking to "Quasi-public-private" if you want to be strictly correct.  Say "Public, with private components" if you want to best convey how the Fed, as an entire entity, behaves. 

Saying:  "The fed is a private for-profit entity!"  May not be totally untrue, but reeks of deception and sophistry.  Kind of like how Clinton "did not have sex with that woman..."  (Using, of course, a definition of sex that doesn't involve blow jobs...).

[quote] Some of the advantages of ownership can be less than obvious, and that is exactly what many of the exposés point out. [/quote]

Oh, most certainly.   However, they hardly reach the conspiracy theory level -- bankers taking over the whole world!  Controlling your life!  Controlling finance!   All because of the Fed! --  that many of these fanciful authors profess.  

It does though, give the Fed some level of bias toward the banks and other financial entities.  No argument there.   My point is that it isn't anything particularly severe, and in fact a rather minor concern overall.

[quote]However, I'll give you the benefit of the doubt and continue reading the posts. You have written a lot and I'm sure I'll learn something if I continue reading.[/quote]

Why thank you.  Feel free to disagree as you will.  While I may sound like I'm laying down irrefutable fact, these are as much mental explorations and learning experiences for me as anyone else. 

--

Steve 

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Tesseractal
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Joined: Apr 18 2008
Posts: 25
Re: Review

 

It strikes me that this focus on ownership should be considerd in terms of function and power - more mental explorations as steve put it:

The Reserve Banks "...participate in the activity that is the primary responsibilty of the Federal Reserve System, the setting of monetary policy"  No ambiguity in what the Fed says there!

How you choose to define the ownership of the component banks I leave at your discretion but they (the member/stockholding/shareholding banks) make the appointments to the board.  While a member is arguably required to work in the interests of the organisation to which they have been appointed they are also less likely to make decisions that are against the interests of the organisation that appointed them - that's just human nature.  Consequently there will inevitably be a bias in the application of power - the question is just how much.

In summary - the commercial banks who "run" the reserve banks are direcly influencing monetary policy - the appointed board members will have inherrent biases - so the end result is that the interests of the economy/nation  will be less than exclusive for the Fed and that is what should be required of it. 

That doesn't mean that the Fed shouldn't act in the interests of shareholding banks - but it does mean it should only do so if it is required to meet the greater good.

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krogoth
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Posts: 576
Re: WHO OWNS THE FEDERAL RESERVE

I have a simple question for all that have spoken here. Would not the government go after people spreading such defamation about it's inner workings with multiple lawsuits? I mean, people are profiting from selling movies or books that some have said here to be partially or completely false. Michael Moore has made over 100  MILLION over making Bush and his cabinet look like a complete idiots. Why no lawsuits against him? If they hold no weight, or are conspiracy theories as many say, then where are all the lawsuits? If the government will arrest and imprison you for not paying your taxes, why would they not go after people spreading all these lies about the government? If Michel Moore slandered me, and made over 100 million off a movie doing it, you can be sure I would drag him into court to prove he was wrong, and get a boatload of damages, unless he was right. Unless alot of them are partially right or completly right and true.

 

defamation (also called calumny, libel, slander, and vilification) is the communication of a statement that makes a false claim, expressly stated or implied to be factual, that may give an individual, business, product, group, government or nation a negative image.

 

Seems to me that if all these subjects about who's getting paid, who's benefiting, who owns what or whatever don't really matter as much as that the groups on the inside and who they are. It's for sure that they don't want much attention drawn to them.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tesseractal's picture
Tesseractal
Status: Bronze Member (Offline)
Joined: Apr 18 2008
Posts: 25
Re: WHO OWNS THE FEDERAL RESERVE

 

What is the point of suing someone if it is just going to cost you money and not change behaviour.  E.g. I  have a $1.00 in the bank and go to town spreading lies about you.  You take me to court and win, it costs you a fortune in legal fees, and I walk out of court with a lot more attention and repeat my behaviour causing untold damage because of a bigger audience.

Regarding Moore and others who have ostensibly profitted from conspiracy theories and/or lies - it would be interesting to know what Moore's true wealth was - not what he or his oppositiom claim both of whom are using it soerve their own purposes.  E.g. Bush in court would generate very good business for Moore and may require the revelation of additional details that the government genuinely cant release.

 

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affert
Status: Silver Member (Offline)
Joined: Sep 22 2008
Posts: 100
Re: WHO OWNS THE FEDERAL RESERVE
Another fact that puts the government in a different position that other people when it comes to defamation: the Bill of Rights.  Freedom of Speech isn't limited to only saying things that can be proven to be true in the court of law.  If I could convince people to give me money by saying that George Bush is an alien princess, I would hope that the courts would protect my constitutional right of free speech.  Governmental repression of different ideas is a centeral idea in many reigns that I would not care to live under.  I (and I'm sure many others) would be very appalled and somewhat scared if the government started suing people that said bad things about the government. 

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