Robin van Spaandonk wrote on 11-28-08: Could someone explain to me how the Federal Reserve Banks get "Federal securities" to "pledge", in the first place ...
Thomas Malloy wrote: Dah, they print them up. Congress gives it's approval, of course. Robin van Spaandonk wrote: I assume you are saying that "they" "print up" the securities, which are effectively IOUs? What I'm really trying to get at is the exact flow of wealth between the Federal Reserve banks and the government of the USA ... Stephen A. Lawrence wrote: Unlike all other federal agencies, the Federal Reserve Board is *not* constrained to running a zero-sum operation. They can actually create money ... As I recall, when the Fed has a burning desire to create more money, they do it by purchasing government securities. In other words, the Treasury "borrows" money, as usual, by selling bonds, but in this case they sell the bonds to the Fed, and the Fed uses "magic money" to buy the bonds. The magic money never existed before the bonds were purchased, which is what makes it magic ... Michael Foster wrote: The issuing of currency by the Federal Reserve is unconstitutional, not that anyone is paying attention. This is supposed to be the the exclusive power of the Congress, most of whom have not even a passing familiarity with our Constitution, or have only contempt for it ... The vast majority of the money supply is not currency, but bank issued debt. The present multiplier allowed to commercial banks is 10. That is, they can lend out ten dollars for every dollar deposited in them. So it hardly matters what happens the cash in circulation. The recent massive increase in the apparent money supply created by derivatives is nearly incalculable, made possible by the repeal of the Glass-Steagall Act. Money created as debt is the root cause of our present financial debacle, and virtually all the previous ones. Incidentally, the Federal Reserve is not a bank and not a part of the government. It has twelve member banks and is a privately held company. It's instructive to read the Federal Reserve Act of 1913. Robin van Spaandonk wrote: This is precisely why I am asking these questions. ;) Michael Foster wrote: The Federal Reserve operates independent of the U.S. government. Our government raises money through taxes, tariffs or fines. In addition the government may raise money through the issue of bonds, notes, or other debt instruments that are generally available to anyone. That might include one of the Federal Reserve banks. Essentially, there is no flow of money between the Federal Reserve banks and the government except if the banks buy government debt or pay taxes. Robin van Spaandonk wrote: This reads as though a private company creates money out of thin air, which the government then "borrows" perpetually putting the people of the US into debt to the private company, with no real benefit in exchange for the debt. Freely translated, this is highway robbery, on a scale so grand as to dwarf the imagination of Joe Sixpack, thus allowing it to continue indefinitely. That would mean that the US population is in consequence a slave population. Michael Foster wrote: The vast majority of the money supply is not currency, but bank issued debt. The present multiplier allowed to commercial banks is 10. That is, they can lend out ten dollars for every dollar deposited in them. Stephen A. Lawrence wrote: I believe that is incorrect. What you said, which I've also seen quoted on the Internet in various places, would make no sense -- the money lent out would be coming from noplace, and banks, unlike every other sort of company, would have the ability to lend out stuff they don't have to start with. They can't do that; only the federal government has the power to create money, and it's been delegated to the Federal Reserve Board. Banks are *not* magic, and cannot create money, no matter what that asinine Brasscheck video about "debt money" tells you. The real situation is actually a bit different: If the current reserve requirement is 10%, then they can lend out 9/10 of each dollar on deposit -- not ten times each dollar on deposit! The reserve requirement, which is may be what this alleged "multiplier" refers to, is a *restriction* on banks, *not* a special power granted to them. There is a true "multiplier" involved, which is a theoretical value obtained by assuming every borrower deposits the full value of the loan back into another bank, which then can lend out most of it to yet another borrower. With a reserve requirement of 10% this "multiplier effect" is about a factor of 9. What that means is that, if the Fed deposits $100 in a bank, the money which flows into the economy as a result is actually about $900. This is probably the multiplier you're thinking of, *but* it's not because banks are allowed to lend out more than they take in; rather it's because sum_0^infinity (a^n) = a / (1 - a) Harry wrote: I don't see how the flow can balance if interest is a factor. At any rate, I would say the flow is bad for trickle-down economics, but great for trickle-up economics! Thomas Malloy wrote: The Federal Reserve is a highly profitable business. Hi All, Renting money is one of the oldest and most exploitive human business activities, witness the early Christian prohibition of "usery". It has an interesting history in the United States. From the beginning, there was a savage struggle over central bank creation of money (Hamilton and the Federalists) versus more populist methods of creating money (Jefferson and the Jacksonians). This struggle was probably the real reason Aaron Burr killed Hamilton in a duel. The Federal Reserve has twelve member banks and is a privately held company. Do these banks have a reserve requirement? I have never been able to find out. Maybe they can lend without possessing any deposits whatsoever. I also have never been able to find out who really owns these banks. I previously mentioned that direct issuance of credit and bills by the U. S. Treasury -- actual and potential -- e. g. "greenbacks", may have been a factor in the murders of Lincoln and J. F. Kennedy. Ron Paul, in his 2008 presidential campaign, made elimination of the Federal Reserve one of his issues. Below are enclosed some related items of information. Jack Smith ----------------- Timeline from http://www.avonhistory.org/mil3/bailout8.htm ``1933: With memories of 1929 stock crash still fresh, Glass-Steagall Act separates "commercial banks" focusing on consumer activities (checking, savings) from "investment banks," which deal with speculative trading and mergers. Sept, 1987: Drexel Burnham Lambert, home to "junk-bond king" Michael Milken, creates "collateralized debt obligations" (cdos) -- securities made up of myriad loans and bonds with different risk levels. Dec 22, 1995: As part of Newt Gingrich's Contract With America, Congress enacts a measure making it more difficult to sue companies for securities fraud. Aug 2, 1996: Office of Thrift Supervision issues rule preempting almost all state laws regulating S&L credit activities ... Nov 1999: Gramm-Leach-Bliley Act guts Glass-Steagall, setting off wave of megamergers among banks and insurance and securities companies. Driving force is Sen. Phil Gramm (R-Texas), who has received $4.6 million ... Dec 14, 1999: As Congress heads for Christmas recess, Sen. Gramm attaches 262-page amendment to an omnibus appropriations bill -- the Commodity Futures Modernization Act will deregulate derivatives trading, give rise to Enron debacle, and open door to an explosion in new, unregulated securities ...'' --------------- http://www.rense.com/general26/dutch.htm How The Bush Family Made Its Fortune From The Nazis By Attorney John Loftus [Union Bank (See Below) was the Bush family's holding company for a number of other entities, including the "Holland American Trading Company."] ``For the Bush family, it is a lingering nightmare. For their Nazi clients, the Dutch connection was the mother of all money laundering schemes. From 1945 until 1949, one of the lengthiest and, it now appears, most futile interrogations of a Nazi war crimes suspect began in the American Zone of Occupied Germany. Multibillionaire steel magnate Fritz Thyssen -- the man whose steel combine was the cold heart of the Nazi war machine -- talked and talked and talked to a joint US-UK interrogation team. For four long years, successive teams of inquisitors tried to break Thyssen's simple claim to possess neither foreign bank accounts nor interests in foreign corporations, no assets that might lead to the missing billions in assets of the Third Reich. The inquisitors failed utterly. Why? Because what the wily Thyssen deposed was, in a sense, true. What the Allied investigators never understood was that they were not asking Thyssen the right question. Thyssen did not need any foreign bank accounts because his family secretly owned an entire chain of banks. He did not have to transfer his Nazi assets at the end of World War II, all he had to do was transfer the ownership documents -- stocks, bonds, deeds and trusts -- from his bank in Berlin through his bank in Holland to his American friends in New York City: Prescott Bush and Herbert Walker. Thyssen's partners in crime were the father and father-in-law of a future President of the United States ... It should be noted that the Thyssen group (TBG) is now the largest industrial conglomerate in Germany, and with a net worth of more than $50 billion dollars, one of the wealthiest corporations in the world. TBG is so rich it even bought out the Krupp family, famous arms makers for Hitler, leaving the Thyssens as the undisputed champion survivors of the Third Reich. Where did the Thyssens get the start-up money to rebuild their empire with such speed after World War II? The enormous sums of money deposited into the Union Bank prior to 1942 is the best evidence that Prescott Bush knowingly served as a money launderer for the Nazis. Remember that Union Bank's books and accounts were frozen by the U.S. Alien Property Custodian in 1942 and not released back to the Bush family until 1951. At that time, Union Bank shares representing hundreds of millions of dollars worth of industrial stocks and bonds were unblocked for distribution. Did the Bush family really believe that such enormous sums came from Dutch enterprises? One could sell tulip bulbs and wooden shoes for centuries and not achieve those sums. A fortune this size could only have come from the Thyssen profits made from rearming the Third Reich, and then hidden, first from the Nazi tax auditors, and then from the Allies ... The Dutch connection remained unexplored until 1994 when I published the book "The Secret War Against the Jews." As a matter of historical curiosity, I mentioned that Fritz Thyssen (and indirectly, the Nazi Party) had obtained their early financing from Brown Brothers Harriman, and its affiliate, the Union Banking Corporation. Union Bank, in turn, was the Bush family's holding company for a number of other entities, including the "Holland American Trading Company." It was a matter of public record that the Bush holdings were seized by the US government after the Nazis overran Holland. In 1951, the Bush's reclaimed Union Bank from the US Alien Property Custodian, along with their "neutral" Dutch assets. I did not realize it, but I had stumbled across a very large piece of the missing Dutch connection. Bush's ownership of the Holland-American investment company was the missing link ...'' --------------- http://www.bushwatch.org/family.htm ``1937 Prescott Bush's investment firm sets up deal for the Luftwaffe so it can obtain tetraethyl lead. 1942 Three firms with which Prescott Bush is associated are seized under the Trading with the Enemy Act.''
