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Thread: The fedral reserve is privately owned.

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    Default The fedral reserve is privately owned.

    I like to read conspiracy theories. I wanted to know how everyone or if anyone thinks about this.


    http://tvnewslies.org/tvnl/index.php...l-reserve.html

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    Default Re: The fedral reserve is privately owned.

    Oops in the title, its federal.

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    Default Re: The fedral reserve is privately owned.

    I think that the person who wrote this is a crackpot.

    There is a reason that the Federal Reserve is not controlled by Congress, which is that it is supposed to act purely upon economic inputs without political influence. Politicians tend to be short-sighted and are primarily interested in currying favor with their constituents and donors for the purpose of remaining in office. Sometimes the short-term interests of politicians and stable fiscal policy are simply not in alignment, which is why our forefathers had the wisdom of keeping the Federal Reserve semi-autonomous.

    The head of the Fed is still appointed by the Preisdent and can be replaced if he is doing a bad job, so there is a mechanism for removal if it is needed. But I cannot help but be glad that the Fed is not subject to every whim of a political class that has clearly shown itself to be inept in controlling spending or in almost every other fiscal matter that we are currently facing.

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    Default Re: The fedral reserve is privately owned.

    Thanks for ur input Rick. Sometimes I read things like this and think the people are crazy and others I start to wonder... It's an interesting topic.

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    Default Re: The fedral reserve is privately owned.

    Technically speaking, the FED is owned by member private sector banks ( one major owner is CitiBank, another is Morgan etc. ) - who are paid a 6% annual dividend on their 'investment' in FED shares. Smaller banks, private sector businesses and individuals etc. may NOT purchase / own FED shares. Indeed foreign interests do exist in the ownership of shares of the member banks ... which in turn own shares of the FED ( with a well publicized example being the Saudi Prince who purchased some percentage of CitiBank during the financial distress of 2008 ).

    Technically speaking, the FED gets to buy newly printed US dollars from the US Mint for the cost of printing the paper ( estimated to be 4 cents for paper bills ... far less for electronic digits ), and in turn is able to use that newly printed money to make loans to member banks or purchase assets from member banks at full value of 100 cents. The 'profits' from this 96+ cent per dollar arbitrage run into the hundreds of billions per year ... most of which is repaid to the US Treasury ( after subtracting the 6% member bank dividend payments plus salaries / expenses of FED personnel and FED regional bank facilities ).

    Technically speaking, member banks are able to deposit their excess reserves in interest bearing FED accounts. From a real world standpoint, this currently means that member banks can borrow from the FED at a ~0.25% interest rate and in turn deposit those borrowed funds in different FED accounts paying a ~2-3% interest rate ( i.e. as 'guaranteed' of a profitable 'safe investment' as can be found anywhere in the world ).

    Technically speaking, the FED's chairman and board of governors are appointed by US Presidents. Technically speaking, the FED is subject to oversight by the US Congress. From a real world viewpoint, while the US congress has the authority to audit the FED they have never done so ... thus real world oversight has generally consisted of the the FED Chairman ( currently Ben Bernanke ) being called to testify before congress. A recent increase in congressional oversight led to the forced disclosure of the actual beneficiaries of FED TARP loan funds ( many of which were foreign financial institutions ).

    The latest version of the FED was chartered in 1913. However, earlier versions existed. Google 1790 Bank of the United States, also 1832 Second Bank of the United States.

    Again technically speaking, FED decisions to expand or contract the US money supply and/or make transactions with member banks to sell or buy US Treasury bonds ( and lately other financial instruments as well ) are ostensibly intended to 'stabilize' the US financial system ( and lately some foreign financial institutions as well ), and also to promote economic growth and restrain inflation.

    Indeed there are those that take the position that the FED is an 'independent' body, as well as those who dispute that position given the structure of political appointment of FED officials as well as the ownership interests of the member banks. As was the case with the link in the original post, there is a fair amount of political controversy over the actual role of the US FED which I won't elaborate about in this forum.

    ~
    Last edited by Melonie; 09-08-2011 at 12:24 AM.

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    Default Re: The fedral reserve is privately owned.

    ^^^ I know and understand. This has gone from one of the most interesting forums on this board to one of the dullest. All in the name of eliminating "politics". That's how Pryce wants it and we all have to go along. It's his board. What I don't get is WHY ?

    Now everybody is reluctant to post anything topical for fear of being "political". You ; me ; Eagle. Everybody. What interest is being served by neutering this forum ? Who is being helped ? Who is happy with the current state of this forum ? Raise your hands please. I'm serious. Who likes a relatively dead forum , devoid of all but the most vanilla , "technical" ? content ? Compared to what we had up to about a week ago ?

    O.K. There were some politics. Even Pryce admitted that politics and economics are inextricably mixed together. There certainly was a wide variety of views expressed. All the way from socialist to ultra-Austrian. So what ? Obviously someone complained so that Pryce felt it necessary to tell everyone to go to their rooms without dessert. (Lol. Just kidding.) Who was it ? What was their problem ? Was this forum so broken that it had to be fixed ? Mel has been the moderator on here for years and the 51% rule seemed to work just fine. When things got too "political" she always stepped in and steered things towards the economic. And when she couldn't, she told everyone to tone down the politics. Afaik, she never had to close a thread.

    Did things ever get heated ? Once in a while. They even got personal on rare occasions but again, so what ? Nothing big boys and girls couldn't handle with a little maturity and restraint.

    If you are a macro-investor especially, then I submit that many of the topics and threads on here were right up your alley. Now they are gone. Who benefits from that ?

    I always scratch my head and wonder about people who want LESS information and in extreme cases LESS discussion. Who is seriously in favor of that ? Somebody must be because all you have to do is look at what has happened to Dollar Den. Somebody must be happy now that this forum has been thoroughly disinfected. Why don't you let us know how and why you think it is better now ?

    I submit that there was nothing posted on here that you couldn't read in the WSJ, Forbes, Fortune or see and hear on CNBC or FoxBusiness . In most cases there was more depth and a wider variety of views expressed here than in those fora I just listed. What was so bad about that ?

    As for the original topic of this thread : Who should care about the history, structure, make up and policies of the Fed ? Only anyone who works, saves, invests, has a business or purchases things. If you are at all affected by interest rates, inflation and the value of the dollar, then Fed policy ought to be of serious interest. It might also interest you to know, unless you quake at anything "political", that Congress has minimal oversight over the Fed even though Bernanke has been relatively open and accessible compared to many past Chairmen.

    There is a lot more of relevance that can and arguably ought to be said about the Fed and Fed policy but I am trying to go along to get along. I'll just say I am still long on gold and shorting long term Treasuries.
    Last edited by Eric Stoner; 09-08-2011 at 11:42 AM.

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    Default Re: The fedral reserve is privately owned.

    There have been multiple Central Banks in this nations history..... For the most part, periods of dollar strength coincide with the times there wasn't.


    http://en.wikipedia.org/wiki/History..._United_States


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    Default Re: The fedral reserve is privately owned.

    ^ Where'd the chart come from? Who compiled it based on what data?

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    Default Re: The fedral reserve is privately owned.

    That's how Pryce wants it and we all have to go along. It's his board.
    That's the bottom line. Pryce is paying the bandwidth bills for SW and we all get to use SW 'for free'. Therefore Pryce is the ultimate arbiter of what content will and will not be allowed on SW. And at risk of making a political statement, unlike the USA in general, on SW those who 'pay the bills' get to vote and those who enjoy the benefits of SW 'for free' don't get to vote on what benefits they will or won't receive.

    ~
    Last edited by Melonie; 09-08-2011 at 02:46 PM.

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    Default Re: The fedral reserve is privately owned.

    Quote Originally Posted by dlabtot View Post
    ^ Where'd the chart come from? Who compiled it based on what data?
    There are literally hundreds, if not thousand of charts depicting the purchasing power of the dollar over any number of years..... Here is another from the time of the creation of the Federal Reserve in 1913.... While they are not quite identical..... The point is made pretty clear.....

    Do you perhaps think our currency has held it's purchasing power over the decades?








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    Default Re: The fedral reserve is privately owned.

    When someone is challenged to reveal the source of their so-called data and they respond with bluster, only one word comes to mind:


    BULLSHIT



    Of course, you still have the opportunity to answer my question if you so choose. You posted another 'chart' - who drew the chart? It says the source is "Bureau of Labor Statistics"... is that true? or a lie? where can I find the underlying data to confirm that this chart is accurate?

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    Default Re: The fedral reserve is privately owned.

    Quote Originally Posted by dlabtot View Post
    When someone is challenged to reveal the source of their so-called data and they respond with bluster, only one word comes to mind:


    BULLSHIT



    Of course, you still have the opportunity to answer my question if you so choose. You posted another 'chart' - who drew the chart? It says the source is "Bureau of Labor Statistics"... is that true? or a lie? where can I find the underlying data to confirm that this chart is accurate?

    The Bureau of Labor Statistics on CPI (inflation).... which is a way of measuring the purchasing power of the dollar.

    http://www.bls.gov/cpi/cpifaq.htm#Question_1


    Here is a calculator the Bureau provides.

    http://www.bls.gov/data/inflation_calculator.htm



    Keep in mind the way inflation is now measured is designed to lower the official CPI. John Williams calculates almost all govt. numbers the way they used to be calculated..... Not surprisingly he shows inflation and unemployment much higher than the official numbers.




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    Default Re: The fedral reserve is privately owned.

    Quote Originally Posted by dlabtot View Post
    ^ Where'd the chart come from? Who compiled it based on what data?
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    It looks to me like chart is a "reverse inflation" chart- it essentially says that purchasing power of $1 in 1913 is now worth only pennies, due to nearly a century worth of mostly inflation years!! DUH!! Really Nobel Prize material.

    Using statement "strength of the dollar" more often implies strength relative to foreign currencies. So, what is mike f getting at by posting this graph? Any SW members born in 1913??
    I'm right 96% of the time. I don't sweat the other 5% .......................

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    Default Re: The fedral reserve is privately owned.

    I was pointing out that this country has had other central banks before this one..... Also that inflation is what you get...... Where is it written that we must have inflation?

    Actually to be honest... the only way this fractional reserve, debt based, fiat money system can work is with more money creation..... The problem really is..... That all money is debt based, meaning that all new money is (can you say Ponzi) loaned into existance...... Save these recent QE's.

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