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The Fed is not a public institution. It's a private bank. It's as Federal as Federal Express.

Frondo 10y ago
From https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm, "Who owns the Federal Reserve? The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution." ...and, it goes on from there...
- jsprogrammer 10y ago
  You left out some of the best parts. >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, paid to member banks at a maximum rate of 6 percent, determined in part by each member bank's total assets. The bank is operated "not for profit", but generates $9x billion in "profit" for the Treasury (as claimed multiple times in this thread). "Ownership" is a moot red herring. Owning a fictional entity is useless; having claims on its cash flows is not. The Federal Reserve System issues stock to commercial banks and pays an annual dividend to them, before any money goes to the Treasury. It is literally all of the upside with none of the downside (e.g. liability). The investment pays for itself in twelve years and then continues to pay in perpetuity.
maxerickson 10y ago
The Fed pays its profits to the US government. The chairman of the Federal Reserve board is appointed by the President and approved by Congress. It has statutory legal authorities. It's a little more federal than Federal Express. https://en.wikipedia.org/wiki/Federal_Reserve_System https://en.wikipedia.org/wiki/Federal_Reserve_System
- jsprogrammer 10y ago
  >The Fed pays its profits to the US government. After paying a dividend to its stockholders (commercial banks).
  - fanzhang 10y ago
    The dividend to stockholders are less than 10x what they give back to the Federal Government.
    - jsprogrammer 10y ago
      What was "given back" was mostly proceeds from maturing Federal bonds. Commercial banks are just first in line to get a special cut, by law.
forgetsusername 10y ago
This trope. The Fed chair is appointed by the government, and profits are returned to the US Treasury. It's independent insofar as the government doesn't have direct control. But they do have oversight, and could legislate it out of existence tomorrow.
the-dude 10y ago
Reposting my comment https://news.ycombinator.com/item?id=11021613 https://news.ycombinator.com/item?id=11021613 : Well, Yellen recently said something along the lines of 'being part of the team' and Bernanke claimed something similar in his book or talks iirc ( sorry, no references atm ). The whole independent claim is just smoke and mirrors.

From https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm, "Who owns the Federal Reserve? The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution." ...and, it goes on from there...

jsprogrammer 10y ago
You left out some of the best parts. >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, paid to member banks at a maximum rate of 6 percent, determined in part by each member bank's total assets. The bank is operated "not for profit", but generates $9x billion in "profit" for the Treasury (as claimed multiple times in this thread). "Ownership" is a moot red herring. Owning a fictional entity is useless; having claims on its cash flows is not. The Federal Reserve System issues stock to commercial banks and pays an annual dividend to them, before any money goes to the Treasury. It is literally all of the upside with none of the downside (e.g. liability). The investment pays for itself in twelve years and then continues to pay in perpetuity.

maxerickson 10y ago

The Fed pays its profits to the US government. The chairman of the Federal Reserve board is appointed by the President and approved by Congress. It has statutory legal authorities. It's a little more federal than Federal Express. https://en.wikipedia.org/wiki/Federal_Reserve_System https://en.wikipedia.org/wiki/Federal_Reserve_System

jsprogrammer 10y ago
>The Fed pays its profits to the US government. After paying a dividend to its stockholders (commercial banks).
- fanzhang 10y ago
  The dividend to stockholders are less than 10x what they give back to the Federal Government.
  - jsprogrammer 10y ago
    What was "given back" was mostly proceeds from maturing Federal bonds. Commercial banks are just first in line to get a special cut, by law.

forgetsusername 10y ago

This trope. The Fed chair is appointed by the government, and profits are returned to the US Treasury. It's independent insofar as the government doesn't have direct control. But they do have oversight, and could legislate it out of existence tomorrow.

the-dude 10y ago

Reposting my comment https://news.ycombinator.com/item?id=11021613 https://news.ycombinator.com/item?id=11021613 : Well, Yellen recently said something along the lines of 'being part of the team' and Bernanke claimed something similar in his book or talks iirc ( sorry, no references atm ). The whole independent claim is just smoke and mirrors.