7 ms·

Interesting isnt it ? The banks are secured by the govt which happens to be the biggest debtor to the banks. Problem being the govt is really the people and w

by geggam 8y ago

Interesting isnt it ? The banks are secured by the govt which happens to be the biggest debtor to the banks. Problem being the govt is really the people and when it comes down to it the people are on the hook for their own debts regardless of how it gets paid. AND we bail out the corporations who spend too much.

manfredo 8y ago
Not really. The government has the authority to print money. They can ensure banks never run out of cash. But it may cause inflation if they overdo it. I suppose inflation is paying for it, but I get the feelings that the semantics around whether inflation is "paying" for things have changed recently (or maybe I've been hearing too many ardent MMT evangelists).
- geggam 8y ago
  The ability to print money was outsourced to the Federal Reserve, while regulated by the govt it is not the govt. When we "borrow" money from the Fed it is at interest. We have created a debt based system where everything is a borrow. Fiat currencies are based on the value of the peoples ability to create value. When the people owe the banks more value than they can generate they are bankrupt. When the people and the govt ( the people ) owe money to the banks to the point they cannot generate enough value to cover the debts what will happen ? I think we will see soon :)
  - geggam 8y ago
    BTW you downvoters who think the Federal Reserve is the govt should read a bit https://www.federalreserve.gov/aboutthefed/section9.htm https://www.federalreserve.gov/aboutthefed/section9.htm
    - manfredo 8y ago
      The federal reserve is indeed part of the government. It has separations from the executive branch but it is indeed part of the government. The same website you linked to has an FAQ page dedicated to clearing up this misconception: https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm > The Federal Reserve System is not "owned" by anyone. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest. > Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. 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. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
      - geggam 8y ago
        Incorrect. That is like saying any corporation publicly traded yet regulated by the govt is now part of the govt. Any bank can apply to become a member and buy shares of the federal reserve. They simply are regulated by the govt.
        manfredo 8y ago
        No. Again I'm really not sure why you insist on saying so given the fact that the Federal Reserve saw fit to dedicate a whole FAQ section to say otherwise. Publicly traded companies area still owned by private people and organizations. The publicly traded nature subjects them to additional oversight, but they're still private enterprises. Where can I buy stake in the Federal reserve? What was it's stock price history? We can't because nobody "owns" the federal reserve, just like nobody "owns" the FBI or the Navy.
        geggam 8y ago
        What you cant see ? A corporation with employees becomes a member of the Federal Reserve. The job is to generate money from nothing, and get paid for it. So as a federal reserve bank you create money, charge for doing so and then you change hats from federal reserve to local private bank and loan that money to the private sector charging profits for doing so. You charge fees coming and going get salaries for both jobs and have no exposure for doing so. Bonus if your bank fails you are insured by the people who are borrowing money from you. And you think they are part of the govt
        manfredo 8y ago
        Yes, banks can join the federal reserve system and other banks can be FDIC insured. But how do you go from that to "the Federal reserve is not part of the government". It's the central bank of the United States. Its chairman is appointed by the government. All profits are paid back to the United States. Is about as independent from the government as the FBI. Saying that the Federal reserve system is not part of the government is as non-sensical as saying the FBI is not part of the government because similar degrees of independence from the executive branch exist. I get that the fact that government agencies can be independent from the executive branch is difficult to wrap one's head around but that sort of independence is not the same as "not part of the government". Here's yet another page from the federal reserve website that explicitly says that it's part of the government: https://www.federalreserve.gov/faqs/about_12799.htm https://www.federalreserve.gov/faqs/about_12799.htm > The Federal Reserve, like many other central banks, is an independent government agency but also one that is ultimately accountable to the public and the Congress. It says right there that it is a government agency. Independent, yes, but ultimately accountable to the government. It's leadership is appointed by the government.
  - manfredo 8y ago
    The federal reserve would print the money. They probably have an even bigger interest in preventing the collapse of America's financial institutions. It's still a part is the government, just one with extra layers of separation from the executive. Like the FBI.
    - geggam 8y ago
      Incorrect 1. Applications for membership by State banks -- Any bank incorporated by special law of any State, operating under the Code of Law for the District of Columbia, or organized under the general laws of any State or of the United States, including Morris Plan banks and other incorporated banking institutions engaged in similar business, desiring to become a member of the Federal Reserve System, may make application to the Board of Governors of the Federal Reserve System, under such rules and regulations as it may prescribe, for the right to subscribe to the stock of the Federal reserve bank organized within the district in which the applying bank is located. [edited for formatting]
      - manfredo 8y ago
        I'm not sure how your quote is relevant to the statement that the Federal Reserve is part of the US government. The Federal Reserve is "independent within the government" [1] not separate from the government. There's a whole page on the Federal Reserve website's FAQ section dedicated to explaining this. Your quote seems to be about how commercial or State banks apply to become a part of the Federal reserve system. 1. https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm
        geggam 8y ago
        Can you not read ? "Any" bank can become a member. It is quite clear in plain english.
        manfredo 8y ago
        Your point? The Federal reserve system is still part of the government. The banks that joined it form the sub-branches of the federal reserve system: https://www.federalreserve.gov/aboutthefed/structure-federal-reserve-system.htm https://www.federalreserve.gov/aboutthefed/structure-federal... Any natural born citizen can become a member of Congress (provided they are over 30 iirc). Does it follow then that Congress is not a part of the government because any persom can become a part of it. A formerly private citizen now sits in the white house. Does it follow that the executive branch is not part of the government? I cannot comprehend why the fact that non-government entities can joint a government entity makes you think the latter ceases to be part of the government.
  - behindmyscreen 8y ago
    Printing money was alway the job of private banking in the US. Bank notes were used in the 19th century but sucked because podunk bank’s note wasn’t accepted in NYC...the federal reserve fixed that by centralizing all bank note creation to a consortium of reserve banks.
ummonk 8y ago
Nobody ends up on the hook. The Fed is a large enough entity that it can step in and prevent the tragedy of the commons that occurs when individual banks start failing and people start making bank runs. This is how the federal government made money off the bailouts. Well this and basically looting Fannie Mae and Freddie Mac.

by geggam 8y ago

manfredo 8y ago

Not really. The government has the authority to print money. They can ensure banks never run out of cash. But it may cause inflation if they overdo it. I suppose inflation is paying for it, but I get the feelings that the semantics around whether inflation is "paying" for things have changed recently (or maybe I've been hearing too many ardent MMT evangelists).

geggam 8y ago
The ability to print money was outsourced to the Federal Reserve, while regulated by the govt it is not the govt. When we "borrow" money from the Fed it is at interest. We have created a debt based system where everything is a borrow. Fiat currencies are based on the value of the peoples ability to create value. When the people owe the banks more value than they can generate they are bankrupt. When the people and the govt ( the people ) owe money to the banks to the point they cannot generate enough value to cover the debts what will happen ? I think we will see soon :)
- geggam 8y ago
  BTW you downvoters who think the Federal Reserve is the govt should read a bit https://www.federalreserve.gov/aboutthefed/section9.htm https://www.federalreserve.gov/aboutthefed/section9.htm
  - manfredo 8y ago
    The federal reserve is indeed part of the government. It has separations from the executive branch but it is indeed part of the government. The same website you linked to has an FAQ page dedicated to clearing up this misconception: https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm > The Federal Reserve System is not "owned" by anyone. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest. > Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. 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. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
    - geggam 8y ago
      Incorrect. That is like saying any corporation publicly traded yet regulated by the govt is now part of the govt. Any bank can apply to become a member and buy shares of the federal reserve. They simply are regulated by the govt.
      - manfredo 8y ago
        No. Again I'm really not sure why you insist on saying so given the fact that the Federal Reserve saw fit to dedicate a whole FAQ section to say otherwise. Publicly traded companies area still owned by private people and organizations. The publicly traded nature subjects them to additional oversight, but they're still private enterprises. Where can I buy stake in the Federal reserve? What was it's stock price history? We can't because nobody "owns" the federal reserve, just like nobody "owns" the FBI or the Navy.
        geggam 8y ago
        What you cant see ? A corporation with employees becomes a member of the Federal Reserve. The job is to generate money from nothing, and get paid for it. So as a federal reserve bank you create money, charge for doing so and then you change hats from federal reserve to local private bank and loan that money to the private sector charging profits for doing so. You charge fees coming and going get salaries for both jobs and have no exposure for doing so. Bonus if your bank fails you are insured by the people who are borrowing money from you. And you think they are part of the govt
        manfredo 8y ago
        Yes, banks can join the federal reserve system and other banks can be FDIC insured. But how do you go from that to "the Federal reserve is not part of the government". It's the central bank of the United States. Its chairman is appointed by the government. All profits are paid back to the United States. Is about as independent from the government as the FBI. Saying that the Federal reserve system is not part of the government is as non-sensical as saying the FBI is not part of the government because similar degrees of independence from the executive branch exist. I get that the fact that government agencies can be independent from the executive branch is difficult to wrap one's head around but that sort of independence is not the same as "not part of the government". Here's yet another page from the federal reserve website that explicitly says that it's part of the government: https://www.federalreserve.gov/faqs/about_12799.htm https://www.federalreserve.gov/faqs/about_12799.htm > The Federal Reserve, like many other central banks, is an independent government agency but also one that is ultimately accountable to the public and the Congress. It says right there that it is a government agency. Independent, yes, but ultimately accountable to the government. It's leadership is appointed by the government.
- manfredo 8y ago
  The federal reserve would print the money. They probably have an even bigger interest in preventing the collapse of America's financial institutions. It's still a part is the government, just one with extra layers of separation from the executive. Like the FBI.
  - geggam 8y ago
    Incorrect 1. Applications for membership by State banks -- Any bank incorporated by special law of any State, operating under the Code of Law for the District of Columbia, or organized under the general laws of any State or of the United States, including Morris Plan banks and other incorporated banking institutions engaged in similar business, desiring to become a member of the Federal Reserve System, may make application to the Board of Governors of the Federal Reserve System, under such rules and regulations as it may prescribe, for the right to subscribe to the stock of the Federal reserve bank organized within the district in which the applying bank is located. [edited for formatting]
    - manfredo 8y ago
      I'm not sure how your quote is relevant to the statement that the Federal Reserve is part of the US government. The Federal Reserve is "independent within the government" [1] not separate from the government. There's a whole page on the Federal Reserve website's FAQ section dedicated to explaining this. Your quote seems to be about how commercial or State banks apply to become a part of the Federal reserve system. 1. https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm
      - geggam 8y ago
        Can you not read ? "Any" bank can become a member. It is quite clear in plain english.
        manfredo 8y ago
        Your point? The Federal reserve system is still part of the government. The banks that joined it form the sub-branches of the federal reserve system: https://www.federalreserve.gov/aboutthefed/structure-federal-reserve-system.htm https://www.federalreserve.gov/aboutthefed/structure-federal... Any natural born citizen can become a member of Congress (provided they are over 30 iirc). Does it follow then that Congress is not a part of the government because any persom can become a part of it. A formerly private citizen now sits in the white house. Does it follow that the executive branch is not part of the government? I cannot comprehend why the fact that non-government entities can joint a government entity makes you think the latter ceases to be part of the government.
- behindmyscreen 8y ago
  Printing money was alway the job of private banking in the US. Bank notes were used in the 19th century but sucked because podunk bank’s note wasn’t accepted in NYC...the federal reserve fixed that by centralizing all bank note creation to a consortium of reserve banks.

ummonk 8y ago

Nobody ends up on the hook. The Fed is a large enough entity that it can step in and prevent the tragedy of the commons that occurs when individual banks start failing and people start making bank runs. This is how the federal government made money off the bailouts. Well this and basically looting Fannie Mae and Freddie Mac.