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> The bank has just converted a house, wood and nails and siding and dirt, into money. This was a clever twist. But is it true? The house existed and monies (

> The bank has just converted a house, wood and nails and siding and dirt, into money. This was a clever twist. But is it true? The house existed and monies (in possession of others) also existed, so that house already had 'value' and fully convertible to money via a cash sale. What has happened is that the bank, using hypothetical/projected money (i.e. mortgage payments), created money and purchased a valuable assembly of land, wood, and nails. It further has a buyer who must make regular payments of money (earned, not created, by working) until the banks hypothetical money is converted into actual money. And the buyer now is the owner of the house. This is when it works out. Here, the bank clears out its book of the fictional principle payed out, but now has interest payments as profit.) When the buyer defaults, now the bank is the owner of a house, which it can sell and pocket the profit. (Remember, it only had $10k from the Fed, and say foreclosed and sold at $50k, so that's 40k). So my Q which this article did not even touch on, is whether the Federal Reserve is a public entity (so its profits go to US treasury and not some island somewhere), and if it is not, why not? Why would a country's central bank not be owned by the people of that country? Why are these things so opaque and reluctant to have open books? "Legal cases involving the Federal Reserve Banks have concluded that they are "private", but can be held or deemed as "governmental" depending on the particular law at issue. In United States Shipping Board Emergency Fleet Corporation v. Western Union Telegraph Co.,[5] the U.S. Supreme Court stated, "Instrumentalities like the national banks or the federal reserve banks, in which there are private interests, are not departments of the government. They are private corporations in which the government has an interest."" https://en.wikipedia.org/wiki/Federal_Reserve_Bank#Legal_status https://en.wikipedia.org/wiki/Federal_Reserve_Bank#Legal_sta...

nocoiner 4y ago
>So my Q which this article did not even touch on, is whether the Federal Reserve is a public entity (so its profits go to US treasury and not some island somewhere), and if it is not, why not? I believe you are conflating the Federal Reserve itself (the agency established by law that has a dual mandate to pursue price stability and full employment) and the Federal Reserve Banks (Richmond, Dallas, Minneapolis, etc.). The equity of the Federal Reserve Banks are owned by the commercial banks of the United States, and remit their profits to the US Treasury. Which seems consistent with the case you cite, where they’re private entities in some contexts (i.e., owned by private sector banks) but public entities in others.

nocoiner 4y ago

>So my Q which this article did not even touch on, is whether the Federal Reserve is a public entity (so its profits go to US treasury and not some island somewhere), and if it is not, why not? I believe you are conflating the Federal Reserve itself (the agency established by law that has a dual mandate to pursue price stability and full employment) and the Federal Reserve Banks (Richmond, Dallas, Minneapolis, etc.). The equity of the Federal Reserve Banks are owned by the commercial banks of the United States, and remit their profits to the US Treasury. Which seems consistent with the case you cite, where they’re private entities in some contexts (i.e., owned by private sector banks) but public entities in others.