End the Fed?
edwardjulio
Posts: 1,144 ✭✭✭✭✭
End Systemic Elitism - It Takes All of Us
ANA LM, LSCC, EAC, FUN
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edwardjulio
Posts: 1,144 ✭✭✭✭✭
Comments
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Experience the World through Numismatics...it's more than you can imagine.
Introducing legislation is a far cry from the end to the Federal Reserve System. It would be like a team going undefeated in the pre-season and saying, no need to play the season, let's just declare them Superbowl Champions! Those two things are worlds apart from happening, but not impossible.
Family, Neighborhood, Community,
make the World a better place.
The current political atmosphere is ripe for radical changes.
I wouldn’t have ever thought that our neighbors to the north would be vilified, but here we are. Bizarro World.
The fact that this is being proposed now, in itself, is a significant move towards making this happen. Although, there have been similar efforts previously, times are quite different now.
The Fed has been successful in stabilizing an unstable, inelastic monetary supply for the last 110 years, despite claims from those pushing this legislation. How many countries can claim that the currency that they created 100+ years ago is still good and valid. Not many. The Fed works well. Congress sets the debt limit and controls gov't. spending, not the Fed.
If it ain't broke, don't fix it. What is the alternative that we are proposing? Nothing that I've heard yet.
Here is one example of how the Federal Reserve Bank fleeced America.
Prior to the Treasury Accord of 1951, the Federal Reserve was allowed to keep 100% of their profits (which ultimately would go into the coffers of their member/owner banks).
From 1914-1933, all Federal Reserve notes issued had a "redeemable in gold" clause printed on them. So those notes were legally exchangeable for gold, on demand, at any Federal Reserve Bank. The problem was that the Federal Reserve had very little gold of their own and the US Treasury had about 6,000 metric tons. That 6,000 tons was already "over-subscribed" by the 16,000 metric tons worth of US Treasury Gold Certificates that had been issued. And then there was also the 10,000 metric tons worth of gold-clause government bonds outstanding in 1933.
But the far bigger problem was that the gold-clause Federal Reserve Notes issued amounted to 54,000 metric tons of gold. Why would the Federal Reserve issue that much currency without the backing that was promised ?
Federal Reserve notes do not pay interest. They show up on the Fed balance sheet as a liability (although they are likely under-reported as to quantity). For every Federal Reserve note that is accepted into circulation, that amounts to an interest-free loan to the Federal Reserve Bank. The total amount of the Federal Reserve notes issued amounted to 35 Billion dollars. The FED could then use that money to invest in Treasury Bonds or anything that paid interest or dividends. And the Federal Reserve Bank (and their member/owner banks) pocketed all the profits.
When things went bad during the Great Depression, Roosevelt bailed out the FED in 1933 by negating all gold-clause obligations.
I'd sure like to be able to borrow billions of dollars at zero interest, invest that money and keep all the profits, and have the government bail me out if things go sour.
In modern times, the Federal Reserve is allowed to keep up to six percent of their profits and is required to remit the rest to the US Treasury. But six percent is still a lot to essentially skim off the top of the economy (although the FED does not always keep all of that 6% and at their discretion they typically remit more than 94% of their profits to the US Treasury).
And what do we get in return?
How about the most stable monetary system in the world for the last century.
Before the Fed was established, the Treasury had that advantage of interest-free loans through Demand or U.S. Notes. So was it the Treasury fleecing us then and now it's the Fed? If you want a return on your dollars, don't hold them as cash-invest. This is America-we're free to choose to do that instead of holding paper that doesn't pay interest.
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When the US Treasury "profited" from the issuance of currency, those profits went towards government expenditures. This lowered the tax burden on citizens and reduced the interest payments that the government had to pay. The "national debt" was low.
When the Federal Reserve began profiting from the issuance of currency, those profits went to the Fed's member/owner banks. Ultimately, that money went into the pockets of the private owners of those banks. It did not go to the government. So the national debt and taxes began to rise (slowly at first, then rapidly).
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I think I understand where you are getting it wrong.
There are not private owners of the Federal Reserve Bank(s). All of their profits benefit all of us through our stable monetary system. There is no conspiracy here and nobody is profiting except all of us.
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No, you are getting it wrong.
Prior to 1951, the Federal Reserve was allowed to keep 100% of their profits. Those profits were paid to the Fed's stockholder banks as "dividends". Those dividends benefited the owners of those private-sector banks.
Citibank, JP Morgan Chase, Goldman Sachs, Wells Fargo, Bank of America, etc., are all member/owner banks of the Federal Reserve. They own shares in the Federal Reserve Corporation. The US Treasury and US Government do not own any shares. In this regard, the Federal Reserve is entirely owned by private-sector banks. All these owner banks have (in the past) received large amounts of dividends from the Fed.
In 2008 during the financial crisis, who was allowed to fail and who was not ? None of the failed entities were members/owners of the Federal Reserve. The Fed assured that AIG would not fail (even though AIG was not a Fed member) because AIG owed a lot of money to Fed member Goldman Sachs. Owner banks of the Federal Reserve benefit in many ways beyond just receiving dividends.
If we all supposedly benefit, then why not just nationalize the Federal Reserve Corporation ? I bet if that was attempted, those member/owner banks would squeal like crazy at the prospect of losing their special privileges.
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And the Federal Reserve Bank of NY and the US Treasury were paid back and made money in connection with the so-called bail out of of AIG. If AIG had failed there would have been catastrophic international financial ramifications.
Experience the World through Numismatics...it's more than you can imagine.
"The Federal Reserve System is a unique entity, neither purely public nor private, and it's not "owned" in the traditional sense. It's an independent entity within the government, deriving its authority from Congress, and its 12 Federal Reserve Banks are structured like private corporations, but their stock is owned by member banks. "
Perhaps you need to be arguing with Google AI. While not always 100% accurate, I believe that Google has it right above.
You have continued to neglect my point that this system works better than any other, correct? So the important question isn't if the Fed makes a profit and what happens to it. It should be about the topic title-should we get rid of the Fed. Is it worth the price that we pay?
I should also point out that we are free to buy the stocks of the banks who you think own the Fed and therefore profit this way.
You seem to be claiming that we, the U.S. public are being ripped off or cheated in some way. Is this your belief? I think that we are getting a great deal and that the Fed has worked well to stabilize out monetary system for the past century plus. Do you agree or disagree with this point? Should we get rid of it? Let's get back on topic.
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As far as we know, that is true. But other entities were allowed to fail and they were "catastrophic" for the economy just the same. None of these failing entities were among the major Federal Reserve member/owner banks (or owed money to them), even though some of those entities were deeper into speculation and leverage than others that did fail.
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The ownership status is intentionally murky and convoluted, so as to hide who really benefits from the system the most.
Take the New York Federal Reserve bank, for example. Two banks combined own nearly three-quarters of the shares in the NY Fed. Those two are Citibank (43%) and JP Morgan Chase (30%). While that still does not result in overly large dividend payments to those two banks, they do have outsized influence on how the NY Fed is run and on the monetary operations. Having such control allows the banks to manipulate monetary policy for their own benefit first, and everyone else second.
The United States had vast economic growth and advancement from about 1875 to 1913. No central bank was needed. The worst economic depression in American history occurred under the stewardship of the Federal Reserve (1929-1933).
The Federal Reserve made an enormous profit by issuing 56,000 metric tons of gold-clause notes (from 1914-1933), while having no significant gold reserves of their own and the US Treasury had only 6,000 metric tons worth. I previously outlined how the Federal Reserve profited from doing that. Where did all those vast profits go ? They didn't go to the US Treasury.
Since going off the gold standard, the United States has not had any system other than the Federal Reserve. So it would be a fallacy to claim that no other system would work better.
Nationalize the Federal Reserve and take the control of it away from the large private-sector banks. For the general public, that would be more of a payday than a "price we would have to pay".
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And how would your proposal differ from any other country with a national bank?
There are other monetary systems in use now and in the past. We don't have to speculate of what WOULD work best-we have living examples. We have had other systems and things weren't so rosy 1870s-1913. We had an inelastic money supply that got us into recessions over and over again. The Fed was created in 1913 to address that inelasticity. When your central bank responds to an emergency by adding zeros to it's currency and printing lots of it, that leads to disasters like in Germany during the 1920s or Hungary during the 1940s. We have been spared collapse of our monetary system but most other industrialized nations haven't.
How do you think all of those vast profits made by the Fed "would be more of a payday" for us than the price that we currently pay? Is it going to trickle down somehow? And more importantly, how do you address the original need for the Fed-the need for quick changes in the money supply. How did we come up with a few trillion extra dollars during our 2020 Covid emergency? That would not have been possible without the Fed and the worldwide debt/credit market that depends on it and on which we depend.
The Fed isn't made deliberately confusing to hide what is happening. Ownership is split between several entities so that a central bank can't just print as much money as it wants. And we haven't. Checks and balances. And it has proven itself for the past 112 years. Claiming that we or others haven't tried other systems is just wrong. Swapping our well-working model for one that has proven itself unreliable is not a good idea.
I think that America got this right and the Fed shouldn't be changed.
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The money supply should not necessarily be "elastic". When it snaps back, the result is a far worse situation than if there had been a static money supply. You claim that recessions were more frequent from 1870 to 1913. Recessions were generally mild for the public. Overall economic growth was very strong during this period. In some cases the recessions were worse for financial institutions but they had it coming due to over-leverage and over-speculation. Recessions have been far more severe since 1913.
Look what an elastic money supply did in the 1920s. The Fed issued billions in currency with no backing. The profits from that went into the pockets of private sector bank owners. It did not benefit the public at large. The rapid increase in money supply created "the Roaring Twenties". But when the party ended, the elastic money supply snapped back, hard. This caused the Great Depression, and it was the Fed;s fault (and maybe their plan as well).
The current system amounts to financial fascism. The public has no say in who runs the central bank. Those large banks that do control the running of the Fed benefit enormously at the public's expense.
Just one example is the predatory practices that took the Denver Public School System (DPS) for $275 million. DPS was looking to refinance their pension system. They turned to JP Morgan and Citibank. Those financial institutions convinced the idiots running DPS to engage in a complex interest rate swap deal. The financial institutions knew it was a crap deal for DPS and they practiced no fiduciary duty whatsoever. Having control over the NY Fed, they knew what interest rates were going to do and led DPS down the path. It put DPS $275 million farther in the hole. The bill for the shortfall was footed by Denver citizens when property taxes were jacked way up to cover the fiasco.
A much better system is possible. When did it become acceptable for a middle man (credit card company) to skim 3% off the top of the economy via credit card fees ? It is time to eliminate (or fully nationalize) the Federal Reserve and cut out the middlemen. The US Treasury could issue a digital currency with a fee structure that could modulate the money supply and eliminate income taxes as well. When the digital currency is transacted, a small percentage would go to the US Treasury. This would replace the income tax system. Monetary policy could be enacted by changing the fee rate and/or the interest rate on the digital currency. The monetary policy would be an algorithm based on several inputs, and everyone would know what that algorithm is.
Imagine never having to file tax returns again. 87,000 IRS agents could do something else that is productive.
Where in the world did you learn U.S. History?
The money supply should not necessarily be "elastic".
When it snaps back, the result is a far worse situation than if there had been a static money supply.
Really? If it isn't and we can't issue debt beyond our assets, how would we have provided money to any of those in need during Covid or natural disasters? This country would not be able to exist without borrowing.
Recessions have been far more severe since 1913.
That's just plain false. What evidence can you offer? The big ones that I can name off the top of my head are the Hard Times of the late 1830s, The Panic of 1873, The Panic of 1893 and the Panic of 1907. The Great Depression had nothing to do with too much currency being issued and what is "snapback"? The economy isn't a rubber band. Here's what AI says were the causes:
_** **"AI Overview
The five main causes of the Great Depression were the stock market crash of 1929, overproduction and underconsumption, bank failures, the Dust Bowl, and the Hawley-Smoot Tariff. "****_ No, it wasn't the Fed's fault but I can understand why you think so by suggesting that the Fed deliberately caused the Great Depression. I must respectfully disagree and suggest that conspiracies like this are quite unlikely.
OK, the Fed isn't owned by the owners of private sector banks, so why do you think that individuals (or banks for that matter) have any right to draw money out of the Fed? Where is this on anyone's balance sheet. I know, it's deliberately kept off the books so that the massive thievery can continue.
I won't even address your Denver example as it just reeks of conspiracy theories. I'll just say that this doesn't come near convincing me that big banks are conspiring with the Fed. Your presumption that management of the Fed and the big banks know what interest rates are going to do and are using this information against it's clients and/or the public, is extremely unlikely, IMHO.
There is a 3% fee for using credit cards because the public and merchants like it and have chosen this system by their dollar votes-spending their dollars using this technology instead of cash. The public has decided that the convenience of using a card is worth 3%. Or it could be a conspiracy by the banks and Fed to squeeze more money out of an innocent public. What do you think? I know what I think and suspect that we don't agree on this, either.
I'll pass on your suggestion of cybercurrency replacing our present monetary system and buy gold and other tangibles if we move in this direction. I don't see how your suggestion gives the public any more say in their central bank than does the present system, and that was your stated concern.
I would never presume to tell you how to strike coins, and you certainly do have some knowledge on this subject, too, but I think that you are coming to some conclusions based on a misunderstanding of the facts-like who profits from the Fed. Again, if you think that the banks are ripping us off-buy their stock and you'll get on the winning team, too. Do you own any big bank stocks? Why not if this is what you really believe? They MUST be outperforming other bank stocks if these guys have their finger on the scale. Since you have figured out their game, get on board and you'll probably make some money.
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Covid policy discussions get pretty political. I will just state that I do no agree with how it was handled, and leave it at that.
We were specifically discussing the time period of the late 1870s to 1913 when America had strong economic growth and advancement without a central bank. You bring up 1837 and 1873 which is not during that time span. But, in any case, 1837 was the result when Andrew Jackson killed the privately-owned "Bank of the United States" (as he should have). 1873 was sort of a monetary reset which did not affect the general population as much. Same for 1893 and 1907.
Are you serious ? There is a reason that 1929-1933 is called the "Great Depression".
The Gold Standard was so massively cheated upon from 1922-1929 that when the party ended, the credit contraction was severely amplified. There was nowhere near enough real assets out there to satisfy all the obligations that had been promised. It was as if there was no discipline or gold standard at all during this time. The money supply expanded enormously, but real assets did not keep up. And then the velocity of real money slowed to a crawl and everything "snapped back" to reality.
By statute, the Fed can pay up to 6% of their profits to their member/owner banks as "dividends". Prior to 1951 it was 100%. Those profits did not go to the US Treasury. So answer this : Where did they go ?
The Denver Public Schools situation is not a "conspiracy theory". Here are some articles about the real events:
https://denverpost.com/2013/04/12/denver-schools-to-pay-millions-to-reverse-controversial-2008-bond-deal/
https://coloradopols.com/diary/11826/banks-win-on-swaps-while-dps-loses-courtesy-of-bennet-boasberg
https://change.org/p/denver-school-board-demand-wall-street-banks-return-the-300-million-taken-from-denver-schools
https://nytimes.com/2010/08/06/business/06denver.html
https://bondbuyer.com/news/denver-schools-deal-includes-129m-to-terminate-swaps
Why should 3% of my efforts go into the private-sector pockets of credit card companies ?
I would be ok with paying 3%, or even more, if it went to the US Treasury and was a replacement for the income tax system.
So you are aware that my background is as a business person and maker of novelty coins, tokens, and medals. Knowing that will help other readers of this forum understand where I am coming from.
Now, perhaps you might indicate what your background is. From your writings, I suspect that you are involved in, or were involved in, finance, banking, and/or brokering ?
Yes, Mr. Carr, of course I know of your extensive knowledge of the striking coins and medals and have great respect for your expertise and contributions to this discussion board. My family owns the Merchant Financial Group, a company that my father and I started in 1985, after his 40 years of experience in the field. I worked in the business and hold an accounting degree. I've also been a consultant/cataloger for Christies for 12 years and have run a coin/currency business on and off for over 50 years. My knowledge of banking comes as an outgrowth of my interest in obsolete currency. From that, I developed an interest in not only how the banking system evolved over the 1700s-Civil War period but, also, what has happened since. My knowledge of the period under discussion isn't quite as good as earlier periods, but I'm always happy to learn and suspect that you possess knowledge that I don't have.
A little known fellow collector of NY obsoletes from several decades back, Steven Goldberg, once handed me a dusty, old book on NY banking laws and asked me to explain to him why or why not Jacob Barkers notes issued in NY during the War of 1812 were legal, valid issues. I studied the book for several days, returning to Steve with my answer and justification. I forgot the details but remember that I was wrong. I've been studying ever since and am still learning. But this is where my interest in banking history comes from. Steve has passed on but my appreciation for his friendship and knowledge hasn't. Thank you, Steve.
Allow me to address the 3% credit card fee first. I see this as a totally different topic than the Fed. This isn't a bank conspiracy. They are entitled to try to make money any legal and ethical way that they can. And the public has chosen to pay the 3% convenience fee. If everybody refused to pay more and used cash instead, credit cards wouldn't be profitable and therefore wouldn't exist. Banks make more from fees than loans these days. They are allowed to try to be as profitable as the market will allow-just like any other business. But enough of that subject.
Instead of repeating points that I have already made, this response will focus on just one of these points, which I'd be interested to see how you address. That point is that the Fed has worked well so why replace it? And as evidence, I would offer this graph which shows the relationship between the amount of currency in circulation and inflation. how closely they have followed each other for the time shown (75 years). Whenever the money supply increases, inflation responds by rising.
Now look at the 2021 Covid peak. Emergency situation and spending spikes higher than ever before. Inflation then soars to 9% (for a month in 2021) before starting to drop in early 2022 in response to the extreme tightening of money supply started in March 2021. How? The Fed stopped issuing bonds to replace all that were being redeemed. By June 2023 inflation is down to 3.2% and has spent a year and a half below 3%. Forget who is President. This is the Fed controlling money supply WITHOUT influence from the President. The Fed has always been independent of the executive branch and it has worked very well, as illustrated by this chart. They are doing an excellent job controlling inflation-so why would you want to fix what ain't broken?
This thread turned out a whole lot more interesting and informative than I first expected.
Stay tuned folks.
My money is on DCarr. 🍿
@dcarr
Just a few comments...
Why write… As far as we know, that is true.
It is well documented that AIG repaid the Federal Reserve Bank of NY as well as the US Treasury. AIG remains a publicly trades company and the financial structure and terms were transparent to stockholders and the public in general. There is no “As far as we know” component… there is no doubt as to what was done and when it was completed. And a profit was recorded by the FRB of NY and the US Treasury.
TARP funds were made available through the US Treasury that stabilized other financial institutions, including the Auto Sector. And it should be noted that Ford declined assistance… GM accepted TARP funds. TARP was better than the alternative than doing nothing. So it was not just AIG, but other financial institutions benefitted. Sure... there were casualties. But what were the realistic expectations in terms of the actions taken by the Federal Reserve Banks given the circumstances and severity of the financial crisis? Without the action of the Federal Reserve and the US Treasury, the outcome would have been substantially worse creating international financial ramifications.
The US economy was significantly different from the hard times of the 1830's through the panic of 1907. The Panic of 1893 was severe and created a Depression that lasted for years- well into 1897. It was not some sort of "monetary reset" as you suggest. That is just factually wrong and even ridiculous. Stocks plunged, 500 banks closed, 15,000 businesses failed and unemployment in several states exceeded 30%. And in New York, unemployment peaked at 43%. Some railroads went bankrupt and credit essentially froze. Thousands of people lost their homes and their savings. Keep in mind that this was 40 years before the FDIC was created so there was essentially nothing in terms of effective action that could be taken.
I won't go into the details of the various other economic panics including 1837, 1873, 1877 and 1907. From the 1830's through the 1890's, the US economy was primarily agrarian with industrial production expanding. There were regional economic differences whereby a Federal Banking System would have provided some financial continuity.
As for the Great Depression, there were policy decisions such as the Smoot Hawley Act that simply exacerbated the economic contraction. The effects of the Dust Bowl were catastrophic, and those issues were addressed by the Dept of interior and Agriculture. I could spend more time in this but in the interest of time and space, I will wrap this up.
The Federal Reserve Banking System has worked well in part because it's structure and independence.
Experience the World through Numismatics...it's more than you can imagine.
@coinkat Thanks for the additional information. My knowledge of the panics of the 19th century largely coincides with yours.
Arguing that the monetary system of the 19th century was better than what replaced it-the Fed.-defies both common sense and wisdom. If the 19th century system was better, why didn't we move back towards that. We didn't because it wasn't.
The basic problem was the inelasticity of the currency. National banknotes effectively doubled the amount of currency in this form but other types of currency, backed and non backed, was needed to address the Panics that arose every 20 years on average. The fed put an end to that an the FED DID NOT cause the Great Depression. The two reasons that @coinkat cited were major factors and two others reason for The Great Depression were cited by my AI quote. Nowhere can you find the Fed actions as a reason for the Great Depression. The treasury (executive branch) didn't need the Fed to make bad economic decisions-like tariffs (Smoot-Hawley). And there's no doubt that those tariffs exasperated the failing economy.
We issue currency today with the approval of Congress who sets the debt limit. This control over the currency supply has proven very effective for controlling inflation and addressing rapidly needed changes, up or down, in the money supply. Why do you think that a central bank, with less checks and balances would do a "better" job. And what would "better" than near perfect be?
You guys talking about the AIG bailout appear to be barking up the wrong tree. Nobody disputes that the fed and Treasury made out financially after taking a HUGE risk but who cares? Where did those profits go? Certainly NOT into the pockets of some rich fat cat bankers.
Do you know how much JP Morgan Chase lost over the past week? The stock market sure doesn't think that big banks have a sweet deal. Their stocks are getting killed. If they are conspiring with the Fed it's not working, and in a big way.
It's good to understand history in order to keep one from repeating mistakes and learn the best route through. If we don't learn, we're damned to repeat it, right?
@JBK Are you taking bets? Even more important, are you learning anything?
Bets about what? Who might be banned first?
As far as what I've learned, I've learned how disrespectful and dismissive certain posters can be towards differing opinions. I've also learned how certain posters can feign ignorance about an issue in one thread in order to stir the pot with provocative questions, but then pivot to a know-it-all approach on another similar thread.
Yes, it's been very enlightening.
Seems appropriate…
It is not surprising that those who have benefited from the Federal Reserve are supportive of it, and those who have not directly benefited are neutral or against it. The Fed benefits a relatively small portion of the population at the expense of everyone else.
The basic contention that the Fed has "worked well" is just an opinion like any other. My opinion is that the Fed has been no better than, and likely much worse than, having the US Treasury be the central bank. The Fed totally screwed everyone during 1913-1951 (especially 1922 to 1934). The Fed was also, at least partially, responsible for 1938, 1978-1983, 1987, 2000, and 2008.
The Fed lacks "checks and balances" in that the people that run it are chosen by big banks and not the general public. In this regard, it amounts to financial fascism.
Yes, the money supply and inflation are linked. Of course that is the reality when the true definition of monetary "inflation" is an increase in the money supply. What else would you expect the chart to show ? The Fed has fostered (been at fault for) numerous credit expansions and contractions. The worst of which was the 56,000 metric tons of gold notes they issued from 1913 to 1933, while having no gold to back it. How could that ever be considered responsible behavior for any bank ? Did Congress authorize that activity ?
I don't care if a credit card company tries to make 3%. But the credit card system is basically obsolete. Way too much fraud and abuse, and it doesn't have to be that way. If a digital Dollar currency was implemented and transaction fees went to the US Treasury instead of private-sector entities, as a replacement for the income tax system it would be of enormous benefit to many people.
Supposedly the US Government made money on the AIG deal. No matter, it was STILL A BAILOUT. They didn't know if they would make money on the bailout at the time they did it. The Fed could have made money bailing out lots of other companies, but they did not bail those out. AIG was chosen as a bailout candidate because they owed a lot to numerous financial institutions including Fed member/owner Goldman Sachs.
Nobody has answered my question:
When the Fed paid out dividends to their stockholders (of up to 100% of the Fed's profits prior to 1951 and up to 6% after), that money did not go to the US Treasury. Where did it go ?
Let's distill the Fed issue down to the most basic component. The Fed exists (and their goal is) to maximize debt service payments. They want the public and governments to be in debt and to successfully service that debt, to the greatest extent possible. In this regard, it promotes debt servitude (the modern form of "slavery").
This quote by Thomas Jefferson is relevant (much more so than any current "AI-generated" quote):
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Why the nasty, personal attacks? Have I attacked or offended you? And just what are you accusing me of feigning ignorance about? If you don't like my "know-it-all" style, move on. After much experience in this field, I have a lot to offer but never think that I know it all. I can even learn from someone who is deliberately offensive, like you, but you have yet to offer anything of value to me or others. Please move on if you can't contribute.
That's what I'd like to know. Have you read your posts lately? 😆
To paraphrase the late US Senator Daniel Patrick Moynihan...
"You are entitled to your opinion. But you are not entitled to your own facts"
There really is no point in discussing this further.
Experience the World through Numismatics...it's more than you can imagine.
**This quote by Thomas Jefferson is relevant (much more so than any current "AI-generated" quote):
Banking establishments are more dangerous than standing armies; ... the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale".**
I had to laugh because this is first thing that I read in your post. If I understand correctly, he is saying that the principle of spending money that you don't have is swindling. It's funny just how wrong that comment turned out to be but understandable since we didn't have a banking system when this comment was made. Well, that's exactly how our Country grew and became so great and powerful-through borrowing by issuing bonds. Hell, that's the only way we were able to fight the Revolution-money to be paid back to France and Netherlands (and colonists) "by posterity" because we sure didn't have that needed money. Our Country was issuing debt (on which it defaulted, hence Jefferson's opinion) since the Revolution but ALL debt issued since then by the U.S. government has been valid and remains so. So did Jefferson think that it was OK for the government to issue unlimited debt while banks were soon to be regulated by the states and would create their own banking laws, nearly all of which limited the amount of debt that could be issued by banks. This system had not yet developed and that's why Jefferson made his comment when he did. WE HAD NO BANKING SYSTEM THEN.
Ok, on to the rest of the post.
The basic contention that the Fed has "worked well" is just an opinion like any other. My opinion is that the Fed has been no better than, and likely much worse than, having the US Treasury be the central bank. The Fed totally screwed everyone during 1913-1951 (especially 1922 to 1934). The Fed was also, at least partially, responsible for 1938, 1978-1983, 1987, 2000, and 2008.
And what was the role of the treasury in these incidents? Zero? I don't know but blaming all financial problems on the fed isn't accurate. the 2008 crash WAS NOT THE FEDS FAULT. Get off this lame argument. Bad real estate loans were made, bundled together and resold so that their faulty nature was disguised. When the truth came out the s**t hit the fan. The Fed was part of the solution, and had nothing to do with causing the problem.
The Fed lacks "checks and balances" in that the people that run it are chosen by big banks and not the general public. In this regard, it amounts to financial fascism.
The Fed chairman is chosen by the President and approved by Congress for a 10 year term. If you are just going to make up false claims, there is no point in further discussion. You continue to do this repeatedly.
Yes, the money supply and inflation are linked. Of course that is the reality when the true definition of monetary "inflation" is an increase in the money supply. What else would you expect the chart to show ? The Fed has fostered (been at fault for) numerous credit expansions and contractions. The worst of which was the 56,000 metric tons of gold notes they issued from 1913 to 1933, while having no gold to back it. How could that ever be considered responsible behavior for any bank ? Did Congress authorize that activity ?
I have to admit that I'm not following you here. My point was to show that when the Fed changes money supply, the economy reacts. The Fed has the ability to move the economy greatly by controlling the money supply and it has done so to control inflation, one of two primary mission goals for the Fed. The other is the keep our job market healthy.
I don't how the issuance of gold certificates plays into this except as part of the effort to switch from bank currency to government currency. And this seems to be exactly what you are advocating-Federal currency instead of bank currency-right? Gold certificates were Federal currency-the kind that you want. Do you understand the difference between the two and what the Federal government was trying to do at the time with so many different types of currency in circulation? What the Treasury did in concert with the Fed was completely consistent with those goals and worked like a charm, resulting in only FRNs and USNs in circulation. The USNs would be phased out three decades later and nobody has missed them as they no longer served the purpose for which they were created during the Civil War. That was to provide an interest free loan for the government and the FRNs were doing that.
I don't care if a credit card company tries to make 3%. But the credit card system is basically obsolete. Way too much fraud and abuse, and it doesn't have to be that way. If a digital Dollar currency was implemented and transaction fees went to the US Treasury instead of private-sector entities, as a replacement for the income tax system it would be of enormous benefit to many people.
You certainly seem to care by bringing this subject into a discussion of the Fed. I'm open to the idea of changing the system, but you are going to have to convince a lot more people than me and I'm not really convinced that cybercurrency is the answer.
Supposedly the US Government made money on the AIG deal. No matter, it was STILL A BAILOUT. They didn't know if they would make money on the bailout at the time they did it. The Fed could have made money bailing out lots of other companies, but they did not bail those out. AIG was chosen as a bailout candidate because they owed a lot to numerous financial institutions including Fed member/owner Goldman Sachs.
I don't have a problem with the same set of facts on which we both agree. Yes, it was a bailout, so what? The treasury and Fed and President could have helped others but didn't-so what? AIG was chosen to be helped because they were the keystone of the economic system. they insured all of those fraudulent losses and therefore would have been responsible for many bank and corporate failures. No, they weren't chosen because of Goldman Sachs relationship. That's a false claim. If AIG failed, all of the companies relying on their insurance would fail, too and they were "too big to fail".
Nobody has answered my question:
When the Fed paid out dividends to their stockholders (of up to 100% of the Fed's profits prior to 1951 and up to 6% after), that money did not go to the US Treasury. Where did it go ?
Good question. I don't know the answer but can guess that it might have gone onto banks balance sheet, at worst. And if that is the case, anyone can profit by buying stock in these owner banks. But I suspect that if banks are making money from the fed, it isn't a significant part of their earnings, but who knows-not me.
Why don't you do a bit of research here and if you think that you smell a rat, sound the alarm? Post here, write your Congressman, etc. I think that with a little research, you will find no conspiracy leading to Uncle Scrooge sitting in a bank vault, counting those Fed profits for himself.
Let's distill the Fed issue down to the most basic component. The Fed exists (and their goal is) to maximize debt service payments. They want the public and governments to be in debt and to successfully service that debt, to the greatest extent possible. In this regard, it promotes debt servitude (the modern form of "slavery").
Now I have always been taught that they Fed 's mission is to control inflation and provide a stable job market. Your opinion that the Fed exists to keep the public and governments in debt seems like a conspiracy theory to me, without evidence.
Please note that I'm the only "know-it-all" who freely admits to not knowing it all and always wanting to learn. But I DO know plenty and am willing to share and learn more. Why does that threaten a few here? This is one of the better discussions that we've had here on the paper money side. If you are not interested in contributing @JBK, please go away.
The person who accuses others of making "nasty, personal attacks" has now told me for the second time this morning to "go away". 🙄
One thing I've learned over the years is that people who have a total lack of self-awareness are usually not worth listening to.
@dcarr
Was the Jefferson quote before or after the Louisiana Purchase?
I suppose banking establishments are dangerous until you need them.
Experience the World through Numismatics...it's more than you can imagine.
I haven't made any nasty attacks, so I ain't taking the bait.
Please take your own advice and stop listening, if you really believe this. I'm asking, not telling anyone to go away.
Here are some of your gems, just from this thread:
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That certainly sounds nasty to me. Maybe it's all compliments where you come from?
I had simply picked a horse in this race and you used that to go after me.
**That certainly sounds nasty to me. Maybe it's all compliments where you come from?
I had simply picked a horse in this race and you used that to go after me.
**
All true. I'm sorry if my words or style are too harsh for your sensitive ears. All the more reason for you to go away. But you can't seem to.
This is not a horse race. If you are looking at this thread that way that is the problem. We don't look for fights here but you seem to be doing exactly that, right?
You are missing the point. Perhaps you consider this harsh, but it's true, just like the above comments, which were not directed at you, until you decided to insert yourself. You drew the fire first by turning our discussion into a gladiator event, that's why I have been asking you to please leave if you have nothing to contribute.
I'll try to get the discussion back on course by discussing what I know of the first few decades of banking in this Country, as this actually relates fairly closely to this discussion today.
By the 1830s we had lots of private banks AND a central bank-the Bank of the United States. But it didn't start this way. The Bank of North America was the first to open in Philadelphia in 1782 and started issuing bank notes almost immediately. The Bank of the U.S. followed shortly after with perhaps a dozen or two banks open by 1800 in several major cities. The Bank of the U.S. was the biggest or one of the biggest during this period. It would expand to have far more branches in far more cities during the early decades of the 1800s.
The private banks grew very fast, too. Banking laws were few and far between at first but some states developed sound laws after a few decades of trial and error. NY laws were fairly tough, so their notes were counterfeited quite a bit. It's chances of being accepted far from home were greater than notes from other states. States regulated banking but the Federal government was still involved, and in a big way.
The Treasury notes of the War of 1812 illustrate just how involved the Federal government was in the use of debt. there were multiple issues of amounts in the millions and tens of millions. At first, they were large denominations, not really intended to circulated much but be held by banks and the rich but subsequent issues included denominations as low as $3 to satisfy the demand for circulating currency. The issues of this currency was far larger than any of the largest banks and a significant percentage of all currency in circulation. The amounts of paper in circulation was in the hundreds of millions, far greater than the specie in circulation. these treasury notes are extremely rare today because the government PAID THEM ALL OFF. YAY for government use of debt to grow a young, struggling economy.
I'm not sure how the Bank of the U.S. fit in and reason for it's failure was related to the economic depression of the late 1830-40s, but it was BIG during the 1800-1830s period, transacting tens of millions of dollars compared to the largest banks millions. And their notes were all redeemed, too, as evidenced by the rarity of issued genuine notes that have not been redeemed.
Thomas Jefferson was clearly proven wrong because he was commenting on banks in a monetary system that hadn't yet developed, and, more importantly, Jefferson never said this. Issuing money based on posterity isn't swindling-it has proven to be sound banking without which development of the U.S. would not have been possible. The value of the U.S. dollar is far beyond the gold holdings of our Country. Our dollar is very strong and the Fed controls it's value by controlling it's supply. It is important for the Fed to remain independent, so as to focus on it's mission to control inflation and regulate the job market. It should not be influenced by politics in any way but make decisions based on these two goals. That's not my opinion, it's the Fed's stated mission in the first point on page 2, here.
Can anybody add more about the relationship between the major issuers of currency during this period-the banks? The Bank of the U.S. and the treasury issues of 1812-15 AND the 1830s and 1840s. The treasury was playing the big role at this time by issuing larger and larger debt amounts-the tens of millions became hundreds of millions by the Civil War. But finding actual issued, unredeemed notes are near impossible for the same reason-they remained valid over the years and were, therefore always redeemed when found.
Was anyone else confused by the comments about 100% vs. 6% of the bank profits comments? I was but looked into it and now understand. Six percent is the amount of the stock dividend paid every year in return for the banks considerable investment in stock that can't be sold if you want to remain a Fed. member. it's more like a bond. And bonds pay interest and stocks pay dividends. And in this case, they go to the bank-not any individual. And it looks like ALL of the Fed banks combined made about $1.6 billion last year on over $7 trillion in assets. That averages a bit over $100 million per district, considerable, but really small profits for the overseer of thousands of smaller banks.
Also, please correct me on anything that you think I got wrong or can be better explained.
You are a keyboard bully. You have no right to tell me or ask me to leave this forum.
Any "wisdom" you might have to offer is negated by your demeanor.
Thanks for your opinion and I'll ASK you to go away, again. Why do you say I don't have the right to ask you to cease and desist when I just did it again? Of course, I do! And I'm not asking you to leave this forum-only this thread. there's still a whole lotta forum out there in which you can play. But you appear to just want to cause trouble and I've just reported you for the second time for your violations of the rules-harassment and name calling. I don't think that I've violated any rules since I haven't heard anything from the mods.
I'm sorry that you have no wisdom to offer in this thread. Since that's the case, your demeanor leaves you deep in the red while I'm breaking even, by your account. My opinion is that my comments are of value and if you don't agree, why are you sticking around just to break even?
Perhaps we can do a poll on whether we should get rid of the Fed. to see where numismatists stand.