THE Federal Reserve Thread (merged)

nero · **Posted:** Sun Nov 27, 2005 10:34 am

someguy_282 wrote:

nero wrote:

Well no that is not all that you need to know. Can you tell me where exactly does the Fed's profits go? I'll give you a hint, it's initials are U.S.A.

Just because the profits stay in the United States you think the system is fair? Even though they're being given to private banks?

No, almost all of the profits (which are substantial) go directly back to the treasury. It's like one of the top five income sources for the federal government.

Checked the US federal budget top receipts. It's the 8th largest contribution to the federal government receipts. The following are the top ten income source for the federal budget of 2006 (All numbers in billions of dollars):

Code:

970 Income Tax 
480 FOASI (Fed. Old Age. and Survivor Insurance , part of FICA)
220 Corporate taxes
160 FHI (Federal hospital insurance, part of FICA) 
82  FDI (Federal Disability Insurance , part of FICA)
38  Unemployment Trust Fund
35  Highway Trust Fund
29  Federal Reserve Deposit
28  FOASI ((Fed. Old Age. and Survivor Insurance , part of SECA)
26  Estate and Gift Taxes

some_guy282 · **Joined:** Sun Jul 18, 2004 12:00 am **Posts:** 680

Almost all should be just plain all. The government is borrowing money at interest from the banks it has the power to create on its own interest free. It's a scam plain and simple.

nero · **Posted:** Sun Nov 27, 2005 1:06 pm

Quote:

Almost all should be just plain all. The government is borrowing money at interest from the banks it has the power to create on its own interest free. It's a scam plain and simple.

The member banks receive by statute a 6% dividend on their capital they put into the Federal Reserve Banks. Note it's 6% of the capital they put in (like a bond) not 6% of profits or 6% of assets. While this is risk free money and currently gives a better return than government debt it is not out of line with the historic average for risk free assets. The amount paid in dividends to the member banks in 2004 was about 600 million dollars (can be found in annual reports).

You might ask why they should get this money at all, and they might equally ask why should they have to put some of their capital into what is essentially a federal institution. The answer is it's a matter of history. Before there was the federal reserve the banking system had an ad hoc system that performed many of the same functions. These private services truly were money making opportunities for the individual banks. When the Federal Reserve banks were created they were set up to essentially take over these tasks that were deemed too important to be left in private hands. Some large banks lost out when this happened since they no longer could make money off of smaller banks. Instead all banks (no matter what size) were mandated to receive some of the profit that was originally concentrated in the hands of a few large New York banks.

Ironically the very same sort of people who rail against the federal reserve system would have been railing a hundred years ago against "those easterner's" who were at the top of the banking hierarchy before the government tried to fix the problem by creating the federal reserve system.

Quote:

What institutions are members of the Federal Reserve System, and what does membership entail?
National banks--those chartered by the federal government (through the Office of the Comptroller of the Currency in the Department of the Treasury)--by law are members of the Federal Reserve System. State-chartered banks and trust companies may apply for membership. To be accepted as a member, an applicant must meet requirements set by the Board of Governors.
Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, of which 3 percent must be paid in; the remaining 3 percent is subject to call by the Board of Governors. The holding of stock in a Federal Reserve Bank does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations. It is merely a legal obligation that goes along with membership, and the stock may not be sold or pledged as collateral for loans. Member banks annually receive a 6 percent divident on their stock, as specified by law, and vote for some of the directors (so-called class A and class B directors) of their Reserve Bank.

FAQ on FED

CB00097 · **Posted:** Thu Dec 08, 2005 10:52 pm

In layman's terms, can some layout their paradigm of exactly where we are and as importanly are going on this issue?

Specifically:
1) What economic factors have made the Treasury feel they need to hide M3 and RP's?
2) What actions do they believe they will need to take to address those economic factors?
3) How the Treasury's actions can be hidden by the statistics being eliminated?
4) How the Treasury's actions will affect the US stock market, commodities, foreign currencies, foreign stock markets, etc.?
5) How you believe an individual investor should be positioning their assets to best defend against what it is you predict?

In short, I think if someone can tie it succinctly together into one tangible argument, it becomes highly unlikely that this is a coincidence.

To whomever replies, thank you in advance and I greatly look forward to your response.

Cheers,

Matthew.

MicroHydro · **Joined:** Sun Apr 10, 2005 12:00 am **Posts:** 1280

CB00097 wrote:

In layman's terms, can some layout their paradigm of exactly where we are and as importanly are going on this issue?

Specifically:
1) What economic factors have made the Treasury feel they need to hide M3 and RP's?
2) What actions do they believe they will need to take to address those economic factors?
3) How the Treasury's actions can be hidden by the statistics being eliminated?
4) How the Treasury's actions will affect the US stock market, commodities, foreign currencies, foreign stock markets, etc.?
5) How you believe an individual investor should be positioning their assets to best defend against what it is you predict?

In short, I think if someone can tie it succinctly together into one tangible argument, it becomes highly unlikely that this is a coincidence.

To whomever replies, thank you in advance and I greatly look forward to your response.

Cheers,

Matthew.

Education is expensive, but ignorance is even more costly. Take some time at the library and read Greenspan's Fraud by Ravi Batra and Secrets of the Temple by Willliam Greider. Also read the many text and audio archives at http://www.financialsense.com

jeffvail · **Joined:** Wed Dec 15, 2004 1:00 am **Posts:** 138

I'm thinking there will be some interestng arbitrage opportunities between derivatives on the Iranian bourse and NYMEX/IPE...

Hi there "Sarbanes-Oxley part II"... meet my friend "Market Demand"

And on an unrelated (??) note, Ariel Sharon has informed the Israeli military that they should be prepared to strike Iran by March. Funny sense of timing, that guy.

Bloke · **Joined:** Sun Dec 11, 2005 1:00 am **Posts:** 2

M3 stats are being withdrawn to hide a sharp fall in money supply.

It is a deliberate move designed to cause a depression and thereby transfer even more wealth into the hands of the controlling bankers.

The general public has been weened onto huge debts and once a depression kicks in their will be so much wealth there for the taking, like taking candy off children.

Wealth is not destroyed in a depression, merely transferred. The sheep are being prepared for shearing.

Bloke · **Joined:** Sun Dec 11, 2005 1:00 am **Posts:** 2

And Gold is not being bought as a hedge against inflation, it is being bought to protect wealth against a depression.

docinthebox · **Joined:** Fri Jan 13, 2006 1:00 am **Posts:** 1

I also find it interesting that there is now an escalation of the US to Take Iran to task regarding its nuclear program. Is the military in the wings? It will be interesting to see what happens, if Iran doesn't back down regarding its nuclear program.... Stay tuned!

dbarberic · **Joined:** Tue Sep 27, 2005 12:00 am **Posts:** 237

Bloke wrote:

And Gold is not being bought as a hedge against inflation, it is being bought to protect wealth against a depression.

Be careful. Gold will protect wealth against an inflationary recession or depression, but it will not protect in a deflationary recession or depression. The definition of deflation is a contraction in the money supply, which has the net effect of increasing each dollars worth/reducing asset values in the same proportion.

While most "honest" economists do not debate that there will be a recession or even a depression, there is still a lot of arguments around if it will be inflationary or deflationary.

IMO, given Helicopter Ben’s reputation and past writings that it is better to drop money out of helicopters than to allow asset deflation, I’d hedge my bets with inflation. However, it does not mean that we could not experience deflation. Investors will need to monitor this closely.

crude_intentions · **Posted:** Wed Feb 22, 2006 11:47 am

I thought this was A bit of interesting news: Yahoo News
Also something else caught my eye on his Wiki bio.
http://en.wikipedia.org/wiki/Roger_W._Ferguson,_Jr.

Quote:

On October 11, 2005, Lawrence Kudlow stated that he believes Alan Greenspan is pushing his name to the Bush Administration for the appointment of the Federal Reserve Chairmanship (although that position eventually went to fellow governor Ben Bernanke.) As a supply-side economist, Kudlow said he was worried that Ferguson would follow a Neo-Keynesian policy and would oppose the Bush Administration's economic policy.

I have to wonder is he angy he did'nt get the job? Tired? Or is it he knows what Bernanke is up too and does'nt want to be caught in the fallout.

Dreamtwister · **Joined:** Mon Feb 06, 2006 1:00 am **Posts:** 2567

If he didn't want to get caught in the fallout, you'd think he'd get out before it all comes crashing down. The way things are looking right now, if I were him, I'd be concerned whether the Fed will even EXIST by late April.

kerosene · **Joined:** Thu Mar 31, 2005 1:00 am **Posts:** 70

Quote:

I were him, I'd be concerned whether the Fed will even EXIST by late April.

wanna bet 2 oz of gold that it does?

MD · **Posted:** Thu Feb 23, 2006 3:50 am

crude_intentions wrote:

I have to wonder is he angy he did'nt get the job? Tired? Or is it he knows what Bernanke is up too and does'nt want to be caught in the fallout.

#2's(#1 losers) frequently leave shortly after the transition. This is not news.

arretium · **Posted:** Thu Feb 23, 2006 12:57 pm

Dreamtwister wrote:

If he didn't want to get caught in the fallout, you'd think he'd get out before it all comes crashing down. The way things are looking right now, if I were him, I'd be concerned whether the Fed will even EXIST by late April.

What do you know that I don't?

Are you referring solely to the Iranian Euro Oil Market? I hope that's not your sole reasoning.

THE Federal Reserve Thread (merged)

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