How Powerful Is the Federal Reserve?



ABCNews

Apart from the discontinuation of M3 the Federal Reserve statement also mentioned that

The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars.


Some commentators think that it is the removal of the RP and Eurodollar data that is much more significant and worrying than the disappearance of M3 which has had a bit of a mixed career as an inflationary indicator. The repurchase agreements are a key means by which the Federal Reserve oils the wheels of the financial system. At the end of 2004 these transactions were worth $5 trillion.

http://en.wikipedia.org/wiki/Repurchase_agreement

This looks like one part of the market that is about to get a lot less transparent.

Arthur Burns, Federal Reserve Chairman under Nixon, finished his career as ambassador to West Germany. The Germans, averse as they are to inflation due to the horrible Weimar hyperinflation, asked him why he didn't stop inflating the economy since the Federal Reserve is independent. Burns replied that the Federal Reserve must do everything the President asks or else it will lose its independence.

It has alot of power but very little control. It is more like a train than a car. It can only determine the speed we are going but not the direction. Similarly, like a train engineer, the Federal Reserve's controllers are even further limited by their choice to obey the rules.

The Fed is a government regulated Private Corporation charged with controlling the various money supplies inside and outside the USA. They set the interest rate at which the federal government borrows money. If that isn't very very powerful, I don't know what is.

The Fed controls the money supply and thus inflation. They want to make sure there is enough money to keep the economy humming, but not too much as to produce too much inflation. Those further up the economic ladder benefit from inflation because they tend to own a lot of assets, which tend to hold their value against a depreciating dollar. There is a time lag for prices to rise in the face of the depreciated dollar vastly benefiting those "generating wealth" (the rich.) Those further down the food chain face the worst hit from inflation because they tend to be already very poorly compensated for their labor and they don't own much. I’m reminded of Ebenezer Scrooge and Bob Cratchit. Americans relieve their guilt by believing that anyone can become rich if they “work hard.” Since the rich are actually creating jobs with their wealth creation (see “trickle down economics”), then they deserve to be taxed less so they can do more “good” with the money which would have been “wasted” by the government. Who makes up for tax cuts for the rich? I think you can answer that. Inflation pushes lower classes into higher and higher tax brackets even though their buying power is at best the same as before.

The average American is very poorly informed which is good for the Fed because if they bothered to educate themselves, mobs probably would have burned down these banks long ago. The Fed is the reason for the destruction of the manufacturing base in the USA. To the financial community, why manufacture here when you can buy cheaper overseas? To them it’s a win on several fronts because not only can you get cheaper products, but it gives the Fed another reason to keep interest rates low and allow the money supplies to grow. The result is cheaper products, more money moving out of the country and extra money created to replace it. This extra money goes right into the economy. This process has been called exporting inflation. The losers are those that used to work in the manufacturing sector.

It all sounds like a ponzi scheme to me. Eventually, the buyers of the treasury bills become saturated and they start spending their dollars in the USA. The fed reacts to this extra money entering the economy by raising interest rates.

If you think about it, the financial community likes the USA exactly as it is. Their version of a perfect world is where the US buys and the rest of the world makes. Since the US has nothing to sell, foreign dollars never return. For the rest of us outside the financial community, it sucks. The average American is forced to participate in financial markets to keep his/her wealth from evaporating. Putting money in the bank is like burning it slowly in the fireplace. The rest of the world doesn’t understand this. Americans live in a world where the money in their wallet is burning a hole and flying away. That’s why we don’t save much.

Considering the above, the fed is about as powerful as the entire nuclear arsenal.

A good analogy in that the Fed squates as a threat over everything, keeping everything in check, the control through threat. Then, suddenly, it can all go wrong in an instant.

http://www.freedomfinancialconsultants.com/feds.htm
A Phone Call To The Fed: The following is a conversation with Mr. Ron Supinski of the Public Information Department of the San Francisco Federal Reserve Bank. This is an account of that conversation.
CALLER - Mr. Supinski, does my country own the Federal Reserve System?
MR. SUPINSKI - We are an agency of the government.
CALLER - That's not my question. Is it owned by my country?
MR. SUPINSKI - It is an agency of the government created by congress.
CALLER - Is the Federal Reserve a Corporation?
MR. SUPINSKI - Yes
CALLER - Does my government own any of the stock in the Federal Reserve?
MR. SUPINSKI - No, it is owned by the member banks.
CALLER - Are the member banks private corporations?
MR. SUPINSKI - Yes

CALLER - Are Federal Reserve Notes backed by anything?
MR. SUPINSKI-Yes, by the assets of the Federal Reserve but, primarily by the power of congress to lay tax on the people.
CALLER - Did you say, by the power to collect taxes is what backs Federal Reserve Notes?
MR. SUPINSKI - Yes
CALLER - What are the total assets of the Federal Reserve?
MR. SUPINSKI - The San Francisco Bank has $36 Billion in assets.
CALLER - What are these assets composed of?
MR. SUPINSKI - Gold, the Federal Reserve Bank itself and government securities.
CALLER - What value does the Federal Reserve Bank carry gold per oz. on their books?
MR. SUPINSKI - I don't have that information but the San Francisco Bank has $1.6 billion in gold.
CALLER - Are you saying the Federal Reserve Bank of San Francisco has $1.6 billion in gold, the bank itself and the balance of the assets is government securities?

MR. SUPINSKI - Yes.
CALLER - Where does the Federal Reserve get Federal Reserve Notes from?
MR. SUPINSKI - They are authorized by the Treasury.
CALLER - How much does the Federal Reserve pay for a $10 Federal Reserve Note?
MR. SUPINSKI - Fifty to seventy cents.
CALLER - How much do they pay for a $100.00 Federal Reserve Note?
MR. SUPINSKI - The same fifty to seventy cents.
CALLER - To pay only fifty cents for a $100.00 is a tremendous gain, isn't it?
MR. SUPINSKI - Yes

CALLER - According to the US Treasury, the Federal Reserve pays $20.60 per 1,000 denomination or a little over two cents for a $100.00 bill, is that correct?
MR. SUPINSKI - That is probably close.
CALLER - Doesn't the Federal Reserve use the Federal Reserve Notes that cost about two cents each to purchase US Bonds from the government?
MR. SUPINSKI - Yes, but there is more to it than that.
CALLER - Basically, that is what happens?
MR. SUPINSKI - Yes, basically you are correct.
CALLER - How many Federal Reserve Notes are in circulation?
MR. SUPINSKI - $263 billion and we can only account for a small percentage.
CALLER - Where did they go?
MR. SUPINSKI - Peoples mattress, buried in their back yards and illegal drug money.
CALLER - Since the debt is payable in Federal Reserve Notes, how can the $4 trillion national debt be paid-off with the total Federal Reserve Notes in circulation?
MR. SUPINSKI - I don't know.

CALLER - If the Federal Government would collect every Federal Reserve Note in circulation would it be mathematically possible to pay the $4 trillion national debt?
MR. SUPINSKI - No
CALLER - Am I correct when I say, $1 deposited in a member bank $8 can be lent out through Fractional Reserve Policy?
MR. SUPINSKI - About $7.
CALLER - Correct me if I am wrong but, $7 of additional Federal Reserve Notes were never put in circulation. But, for lack of better words were "created out of thin air " in the form of credits and the two cents per denomination were not paid either. In other words, the Federal Reserve Notes were not physically printed but, in reality were created by a journal entry and lent at interest. Is that correct?
MR. SUPINSKI - Yes
CALLER - Is that the reason there are only $263 billion Federal Reserve Notes in circulation?
MR. SUPINSKI - That is part of the reason.
CALLER - Am I mistaking that when the Federal Reserve Act was passed (on Christmas Eve) in 1913, it transferred the power to coin and issue our nation's money and to regulate the value thereof from Congress to a Private corporation. And my country now borrows what should be our own money from the Federal Reserve (a private corporation) plus interest. Is that correct and the debt can never be paid off under the current money system of country?
MR. SUPINSKI - Basically, yes.
CALLER - I smell a rat, do you?
MR. SUPINSKI - I am sorry, I can't answer that, I work here.
CALLER - Has the Federal Reserve ever been independently audited?
MR. SUPINSKI - We are audited.
CALLER - Why is there a current House Resolution 1486 calling for a complete audit of the Federal Reserve by the GAO and why is the Federal Reserve resisting?
MR. SUPINSKI - I don't know.

CALLER - Does the Federal Reserve regulate the value of Federal Reserve Notes and interest rates?
MR. SUPINSKI - Yes
CALLER - Explain how the Federal Reserve System can be Constitutional if, only the Congress of the US, which comprises of the Senate and the House of representatives has the power to coin and issue our money supply and regulate the value thereof? [Article 1 Section 1 and Section 8] Nowhere, in the Constitution does it give Congress the power or authority to transfer any powers granted under the Constitution to a private corporation or, does it?
MR. SUPINSKI - I am not an expert on constitutional law. I can refer you to our legal department.
CALLER - I can tell you I have read the Constitution. It does NOT provide that any power granted can be transferred to a private corporation. Doesn't it specifically state, all other powers not granted are reserved to the States and to the citizens? Does that mean to a private corporation?
MR. SUPINSKI - I don't think so, but we were created by Congress.
CALLER - Would you agree it is our country and it should be our money as provided by our Constitution?
MR. SUPINSKI - I understand what you are saying.
CALLER - Why should we borrow our own money from a private consortium of bankers? Isn't this why we had a revolution, created a separate sovereign nation and a Bill of Rights?
MR. SUPINSKI - (Declined to answer).
CALLER - Has the Federal Reserve ever been declared constitutional by the Supreme Court?
MR. SUPINSKI - I believe there has been court cases on the matter.
CALLER - Have there been Supreme Court Cases?
MR. SUPINSKI - I think so, but I am not sure.
CALLER - Didn't the Supreme Court declare unanimously in A.L.A. Schechter Poultry Corp. vs. US and Carter vs. Carter Coal Co. the corporative-state arrangement an unconstitutional delegation of legislative power? ["The power conferred is the power to regulate. This is legislative delegation in its most obnoxious form; for it is not even delegation to an official or an official body, presumptively disinterested, but to private persons." Carter vs. Carter Coal Co...]
MR. SUPINSKI - I don't know, I can refer you to our legal department.

CALLER - Isn't the current money system a house of cards that must fall because, the debt can mathematically never be paid-off?
MR. SUPINSKI - It appears that way. I can tell you have been looking into this matter and are very knowledgeable. However, we do have a solution.
CALLER - What is the solution?
MR. SUPINSKI - The Debit Card.
CALLER - Do you mean under the EFT Act (Electronic Funds Transfer)? Isn't that very frightening, when one considers the capabilities of computers? It would provide the government and all it's agencies, including the Federal Reserve such information as: You went to the gas station @ 2:30 and bought $20.00 of unleaded gas @ $3.41 per gallon and then you went to the grocery store @ 2:58 and bought bread, lunch meat and milk for $12.32 and then went to the drug store @ 3:30 and bought cold medicine for $5.62. In other words, they would know where we go, when we went, how much we paid, how much the merchant paid and how much profit he made. Under the EFT they will literally know everything about us. Isn't that kind of scary?
MR. SUPINSKI - Yes, it makes you wonder.
CALLER - I smell a GIANT RAT that has overthrown my constitution. Aren't we paying tribute in the form of income taxes to a consortium of private bankers?
MR. SUPINSKI - I can't call it tribute, it is interest.
CALLER - Haven't all elected officials taken an oath of office to preserve and defend the Constitution from enemies both foreign and domestic? Isn't the Federal Reserve a domestic enemy?
MR. SUPINSKI - I can't say that.

CALLER - Our elected officials and members of the Federal Reserve are guilty of aiding and abetting the overthrowing of my Constitution and that is treason. Isn't the punishment of treason death?
MR. SUPINSKI - I believe so.
CALLER - Thank you for your time and information and if I may say so, I think you should take the necessary steps to protect you and your family and withdraw your money from the banks before the collapse, I am.
MR. SUPINSKI - It doesn't look good.
CALLER - May God have mercy on the souls who are behind this unconstitutional and criminal act called the Federal Reserve. When the ALMIGHTY MASS awakens to this giant hoax, they will not take it with a grain of salt. It has been a pleasure talking to you and I thank you for your time. I hope you will take my advice before it does collapse.
MR. SUPINSKI - Unfortunately, it does not look good.
CALLER - Have a good day and thanks for your time.
MR. SUPINSKI - Thanks for calling.

And that is all the information you need to know that the Fed is not a government entity. It's a privately owned for profit institution. Anyone have a link for that money masters documentary? I have it at home, and can post it later.

Dang I had a good laugh with that one!
And we are how many TRILLIONS in debt.... BWAHAHA

The way I see it the economy is nothing but one big pyramid scheme with the Federal Reserve bankers at the top stealing from everyone else in the system. They literally own everything and everyone.

"Abolish the Fed" by Rep. Ron Paul, MD and "WHY GOLD?" By Llewellyn H. Rockwell, Jr.



I don't know why we also couldn't have a currency backed by stock. We could exchange shares of huge mutual funds instead of fiat dollars.

Sorry, but had to delete my original post. If anyone is interested, I will send it to you in a pm.

AmericanEmpire 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.

A quote from The Future of Money by Bernard Lietaer (p.304) :

So how much power does the FED really have? They can't make the government stop racking up debt. I think the FED doesn't really control the money supply, because they must supply the government with what it demands. Who cares what they do with the interest rates, the government can just borrow more to pay the interest. If the government turns out to be a junky, there is nothing the FED can do to stop it.


But what happens when the government pays off the loans. What happens to the money? Will it be destroyed/dissapear, or does the central bank keep the money, pay it to the shareholders? Is the central bank allowed to print money for itself? Say I owned the central bank, can I print money to buy myself whatever I want? Could they issue checkes for themselves and say deposit it in some bank account of a bank in the Caribbean, and use that money to buy everything they want: stocks, bonds, land, oil, gold, etc.? Basically buy up everything for as long as people will still accept payment in US$ (or any other fiat currency for that matter)? The government could do the same, buy up everthing with money loaned from the Central Bank, they basically never have to pay off those loans, because they can pay them off and pay interest by taking another loan. So could both the government and the Central Bank try to buy up everything for as long as others will still accept to get paid in US$? After a while the US$ will get useless (hyperinflation), but the hard assets will still have their value.

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