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Old 10-14-2011, 07:37 AM
 
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The seven member board of Governors which oversees the FED is a federal agency. The rest are not federal employees.
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Old 10-14-2011, 08:04 AM
 
Location: Earth
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Quote:
Originally Posted by hnsq View Post
The seven member board of Governors which oversees the FED is a federal agency. The rest are not federal employees.
This is about the only useful bit of information in this thread so far. The rest of you need to loosen your tin-foil hats. Whether you believe the Fed is part of the evil empire or not, it's more useful to at least understand what the Fed alleges to be.

Here's a simplified explanation for the OP:
The Fed controls the money supply and therefore the value of our money. They create money by buying bonds from banks (giving them cash in return thus increasing their liquidity) and they reduce the money supply buy selling bonds (the bonds being bought and sold are called treasury bonds, or just "treasuries").

Banks are regulated in the amount they can lend by the amount of deposits they take in - they have a "reserve requirement". The money supply gets multiplied when banks lend it. (Say the reserve requirement is 10% of deposits. If you deposit $100 the bank can lend someone else $90. In theory, that person could put their borrowed $90 in another bank and that bank could lend another person $81, and so on.) The Fed can control this multiplication effect by setting the reserve requirement of banks.

The Fed is meant to be outside the influence of politics. (I won't debate whether it is or isn't so.) That's why it sort of is a government agency but really isn't. Chairmen usually come from academia and will serve both republican and democrat presidents. The theory is that elected officials will tweak the money supply and the economy to get re-elected without regard for long term consequences. The Fed Governors are supposed to be objective and not make decisions based on a political agenda.
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Old 10-14-2011, 08:12 AM
 
Location: Earth
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A reminder of the sticky by the moderator:

"Please keep this forum subject about business, finance and investing. If your topic is about politics, please post here: Politics and Other Controversies Forum - Relocation, Moving, Local City Discussions - City-Data Forum

There is sometimes a fine line between the two but we are trying to keep this area more about helpful info., rather than the political controversies involved in government and business. Thank you."
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Old 10-14-2011, 08:18 AM
 
9,856 posts, read 14,043,505 times
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Quote:
Originally Posted by Eastern Roamer View Post
This is about the only useful bit of information in this thread so far. The rest of you need to loosen your tin-foil hats. Whether you believe the Fed is part of the evil empire or not, it's more useful to at least understand what the Fed alleges to be.

Here's a simplified explanation for the OP:
The Fed controls the money supply and therefore the value of our money. They create money by buying bonds from banks (giving them cash in return thus increasing their liquidity) and they reduce the money supply buy selling bonds (the bonds being bought and sold are called treasury bonds, or just "treasuries").

Banks are regulated in the amount they can lend by the amount of deposits they take in - they have a "reserve requirement". The money supply gets multiplied when banks lend it. (Say the reserve requirement is 10% of deposits. If you deposit $100 the bank can lend someone else $90. In theory, that person could put their borrowed $90 in another bank and that bank could lend another person $81, and so on.) The Fed can control this multiplication effect by setting the reserve requirement of banks.

The Fed is meant to be outside the influence of politics. (I won't debate whether it is or isn't so.) That's why it sort of is a government agency but really isn't. Chairmen usually come from academia and will serve both republican and democrat presidents. The theory is that elected officials will tweak the money supply and the economy to get re-elected without regard for long term consequences. The Fed Governors are supposed to be objective and not make decisions based on a political agenda.
Good explanation. I didn't want to waste time writing an essay on the fed when people could just do a search on Wikipedia for the federal reserve and find what they are looking for. Their wikipedia page is a pretty solid article.

In a post-commodity based monetary system, the federal reserve serves a very essential purpose in terms of price and inflation control. Some of the work they have done lately in terms of risk management makes me nervous, but pre-2007 the FED performed an essential duty given our current form of money.
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Old 10-14-2011, 03:11 PM
 
Location: Stankwell Falls, NC
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The Federal Reserve was created in 1914 by an act of Congress. i.e. It is a legislated entity, not a constitutional one. At the time, the vast majority of the population used $s issued by the US government that were backed by gold and silver coinage. There was no income tax and in fact very little taxation at all. The Federal Reserve is a private entity where the shareholders are mainly the TBTF banks. (huge conflict of interest here) The only real power the US has over the Federal Reserve is the President gets to nominate the head of the Federal Reserve and the Senate gets to confirm or deny the choice. The current head was originally picked by Bush and later re-nominated by Obama.

Where did the Federal Reserve get its initial funding and currency monopoly? In 1933, FDR issued an executive order which essentially seized all gold coinage, gold dollar certificates, and most other forms of gold. All people were ordered to take their gold currency to the local Federal Reserve bank where for each ounce of gold turned in, they would receive a $20 Federal Reserve Note. As a whole, this represented around 20,000 tons of gold. They built Ft. Knox and the gold was stored there. A portion of this gold still exists there today but it has not been audited since 1973. It's approximately 7000 tons.

So after FDR had the gold he then sold it to the Federal Reserve for $35/ounce. The FR was not given the physical gold, but rather holds gold certificates for it. This gold is still listed on their balance sheets as an asset today if you wish to check it for yourself. More importantly, this represented a 75% devaluation of the US $. i.e. An ounce of gold went from $20 to $35. Remember the rest of the world was still trading in gold currency. The difference was then used by FDR to fund his social programs of the 1930s. It also gave the central bank and government unprecedented power over the day to day transactions of the common person.

The above scenario was how the Federal Reserve was originally funded. By 1964, so many Federal Reserve $s had been printed they had to remove silver from the coinage. At the time the $ was still convertible into silver at the rate of $1/ounce. In 1968 because of the $ printing by the Federal Reserve, the US government invalidated all the Silver $ certificates. They are still usable as regular dollars but you can no longer get silver for them. However there is a numismatic value on these $ bills that is worth far more.

Until 1971, other nations could redeem their excess Federal Reserve notes for US gold. By that point the USA was spending money at unprecedented levels and so much of the Ft. Knox gold was flowing out of the country there was a potential the USA would run out. So in 1971 Nixon halted these redemptions without warning. One of his cabinet members very famously said "It's our currency but your problem." directed towards France. There were two other important changes that happened at this time. The laws preventing gold ownership by individuals were removed and the USA stopped directly issuing dollars. At this point the Federal Reserve was given a 100% monopoly on issuing currency.

Also at this point the USA went 100% fiat with its currency. This means it's backed by nothing but words. All other world governments are fiat as well and pretty much by similar arrangements. The Federal Reserve allows the Federal government to borrow $s without having to force immediate tax increases on the people as otherwise required by the Constitution. Numerous laws have been quietly passed since then to cement the Federal Reserves monopoly and make it completely shielded from most oversight.

These arrangements of unlimited printing of money can get wildly out of control which was last demonstrated in 2009 with the failure of the Zimbawbe equivalent to the Federal Reserve. They hit the famous puck end of the hockey stick curve of inflation and had to start printing larger and larger denominations so people would not have to have a truck load of currency to buy food. Eventually they were printing 100 Trillion $ notes. The bank finally failed and the people were left with nothing.



Last edited by 波斯語; 10-14-2011 at 04:23 PM..
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Old 10-15-2011, 03:20 PM
 
Location: San Diego California
6,797 posts, read 6,624,776 times
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Quote:
Originally Posted by Eastern Roamer View Post
This is about the only useful bit of information in this thread so far. The rest of you need to loosen your tin-foil hats. Whether you believe the Fed is part of the evil empire or not, it's more useful to at least understand what the Fed alleges to be.

Here's a simplified explanation for the OP:
The Fed controls the money supply and therefore the value of our money. They create money by buying bonds from banks (giving them cash in return thus increasing their liquidity) and they reduce the money supply buy selling bonds (the bonds being bought and sold are called treasury bonds, or just "treasuries").

Banks are regulated in the amount they can lend by the amount of deposits they take in - they have a "reserve requirement". The money supply gets multiplied when banks lend it. (Say the reserve requirement is 10% of deposits. If you deposit $100 the bank can lend someone else $90. In theory, that person could put their borrowed $90 in another bank and that bank could lend another person $81, and so on.) The Fed can control this multiplication effect by setting the reserve requirement of banks.

The Fed is meant to be outside the influence of politics. (I won't debate whether it is or isn't so.) That's why it sort of is a government agency but really isn't. Chairmen usually come from academia and will serve both republican and democrat presidents. The theory is that elected officials will tweak the money supply and the economy to get re-elected without regard for long term consequences. The Fed Governors are supposed to be objective and not make decisions based on a political agenda.
The important part to know about the Federal Reserve is that it has illegally usurped, and abused the people’s power to control the nation’s money supply and thereby control inflation.

The Constitution was carefully constructed to purposely give the power to print money to the Congress who at that time, (prior to the 17th amendment) was directly answerable to the States and to the people. If Congress was negligent in their management of the money supply, the voters and the States could replace the elected members of Congress.

The control of the money was therefore directly under control of the people and of the States.

The creation of the Federal Reserve was accomplished by enacting legislation written by bankers and usurping the power of the people and the States. This is in direct contrast to the 10th Amendment.
In addition, it provided for the creation of the fractional banking system in which the Federal Reserve delegated its authority to produce money to its member banks.

The result of this change, besides the loss of control by the people of their own money supply, is that every dollar that is produced is loaned into existence at interest. It is impossible to ever pay our debt to the Fed because the principal plus the interest exceeds the total amount of money produced. It is therefore necessary to continuously borrow increasing amounts of money to pay the compounding interest.

This is also the mechanism that creates inflation, and insures that every dollar you earn and save will be worth less when you spend it.
Now ask yourself why anyone in his or her right mind, besides the bankers, would want a system that did that?

This system discourages saving, and encourages the purchase of assets using credit which makes huge amounts of money for banks.

So, to sum it up we have a system that keeps our government and our people in a constant state of debt in order to enrichen bankers. It has no accountability to the people, and is contrary to the very definition of a Republic.

The real question is, why do we tolerate it? My hope is going forward, we will not.
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