Thread: Federal Reserve

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  1. #1

    Federal Reserve

    How many people actually know what this is?
    Why are they in charge of US currency?

  2. #2
    Quote Originally Posted by lockedout View Post
    Why are they in charge of US currency?
    They're not, strictly speaking. To the extent that they are, it's because monetary policy is their domain as per the Federal Reserve Act.

  3. #3
    Quote Originally Posted by Spectral View Post
    They're not, strictly speaking. To the extent that they are, it's because monetary policy is their domain as per the Federal Reserve Act.
    They are not even part of the federal government. They are a private entity.

  4. #4
    The Insane Reeve's Avatar
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    Quote Originally Posted by lockedout View Post
    How many people actually know what this is?
    Why are they in charge of US currency?
    I think a lot of people know exactly what it is. It's a private bank empowered by the Federal Reserve Act to act as the central bank for the United States.

    ---------- Post added 2013-02-11 at 03:07 PM ----------

    Quote Originally Posted by lockedout View Post
    They are not even part of the federal government. They are a private entity.
    So what? That has nothing to do with what he said.
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  5. #5
    Quote Originally Posted by Reeve View Post
    I think a lot of people know exactly what it is. It's a private bank empowered by the Federal Reserve Act to act as the central bank for the United States.

    ---------- Post added 2013-02-11 at 03:07 PM ----------



    So what? That has nothing to do with what he said.
    He said they aren't in charge of US currency. All my money says federal reserve note on it.

    If you will pull a dollar bill out and take a look at it, you will notice that it says "Federal Reserve Note" at the top.

    It belongs to the Federal Reserve.

    The U.S. government cannot simply go out and create new money whenever it wants under our current system.

    Instead it must get it from the Federal Reserve.

    So when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.

    The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days).

    So that is how the U.S. government gets more green pieces of paper called "U.S. dollars" to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on.

    So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.

  6. #6
    Quote Originally Posted by lockedout View Post
    They are not even part of the federal government. They are a private entity.
    Also, orange juice is tasty.

    Infracted
    Last edited by Darsithis; 2013-02-11 at 03:15 PM.

  7. #7
    welcome to the world of debt based money \o/
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  8. #8
    The Insane Reeve's Avatar
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    Quote Originally Posted by lockedout View Post
    He said they aren't in charge of US currency. All my money says federal reserve note on it.

    If you will pull a dollar bill out and take a look at it, you will notice that it says "Federal Reserve Note" at the top.

    It belongs to the Federal Reserve.

    The U.S. government cannot simply go out and create new money whenever it wants under our current system.

    Instead it must get it from the Federal Reserve.

    So when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.

    The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days).

    So that is how the U.S. government gets more green pieces of paper called "U.S. dollars" to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on.

    So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.
    Treasury bills aren't the only thing the Fed buys to manage money supply. And the actual bills are printed by the US treasury, not the Fed. The Fed buys the bills from the Treasury Department.

    Either way, you still haven't made a point.
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  9. #9
    Quote Originally Posted by Reeve View Post
    Treasury bills aren't the only thing the Fed buys to manage money supply. And the actual bills are printed by the US treasury, not the Fed. The Fed buys the bills from the Treasury Department.

    Either way, you still haven't made a point.
    Point is privately owned banks control our countries money supply. It doesn't say US Treasury Note.
    I was just curious to see peoples views on that. Most people think since it says "Federal" it is part of the government.

  10. #10
    Quote Originally Posted by Reeve View Post
    Treasury bills aren't the only thing the Fed buys to manage money supply. And the actual bills are printed by the US treasury, not the Fed. The Fed buys the bills from the Treasury Department.

    Either way, you still haven't made a point.
    i guess his point is, for every dollar printed one dollar and "x amount" of cent have to be repaid... not really that new but a nice topic to talk about
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    Remember, a firearm homicide is not always firearm violence.
    Quote Originally Posted by Mayhem;
    And, firearm violence is not always a firearm homicide.

  11. #11
    Quote Originally Posted by lockedout View Post
    Point is privately owned banks control our countries money supply.
    That is commonly know I think most people who care about the economy enough to know something about it know that that the federal reserve is not part of the government.

  12. #12
    The Insane Reeve's Avatar
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    Quote Originally Posted by lockedout View Post
    Point is privately owned banks control our countries money supply. It doesn't say US Treasury Note.
    I was just curious to see peoples views on that. Most people think since it says "Federal" it is part of the government.
    I think some people think that, but a lot of us, especially those of us on a site like this that talks about it regularly, or those who have gone to University, know exactly what it is.

    My view on it is that it's fine. I think that the Fed has generally acted sensibly and responsibly throughout its history, to the benefit of the US economy.
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  13. #13
    Mechagnome helheim's Avatar
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    Quote Originally Posted by Reeve View Post
    I think some people think that, but a lot of us, especially those of us on a site like this that talks about it regularly, or those who have gone to University, know exactly what it is.

    My view on it is that it's fine. I think that the Fed has generally acted sensibly and responsibly throughout its history, to the benefit of the US economy.
    you mean like their admission that they were responsible for the great depression? really responsible...

    http://www.federalreserve.gov/boardd...08/default.htm

    Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has published numerous academic journal articles. Before Bernanke's work, the dominant monetarist theory of the Great Depression was Milton Friedman's view that it had been largely caused by the Federal Reserve's having reduced the money supply. In a speech on Milton Friedman's ninetieth birthday (November 8, 2002), Bernanke said, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna [Schwartz, Friedman's coauthor]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
    Last edited by helheim; 2013-02-11 at 03:31 PM. Reason: added quote

  14. #14
    Imagine if congress had direct control over the printing press instead.

    Yeah... You don't wanna go there.

    The US can borrow extremely cheaply (the yields on US bonds are still very low, go compare it to other countries in the world), so your idea of the interest increasing and increasing makes no sense.

  15. #15
    The Insane Reeve's Avatar
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    Quote Originally Posted by helheim View Post
    you mean like their admission that they were responsible for the great depression? really responsible...
    I'm not sure what you're specifically referring to, but I'd much rather our institutions recognize when they made a mistake and work to avoid such mistakes in the future. That is responsible behavior.
    Well 1, 2, 3, take my hand and come with me
    Because you look so fine
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  16. #16
    Quote Originally Posted by helheim View Post
    you mean like their admission that they were responsible for the great depression? really responsible...
    Citation needed on this. The federal reserve does monetary policy which by it self would not cause the great depression, which was a collapse of the financial system.

  17. #17
    Mechagnome helheim's Avatar
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    i added the quote to my post for clarification. i'm sorry, but your ignorance is making me very angry. i'm checking out of this thread before it gets me in trouble.

    edit: before i go, i leave you with this video, which explains quite clearly how fractional reserve banking is inherently flawed.

    http://www.youtube.com/watch?feature...MBOB4Gg#t=413s
    Last edited by helheim; 2013-02-11 at 03:39 PM.
    i do not spew profanities. i enunciate them clearly, like a fucking lady.
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  18. #18
    Quote Originally Posted by Reeve View Post
    I think some people think that, but a lot of us, especially those of us on a site like this that talks about it regularly, or those who have gone to University, know exactly what it is.

    My view on it is that it's fine. I think that the Fed has generally acted sensibly and responsibly throughout its history, to the benefit of the US economy.
    because getting money out of the process of creating money is the definiton of benefit to a countrys economy/people

    really?
    secretly gay

    Quote Originally Posted by Tinykong View Post
    Remember, a firearm homicide is not always firearm violence.
    Quote Originally Posted by Mayhem;
    And, firearm violence is not always a firearm homicide.

  19. #19
    Quote Originally Posted by lockedout View Post
    Point is privately owned banks control our countries money supply. It doesn't say US Treasury Note.
    I was just curious to see peoples views on that. Most people think since it says "Federal" it is part of the government.
    Postal Service isn't part of the government either, but that doesn't mean the government doesn't exert as much or as little control as they desire upon it.

  20. #20
    Quote Originally Posted by Mayhem View Post
    because getting money out of the process of creating money is the definiton of benefit to a countrys economy/people

    really?
    Creating money can increase liquidity in an economy leading to increased investment spending.

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