Question About Economics?

[Grudgie]

I'm learning a bit about how the system works and I am wondering about something. I'm confused as to the relationship between the Fed and the Treasury. The Fed has the power to print the money and exchange it for Treasury bonds, but does the Fed have the power to force the printing of money and the Treasury is forced to give it bonds? Or does the Treasury request the Fed to print money and the Fed only prints at the Treasury's disgresson?

[Outonowhere]

correct me if I'm wrong:

The congress originally had the authority to order the treasury to "issue" currency.  After 1913 they gave up that power over to the Fed.  So in essence the Treasury is just the worker while the Fed is the foreman (which also means in charge of the books).

[NOLA556]

it's a good question, and it certainly is a convoluted one. I'd actually like to hear some of the other responses, as I'm no expert.

from what I've seen, the Fed seems to dictate what happens far more than the treasury does. plus, the whole situation gets real muddy real quick because the people at the treasury are usually pretty cozy in bed with the people at the Fed. for example, our current treasury secretary is the former NY Fed chairman... you get where this is going. it's the proverbial "revolving door".

long story short, to my understanding, they both work in conjunction to manipulate the money supply as they see fit, all the while operating totally outside of the will of the people.

also consider that the treasury was only intended to be a bank account. take the direct revenue collected from taxes and hold it as a reserve until congress decided what to spend it on. it was never meant to be the "middle man" that it is today, a tool for arbitrary currency manipulation.

but to answer your question about who "officially" pulls the strings between the two, I honestly don't know. my gut tells me that the Fed probably has a little more clout than the treasury does, which is a sad state of affairs if I'm correct. my best guess would be that these bond transactions serve the mutual benefit of private parties on both sides. these deals are most likely concocted to serve the interest of this banker or that one, this insider trader or that one, and they do it under the guise of "stimulus"... and other similar labels.

one thing that I DO know for sure is that if nobody benefited personally from the printing press, then the printing press wouldn't exist, because the printing press only serves to destroy a currency, not strengthen it. this much is common sense.

[Outonowhere]

NOLA +1  [URL=http://www.smileyvault.co

BTW... In case you missed it the Fed has already announced, not QE3... but QE INFINITE.  Yup, they will be purchasing like 40 billion dollars in mortgage backed securities every month INDEFINITELY. 

[Outonowhere]

BTW, watch for them to put that monthly amount into the derivatives market...

Using your mortgage money for interest bearing vehicles like... YOUR MORTGAGE.   [img]http://www.arrse.co.uk/at

[JohnyMac]

Worth reading...

The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907.[2][3][4][5][6][7] Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved.[3][8] Events such as the Great Depression were major factors leading to changes in the system.[9]

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

IMO, Ron Paul has it right when he says that it needs to be audited! Once audited it needs to be recommissioned with new objectives and goals like any company does YEARLY!

[NOLA556]

Worth reading...

The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907.[2][3][4][5][6][7] Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved.[3][8] Events such as the Great Depression were major factors leading to changes in the system.[9]

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

IMO, Ron Paul has it right when he says that it needs to be audited ended! Once audited it needs to be recommissioned ended with new objectives and goals like any company does YEARLY!

 

[JohnyMac]

LOL NOLA!

Even Cod Liver Oil has its purposes. 

[NOLA556]

this should explain it

POWER FED!!!

[JohnyMac]

LMFAO! Oh that is c.l.a.s.s.i.c! Thanks NOLA I needed a good laugh before I went to bed  [URL=http://www.smileyvault.co

[EJR914]

I have a Finance BS from a very good Finance program, and I still scratch my head a bit at it, not because I don't understand it, but why in the F do we have the Central Bank in the first place.  Its a horrible idea, especially coupled with not tying the currency to a precious metal.

You've done a good job, so far of explaning it all.  If I have more time, I'll come back and try to explain in further detail.

Basically, to create currency, our dollar, we GO INTO DEBT, by issuing bonds.  Then the US has to pay the Federal Reserve large amounts of money in interest on that debt, and then the Federal Reserve gets to use that money however they want, until the end of the year, when they pay 99% or so of it back, and that number is still huge amount, 1%.  The Federal Reserve is a FOR PROFIT private bank, made up of member banks.  Remember that.  I consider it to not be a good thing for us and our country, especially when Nixon finally completely took us off the gold standard, and we are now a 100 percent fiat currency, that can be inflated beyond our imaginations.  Also, look into all the Quantativive Easing, where nobody wants to buy our debt anymore, so the FED has to buy the bonds back, because nobody wants them.  Its pure inflation, like main-lining inflation.  Now Bernanke has called an endless QE on mortagage debt, so now the sky is the limit.  This new QE5 or whatever, is limitless, and now so is the inflation of the dollar when the economy starts to heat back up.  They will have to raise the FED rate to cool down the inflation, which means much higher interest rates at some point in our future.  22% interest rate on your mortgage, like back under Carter will seem like a dream compared to what they will have to do to cool inflation.  It will not be pretty.  Its coming fellas.

[thatGuy]

Who pulls the strings?

[Outonowhere]

 [img]http://www.arrse.co.uk/at
lol

[Grudgie]

So correct me where I am wrong here. Let me get this straight.

-To pay for what the Treasury buys, they borrow money from the Fed in return for a promise to pay it back with intrest.

-This money then gets released to citizens through government employees, military, subsidies, and corporations like hospitals who recieve governmet money to pay for medicare/caid to pay their doctors and personel. These citizens then put their money in private banks

-These private banks are required to keep 10% of the deposited money, the other 90% can be loaned to other people wanting to essientially borrow money from the future to pay for the now be it a car, house, small buisness, etc. With a promise to pay back the bank with interest ofcourse. Thus the banks 'create' 190% of the money that was never there. $100 deposited dollars then becomes $190 dollars when it is loaned.

-The government then levies taxes on any money that moves in the economy. When people are paid, when people use money, and even when people own land that belongs to the soverign United States. The Treasury uses these taxes to pay off the intrest that they borrowed from the Fed in the first place.

So looking at this in the big picture if I have my facts straight, the Treasury must keep borrowing more and more money each cycle or else the whole system collapses. If we suddenly stop injecting new inflated money into the system, less money will be deposited in banks, new money will not be able to be 'created' by banks, people will not be able to obtain loans and buy cars and houses, thus the economy stagnates, jobs will plumet. Less money is moving around and so the government does not recieve as many taxes to pay off the intrest that it borrowed.

Please tell me I am wrong somewhere folks.. is this system doomed to collapse?

[Outonowhere]

The American Dream By The Provocateur Network

WELL worth your time to watch this.  And yes ESPECIALLY with the steps taken recently it is DESIGNED to fail. 


They want to crash the system to make all the sheeple cry for gov help.  When the gov comes to help it will be with a meager portion in one and and irons in the other.  Hence the move to control ALL food as well.

[JohnyMac]

Grudgie,
Its a pyramid scheme. Once we went off the dollar standard in '71 we have been living the "BIG" pyramid scheme.

POST SCRIPT: Great vid OOKW!!!

[gapatriot]

Completely impossible to ever pay the debit off!!! the fed only creates the amount to loan NOT the amount plus interest, so........ Even if we paid back everything but interest there will be no money in the economy! [url=http://www.freesmileys.or

[Outonowhere]

Only one way to clear a country's debt ladies and gents and those are not the drums we want to hear.  But I fully expect them to start pounding sometime soon...

[EJR914]

The American Dream By The Provocateur Network

WELL worth your time to watch this.  And yes ESPECIALLY with the steps taken recently it is DESIGNED to fail. 


They want to crash the system to make all the sheeple cry for gov help.  When the gov comes to help it will be with a meager portion in one and and irons in the other.  Hence the move to control ALL food as well.

While this video, which I've watched many times before, seems a little cheesy, it is closer to the truth than I think anyone realizes, because its in the form of a fucking cartoon.

Also look up, Fractional Reserve Banking as well.  Its fucked up.

[1000meterstare]

I have a BS in Business Admin/Economics; that by no means makes me an expert.  The way the system is originally intended to work is that the Treasury (with blessing from Congress) is supposed to tax us directly, thus eliminating middle-men and interest.  Instead, the Treasury borrows from the Fed and covers the repayment with tax revenue plus interest (via T-Bills and gov't bonds).  Essentially the American people are paying interest on their own money.  The IRS is a thug enforcement arm, but it collects less as a tresult of audits than the cost of the audits themselves.  The Fed also controls M3, or the money supply.  Too much money in the system, you have inflation.  Too little, you have high interest rates.  Essentially, the system is broken...

We need money creation without debt associated with it. [url=http://www.freesmileys.or