Why is there not more focus on the Federal Reserve??

[truhavoc]

I think it is the biggest Ponzi scheme of all, I wrote about it just now in my blog and am curious to see what people think??

http://amoreperfectunion-dc.blogspot.com/

[zipplewrath]

1. Simple question

Who profits the most from the Federal reserve bank? i.e. where to most of the profits go?

[truhavoc]

2. Good question

I would have to say the politicians profit because they can continue to borrow without raising taxes, and then the shareholders of the banks profit because of the interest they get on the money borrowed by the government. Good question though about where the interest income goes, it might be filtered into something else - I will have to look into that.

[A HERETIC I AM]

3. Simple answer; The United States Treasury. n/t

[truhavoc]

4. How is that possible?

How would the interest end up in the treasury? It is the treasury dept that is basically "borrowing" from the fed right?

[A HERETIC I AM]

5. Several articles describing the process;

Myth #4: The Federal Reserve is a privately owned bank out to make a profit at the taxpayers'expense.
Home page of the above website debunking other Federal Reserve myths This website was last updated 9 years ago.
Wikipedia entry on the Fed, subsection - Balance sheet
Similar article debunking the idea the Fed makes a profit from taxpayers
"Purposes and Functions" from the website of the Federal Reserve (.pdf document 29MB)

There are plenty of websites and articles to the contrary so believe what you wish, I suppose.

[truhavoc]

7. Sorry, i didn't mean it like that

Always open to information, thanks for the links!

[HamdenRice]

6. Because most people aren't crazy, their minds captured by right wing Ron Paul anti-Fed nut ideology

When someone rails against the Fed as a private bank or ponzi scheme, they are easily dismissed.

The fact that the vast majority doesn't go alone with such nut job thinking proves that the vast majority of people are rational, and have not had their minds captured by right wing, nut job, Ron Paul craziness.

[truhavoc]

8. Whoa...

First off, I'm far from a right winger. Secondly, you would think that as skeptical as we all are about big business (big banks) - you would be extremely bothered by how the Fed was put together in secret 100 years ago and how it continues to operate as a private entity under the guise of a federal department. I was just raising the questions that came to me, if you want to shut them down automatically just because someone like Ron Paul is asking the same sort of questions - that seems like closed-mindedness to me.

[HamdenRice]

9. It's not a private entity

That's like say, discussing Microsoft and starting out with the premise that they're run by wizards.

The premise is simply crazy. It's a meme that emanates from the right wing, anti-New Deal fringe -- although, I'll grant you, a few people on the left have somehow been convinced to spout it.

No matter how smart you may be as an individual, when you start spouting right wing nonsense talking points, people will treat you as though you are, well spouting right wing nonsense talking points.

Sane people don't spout those talking points -- even left progressive Nobel Prize winning economists like Paul Krugman, who knows a shit load about the Fed.

[truhavoc]

10. Ok help me out

Obviously unlike those on the right, I don't want to just spew crazy talking points. I just (apparently) need to know more. Okay, so my understanding was that the fed was started by heads of all of the major banks at the time in 1910 in conjunction with Senator Alridge. The legislation made it to congress in 1913, and these bankers (that essentially wrote the bill) all campaigned against the legislation - leading the public to think it was in their interest to pass the legislation. You have to admit that the 12 regional federal reserve banks are all privately held, and that numerous other private banks make up the system. Seems like a private entity to me??

[HamdenRice]

13. Sorry for the snark

Unfortunately, I won't be online most of today and your question deserves a well reasoned answer. I'll maybe be able to post something tonight.

Basically, the idea of the Fed being private comes from the fact that banks are required to subscribe shares, which makes it look like they own the Fed. In fact, the share structure exists because the Fed costs banks in various ways, and when it was set up, a share system that rebated some of those costs was built in.

But the Fed's profits are deposited in the account of its owner -- the US Treasury.

In the meantime, last time I checked the Wiki article on the Fed was pretty complete.

[AdHocSolver]

12. Microsoft is run by Wizards.

Their wizardry is in how they got so many people to give them billions of dollars to use some of the crappiest software ever written.

[AdHocSolver]

11. The Fed, for all intents and purposes, is a corporation set up for the profit of bankers...

... by manipulating the interest rates and the money supply.

You are correct. The corporate and bank Ponzi schemes would not have succeeded without the active collusion of the Federal Reserve.

By keeping the interest rates artificially low, the banks were able to get away with paying their depositors absurdly low interest on their savings deposits. Then the stock brokers got people to take their savings out of the banks, "where the interest they are paying isn't even keeping up with inflation", and buy stocks with it. The very act of throwing lots of money at the stock market drove up the stock prices (big demand, limited supply). It was how Enron shares were driven up in price even though the company looked good only because it was "cooking the books".

The same mechanism worked in the real estate markets. Artificially low interest rates enabled banks to give out mortgages at low interest rates so that people were encouraged to spend more money for houses than the houses were actually worth. The banks issued adjustable rate mortgages (ARM's), also aptly called balloon mortgages, to encourage people to get in over their heads. The banks made profits on fees, the real estate companies made profits on bigger commissions, and now with all the foreclosures, the banks are repossessing all of this property to sell all over again after the economy "recovers".

The Fed is currently again keeping interest rates artificially low to screw depositors while banks rip off their credit card holders with usurious interest rates. The Fed is serving the banks. They are not protecting the economy. We would be better off if it were abolished.

Moreover, don't believe Greenspan when he claims he "made a little mistake; no one could have foreseen what would happen". Nonsense. He was one of the chief architects of the Ponzi schemes. That is why he was put in charge of the Fed.