Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold among Negative-Yielding Bonds - 20th Sep 19
Panicky Fed Flooding Overnight Markets with Cash - 20th Sep 19
Uber Stock Price Will Crash on November 6 - 20th Sep 19
Semiconductor Stocks Sector Market & Economic Leader - 20th Sep 19
Learning Artificial Intelligence - What is a Neural Network? - 20th Sep 19
Precious Metals Setting Up Another Momentum Base/Bottom - 20th Sep 19
Small Marketing Budget? No Problem! - 20th Sep 19
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

$8.4 Trillion Hidden Profit For The Federal Reserve

Politics / Central Banks Jul 27, 2011 - 11:35 AM GMT

By: Submissions

Politics

Liberty writes: The public is aware that deficit spending is the government's ability to spend money that it does not have. The image projected is the government borrows from the public, or the Federal Reserve, and the money that can be spent is above and beyond the funds collected in the form of taxes and fees.


It the borrowed amount came from the public as touted, there would be no inflation. The transfer of money would be the same as if taxes or fees had been collected, but the government would additionally be giving a certificate (maybe) and a promise to pay interest on the loan. There is no way that such an imagined borrowing from the public can cause inflation.

The government can only “borrow” money from the Federal Reserve. To guarantee such a loan, the Fed demands collateral. The collateral is a contractual promise from the government to pay back the loan and is in the form of a Treasury security, such as a Bill, Bond, or Note. Upon receiving the collateral, the Fed will make a book-entry credit on a Treasury account in the amount of the collateral. This value is the amount of money that is added to the economy (i.e., off of the printing press). With the completion of this arrangement, the Fed will honor the checks written by the Treasury for government expenses.

Did the Fed put up anything of value for this agreement? No. When the government suppliers deposit the payment checks in the banking system, the Fed debits the government account. The Fed loses nothing. If any depositor insists on cash, the Fed can buy FR notes from the Treasury for four cents per small notes (i.e., a one dollar bill) or up to nine cents for a $100 FRN. Talk about a bargain. Eventually, the Treasury account is depleted and the fiat money is in circulation.

It is the T-security held by the Fed as collateral that falls below the horizon of awareness. When maturity is reached, it must be redeemed. How is that done? Well, the government does not have any money so it gives the Fed another security in the same amount. The Fed can then sell that security and the money from the sale goes into the private coffers of the Fed. The Fed has probably already sold the original but the government must create money to roll-over the security regardless of who holds it so the result is the same. It is assumed the same procedure of creating fiat money with the original security is repeated.

How does the Fed sell the security? Well, the Treasury helps sell them by posing as an auctioneer. The FRBNY handles all of the paperwork and accounting, despite the Bureau of Public Debt website pretending the government is involved. Ref. GAO FINANCIAL REPORT TO SECRETARY OF TREASURY, Nov 2010, page 17; http://www.treasurydirect.gov/govt/reports/pd/feddebt/feddebt_ann2010.pdf ; also ANNUAL REPORT: BUDGET REVIEW 2010, Fed publication MS N-127, p5.

The auction records maintained by the FRBNY are never audited or reported to Congress nor is there any $8.4 trillion value in government accounting records from the auctions of 2010. Where does the money from the auctions go? Nobody knows. Privately held corporations such as the BOG of the FR, even those operating under the guise of an agency, do not have to reveal who holds ownership shares or their accounting records. The ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE audit is performed in accordance with guidelines established by the BOG; it does not include any records of income or outgo of the auction funds. Ref. http://www.usa-the-republic.com/banks/Federal_Reserve_Ripoff.pdf .for additional details. All of the fiat money from inflation and the auctions has become profit for the Fed.

Does 12 USC section 247 require the BOG to submit a “full report” of the Fed's operation to Congress? Yes. Why is there NO mention of the $8.4 Trillion received by the FRBNY from the auctions in the ANNUAL REPORT or any other accounting record? I don't know. The courts have declared that all profit from the Fed's operation belong to the government. Is it a crime to steal money from its owners by accounting fraud? I believe that is called embezzlement.

You might ask your Congress-critters where the money went. You might also ask how much the banks are counting on increasing the National Debt (current DC conundrum) so the funds will be available from the Fed to continue their rescue.

To put this in perspective, the government only took in $2.1 trillion in taxes last year. The auctions totaled $8.4 trillion. And you wondered how some of these collectivist programs received funding.

By Reb

liberty@asimplewebaddress.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules