The Fed controls goverment through debt question.

Economics Economics Questions
1

I keep listening to this argument again and again. The Zarlenga wackos keep promoting this idea through different websites, the last one I found is this: http://www.swarmusa.com/, specially this article: http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY . I keep getting people at forums with the same story.

But as I see it there is a very easy rebutal. Can anyone tell me if there is anything wrong with what I am about to say, since it is so simple that it should be evident.

So the argument says that the Federal Reserve has all the debt from goverment and that goverment is a slave to the Fed because it has to pay interest on that debt.

But the reality is that all the benefits of the Federal Reserve have to be payed back to goverment by law. Therefore, when the goverment pays interest on the treasuries that the Fed has, in reality, its paying to itself, since all the interest it pays will go back to the goverment as Fed benefits.

Obviously this is not true for treasuries that the Fed does not hold.

So in reality the treasuries that the Fed hold, do not create any real interest payments to goverment, its just an accounting trick.

Am I right? Or where did I get it wrong?

2

Read this: http://mises.org/daily/4171

Thankfully this article clarifies the FACT that the Fed is the government. I’m so tired of hearing people trying to claim that the central bank is somehow separate from the government; it’s insane.

3

The problem is that the federal reserve was created by the socialists, and now they have a hard time pinning it on the “capitalists.”

4

That was great thanks. Good insight on the real structure of the Fed. I think it confirms my reasoning, but I would apreciate if someone could check it and confirm that I am not missing something.

5

Absolutely. I’ve been saying for a while now that the babbling idiots who claim the Fed is private are the most blatant socialist apologists around. They can’t pretend that the central bank is anywhere near successful, so now they are just trying to claim it’s not part of the government.

6

Agreed. So what can we do to stop those wackos from spreading those lies. I watched “The Money Masters” and I loved it. If it was not for Ron Paul first and then mises.org later when I knew a bit more about economy, I would have ended up believing that greenbaks were very different from FRN. I am sure a lot of people is learning it that way.

Why do this guys promote this ideas if they are so obviously false? I dont think (or dont want to think) that the guy is a bad guy, just confused, what can we do to stop all this nonsense?

7

I think this also clears up nicely my thread on ‘money as debt’ - Money as debt, again.

Also interesting ‘The Dangers of Monetary Reform’ - http://mises.org/daily/4102

8

I’m more interested in knowing if the analysis on that page is sound at all. It’s been obvious that much of the debt on the Fed’s books is debt it has bought from external entities, especially in this rescue climate. So is the SwarmUSA analysis accurate? Or have they missed some causes and effects?