What happens to the profits made by the U.S. Federal Reserve?

Economics Economics Questions
1

I would like to know what exactly happens to the profits made by the Federal Reserve because it seems that it partly redistributes its profits to the U.S. Treasury, I would like to know what happens to the rest.

2

Member banks get a 6% dividend from the profits.

3

Well, I’m not sure what you mean by this. Whenever the federal reserve gains money, it goes out of circulation. Whenever the fed “loses” money, it prints it, and the money supply increases. As the fed is sole legal counterfeiter of legal tender money, it could literally steal all of the money in the country for itself if it decided to do so.

I think this would precipitate a fall of the government, and ideally a move to a free market money. But maybe that’s too much to hope for. And the fed is too cunning to be that obvious anyway.

4

If everything went into private coffins as you just mentioned, I doubt there would be any money circulating in the US. Use some common sense.

5

I am not sure, what makes it a counterfeiter. Federal reserve notes are 100 percent real, altough private parties make fake notes. ^^

6

I think nearly all the profits go to the Treasury, apart from whatever dividends are paid to the member banks. Not sure how it works though.

7

Because it can create money out of thin air, sort of like a counterfeiter. The only difference is:

  1. They can do this legally.
8

legal counterfeiter.

9

I think all profit disappears because all money were created out of thin air!

10

If you mean the interest on the principle issued to the Government from the fed then it is rebated to the government after operating expenses plus a 6% return (of the interest) for shareholders are taken out.

I do not know why they do not just estimate what the %6 plus expenses would be and charge that instead of the normal interest so that most of the interest can remain in the economy without having to be collected through taxes, given to the fed, rebated to the government after expenses and %6 are taken out then spent back into the economy which is essentially a huge inefficiency and a drag on tax-payers