Note the wording: Nominally owned.
The Fed has private shareholders, but they are owners in name only(nominal). They do not exercise true control over the fed. He is explaining why the Fed is a de facto government agency.
The sytem is similar to the German style socialism that existed during the Nazi Regime. Capitalists retained formal ownership of their factories, but the german state directed all production and prices.
Cashin: OK it sounds like you’re saying that these class A shareholders own the NY FED. But what does the NY FED do? Does it even turn a profit?
JonBostwick: Thanks for pointing out that he said nominal. But, I still need to know why the FED requires that the private banks purchase shares in the first place–what the heck is the point?!
of course the Fed earns a profit for its owners, that’s why it was MADE by the MONEY TRUST in 1913 in the first place. Honestly, you REALLY have to read Mullins and Griffin if you want to a clear picture of this. They go over it very thoroughly.
The Fed just has a cheque book where it literally “writes” up new money whenever the US government needs it, and it OWNS the money too, and thus it “lends” it out to the US
it’s perfectly legitimate to call it a “conspiracy” because that’s exactly what it is. Honestly, why are people so obtuse and herd minded that they make up lousy smear terms such as “conspiracy theorist” to slam anyone that tells the Truth?
Rothbard wasn’t referring to the Federal Reserve, he was talking about the Second Bank of the United States.
The 12 banks operate regionally, each maintains an inventory of cash reserves which are held to meet the needs of depository institutions within each banks district.
Owning a share in the Fed means having a vote on who sits on the board of directors as well as dividends, I believe by law they must issue shares.
Have any of you ever read the Federal Reserve Act of December 23, 1913? Lets all be VERY clear on this FED issue! The Federal Reserve System and the Federal Reserve Act are entirely unconstitutional! So stop kidding around and get your 535 voting Congress members in the House and Senate to pass a simple majority to ABOLISH it! Be careful that its not repealed according to the Fed Reserve Act hence making the government buy it at pennies on the dollar and assume all its further debt obligations!
But thats not all since the States must have Constitutional money according to Article I Section 10..“No State Shall…Make Anything But Gold & Silver Coin A Tender In Payment of Debts” so the Congress must provide Constitutional Money according to this now since also Executive Order #11110 of June 1963 is still enforceable so start minting and issuing Standard Silver Dollars immediately in January 2008! The House of Reps will debate on the size, weight, measure and value of the Gold Coins to follow according to Article I Section 8 clause 5 which empowers the House to “Regulate The Value Thereof”, later but Standard Silver Dollars can and should be minted with immediate effect! Also remember the power of the House “To Emit Bills” was struck out during the 1787 Constitutional Convention so no paper money allowed hence paper money was “crushed forever”!
Now for those of you who want paper money you need to get an amendment passed to alter Article I Section 10 because paper money is still unconstitutional today! Meanwhile you are aiding and abetting a high crime via the 9th Amendment by using Federal Reserve Notes and debt/credit instruments instead of Standard Silver Dollars 90% fine according to the Mint Act of April 2nd, 1792! Yes we are on a SILVER Standard forever according to this Act which enforced the recommended provisions of Secretary of the Treasury Alexander Hamilton’s “Report On The Establishment of a Mint” February 28, 1792! Anything else now is unconstitutional.
I would not call the Federal Reserve Act a contract. And it might not be entirely unconsitutional.
Because it is private since 1913.
The fact that something is unconstitutional hasn’t really stopped the federal government in other cases, why should we expect this to be any different?
Also many of us not only want to abolish the Fed, but also to get government out of the money printing business altogether. Money is simply the most commonly traded good for the purposes of indirect exchange, i.e. medium of exchange. Money predates government control of money, and there’s no truly valid reason for the government to control our money, constitutional or not.
The FED follows a clear example of “progressive” government ideology and its outcome:
Regulate business. This is favorable to the public who is spared the blight of “greedy, harmful” actions on the part of private enterprises. It is also favorable to the dominant businesses, who are spared from many arenas of competition. It is a means of founding a publicly-acceptable cartel. Any additional private gains made by the business owners are supposedly reflected in the public benefits of stability, safety, etc.
What is private property? What is private ownership? Is it entitlement to use some good as one sees fit? Or is it entitlement to a share of gains derived from some property? We could argue today that there is no such thing as truly private property, with government regulation, taxation, prohibition, etc. If you cannot use some good as you desire, it cannot be considered your property, even if you are legally described as the good’s owner.
The power of the Federal Reserve comes from its ability to monetize government debt, with that new money being a legal tender for all other prior debts. In essence, the Federal Reserve allows the government to nullify any debt, which means that all credit assets are subject to government control. Congress can repeal this power with a majority vote. If this is a get-rich conspiracy, a majority of congress has either been in on it or unaware of it for almost 100 years. Like most government agencies, some people are getting rich, but its driving spirit is that congress can use it to positively benefit the economy. Consider the FDA. It makes people rich, but that isn’t its driving motivation for supportive votes in DC. Congress believes it is fulfilling a necessary and proper function of government for public benefit.
ALL OBSERVATIONS OF “PRIVATE OWNERSHIP” ARE FUNDAMENTALLY MISLEADING. What does anyone privately own in this system? Nothing. Private citizens and organizations cannot create government debt, monetize it, or protect themselves while operating fundamentally inflationary banks. These “private” banks require government market distortion to exist.
Why require ownership of stock purchase? BARRIER TO ENTRY - THE PRIMARY MEANS OF CREATING TODAY’S CARTELS.
There ARE private gains derivable from the actions of the Federal Reserve. Having insider access to their decisions could allow one to make a great amount of money in investments. Also, the interest earned above ~6% on government debt is distributed as dividends to the member banks. Also, banks operating as they do today in a free market would not be profitable. Thus, inherently inflationary banks benefit. Certain market actors, such as large-scale corporate owners, benefit by the ability to create credit out of thin air. In that inflation inherently creates value in new money by debasing the value of existing money, it can be said to be a purposeful transfer of wealth. In that the government does not allow monetary freedom, such a transfer of wealth can be considered a tax.
And not all Fed notes represent debt. The Fed has hundreds of billions of dollars worth of gold listed on their balance sheet (although they only list it as being worth $11 billion). Also, highly secure debt assets necessarily a bad thing to have on a balance sheet. The bad thing is using a monetary unit that has no firm limits on supply. And the silly thing is for the issuer of monetary units to mark its debts in these same units.
I don’t know who owns the buildings or signs the checks, but the point seems moot. The decisions involving money supply are mostly made by government appointees. If the government was disgruntled by these appointees, it could strip them of power overnight. The government benefits. As with ANY government policy, there are private gains to be found, but the driving nature of the Federal Reserve is not a private institution enslaving the world (including government) for its own benefit, but the traditional idealism of public benefits through government distortions of the market.
Does this all mean that the government can simply close the Fed and stop paying its debts? Meaning that the the debt US owns is formally a Fed’s debt?
The debt can be repudiated by the US government. It would collapse the US dollar.
If they keep on printing money it’s going to collapse anyway.
I guess I should really start buying up silver & gold.
The FED holds the government’s debt as assets, and its “liabilities” are the outstanding money supply, including the deposits of its member banks at the Fed’s regional branches, which are considered reserves to those banks. Yet, when the government buys back its debt, with interest, almost the entire amount of interest is returned to the government.
It would make little sense for the government to close the Fed as a means to get out of debt. It essentially offers nominally 0% interest money, which is actually negative real interest when taking into account price inflation. In other words, from a pure bargain-standpoint, the government would be better off having the Fed monetize its debt than borrow from foreign governments.
In fact, the government could use the FED to monetize new debt to pay off its prior foreign debts. This is what Germany did to attempt to pay its war debts when it experienced hyperinflation.
The real check against government simply using the printing press as a sole means of “revenue,” is that such large-scale inflation would destroy the currency’s ability to function well as money, and the people would resort to substitutes, both in short-term savings and exchange.
Besides hyperinflation, the other reason we resort to foreign debt rather than inflation is trade policy. One of the only means to maintain a trade imbalance between nation is perpetually lending the consuming nation back its purchasing power.
It all seems very confusing (probably intentionally).
It feels like money is being created out of nothing and one day it comes down crushing on us.
You should tell your Congress you want your Silver Dollars minted and issued into general circulation this January 2008. Then you will be earning real honest money and will not need to buy it since your sweat would be paying for it! If your Congress does not give you Silver Dollars then tell the President to act on Executive Order #111110 and he will tell the Treasury to Mint and issue the Standard Dollars in Silver being 412.5 grains of silver 90% Fine or 371.25 grains of pure silver. The same silver standard dollar since April 2nd, 1792.
After the Dollars In Silver are minted into circulation then tell Congress to mint Gold Coinage based on real current bimetallic value ratios to silver. Then you will earn Gold!
Why would that collapse the US dollar? Sure it would collapse a majority of the asset side of the Fed’s “balance sheet,” but so what? Federal Reserve Notes aren’t redeemable for any of those assets anyway (i.e., FRNs aren’t really liabilities of the Fed any more because they are no claim upon it). All it would mean is that the Fed would not have as many assets available to sell in the event that it wanted to contract the money supply.
No no no. The Fed on their own FAQ, say they are fully accountable and are not in any way privately owned. go back to sleep
You need to account for foreign bondholders.
What about them? That could make them want to go to war with us or something because they won’t get paid. But how would it collapse the dollar?