vikinghammer
05-03-2010, 07:37 PM
Hello,
I am looking for some answers and clarification on the Federal Reserve system or central banks in general and the power that they have and how money and banking work.
I have recently watched some videos such as Money as Debt and The Moneychangers: How international bankers took over America. What I am trying to figure out is what exactly is the biggest problem with the system, as in what is the most sinister aspect of it.
I understand that the population is basically enslaved to debt through fractional reserve banking. I understand that 90% of money in circulation is in fact debt, as in a loan that must be paid back to the banks, and that it is impossible to pay it all back being that interest is expected to be paid as well and only the principal amount is created through loans. Also, that to pay back all this debt would be to destroy the money supply so the only way to keep the system going is to issue more and more debt, keeping the population forever in debt.
From what I understand, the greatest power that the FED or central banks have is the power to control the money supply. The main way they do this is by regulating the amount of reserves that banks can have. I understand the multiplier effect of reserves. This being that increasing reserves by $1,000 would essentially increase the money supply by $10,000, being that the bank only has to keep 10% of the $1,000 and can loan out $900. This $900 then gets deposited into another bank and that bank can loan out $810 and so on. The main way the FED affects reserves is by buying or selling treasury securities in the secondary market. One thing I was confused about is how exactly purchasing treasury securities increases reserves. Say a FED bank purchases $10,000 worth of treasury bonds. How exactly does this increase reserves for banks within its district. Do the treasury bonds themselves count as reserves?
Another aspect of the FED is that people claim it is a private corporation that seeks to realize the greatest amount of profit that it can like any other corporation. I understand how it is setup, it is owned by private shareowners and run by the board of governors, who I’m sure only get appointed if the bankers want them there. I have heard the president actually has to pick from a list. The thing about this is that I found sources that say the FED gives basically all of its profit back to the treasury. The FED only owns a fairly small portion of the treasury securities issued, which they purchase in the secondary market. They also give back mostly all of the interest they earned from the securities essentially making it an interest free loan for the U.S. government. This then actually saves taxpayers money on interest that would have been owed to others had the FED not been the purchasers of the securities.
Another aspect of the system is that the government does not issue its own money, which I believe the constitution permits them to do. Certain videos and quotes from many famous people propose that the government should do so. This is another thing I can’t quite wrap my head around. I know that Lincoln did this with greenbacks and it has been done other times in history. I understand that it would eliminate the problem of the huge national debt. But what does it exactly mean if a government issued its own debt free notes? Say the government needs $10,000 for something. Would they just print this and give it out and then it would just remain in circulation? How would this not always eventually result in ridiculous inflation? How could this work?
There are many quotes from famous people of the past condemning bankers and central banks. Thomas Jefferson, Benjamin Franklin, Abe Lincoln, Andrew Jackson, Woodrow Wilson, Thomas Edison all have drastic quotes about the banking system and money. Even quotes by bankers such the Rockefellers and Rothchilds and various other bankers themselves arrogantly speaking of the power that they have.
So what I’m asking is what is the biggest problem here? What is their biggest form of power of countries? Fractional reserve banking? The power of central banks to control the money supply? The fact that the government does not issue its own money?
I am looking for some answers and clarification on the Federal Reserve system or central banks in general and the power that they have and how money and banking work.
I have recently watched some videos such as Money as Debt and The Moneychangers: How international bankers took over America. What I am trying to figure out is what exactly is the biggest problem with the system, as in what is the most sinister aspect of it.
I understand that the population is basically enslaved to debt through fractional reserve banking. I understand that 90% of money in circulation is in fact debt, as in a loan that must be paid back to the banks, and that it is impossible to pay it all back being that interest is expected to be paid as well and only the principal amount is created through loans. Also, that to pay back all this debt would be to destroy the money supply so the only way to keep the system going is to issue more and more debt, keeping the population forever in debt.
From what I understand, the greatest power that the FED or central banks have is the power to control the money supply. The main way they do this is by regulating the amount of reserves that banks can have. I understand the multiplier effect of reserves. This being that increasing reserves by $1,000 would essentially increase the money supply by $10,000, being that the bank only has to keep 10% of the $1,000 and can loan out $900. This $900 then gets deposited into another bank and that bank can loan out $810 and so on. The main way the FED affects reserves is by buying or selling treasury securities in the secondary market. One thing I was confused about is how exactly purchasing treasury securities increases reserves. Say a FED bank purchases $10,000 worth of treasury bonds. How exactly does this increase reserves for banks within its district. Do the treasury bonds themselves count as reserves?
Another aspect of the FED is that people claim it is a private corporation that seeks to realize the greatest amount of profit that it can like any other corporation. I understand how it is setup, it is owned by private shareowners and run by the board of governors, who I’m sure only get appointed if the bankers want them there. I have heard the president actually has to pick from a list. The thing about this is that I found sources that say the FED gives basically all of its profit back to the treasury. The FED only owns a fairly small portion of the treasury securities issued, which they purchase in the secondary market. They also give back mostly all of the interest they earned from the securities essentially making it an interest free loan for the U.S. government. This then actually saves taxpayers money on interest that would have been owed to others had the FED not been the purchasers of the securities.
Another aspect of the system is that the government does not issue its own money, which I believe the constitution permits them to do. Certain videos and quotes from many famous people propose that the government should do so. This is another thing I can’t quite wrap my head around. I know that Lincoln did this with greenbacks and it has been done other times in history. I understand that it would eliminate the problem of the huge national debt. But what does it exactly mean if a government issued its own debt free notes? Say the government needs $10,000 for something. Would they just print this and give it out and then it would just remain in circulation? How would this not always eventually result in ridiculous inflation? How could this work?
There are many quotes from famous people of the past condemning bankers and central banks. Thomas Jefferson, Benjamin Franklin, Abe Lincoln, Andrew Jackson, Woodrow Wilson, Thomas Edison all have drastic quotes about the banking system and money. Even quotes by bankers such the Rockefellers and Rothchilds and various other bankers themselves arrogantly speaking of the power that they have.
So what I’m asking is what is the biggest problem here? What is their biggest form of power of countries? Fractional reserve banking? The power of central banks to control the money supply? The fact that the government does not issue its own money?