Enlighten me on the Federal Reserve.

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I cannot get the description from Zeitgeist (wha? search youtube) out of my head. Is it an institution, separate from our government (us) which loans us money, at interest, and also controls our money supply (value)?

Does it mean that every dollar in circulation, ie - every "loan" to our government, is worth less, automatically, than it's face value, because of the attached interest (debt)?

Does it mean that the Fed must continually increase the money supply so that we can afford to pay back the earlier debt, thereby incurring further debt, in a never-ending cycle?

Is this evidenced by the fact that it's all we can do to pay the interest, much less the principle, on our debt each year?

From 2007: To whom does the US owe money?



And this entity is not controlled by our gov.

How the hell do we owe an ever-increasing mind-boggling amount of money to some entity that loans us our own money?

I'm asking because I am no economic expert, as probably evidenced by the subject line of my op. And I might look mighty stupid here for asking. But I want to know. Is zeitgeist right, that the Fed was created in the dead of night with congress at recess, pushed by a group of elite bankers here and around the world, seeking profit and control, which boils down now to a death-grip on our government and its economy?

I just asking...

[Mojorabbit]

1. I don't understand it

it is way over my head.

[originalpckelly]

12. The people who own us want us to look at the Fed like a black monolith in 2001: A Space Odyssey.

It's really a simple system, and it does a ton of different things.

It's all of the following:
1. The government's bank
2. The bankers bank for it's members
3. The lender of last resort
4. The controller of monetary policy
5. An interbank check clearing system
6. A system to facilitate loans between banks

It's quite complicated when you get down to the nuts and bolts, but what it is can be described quite by the above.

[Mojorabbit]

14. If Obama had objections

to something the fed wanted to do could he stop them from doing it? They seem to have control over our economic state in a big way.

[rcrush]

17. Not according to his guy he cant.

http://www.youtube.com/watch?v=O9dVQi-APZ8

[ColbertWatcher]

19. It's all these things? But, is it public or private? Who is it accountable to? n/t

[RUMMYisFROSTED]

2. The biggest vigorish of them all.

:(

[babylonsister]

3. All I have heard is that Congress has no control over them/it. Good question. nt

[rcrush]

18. Thats what this guy says...

http://www.youtube.com/watch?v=O9dVQi-APZ8

[elleng]

4. Have fun!

http://en.wikipedia.org/wiki/Federal_Reserve

[suston96]

5. Google is your friend.......

http://en.wikipedia.org/wiki/Federal_Reserve

The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act, it is a quasi-public (government entity with private components) banking system<1> that comprises (1) the presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) twelve regional privately-owned Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors; (4) numerous other private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils. Since February 2006, Ben Bernanke serves as the Chairman of the Board of Governors of the Federal Reserve System. Donald Kohn is the current Vice Chairman (Term: June 2006 - June 2010).

[Hannah Bell]

6. as i understand it, it's a private/public partnership.

private interests own it, the gov't gets a cut of profits.

i may be wrong, but, fwiw:

http://www.geocities.com/CapitolHill/Senate/3616/FedReserveFacts.html



I do think certain interests gain by increasing federal debt levels. It's my opinion that one of the reasons Clinton was hated in some quarters was because he reversed the acceleration of debt.

First thing Bush II did was re-accelerate it.

[Name removed]

7. Deleted message

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[originalpckelly]

8. Money is created by making loans on deposits in our system, for the most part.

If I have $100 printed dollars in a town, and I open up a bank that gets all $100 in the form of deposits, and I loan it all out, I've just doubled the amount of money (aka money supply) in the economy.

Banks do not lend all the money out in practice, but keep some of it in reserve. So they keep $10 dollars in reserve, just in case someone wants to come in an close their account, or withdraw money.

By keeping money on call, while actually lending it out, you can create more money.

The reserves a bank keeps in case someone wants to withdraw money is where the RESERVE part of the bank's name comes from.

The banks are depositors at the Fed branches, just like we put money in their banks, they deposit some of their "reserve" at the Fed. The Fed then re-loans this money to the banks (in emergencies as a lender of last resort), and it multiplies the amount of money available in the economy. The banks also use the Fed to facilitate lending to one another. If the banks don't lend to one another, then that impacts the growth of the money supply. This is one reason the credit freeze was so bad.

It is the bankers bank.

The bank is a hybrid of government and the private banking industry.

It is interesting to note that the Fed only works with for-profit banks, and not credit unions, and the bankers bank (or credit union) of credit unions was just seized earlier today because it was insolvent. This is, in part, because of the fact that the Fed is a privately owned system that's for profit, and banks have an intense battle against the credit unions. The government also doesn't give the non-profit credit unions any major business, as the fed also serves as the government's bank, which is why they own a lot of the government's debt.

[creeksneakers2]

13. The Federal Reserve is not a for profit outfit

Any money that is profit gets turned over to the Treasury. The Fed does have 12 regional banks that are capitalized by the member banks of the Federal Reserve system. The member banks are issued shares, but the dividends are set in advance and the member banks have no votes, other than picking a regional bank CEO, who can be vetoed by the federal government.

The Federal Reserve is owned by the United States.

[notesdev]

9. The Fed is simply a mechanism to control the money supply

the problem comes when one has to ask in whose interest those decisions are being made. This institution being private raises an inherent conflict of interest.

[originalpckelly]

10. Every bank, every credit union, anything that makes a loan...

while keeping the original capital on call, in full or in part, serves to increase the money supply.

[notesdev]

15. The Fed regulates it

the Fed is empowered to regulate the reserve capital of banks, and uses that as a means to control the money supply.

[originalpckelly]

11. When the Fed buys government debt, it is basically printing money.

Because it is loaning the money to the government, by buying a bond, which the government must pay back with interest at a later date.

[Tierra_y_Libertad]

16. Yup. A surefire way to devalue the dollar and bring on inflation.