Question on existence of Federal Reserve printing money vs. government doing it

[yurbud]

If I understand correctly, the Fed prints money, which the government buys with T bills, which means all money puts us in debt.

What would be wrong with the government printing money itself to pay for government spending? Wouldn't that cut out an unnecessary middle man, stop our national debt from accumulating at an astronomical rate, and reduce the need for taxes on individuals?

Wouldn't there be some way to control inflation by expanding and contracting the money supply?

Why do we have to make the rich richer in order to simply have money?

[Demeter]

1. Such Was the Case Until 1913, When Some Midnight Coup in the Legislature Created the Federal Reserve

Read all about it--it's a shocking story.

Read also about Andrew Jackson's fight over the national banks.

[Truth2Tell]

2. It would be the most sensible thing ever.

That's why Chavez nationalized the central bank in Venezuela.

The problem is that it would put the owners of the Federal Reserve out of business, and thanks to their monopoly on money creation they are the wealthiest and most powerful humans on earth. So they tell us what to do, not vice-versa.

[yurbud]

4. I read something recently that said Kennedy considered that and Lincoln of course actually did it

and they both got a bullet in the back of the head.

Maybe we need a president wearing a helmet to fix this.

[Truth2Tell]

8. The Kennedy story is a myth.

I recently looked into it.

What we need is a President who isn't already OK with system. Maybe someday.

[xyouth]

3. Also look at Executive Order 11110

http://www.fdrs.org/executive_order_11110.html

Another reason JFK may have been killed.

The fed bankers don't like getting cut out.

[Truth2Tell]

9. Sorry, It would be nice to believe

that Kennedy wanted to strike at the Federal Reserve, but that myth has been debunked:

http://www.publiceye.org/conspire/flaherty/flaherty9.html

I don't think any American leader will come anywhere near abolishing the Fed until there is a popular movement to do so. Right now most Americans have no idea what the Federal Reserve is or what it does - so we are a long way from doing anything about it.

[soothsayer]

10. Poppy bush has said it will be abolished over his dead body

[Truth2Tell]

14. "abolished over his dead body"

OK

[girl gone mad]

11. There is a movement..

I'm not sure how popular it is, though.

http://www.youtube.com/watch?v=A8jEZ1JkA7c

[xyouth]

16. Thanks, always happy to get re-educated.

[Irish Girl]

5. Very few people are aware that the Federal Reserve is international bankers and not federal

This is one change I'm hoping the American people will eventually demand. We've eliminated two central banks during our short history and I'd also like to see the Federal Reserve go the way of the dinosaurs as well.

[yurbud]

13. the financial elite have fucked up to the point that people are a half step away from seeing it.

[gravity]

6. The treasury prints the money

and sells T bills to the public to finance the debt of the United States.

The Fed controls the banking system in the United States and indirectly influences the money supply by controlling interest rates. There is no one actually printing money to increase the supply.

And the reason Congress can't print money is because they would be because they are subject to too many political pressures, and would likely cause hyper inflation scenarios. Printing money is not a prudent way to reduce the national debt.

[Locrian]

7. MoneyMasters = very important video/site

http://www.themoneymasters.com/ - dont forget the FED is a PRIVATE bank. NOT a government institution!


Question: How does the Fed “create” money out of nothing?

Answer: It is a four-step process. But first a word on bonds. Bonds are simply promises to pay — or government IOUs. People buy bonds to get a secure rate of interest. At the end of the term of the bond, the government repays the principal, plus interest (if not paid periodically), and the bond is destroyed. There are trillions of dollars worth of these bonds at present. Now here is the Fed moneymaking process:

Step 1. The Fed Open Market Committee approves the purchase of U.S. Bonds on the open market.

Step 2. The bonds are purchased by the New York Fed Bank from whomever is offering them for sale on the open market.

Step 3. The Fed pays for the bonds with electronic credits to the seller’s bank, which in turn credits the seller’s bank account. These credits are based on nothing tangible. The Fed just creates them.

Step 4. The banks use these deposits as reserves. Most banks may loan out ten times (10x) the amount of their reserves to new borrowers, all at interest.

In this way, a Fed purchase of, say a million dollars worth of bonds, gets turned into over 10 million dollars in bank deposits. The Fed, in effect, creates 10% of this totally new money and the banks create the other 90%.

This also explains why the Fed consistently holds about 10% of the total US Treasury bonds. It had to buy those (with accounts or Fed notes the Fed simply created) from the public in order to provide the base for the rest of the money the private banks then get to create, most of which eventually winds up being used to purchase Treasury bonds, thus supplying Congress with the borrowed money to pay for its expenditures.

Due to a number of important exceptions to the 10% reserve ratio, some loans require less than 10% reserves, and many no (0%) reserves, making it possible for banks to create many times more than ten times the money they have in “reserve”. Due to these exceptions from the 10% reserve requirement, the Fed creates only a little under 2% of the total US money supply, while private banks create the other 98%.

To reduce the amount of money in the economy, the process is just reversed — the Fed sells bonds to the public, and money flows out of the purchaser’s local bank. Loans must be reduced by ten times the amount of the sale. So a Fed sale of a million dollars in bonds, results in 10 million dollars less money in the economy.

[Recursion]

12. Well, the Bureau of Engraving and Printing "prints" money

The Federal Reserve (a privately-owned group of banks with certain legal restrictions and responsibilities) "decides" how much dollar-denominated money "exists in the world", which colloquially called "printing money".

The Bureau of Engraving and Printing (an agency within the Treasury Department) decides how much physical money actually needs to be printed and physically prints it. The two questions (what the US Money Supply is, and how much physical currency is needed) are really almost completely unrelated. The actual physical printing of money is just based on how much is being destroyed, recycled, or spent in physical form as opposed to electronic form, and doesn't have very much in the way of "policy" implications.

What would be wrong with the government printing money itself to pay for government spending?

There are some dry and boring macroeconomic arguments about why a government shouldn't fiat it's own currency. I won't bore people with my mis-memories of the details, nor will I claim to agree with them, but the basic idea behind it is that the government has more spending and borrowing flexibility if it's not the entity that is directly responsible for the money supply. IE, the Reserve plays the role that specie currency once did.

[Greyhound]

15. I think Henry Ford said it best;

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

While an asshole of galactic proportions, he knew what he was talking about. Thanks to Frank Capra (It's a Wonderful Life), our ignorance of this subject is cemented into our collective conscious.
:dunce:

[Azooz]

17. Kill The Fed?

I think November 22nd was Fill the Fed day, anything come out of it? It's legal counterfeiting until it becomes illegal.

This is muliti-part speach about the Fed, part one is 10 minutes, starts with the history of the Fed, more if you are interested:

Federal Reserve - The Creature from Jekyll Island (Part 1)

http://www.youtube.com/watch?v=mbdgEWjadE8