[quote=investor]
Sorry I wasn’t clearer. Lets say that the US wants to loan 100 billion to the EU countries. The US could loan it directly and have the EU pay us the interest on it. Instead what happens is that the cash goes to the fed, at no interest, which then loans the money to the EU and charges the EU interest on it. So, the US taxpayer lost the ability to make interest on the dollars loaned to the EU. [/quote]
Oy. Where to begin. I’ve been reading fed reports for quite a few years. I have no recollection of any foreign government debt being on their books. Federal government loans to foreign governments must be ratified by congress and loans are issued by the treasury department, not the fed. Although more commonly, rather than actually making loans, they guarantee loans made by others. You have to come up with a citation of the US loaning the EU $100 billion. I don’t recall that every happening.
Moreover, (and please pay attention carefully here) 100% of the feds profits over statutory fixed dividends go back into the US treasury. So even if it was as you described (which it is not) any profit on those loans would still go back to the US treasury, so there would be no net cost running it through the fed over making the loan directly.
I could go on, I won’t. Except to say that your lack of curiousity about the things you’re writing about is astounding. The fed IS audited every year. By public CPA firms. (for 2009, they were audited by Deloitte, published in April.) Just like virtually every publicly traded company is. The scope and nature of disclosures probably differ because they are not subject to SEC regulations. But otherwise according to GAAS. By the GAO. By the inspector general. The scope of the GAO and inspector general audits may be less than optimal, and disclosure of those audit results may be limited, but it IS audited. Every single year.
