[quote=SK in CV][quote=investor]
The loss of interest paid to the US govenment on loans to other governments is a large loss to the american tax payer as well as instead of making interest on loaning our money, we wind up paying the federal reserve to loan out our own money! As riduculous as this sounds, that is the reality of what is happening.
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I have no idea what you mean by this. If interest is paid to the US government, then the US government gets it. Are you aware of loans the fed has made to foreign governments directly? (I’m not, they may exist. I’ve just never seen them disclosed. The feds annual financial disclosures do not identify any.) Additionally, the fed is self funding and any net profit that the fed has, over and above it’s statutory dividends (previously noted above), are paid directly to the US government, so there is no “profit” being lost to a private company.[/quote]
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. The next step is that the EU can use some of the extra dollars to buy up tresury bills at auction. When this happens, the US gets its dollars back but now owes interest on the dollars that the EU gave to us, which is of course our own money. Instead, the US could have loaned the dollars to the EU directly and have been paid interest instead of paying the EU interest on our own money that filtered through the fed. The fed gets paid interest on the loans to the EU by the way. Everyone makes interest on our own money but the US. The US which winds up paying the EU interest. The EU winds up paying the fed interest, all on our own money. That is what john lott is saying in his opinion piece on fox business. Yes, the fed does return some of the interest it receives from the EU but the point is, the fed has never been audited so how do we know how much it is keeping and how much it is returning to the US? The federal reserve was not started to bring stability to the markets. It was founded to give large stockholders of the fed, who owned large banks, an advantage over small banks in that it could use its power to get bailed out should it make risky loans (sound familiar?) and make money/interest on the money supply of the US. Do you honestly think that they would do all of this and then give 100% of the interest back to the US taxpayer? THE FED HAS NEVER BEEN AUDITED and will fight an audit tooth and nail because it knows that when a significant number of americans know what is going on, the game is up.
The fed, by the way, is a private company that has some its directors/ chairman OK’ed by the president and congress but all of the selected people come from the fed anyway. (who controls a company? the CEO or the board of directors?) The fed has no money reserves of its own. The name “federal reserve” was used to throw people off its true make up. I know that this stuff sounds crazy but this is the reality of it. The book “creature from jekyll island” spends 800 pages explaining this in detail. Much better than I can in a blog. The vast majority of people do not know the basics of how the money flows in our government as witnessed by some of the responces on this thread.
