US "Federal" Reserve used to prop up failed Irish Banks

robbyvibes

The Independent writes

Files released by the US Federal Reserve, America's central bank, reveal that AIB racked up cumulative borrowings of more than $27bn (€20bn) under the Fed's Term Auction Facility, which was part of the response to prevent the complete collapse of the financial system around the time of the Lehman Brothers flame-out.

Some of you here might know that the Federal Reserve has the ability to create money out of thin air whenever it wants.

You shouldn't be fooled by the use of the word "Federal" in its name, it is no more Federal than Federal Express.

The reserve banks are private organisations run by bigger banks to maximise profits for themselves at the expense of the tax payer in the US and abroad.

Money created out of thin air is lended to other smaller banks at 0% interest who then lend out to ordinary people that promise to work hard paying back the loan with interest added.

The bailout for banks from the IMF is exactly just more money created out of thin air with Irish tax payer as collateral.

Can people not see what's happening? Ireland is being enslaved by an incredibly corrupt banking system.

Can Irish people honestly support what is clearly a scam?

article here

later12

Wasn't that data around since the middle of last week? Hardly surprising anyway, it just underlines the global nature of the recession and the Fed's role in trying to rescue the international financial system. Hardly a surprise I would have thought.

Personally, i don't think that releasing that kind of information really helps anyone and I'm surprised it was released at all. It just reveals internal weaknesses that could be corrected anyway, and tends to scare off wealth investors. Anyway, in terms of the Irish banks, this information is hardly shocking.

robbyvibes

Do you support the continued bailout of Irish banks at the expense of Irish Tax payers?

later12

No. And what's that got to do with Fed lending?

You know what, forget that question. I presume it will probably only be decorated with mini rants on the evils of money and banks.

I just think there is nothing shocking in the article, it seems quite normal, sorry.

robbyvibes

No. And what's that got to do with Fed lending?

I would have thought it obvious, i'll try to explain as simplistic as possible for you.

The "Federal" reserve creates money out of thin air backed by absolutely nothing. It lends this imaginary wealth to banks who then lend their imaginary wealth to people who work hard to pay it back with interest.

This system is so totally fraudulent because it gives banks the power to control the wealth of all people.

So, it has cost the "Federal" reserve absolutely nothing to give Irish banks $27 bln which we have no idea what it was used for and it doesn't matter anyway because it isn't my loan, it isn't a loan for Irish people.

You know what, forget that question. I presume it will probably only be decorated with mini rants on the evils of money and banks.

Well, i would take your answer as "Yes, I do support the bailout"

it seems quite normal, sorry.

I'm sure it does, your apology is accepted.

later12

Thank you for your explanation. I've just had a Eureka moment. Excuse me while I tear up my degree and subscribe to your newsletter.

If you want to discuss the significance of the article in realistic terms, I'd be glad to do so. But I'm not debating a conspiracy theory.

robbyvibes

Thank you for your explanation. I've just had a Eureka moment. Excuse me while I tear up my degree and subscribe to your newsletter.

You have a degree? so what? nearly the whole country has one at this stage. You feel you're more privileged to give an opinion because of that? rubbish.

If you want to discuss the significance of the article in realistic terms, I'd be glad to do so. But I'm not debating a conspiracy theory.

You can't refute facts by calling someone a conspiracy theorist.

If there are obvious flaws in the arguments I made, point them out.
I won't hold my breath..just expect childish name calling.

Anonymous1987

Firstly, the Federal Reserve is not private, for the benefit of people who don't venture into US politics forum see here.

Secondly the Fed manages the supply of money. It does this by "printing money" which is the layman term for buying up US government bonds. Buying US government bonds increases the supply of money thus reducing the interest rates that banks charge one another. The Fed acts carefully not to introduce too much of this liquidity into the system by keeping an eye on inflation. If the Fed were to introduce too much liquidity i.e. print too much money then the currency would lose its value and inflation would skyrocket. See here for more.

Also note that the Irish banks, like all banks, would have paid interest on the loans they received. The Fed was offering these loans because following the collapse of Lehman, the banks did not trust lending to one another and the financial markets were seizing up.

Our crisis was unrelated to this. The Irish crisis was the result of the collapse of a speculative bubble in property with result being major losses suffered on loans made by the banks to property developers. In contrast, the US crisis was the result of complex financial instruments which masked the real risk of the underlying loans.

With regards to the IMF, it is not a central bank. It does not manage the money supply, its funds come from its member countries and it offers loans to countries in danger of default.

Where the real pressure to bail out the banks is coming from would seem to be from Europe. If our banks failed, there would likely be major contagion effects to other European economies with exposure to Irish banks and of course further contagion in the sovereign debt crisis. Not to mention we would effectively be without a financial system.

Sometimes the markets get carried away with themselves, make bad investments and the entire system has to face the losses. There is no conspiracy here. Unfortunately for the Irish taxpayer though our government has decided to take the losses rather than the bank bondholders.

hiorta

Later 10, isn't the US 'Ferdal Bank' just a conglomerate of 5 or so Israeli mega-wealthy families who literally do 'create' money out of thin air and launder it via the American Government?
Their trick would seem to be to print money for printing and paper cost, lend it at real rates - but crucially not the interest - which has to be found by more borrowing, etc., and etc., in an impossible spiral leading to ever more debt which is financed by...... The US Federal Bank?
The only individusal who could break this sinister chain is an American President, two of whom tried - Garfield and Kennedy - both assassinated very soon after passing the necessary Law.

loldog

Yeah, banks are our real enemy, always have been. Bankers have actually deliberately caused recessions to pursue their agenda. Money really is the root of all evil, and we're starting to see how bankers have controlled everything for the last three centuries. Eventually the people will get tired of working harder and longer to pay off more and more debt, then we can see about setting up a sensible currency system.

As usual, the bankers have their apologists, even after all that has happened in the last few weeks. Their usual tactic, as evinced above, is to pretend it's all very complicated.

The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.
JK Galbraith.


It's good to see people are starting to question the monetary system. People know when something is wrong, even though the banksters try to hide it.

.

Moved to CT

robbyvibes

Anonymous1987 wrote: »

Firstly, the Federal Reserve is not private, for the benefit of people who don't venture into US politics forum see here.

I would refer you to Lewis v. United States, 680 F.2d 1239 (1982)

Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act.

Affirmed:

There are no sharp criteria for determining whether an entity is a federal agency within meaning of the Federal Tort Claims Act, but critical factor is existence of federal government control over "detailed physical performance" and "day to day operation" of an entity

Federal reserve banks are not federal instrumentalities for purposes of a Federal Tort Claims Act, but are independent, privately owned and locally controlled corporations

The US court seems to agree the Federal Reserve is not a government entity.
It states clearly that it is privately owned.

NAMBLA claimed on their website they weren't pedophiles but lobbied to have age of consent for young boys abolished so should we believe they aren't pedophiles?

Just because an organisation makes a claim, doesn't necessarily mean they're being honest about it.

The Federal reserve claims it is independent...but not private :rolleyes:

Secondly the Fed manages the supply of money. It does this by "printing money" which is the layman term for buying up US government bonds. Buying US government bonds increases the supply of money thus reducing the interest rates that banks charge one another. The Fed acts carefully not to introduce too much of this liquidity into the system by keeping an eye on inflation. If the Fed were to introduce too much liquidity i.e. print too much money then the currency would lose its value and inflation would skyrocket. See here for more.

Yes, and that's the problem.Fed are a private bank with the sole purpose of generating wealth from nothing.
They issue credit created out of thin air and lend it to financial institutions at 0% interest.

This is absolute fact.

I'm not sure why later10 earlier tried to claim this is "conspiracy theory" - it's well documented the FED have the power to issue money backed by absolutely nothing.

If i'm wrong, please tell me where.

Also note that the Irish banks, like all banks, would have paid interest on the loans they received. The Fed was offering these loans because following the collapse of Lehman, the banks did not trust lending to one another and the financial markets were seizing up.

What was the interest rate on the loans?
If I recall correctly, Bernanke dropped the rate to 0% following the collapse of 08. So if Irish banks were borrowing at 0%, why would they need to pay back those loans with interest?

It's irrelevant anyway, the money was created from nothing and now Irish tax payers are expected to pay it back...it's disgusting.

Our crisis was unrelated to this. The Irish crisis was the result of the collapse of a speculative bubble in property with result being major losses suffered on loans made by the banks to property developers. In contrast, the US crisis was the result of complex financial instruments which masked the real risk of the underlying loans.

Our crisis is pretty much the same as any other financial crisis that's happened in the world.

Banks made loans to people they knew couldn't possibly pay back..Banks didn't care because the debt was guaranteed by government anyway.

In the US, 90% of current mortgages are guaranteed..it's the same story over and over again and it's the same people defending this criminality.

"complex financial instruments" - don't you mean securitized mortgages?
Mortgages for people the banks knew couldn't pay back?

Let's be honest, anon..you sound like you work in finance with your descriptions but I know how the US collapsed and it wasn't due to "complex financial instruments" - that's completely false, it was simply terrible lending practices.

With regards to the IMF, it is not a central bank. It does not manage the money supply, its funds come from its member countries and it offers loans to countries in danger of default.

The only country with veto power is the US, correct?
And can you confirm that this organisation was almost bankrupt until Ireland needed a bailout?

It's a bit like the UN, many countries are part of it but there's only 1 or 2 that have any real power within it.

In the case of IMF, with US as the only country with veto, you can't say this is "international"

Other countries may be part of the IMF but it is essentially an organisation which works to protect US economic interests.

Sometimes the markets get carried away with themselves, make bad investments and the entire system has to face the losses. There is no conspiracy here. Unfortunately for the Irish taxpayer though our government has decided to take the losses rather than the bank bondholders.

robbyvibes

to mods of CT: this should be in politics forum, not CT. please move it back to politics.

Yitzhak Rabin

That the Federal Reserve is a private institution controlled by an elite in order to force America into an unpayable debt is a long established CT and belongs here, not in politics.

Anonymous1987

robbyvibes wrote: »

I would refer you to Lewis v. United States, 680 F.2d 1239 (1982)

Firstly this is in reference to one of the regional Federal Reserve Banks which are structured differently to the Federal Reserve itself. Secondly, I'm no lawyer but if you read this, you will notice that this is in reference to Federal Tort Law, basically for insurance purposes.

robbyvibes wrote: »

Yes, and that's the problem.Fed are a private bank with the sole purpose of generating wealth from nothing.
They issue credit created out of thin air and lend it to financial institutions at 0% interest.

This is absolute fact.

The Fed creates money, but it does not lend at 0% interest. It aims to influence the interest rate which banks charge to one another to manage the money supply. The current target is 0-0.25%, the Fed lends money through its discount rate. Again if the Federal reserve were to lend out free, then the economy would be flooded with liquidity, inflation would increase dramatically and the value of money would collapse i.e. the basic laws of demand and supply.

robbyvibes wrote: »

I'm not sure why later10 earlier tried to claim this is "conspiracy theory" - it's well documented the FED have the power to issue money backed by absolutely nothing.

Why would this be a problem? Money is only means with which to conduct transactions not a commodity in itself. Once inflation is under check, the value of money is secure.

robbyvibes wrote: »

What was the interest rate on the loans?

Ok this will involve some work with excel, so for a link to the loans made click here for the excel file, now click the "taf data" tab at the bottom of the screen. Now under the borrower drop down filter, unselect all and then select "ALLIED IRISH BANKS NYBR". Here are all the loans made to AIB at an interest rate 0.25% interest rate, remember this was emergency funding so it was lower than the discount rate normally charged but above the Federal Fund target rate of 0-0.25%.

robbyvibes wrote: »

If I recall correctly, Bernanke dropped the rate to 0% following the collapse of 08. So if Irish banks were borrowing at 0%, why would they need to pay back those loans with interest?

Like I showed above, the 0% is reference to the target 0-0.25% target rate. This the interest banks charge one another for short term lending and the Fed can drive this down by introducing liquidity into the system (creating money). The Fed is not lending money at 0-0.25%, private banks are. This is also (causing much confusion) referred to as the Federal Funds rate, the rate at which banks with deposits are the fed offer loans to other banks. The rate at which the Fed offers loans is the discount rate.

See here, the federal funds rate is the target rate, at the moment in and around 0.2% not 0%. The discount rate at which the Fed lends is 0.75. There is much confusion with this because as you can see there are a multitude of interest rates.

robbyvibes wrote: »

It's irrelevant anyway, the money was created from nothing and now Irish tax payers are expected to pay it back...it's disgusting.

What is disguising is that the Irish taxpayer is bailing out private institutions who made poor investments

robbyvibes wrote: »

Our crisis is pretty much the same as any other financial crisis that's happened in the world.

Banks made loans to people they knew couldn't possibly pay back..Banks didn't care because the debt was guaranteed by government anyway.

There is a moral hazard in bailing out banks, that they will realise that no matter what happens they will be bailed out. This is true and the primary reason Lehmen Brothers and other banks were let go. It remains a reason why we should consider letting our banks go or at least the bondholders.

robbyvibes wrote: »

"complex financial instruments" - don't you mean securitized mortgages?
Mortgages for people the banks knew couldn't pay back?

Let's be honest, anon..you sound like you work in finance with your descriptions but I know how the US collapsed and it wasn't due to "complex financial instruments" - that's completely false, it was simply terrible lending practices.

I don't work in finance, just studied it but I agree with you on this, there needs to be far more transparency in the markets with regards to risk.

robbyvibes wrote: »

The only country with veto power is the US, correct?

Correct

robbyvibes wrote: »

And can you confirm that this organisation was almost bankrupt until Ireland needed a bailout?

No, who says the IMF is bankrupt? It is an international organisation of member states.

robbyvibes wrote: »

It's a bit like the UN, many countries are part of it but there's only 1 or 2 that have any real power within it.

In the case of IMF, with US as the only country with veto, you can't say this is "international"

Other countries may be part of the IMF but it is essentially an organisation which works to protect US economic interests.

Sure the IMF is heavily biased towards and favours the US but its not like the US has free reign either. Think about the President in the US, he has veto power but that doesn't mean he can dictate the country either.

Anonymous1987

hiorta wrote: »

Later 10, isn't the US 'Ferdal Bank' just a conglomerate of 5 or so Israeli mega-wealthy families who literally do 'create' money out of thin air and launder it via the American Government?

No.

hiorta wrote: »

Their trick would seem to be to print money for printing and paper cost, lend it at real rates - but crucially not the interest - which has to be found by more borrowing, etc., and etc., in an impossible spiral leading to ever more debt which is financed by...... The US Federal Bank?

The Fed creates money to manage the money supply, it does not lend it out for free. Why do people never seem to get past the point that money is only a method of transaction?

hiorta wrote: »

The only individusal who could break this sinister chain is an American President, two of whom tried - Garfield and Kennedy - both assassinated very soon after passing the necessary Law.

This and your first argument is why this was moved to CT.

Cavehill Red

It's self evident in US law that the Federal Reserve is a private entity and not an arm of the American government.

It does the moderation of this site no credit to attempt to dismiss well-established fact as a conspiracy theory.

Anonymous1987

Cavehill Red wrote: »

It's self evident in US law that the Federal Reserve is a private entity and not an arm of the American government.

The plan adopted in the original Federal Reserve Act called for the creation of a System that contained both private and public entities. There were to be at least eight, and no more than 12, private regional Federal reserve banks (12 were established) each with its own branches, board of directors and district boundaries (Sections 2, 3, and 4) and the System was to be headed by a seven member Federal Reserve Board made up of public officials appointed by the President and confirmed by the Senate (strengthened and renamed in 1935 as the Board of Governors of the Federal Reserve System with the Secretary of the Treasury and the Comptroller of the Currency dropped from the Board - Section 10). Also created as part of the Federal Reserve System was a 12 member Federal Advisory Committee (Section 12) and a single new United States currency, the Federal Reserve Note (Section 16).

http://en.wikipedia.org/wiki/Federal_Reserve_Act#The_Act
The Federal Reserve is public, the regional Federal Reserve Banks are private, there is a difference.

Anonymous1987

loldog wrote: »

Yeah, banks are our real enemy, always have been. Bankers have actually deliberately caused recessions to pursue their agenda.

While banking failures have forced many an economy into recession, its more to do with short decision making to meet quarterly targets and speculation about investments than conspiracy.

loldog wrote: »

Money really is the root of all evil, and we're starting to see how bankers have controlled everything for the last three centuries. Eventually the people will get tired of working harder and longer to pay off more and more debt, then we can see about setting up a sensible currency system.

Money is amoral, merely a method of transaction, the problem with banks is we need a banking system to run the economy and banks know this.

loldog wrote: »

As usual, the bankers have their apologists, even after all that has happened in the last few weeks. Their usual tactic, as evinced above, is to pretend it's all very complicated.

If that is directed to me, I am not an apologist. I wasn't trying to claim its too complicated, in fact I've gone out of my way to explain as clearly as possible the system. The only place where I mentioned complexity was in reference to the 2007 crisis where people, including bankers, did not understand the true level of risk associated with the financial instruments. Whether there was an intention to mask the risk or just that the level of risk was poorly understood is open to debate. Regardless this was the action of private bankers not the Fed.

Cavehill Red

Anonymous1987 wrote: »

http://en.wikipedia.org/wiki/Federal_Reserve_Act#The_Act
The Federal Reserve is public, the regional Federal Reserve Banks are private, there is a difference.

Not in law, there isn't. The Federal Reserve is not a public institution. Even the wiki quote you provide makes clear that only the board is made up of public appointees. The shareholders are private banks.

If you can demonstrate for me how the Federal Reserve is a publicly owned institution, I'd be fascinated to hear it. The law states it is not, and not one of the 200 or so amendments since has changed that fact one iota.

squod

Anonymous1987 wrote: »

While banking failures have forced many an economy into recession, its more to do with short decision making to meet quarterly targets and speculation about investments than conspiracy.
Money is amoral, merely a method of transaction, the problem with banks is we need a banking system to run the economy and banks know this.
If that is directed to me, I am not an apologist. I wasn't trying to claim its too complicated, in fact I've gone out of my way to explain as clearly as possible the system. The only place where I mentioned complexity was in reference to the 2007 crisis where people, including bankers, did not understand the true level of risk associated with the financial instruments. Whether there was an intention to mask the risk or just that the level of risk was poorly understood is open to debate. Regardless this was the action of private bankers not the Fed.

I'm calling troll. This topic should be moved back to whatever forum it came from.

Anonymous1987

Cavehill Red wrote: »

Not in law, there isn't. The Federal Reserve is not a public institution. Even the wiki quote you provide makes clear that only the board is made up of public appointees.

Yes the board is made of public appointees who manage the money supply and create money.
http://en.wikipedia.org/wiki/Federal_Reserve_Board#Board_of_Governors

Cavehill Red wrote: »

The shareholders are private banks.

The share holders of the regional Federal Reserve Banks, yes, not the board.

Cavehill Red wrote: »

If you can demonstrate for me how the Federal Reserve is a publicly owned institution, I'd be fascinated to hear it. The law states it is not, and not one of the 200 or so amendments since has changed that fact one iota.

The board is public, the regional Feds are private. The board makes the decisions on managing the money supply.

Anonymous1987

squod wrote: »

I'm calling troll. This topic should be moved back to whatever forum it came from.

Explain how am I trolling? I am being civil and offering evidence to support claims I make. Where is your counter argument and/or evidence?

anbrutog

http://fskrealityguide.blogspot.com/2008/06/compound-interest-paradox-revisited_14.html

Greenspan himself admits the agency is independent..

http://www.youtube.com/watch?v=pVmxQsvj6lo

Anonymous1987

anbrutog wrote: »

http://fskrealityguide.blogspot.com/2008/06/compound-interest-paradox-revisited_14.html

Greenspan himself admits the agency is independent..

http://www.youtube.com/watch?v=pVmxQsvj6lo

Yes it is independent, to prevent political interference in the money supply. Independent does not mean private. Think about it, the Judiciary is independent of the Executive.

The Recliner

squod wrote: »

I'm calling troll. This topic should be moved back to whatever forum it came from.

Careful now, calling troll can see you banned

But seeing as you seemed to have missed it earlier, here is yekahs post about it again
http://www.boards.ie/vbulletin/showpost.php?p=69407660&postcount=14

Torakx

I thought the point of the Ct's on this is that we shouldnt have to pay extra to use money for transactions.Its like a credit card but the charges are passed on and shifted round and ofc you cant pay back what doesnt exist without creating more money to pay it back but then you need to create more to pay that back etc.
There is a state in america i hear has its own currency now and is doing better than its neighbours with no price being paid to use the money for trade etc.
Barter systems used to work long ago.Why is it we cant use a barter system with money?
Why do we have to pay to trade our goods these days?

Anonymous1987

Torakx wrote: »

I thought the point of the Ct's on this is that we shouldnt have to pay extra to use money for transactions.Its like a credit card but the charges are passed on and shifted round and ofc you cant pay back what doesnt exist without creating more money to pay it back but then you need to create more to pay that back etc.

Private banks also "create money" by offering loans in excess of deposits. This is not a problem. If the risk of making losses is managed effectively, no problems and people who need to borrow for investments can do so. If the losses made on investments are too high the bank fails. Banks are basically in the business of managing risk and investment. By the way most banks offering free banking, they also offer you interest (very little) on your deposits you hold with them.

Torakx wrote: »

There is a state in america i hear has its own currency now and is doing better than its neighbours with no price being paid to use the money for trade etc.

Source?

Torakx wrote: »

Barter systems used to work long ago.Why is it we cant use a barter system with money?

Lets say I want to sell my potatoes to buy an airline ticket. What does the airline do with the potatoes? Barter is ineffective. Lets say you are starving so you want to sell your car for food, you have to find someone who is looking for food and willing to buy your car. Where would you start.

Torakx wrote: »

Why do we have to pay to trade our goods these days?

No-one pays any interest unless they are borrowing.

anbrutog

Anonymous1987 wrote: »

Yes it is independent, to prevent political interference in the money supply. Independent does not mean private. Think about it, the Judiciary is independent of the Executive.

True , in theory. Famous Fed apologist Edward Flaherty outlines below how the board works, with a rebuttal from The Creature from Jekyl Island author Edward Griffin.

Flaherty: Hypothesis: Each of the 12 Federal Reserve banks is a privately owned corporation. Like any firm, their main objective is to maximize profits. They do so by lending the government money and charging interest. They manipulate monetary policy for their own gain, not for the public good. Facts: Yes, the Federal Reserve banks are privately owned, but they are controlled by the publicly-appointed Board of Governors. The Federal Reserve banks merely execute the monetary policy choices made by the Board.
My reply: Basically, Flaherty is correct as far as he goes. But, as we shall see in so many of his statements, he stops short of the entire truth. A half-truth is just as much of a deception as an outright lie. Flaherty says that the Board of Governors is politically appointed. This is true and it is supposed to make us feel safe in the thought that the President responds to the will of the people and that he selects only those who have the public interest at heart. The part of the story omitted by Flaherty is that the President does not select these people from his own personal address book, nor does he ask the public to submit nominations. With few exceptions, he makes appointments from lists given to him by the staffs of banking committees of Congress and from private sources that have been influential in his election campaign. The most powerful of all these groups are the financial institutions (including prominent members of the Fed itself) and the media corporations over which they have effective control. One does not have to be a so-called conspiracy theorist to recognize the tremendous influence that these institutions have over the outcome of presidential campaigns, and anyone with knowledge of how our current political system works will understand why the President makes exactly the appointments that the banks want him to make. All one has to do to see the accuracy of this appraisal is to examine the backgrounds and attitudes of the men who receive the appointments. While there is an occasional token individual who appears to come from the consumer sector of society, the majority are bankers deeply committed to the perpetuation of the system that sustains them. Anyone who would seriously challenge the power of the banking cartel would never be appointed. So, while Flaherty is correct in what he says, the implication of what he says (that the Fed is subject to control of the people through the political process) is entirely false.

Why isnt it possible for the American government to produce its own debt free money??
To whom they owe this debt to??

http://fskrealityguide.blogspot.com/2007/11/national-debt-who-is-creditor.html

Why has the Fed never been audited ?
Should it have been audited ( and I'm missing something ) , then why is Ron Paul repeated asking for it to be audited??
Is he missing something too??

http://www.ronpaul.com/legislation/audit-the-federal-reserve-hr-1207/

Why was the Fed created in secrecy in 1913, ushered in over Christmas when there were only a handful of Congressmen present??

Regardless of whether the above is true or not , a close examination of the Fed throws up more questions than answers.

iPlop

The Islamic banking system seems like a fair one ,at least fairer than the greedy one used througout the western world. see full article here do away with the Rothschild bail out and adopt the Islamic banking system and tweak it to our needs ,maybe thats what this country needs

Principles

Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of riba (usury). Common terms used in Islamic banking include profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).
In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the bank's profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).
An innovative approach applied by some banks for home loans, called Musharaka al-Mutanaqisa, allows for a floating rate in the form of rental. The bank and borrower form a partnership entity, both providing capital at an agreed percentage to purchase the property. The partnership entity then rents out the property to the borrower and charges rent. The bank and the borrower will then share the proceeds from this rent based on the current equity share of the partnership. At the same time, the borrower in the partnership entity also buys the bank's share of the property at agreed installments until the full equity is transferred to the borrower and the partnership is ended. If default occurs, both the bank and the borrower receive a proportion of the proceeds from the sale of the property based on each party's current equity. This method allows for floating rates according to the current market rate such as the BLR (base lending rate), especially in a dual-banking system like in Malaysia.
There are several other approaches used in business transactions. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc. The aim of this is to engage in only ethical investing, and moral purchasing.
In theory, Islamic banking is an example of full-reserve banking, with banks achieving a 100% reserve ratio.[26] However, in practice, this is not the case, and no examples of 100 per cent reserve banking are observed.[27]
Islamic banks have grown recently in the Muslim world but are a very small share of the global banking system. Micro-lending institutions founded by Muslims, notably Grameen Bank, use conventional lending practices and are popular in some Muslim nations, especially Bangladesh, but some do not consider them true Islamic banking. However, Muhammad Yunus, the founder of Grameen Bank and microfinance banking, and other supporters of microfinance, argue that the lack of collateral and lack of excessive interest in micro-lending is consistent with the Islamic prohibition of usury (riba).[28][29]

Anonymous1987

anbrutog wrote: »

Why isnt it possible for the American government to produce its own debt free money??

Because it would increase the money supply substantially leading to hyperinflation.

Hyperinflation becomes visible when there is an unchecked increase in the money supply (see hyperinflation in Zimbabwe) usually accompanied by a widespread unwillingness on the part of the local population to hold the hyperinflationary money for more than the time needed to trade it for something non-monetary to avoid further loss of real value. Hyperinflation is often associated with wars (or their aftermath), currency meltdowns like in Zimbabwe, and political or social upheavals.

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

anbrutog wrote: »

To whom they owe this debt to??

Holders of government bonds, mainly the public.

anbrutog wrote: »

Why has the Fed never been audited ?
Should it have been audited ( and I'm missing something ) , then why is Ron Paul repeated asking for it to be audited??
Is he missing something too??


Why was the Fed created in secrecy in 1913, ushered in over Christmas when there were only a handful of Congressmen present??

I hope the following answers your questions

Since the Federal Reserve has considerable discretion in carrying out its responsibilities, to whom is it accountable?

The Federal Reserve's ultimate accountability is to Congress, which at any time can amend the Federal Reserve Act. Legislation requires that the Fed report annually on its activities to the Speaker of the House of Representatives, and twice annually on its plans for monetary policy to the banking committees of Congress. Fed officials also testify before Congress when requested.
To ensure financial accountability, the financial statements of the Federal Reserve Banks and the Board of Governors are audited annually by an independent outside auditor. In addition, the Government Accountability Office, as well as the Board's Office of Inspector General, can audit Federal Reserve activities.

Are the Federal Reserve System and Reserve Banks ever audited?

The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act (enacted in 1978 as Public Law 95-320), which authorizes the Comptroller General of the United States to audit the Federal Reserve System, the Government Accountability Office (GAO) has conducted numerous reviews of Federal Reserve activities. In addition, the Board's Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board’s Annual Report (before 2002, the reviews were listed in the Board's Annual Report: Budget Review).
The Board's financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the OIG. The financial statements of the Reserve Banks are also audited annually by an independent outside auditor. In addition, the Reserve Banks are subject to annual examination by the Board. The Board's financial statements and the combined financial statements for the Reserve Banks are published in the Board's Annual Report.

http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#9

anbrutog wrote: »

Regardless of whether the above is true or not , a close examination of the Fed throws up more questions than answers.

Look everyone knows corporations and the financial industry will protect their interests and profits above all others and they carry a great deal of influence but they are by no means in control of the financial system or money supply.

squod

yekahs wrote: »

That the Federal Reserve is a private institution controlled by an elite in order to force America into an unpayable debt is a long established CT and belongs here, not in politics.

1. That the Federal Reserve is a private institution
2. controlled by an elite
3. to force America into an unpayable debt
4. established CT
5. belongs here, not in politics

We have five statements here, not one. Care to articulate which ones are correct?

Yitzhak Rabin

squod wrote: »

1. That the Federal Reserve is a private institution
2. controlled by an elite
3. to force America into an unpayable debt
4. established CT
5. belongs here, not in politics

We have five statements here, not one. Care to articulate which ones are correct?

I have no idea what the truth of the first three statements are. The last two are correct.

The mods of politics have indicated that they do not want the thread. I am quite content to allow discussion of it to continue here. However if people continue not to discuss it'll be locked. If you have any further queries please PM me and do not continue to question mod decisions on thread.

squod

yekahs wrote: »

I have no idea what the truth of the first three statements are. The last two are correct.

The mods of politics have indicated that they do not want the thread. I am quite content to allow discussion of it to continue here. However if people continue not to discuss it'll be locked. If you have any further queries please PM me and do not continue to question mod decisions on thread.

That's a fair answer.

robbyvibes

Anonymous1987, what "federal" reserve bank was the judge referring to in the court case: lewis vs united states?

How many "federal" reserve banks are you arguing exist?

I'm quite satisfied based on the evidence available that Federal Reserve are a private banking cartel posing as a federal institution for the sole purpose of controlling the supply of US dollars and maximising profits for all the banks who are members of the board.

You can't argue it doesn't control the money supply when we've established it does. You've even stated the only way the US government can spend money is through borrowing from the Federal Reserve...

You argue this system is to prevent government causing hyperinflation with excessive money creation, but the other side of the coin is that banks can control governments and entire nations which we could argue they do quite effectively with the help of World Bank and IMF "World" and "International" (both misnomers)

If you look at QE2 which the FED claim is to push the rate of US government bonds down so that banks might look elsewhere to invest, where are they looking?

They won't lend into the US economy because they know its banjaxed so where does the money go? not where its supposed to, not where Bernanke claims it will go.

as you probably know, it's going into equities and commodities...so WTF are US tax payers on the hook for? so that banks who get that money from the FED can enrich themselves even more, investing overseas?

paying themselves huge bonuses while people starve on the street?

At some point in the future, american people are going to snap... this trickle down economic policy isn't working and its only a matter of time.

You say that the fed are careful not to create too much money incase of hyperinflation..but what other routes are they prepared to take? can they honestly raise interest rates like Volcker did in the 80's? it's not possible with the total amount of debt incurred.

There's no question of austerity ahead for americans.
Foreign countries are no longer interested in buying dollars because you can't buy any american assets with those dollars, just IOU's that will never be paid.

Their biggest creditor was china, and there you see the US sending over warships to N.Korea, telling china they're "currency manipulators" placing blame for their economic problems on the doorstep of china who has been buying up their bonds for all their military conquests in the world.

So where are going? just keep printing money out of thin air and hope the problem of accumulated debt disappears?

Hyperinflation is exactly what the US is going to experience, because there's absolutely no way out of this debt they're creating...no way.

The sooner the better, china and russia swapping currencys was great news.

Anonymous1987

robbyvibes wrote: »

Anonymous1987, what "federal" reserve bank was the judge referring to in the court case: lewis vs united states?

If you bothered to read the first two lines of the link I supplied you would see it is reference to San Francisco regional Federal Reserve Bank which is private as opposed to the Federal Reserve board which controls the money supply and is public.

robbyvibes wrote: »

How many "federal" reserve banks are you arguing exist?

12 private regional federal reserve banks. http://en.wikipedia.org/wiki/Federal_reserve_system#Federal_Reserve_Banks And of course the Federal Reserve Board which is normally what someone means when they refer to the Fed is separate to these and is a public institution.

robbyvibes wrote: »

You can't argue it doesn't control the money supply when we've established it does.

Yes the Federal Reserve bank (the board that is) does control the money supply.

robbyvibes wrote: »

You've even stated the only way the US government can spend money is through borrowing from the Federal Reserve...

No I didn't the US gov can tax or borrow from public. Borrowings of course have to be repaid by taxes.

robbyvibes wrote: »

You argue this system is to prevent government causing hyperinflation with excessive money creation, but the other side of the coin is that banks can control governments and entire nations which we could argue they do quite effectively with the help of World Bank and IMF "World" and "International" (both misnomers)

Again the Fed which is public controls money supply, not the banks.

robbyvibes wrote: »

If you look at QE2 which the FED claim is to push the rate of US government bonds down so that banks might look elsewhere to invest, where are they looking?

They won't lend into the US economy because they know its banjaxed so where does the money go? not where its supposed to, not where Bernanke claims it will go.

as you probably know, it's going into equities and commodities...so WTF are US tax payers on the hook for? so that banks who get that money from the FED can enrich themselves even more, investing overseas?

paying themselves huge bonuses while people starve on the street?

Yes some of the liquidity is going into commodities and equities but the fact that money is going into equities is a good thing. Equity is another way for a firm to raise capital for investing and producing.

robbyvibes wrote: »

At some point in the future, american people are going to snap... this trickle down economic policy isn't working and its only a matter of time.

You say that the fed are careful not to create too much money incase of hyperinflation..but what other routes are they prepared to take? can they honestly raise interest rates like Volcker did in the 80's? it's not possible with the total amount of debt incurred.

The Fed has also devised a new monetary tool, the term deposit facility:

The Term Deposit Facility is a program through which the Federal Reserve Banks will offer interest-bearing term deposits to eligible institutions. By removing "excess deposits" from participating banks, the overall level of reserves available for lending is reduced, which should result in increased market interest rates, acting as a brake on economic activity and inflation.

http://en.wikipedia.org/wiki/Asset_Backed_Commercial_Paper_Money_Market_Mutual_Fund_Liquidity_Facility#Term_deposit_facility

robbyvibes wrote: »

There's no question of austerity ahead for americans.
Foreign countries are no longer interested in buying dollars because you can't buy any american assets with those dollars, just IOU's that will never be paid.

If the markets no longer had faith in the dollar, it would depreciate relative to other currencies, at present this has not happened to any great degree.

robbyvibes wrote: »

Their biggest creditor was china, and there you see the US sending over warships to N.Korea, telling china they're "currency manipulators" placing blame for their economic problems on the doorstep of china who has been buying up their bonds for all their military conquests in the world.

So where are going? just keep printing money out of thin air and hope the problem of accumulated debt disappears?

Hyperinflation is exactly what the US is going to experience, because there's absolutely no way out of this debt they're creating...no way.

The sooner the better, china and russia swapping currencys was great news.

While the level of US debt is worrying it's not like its unprecedented, here is a historical graph showing debt as a percentage to GDP. At present we are approaching the 100% mark but this is still below the levels of the 50's.

phantom_lord

robbyvibes wrote: »

I'm quite satisfied based on the evidence available that Federal Reserve are a private banking cartel posing as a federal institution for the sole purpose of controlling the supply of US dollars and maximising profits for all the banks who are members of the board.

One problem with this ct is that the US Government controls the FED and also receives the profit made by it.

Cavehill Red

Our friend anon remains incapable of demonstrating how the Federal Reserve is a public institution, other than by simply saying so and hoping he won't be questioned on it.

Sadly, I feel obliged to do exactly that. For the second time of asking, Anon, please demonstrate for us how you believe the Federal Reserve to be a publicly owned institution when the law clearly states that it is not, and merely has some public appointees?

Anonymous1987

I already covered it here. The key points are:

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

http://www.federalreserve.gov/genera...q/faqfrs.htm#5

Take it or leave it because I'm only repeating myself here. If you can't or do not want to understand this that's you prerogative. The only piece of evidence in favour of your conspiracy theory given here was shown to refer to the San Francisco Federal Reserve Bank however throughout this thread I have shown the SF Fed does not manage the money supply however the Fed Board manages the money supply which is public accountable to congress, not to mention regularly audited.

Cavehill Red

Yes, you're repeatedly incorrect. It is a private bank made up of private shareholders with a federal right to print reserve notes overseen by a board of government appointees.

That makes it a private company with a public contract which is overseen by public officials appointed to the private company.

Anonymous1987

Cavehill Red wrote: »

Yes, you're repeatedly incorrect. It is a private bank made up of private shareholders with a federal right to print reserve notes overseen by a board of government appointees.

That makes it a private company with a public contract which is overseen by public officials appointed to the private company.

The public officials are in control, they make all the decisions not the private banks.

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

Cavehill Red

That's debatable of course. They are nominally in control, for sure. They also answer to their shareholders.

But that's not the question I asked. You stated the Fed was a publicly owned entity. By law it is not. It is a private company with some public appointees. Do you now accept that you were wrong to suggest otherwise?

Anonymous1987

Cavehill Red wrote: »

That's debatable of course. They are nominally in control, for sure. They also answer to their shareholders.

But that's not the question I asked. You stated the Fed was a publicly owned entity. By law it is not. It is a private company with some public appointees. Do you now accept that you were wrong to suggest otherwise?

It couldn't be clearer

Legal status of regional Federal Reserve Banks

The Federal Reserve Banks have an intermediate legal status, with some features of private corporations and some features of public federal agencies. The United States has an interest in the Federal Reserve Banks as tax-exempt federally-created instrumentalities whose profits belong to the federal government, but this interest is not proprietary.[72] Each member bank (commercial banks in the Federal Reserve district) owns a nonnegotiable share of stock in its regional Federal Reserve Bank. However, holding Federal Reserve Bank stock is unlike owning stock in a publicly traded company. The charter of each Federal Reserve Bank is established by law and cannot be altered by the member banks. Federal Reserve Bank stock cannot be sold or traded, and member banks do not control the Federal Reserve Bank as a result of owning this stock. They do, however, elect six of the nine members of the Federal Reserve Banks' boards of directors.[37] In Lewis v. United States,[73] the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations." The opinion went on to say, however, that: "The Reserve Banks have properly been held to be federal instrumentalities for some purposes." Another relevant decision is Scott v. Federal Reserve Bank of Kansas City,[72] in which the distinction is made between Federal Reserve Banks, which are federally-created instrumentalities, and the Board of Governors, which is a federal agency.

http://en.wikipedia.org/wiki/Federal_reserve#Legal_status_of_regional_Federal_Reserve_Banks

Cavehill Red

Yes it is perfectly clear, and you bolded the wrong bit. Allow me:

The Federal Reserve Banks have an intermediate legal status, with some features of private corporations and some features of public federal agencies. The United States has an interest in the Federal Reserve Banks as tax-exempt federally-created instrumentalities whose profits belong to the federal government, but this interest is not proprietary.[72] Each member bank (commercial banks in the Federal Reserve district) owns a nonnegotiable share of stock in its regional Federal Reserve Bank.
However, holding Federal Reserve Bank stock is unlike owning stock in a publicly traded company. The charter of each Federal Reserve Bank is established by law and cannot be altered by the member banks. Federal Reserve Bank stock cannot be sold or traded, and member banks do not control the Federal Reserve Bank as a result of owning this stock. They do, however, elect six of the nine members of the Federal Reserve Banks' boards of directors.[37] In Lewis v. United States,[73] the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations." The opinion went on to say, however, that: "The Reserve Banks have properly been held to be federal instrumentalities for some purposes." Another relevant decision is Scott v. Federal Reserve Bank of Kansas City,[72] in which the distinction is made between Federal Reserve Banks, which are federally-created instrumentalities, and the Board of Governors, which is a federal agency.

Anonymous1987

Cavehill Red wrote: »

Yes it is perfectly clear, and you bolded the wrong bit. Allow me:

The key point you are missing is that the Federal Reserve Board which controls the money supply is appointed by the President and is accountable to congress.
http://en.wikipedia.org/wiki/Federal_Reserve_System#Board_of_Governors

The Federal Reserve Banks on the other hand are privately owned. Do not confuse the Federal Reserve Bank's board of directors with the Federal Reserve Board, they are separate.

Cavehill Red

Anonymous1987 wrote: »

The key point you are missing is that the Federal Reserve Board which holds all the control over the money supply is appointed by the President and is accountable to congress.
http://en.wikipedia.org/wiki/Federal_Reserve_System#Board_of_Governors

The Federal Reserve Banks on the other hand are privately owned. Do not confuse the Federal Reserve Bank's board of directors with the Federal Reserve Board, they are separate.

This really isn't a difficult question - the answer is in the text you yourself quoted - is the Federal Reserve a public or privately owned entity?
The answer is a privately owned one.

Anonymous1987

Cavehill Red wrote: »

This really isn't a difficult question - the answer is in the text you yourself quoted - is the Federal Reserve a public or privately owned entity?
The answer is a privately owned one.

The Federal Reserve Board, the one which controls the money supply is publicly owned. Also I edited my previous post as on double checking, the Federal Reserve Board does not hold "all" the control of the money supply it does consist of a majority of the members (7 out of 12) of the Federal Open Market Committee who decide monetary policy. Make what you want of it, the government is still in control and the various audits and reporting to congress ensures accountability.

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

Cavehill Red

You're still wriggling.
Answer the question: who owns the Fed?

Anonymous1987

Cavehill Red wrote: »

You're still wriggling.
Answer the question: who owns the Fed?

The US government owns the Fed. See the first point here, I've demonstrated that Federal Reserve Board (US owned) is the dominant force behind monetary policy.

Cavehill Red

Anonymous1987 wrote: »

The US government owns the Fed.

No, it does not. The banks own the Fed, as your own links, and the relevant legislation, make crystal clear.

squod

Anonymous1987 wrote: »

The US government owns the Fed. See the first point here, I've demonstrated that Federal Reserve Board (US owned) is the dominant force behind monetary policy.

I think I'll just edit the page and make Donald Duck the CEO.