The Real "Fiscal" Problem...
 

The Federal Reserve's Money Printing Failure

The Federal Reserve is the Central Bank of United States of America. It is responsible for printing the U.S. dollars & much more. The reason for Federal Reserve's existence is to maintain price stability and maximum employment.

The Federal Reserve (and other Central Banks) have been 'printing' money in recent years under various code-names, including Quantitive Easing (QE 1, 2, & 3), LTRO, SMP, TWIST, TARP and TALF, in order to bring unemployment down & speed up the economy. This article explains the failure behind the current money printing scheme and how banks, not people, get the money.

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The Federal Reserve - Central Bank of United States of America

The Federal Reserve has a bottomless pit of money at its disposal. It is arguably the most powerful institution in the world- it controls the money of the Reserve Currency of the World - The US Dollar. It could destroy the world economy by simply changing the main interest rate (Federal Funds Rate), just like in '07/'08.

How money printing happens: The newly printed money is just a number on the computer; printing real money is expensive. The Federal Reserve must have a system to spread the newly printed money. It spreads the money by 'taking over' existing loans; in essence buying the loans (from banks, hedge funds or other financial institutions). This system reimburses the banks the money banks loaned out before it's repaid by client, by so injecting new money into the economy.

The loans are considered "assets" because they earn interest. There are various loans (assets) the Federal Reserve buys through its programs, including
Government loans (treasury bills, securities, bonds, etc), MBS (Mortgage Backed Securities- home loans), student loans, credit cards and auto loans and many more.

Little known fact: All money is debt. All money is loaned into existence. Banks can ALSO create money by making a "Reserve Requirement" deposit with the Federal Reserve. If a bank deposits $1 million with Federal Reserve, with a 10% Reserve Requirement it can loan out $10 million by simply typing it into the computer into an account. This is called Fractional Reserve Banking. Federal Reserve also works as a lender of last resort when the banks that loaned out 10x more than they have deposited, get a 'run on the bank' and can't come up with the money-- when more people are pulling it out than they have available. Federal Reserve protects the system that allows lending out what one does not actually have. Federal Reserve is also a private bank, privately owned and not responsible to the Government, or anyone, except possibly its 300 private share holders.

This might sound confusing, but money-creation is not taught in schools, therefore many completely lack the concept of how the system works. The economy text-books of today are Keynesian theory based-- "print more cash please", written by big corporations, such as McGraw Hill-- which are owned by the banks. Banks benefit from this system, and from you not understanding it. There are many videos and sites covering the concept of money creation.

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Quantitive Easing 3 (QE3) - Fancy name for cash printing operation
$40 Billion / month in 2012

Federal Reserve to print $40 billion a month for remainder of 2012.

In September 2012, the Federal Reserve started its 3rd QE economic stimulus program.
Under this program Federal Reserve will for the rest of 2012 buy $40 Billion a month, each month, in MBS (home-backed loans) from the market, by so infusing new money into the economy.

$40 billion a month would amount to 9,600,000 jobs paying $50,000 / year. Unfortunately, more money does not equal more jobs. The newly printed money is not getting loaned out to consumers (as intended by the stimulus package) but stays with the banks and the banks invest the newly printed money in stocks for fast profits, by so pushing the stock market higher. The money does not go to SBA Bonds that are aimed at pumping cash into small business sectors.

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Quantitive Easing 3 (QE3) continues into 2013
$85 Billion / month in 2013

Above is the projected Federal Reserve printing volume of dollars for 2013.
Federal Reserve intends to print $1020 Billions ($1.02 Trillion) in 2013.

In 2013 Federal Reserve will increase printing from $40 to $85 Billion per month by purchasing $40 Billion a month in MBS (home-backed loans) AND additional $45 billion in 10-30 year US Government treasurys (loans) from financial institutions. "The Fed will therefore monetize roughly half of the US budget deficit in 2013."- ZH

This is equivalent to 20.4 million jobs per year paying $50,000 / year.

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Simply put... the Federal Reserve is destroying the value of the dollar. Don't be surprised if we experience 'hyperinflation' soon as well as the U.S. dollar losing it's status as the world reserve currency... if this happens it will be devastating to the American economy.

Nice post … Demoralizing but informative.

It was interesting to see how physically small 1 million printed dollars is.

The Federal Reserve doesn't print US dollars, the US Treasury prints the paper currency that spits out of an ATM.

If you read the post you would have seen the part that says "The newly printed money is just a number on the computer."

The FED doesn't print actual bills, they just enter in some numbers digitally into a computer. A very tiny percentage of the total money supply is actual physical paper money.

So how do we keep Wall Street from being the crooks they are? It's a serious question. What is it going to take to make them stop being scumbags only interested in their own personal gain?

And because so much money is made for creating nothing, everyone wants to be a banker -- so you end up having less people becoming qualified for the jobs that keep our society functioning.

The problem is that the crooks run the country. These same Wall Street crooks also have high level government jobs and tons of lobbyists who influence the law and policy making of this country.

Here is a stark contrast. In Iceland the crook bankers who pulled off shady and risky deals that help collapse the economy are now being tried and put in jail. In the US they are given billions in bailouts and are now cabinet members, lawmakers and lobbyists and they continue on as if nothing ever happened.

Bump...................

You hold them ALL accountable and put them in prison. No exceptions. Everyone who had their hands in the 2008 crash needs to go to prison for 5 - 10 years. That would be a good start.

The constitution says congress is supposed to regulate the monetary policy, not a private central bank. Fix that first and then maybe we can move forward...

From a Canadian no less.

AIG to sue over bailout

http://www.latimes.com/business/mone...,4871507.story

Federal Reserve President Warns Stimulus May Backfire and Fuel Inflation:

http://www.bloomberg.com/news/2013-0...inflation.html

Those Canadians aren't too bright, they always bitch and complain about how fucked up the US is but that is truly a gem!

Um Mutt was right and Rochard was pointing out that Americans apparently don't understand how the system works.

I don't know why I even bother with you anymore.

And apparently you are one of them.

All 3 of you are wrong according to Wikipedia.

Mutt said:
United States Bureau of Engraving and Printing prints it.

Look at any dollar bill, first line says "Federal Reserve Note" not "US Treasury Note"

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http://en.wikipedia.org/wiki/Federal_Reserve_Note
A Federal Reserve Note, also a United States banknote or U.S. banknote, is a type of banknote used in the United States of America. Denominated in United States dollars, Federal Reserve Notes are printed by the United States Bureau of Engraving and Printing on paper made by Crane & Co. of Dalton, Massachusetts. Federal Reserve Notes are the only type of U.S. banknote currently produced.[1] They are distinct from Federal Reserve Bank Notes, each of which was issued (until 1971) and backed by one, rather than all collectively, of the twelve Federal Reserve Banks.



Treasury Note

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http://en.wikipedia.org/wiki/United_...f_the_Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue. The Department is administered by the Secretary of the Treasury, who is a member of the Cabinet.

don't sweat it... a bunch of jerk wads on a porn forum will have this fixed up in no time.... sure am glad this was brought to our attention. problem solved :thumbsup

Great post SG

Notice that our paper money are called FEDERAL RESERVE NOTES. The last president who dared to print United States Notes ended up with his brains blown out in Dallas.

Another easily discovered fact that less than 1% of our people know.

Gee, I wonder why it isn't taught in schools :1orglaugh :disgust

The bureau is a part of Treasury, dip shit. Treasury secretary runs it. Guess what else treasury secretary runs? Maybe the treasury department?

Great post dude.

Meanwhile, 95% of America just argues silly Dem vs Rep bullshit without seeing the bigger picture.

The criminals who perpetrated a $12+ Trillion fraud not only got off scot-free from prosecution, they got blank checks and implicit permission to carry on.

Why? Because they own the politicians!

A couple recent examples: Bush II's connections to the big banks are well known. Less known is how his administration willfully dismantled regulatory oversight. Also, I wonder how many Dems know that the biggest contributors to Obama's 2008 campaign were the big banks. Is it any surprise that his Department of "Justice" hasn't lifted a finger to go after these fraudsters?

Doesn't matter who is president or in congress guys. With very few exceptions, both parties are corrupt to their cores and have been selling out this country for 30+ years. All of you buying into their thinking points are nothing more than dupes.

federalreserve.gov so where's federalexpress.gov?

We are all bartering with what is essentially the same as cans of pepsi.

This whole argument that Canadians don't belong in any discussion about America is blatantly retarded. I'm not sure why Baddog and Rochard resort to that kind of argument on a regular basis.

If the person is wrong about something, attack the facts, not the country someone is from.

It's almost as bad as discounting anything a black person says, for example, or male vs female.

It's even worse considering we get mostly US TV channels and news for our whole lives.

Also, we love you guys.

Actually, they were asked to join former CEO Maurice "Hank" Greenberg's lawsuit against the government. Sensibly, they declined.

Matt Taibbi (and others) had a great take on that narcissist Greenberg's suit LINK

That's your response to an otherwise informative post? Aren't you the insightful genius, or something :error