The Popular Uprising Against the Fed

(that title makes it sound like I’m soon gonna be calling for “agrarian reform!” and nationalization of industry, doesn’t it?  lol)

Here’s a great article from The American Conservative magazine examining the fading of the taboo against criticizing the Fed.  Or perhaps not taboo but exclusion from discourse (kinda reminds me of Chomsky’s manufacturing Consent, where he accuses the MSM of defining the terms of debate within exclusive parameters and/or not giving voice to viewpoints that greatly upset conventional wisdom…or power).  It looks at Ron Paul as an icon of this resurgent unease or even hostility toward the Fed, and examines how he served to bring the debate into the mainstream and have it somewhat ratified via his virulent, empassioned supporters.

It also makes a pretty convincing case for the wisdom of the Austrian school of economics, a long-time critic of fiat money (money that is created within a system, as opposed to currency that is backed by commodities like silver or gold) and central banking.  I confess I am quite confused and uninformed when it comes to macroeconomics; an uncertainty that grates at me when I see convincing, albeit frivolous and surely suspect, internet movies decrying international banking and central banking (along with 9/11 and, in this particular movie: Zeitgeist, religion).  I just wish I knew more so I could put suspicions to rest.

Any Citizens out there wanna share knowledge on the subject?  I struggle with: A) Does the Fed “lend” money to the US government, and charge interest? (If so, what on earth is anyone doing charging our gov interest for the money our gov creates?)  B) Are there good reasons why not to be suspicious of the enormous amount of power concentrated with the Fed, especially now that we are handing them huge sums of money?  C) Why did we get off the gold standard?  Was this a good thing?  Ron Paul sure made sense when he ranted against this on the campaign trail (and yes, I still commend his courage in mentioning ‘blowback’ in the context of 9/11 at mainstream debates…more whispers of Chomsky).

Sorry to keep you chasing ghosts  :/  I hope to add more of my thoughts on this later (trying to find the $ segment in Zeitgeist so I can refresh the questions it raised).

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3 Responses to “The Popular Uprising Against the Fed”

  1. Creedo Says:

    The gold standard that is usually referred to by most people today, including Ron Paul, (I am assuming of course), was setup by the Bretton Woods agreement after WW2. There had been other “gold standard” regimes before that. We got off the Bretton gold standard because the US could no longer afford to be the world’s reserve currency. The US could not maintain the $35 per ounce gold price that was set up by the regime. We had to pay for the Great Society (Medicare, Medicaid) as well as Vietnam. So blame it on LBJ. He also privatized Fannie Mae and Freddie Mac and we all know what a mess that became. We no longer had the gold to back our currency.

  2. BROUSS Says:

    We discussed this at length almost exactly one year ago. It’s been a while, but i think the highlights are still with me. The Fed, first of all is NOT a profit-making entity. See this excerpt from the Board of Governors Annual Report 1999:

    1999 Combined Statements of Income
    of the Federal Reserve Banks
    (in millions)

    Interest income
    Interest on U.S. government securities $28,216
    Interest on foreign securities 225
    Interest on loans to depository institutions 11
    Other income 688
    ——-
    Total operating income 29,140

    Operating expenses
    Salaries and benefits 1,446
    Occupancy expense 189
    Assessments by Board of Governors 699
    Equipment expense 242
    Other 302
    ——-
    Total operating expenses 2,878

    Net Income Prior to Distribution $26,262

    Distribution of Net Income
    Dividends paid to member banks 374
    Transferred to surplus 479
    Payments to U.S. Treasury 25,409
    ——-
    Total distribution 26,262

    Source: 86th Annual Report of the Board of Governors, p.335.
    http://www.federalreserve.gov/boarddocs/rptcongress/annual99/ann99.pdf

    If you’re still curious about some of these details, research some yourself. Find hard sources, hard definitions, share them here if you like.

  3. BROUSS Says:

    Ok sorry, answered my own question, and failed to highlight the significance for everyone else. For starters, the numerical explanation here could at least use some simplifying for your perusal.

    In millions:
    Total operating income 29,140
    Total operating expenses 2,878
    Total distribution 26,262 (25,409 of which -goes back to the US TREASURY-)

    For me this answers one of the more significant of Papo’s concerns here. “what on earth is anyone doing charging our gov interest for the money our gov creates?” The implication here is that the FRB is charging American citizens interest so that IT can make a profit. The above budget sheet show very clearly that the VAST majority of interest accrued by the FRB is given BACK to the US Treasury. The roughly 10% that is not paid back to -the US Government- is accounted for under the FRB’s operating expenses. I welcome any and all of you to please research this relatively small section of the FRB’s budget.

    While I don’t believe the FRB to be part of a vast conspiracy profiting off of the witless American people, I do think it’s worth understanding the need for this interest rate. I’ve begun reading on the 3 divisions: Member banks, Federal Reserve Banks, and the Board of Governors. I’m DEF not a finance major. Finance majors I do know tell me that a Fed interest rate follows basic finance principle, that money -held- is more valuable than a money -credit-. This policy applies to the Fed just as well as it applies to your local bank. Feel free to further inform me.

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