We're looking for historical fact here folks! Not quotes from the Federal Reserve website. Just because its an official website doesn't mean its factual. Historical examples only please!
After everyone weighs in, I'll edit my response to something more informative... but I don't want to give away any freebies! I want to know how smart people really are!
GJ Bob, you are getting there, but I WANT TO SEE A THOROUGH ANSWER! LETS GO PEOPLE (I believe in you!)!
VERY NICE ANSWER TBD! But that's not even the tip of the iceburg....
the_divine_mrs_m... You're right on target! Will you marry me?
It gives me great strength of heart to see that there are good people out there who know what's going on! I hope that we can help everyone else understand this stuff ASAP, it's become my personal mission. I'll be part of a demonstration outside of my city's Federal Reserve bldg on the 15th with information and cameras!
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OK, as promised, here's my informative answer. The Federal Reserve doesn't "print" money, per se, since most of our currency these days really only exists in computer databases. But the Fed IS responsible for CREATING currency, or more accurately, limiting its creation by lower banks. I will elaborate...
It should be clear that the primary cause of inflation is an increase in the total amount of currency in circulation, which (until recently) was measured by a statistic called M3. But where does the new money come from? I know it seems complicated, but it's really not... let me explain....
There's an old trick called "fractional reserve banking."
Let's say you have a bank, and in your vault you have $1000 from all your depositors. Someone comes in to take out a loan for $10,000. Uh oh! You don't have that amount! Doesn't matter. Under a fractional reserve monetary system, you are allowed to issue credit for, say, 10 times the amount you actually have. This works because all the banks are in agreement to honor one anothers' credit.
So the person wishing to take a loan for $10,000 signs his house away as collateral. His house actually has value. In exchange, you, the banker, issue him a bank credit for $10,000. In the moment he signs his name, $9000 was just created out of THIN AIR. You have just robbed this man, and he is none the wiser because he fails to understand the trick. He has just traded his house for a slip of paper.
Many people think that money is created when printed by the Treasury. This could not be more wrong. Money is created every day, by the banks themselves, as liquid credit.
This is why it holds no value. It's an ongoing scheme to rob the American people of their property, and bury them under insurmountable debt. Between the taxes, the inflation (the devaluing of the dollar which is never accurately reported) and the interest on the debt, we have been made to be slaves to our creditors.
So where does the Fed come in? Well, the Fed determines the Fraction does federal reserve printing moneypart of the Fractional Reserve System. It is the authority to which all the lower banks refer. It also determines the interest rate on new currency (which the Fed technically LOANS to the Treasury)... but I want to keep my answer short so I won't get into this aspect.
Still confused? Here, watch this documentary:
Fractional reserve banking does not allow a bank to print money. If the bank has $1000 and a reserve requirement of 10% that allows the bank to lend out at most $900, the rest it must keep.
The rest of the post is similarly misinformed; perhaps a result of too many youtube "documentaries".
Ya I agree, 47 doesn't know what he is talking about. If $1000 is paid in, the bank must place $100 in their regional federal reserve bank. That means it can only lend out $900, NOT any amount it wishes. The bank may BORROW the additional money from the Federal Reserve..........
..........continued......but the money it's borrowing comes from the $100 it paid in prior, along with the money every other bank paid in. There's no money being created from THIN AIR!
47 is wrong regarding the mechanics of the "multiplier effect." Banks cannot physically loan out more than they take in with deposits (see other comments). Money is, however, created out of thin air by the fed though through different mechanisms: open market operations, reserve ratio, dsct. window.
Do you have any sources for this allegations?
This is the best answer? This guy plans on protesting his local Federal Reserve based on his superior knowledge of the reserve banking system and when he finally shows his cards it turns out he has an incorrect understanding of fractional banking. Brainwashed by one too many conspiracy theories.
The Fed Reserve is privately owned by 9 different banks. They are mainly Israeli backed- you do the math
Fact: The Federal Reserve is a private company. Don't let the word Federal fool you. It is as much a part of the government as Federal Express, the delivery company. By allowing a private company to be in charge of this country's currency, we have, in essence, been sold to the banks and financial corporations. Not much can be done without money, and who is it that decides how much our money is worth and how much of it is to be had? The Federal Reserve, that's who.
Fact: The money being printed by the Federal Reserve has no gold or silver to back it up. It is, in essence, worthless paper. Any time a country's money's value goes down, as the U.S. dollar has done, inflation is a result.
Fact: The government is now plotting a new form of currency to take the place of the failing dollar. I wish I had more information to offer on that, but I don't. I havedoes federal reserve printing money heard whispers of an "Amero", patterned after the Euro, and legal tender in America, Mexico and Canada. I have also noticed an awful lot of those "Send in your 'scrap' gold for cash!" ads on t.v. I think that there are people trying to get their hands on as much of the country's gold as they can, that way, when whatever is going to happen to our currency system happens, they will have all the power, really, because they will have all the gold, which will always be valuable. This is simply speculation on my part, and not really the 'historical fact' you requested.
Fact: There is a lot of information to be had about the Federal Reserve and its ugly history. Dig around. You will likely be surprised and disgusted by what you find out.
Thanks, Oishi! I wondered if you'd remark upon my comments, after reading what you had to say about the responses of others. And you made me blush with your "proposal"!!! Hee-hee!
Current administration policies
- oil price is triple the average level
- phony approach of oil independence e.g. bio fuels skyrocketed corn prices and most f the produce
- record budget deficits ; national debt practically doubled
(Enough?)
oishi , wow you are so smart! actually technically good point about the bank, but you are completely missing cause and effect. Feds would not need to "print" money if we did not have a deficit.
As to the historical fact, there is one, and it can be easily researched by anyone wishing to do so.
In sum,
INFLATION WAS NOT A PROBLEM for 100++ years prior to:
1. the creation of the Federal Reserve, and
2. adoption of the Fiat money system (e.g. money no longer backed by a commodity such as gold).
Our Money is backed by the good faith of the american people. LOL its true. Money does come out of thin air in forms of bank fee's, NSF fees, Credit card fee's, and so forth. That money never existed aka $35.00 overdraft fee but you created by doing direct deposit and they directly take your money! Gotta Love FREE CHECKING for that FREE COOLER!
The US$ is a fiat currency, which means that nothing (i.e. gold) backs it up. So, in a sense, it is out of "thin air."
The Federal Reserve doesn't print money. They buy securities (treasury bills) via the FOMC (Fed. Open 马克et Committee). When they buy more securities, the money they pay is injected into the economy.
This action is not in itself inflationary, but it can encourage inflation. Current US price inflation is almost entirely driven by oil prices.
For an example of inflation by runaway money printing, see Germany in the 1920s or Zimbabwe today.
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