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Does the Federal Reserve print money out of thin air?

Discuss conspiracies, mysteries and paranormal phenomena.

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Does the Federal Reserve print money out of thin air?

Postby Winston » Sat Mar 14, 2009 9:55 pm

Lots of sites and videos say that the Federal Reserve is a scam, owned by private banks, and that it prints money out of thin air and loans it to the US government at interest. Is that true? If so, is this the cause of the national debt and America's economic problems?

List of sites about the Federal Reserve conspiracy

http://www.google.com/search?hl=en&q=fe ... tnG=Search

Relevant video from Zeitgeist

[youtube]http://www.youtube.com/watch?v=_dmPchuXIXQ[/youtube]
Last edited by Winston on Tue Jul 16, 2013 6:34 pm, edited 6 times in total.
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Postby Winston » Sun Oct 16, 2011 10:59 am

Here is a funny cartoon that explains how the Federal Reserve and US banking system scams people. It's really funny and easy to understand and contains parodies of movie scenes.

[youtube]http://www.youtube.com/watch?v=MtSz1A0vQmQ[/youtube]

[youtube]http://www.youtube.com/watch?v=qSG2IaoGUJs[/youtube]
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Postby Winston » Sun Oct 16, 2011 11:18 am

Is it true that the taxes that the American people pay goes to pay off the interest on the loans the government borrows from the Federal Reserve? These conspiracy films say that. But where is the evidence that that's true?

ErikHeaven? Odbo?
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Postby onezero4u » Sun Oct 16, 2011 2:05 pm

imagine this business...

you own a printing press and a monopoly on US currency.

you pirnt 1, 5, 10, 20, 50, 100, 500, 1000 dollar bills for roughly 4 cents each for paper and material etc...

then you charge the debtor country interest on the FACE VALUE of the money!!!!!!

imagine the profit on interest on $1000 when it cost you 3 cents to make.... and then multiply that times a few billion!!

yeah, were basically f***ed economicaly unless a miracle happens
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Postby Winston » Sun Oct 16, 2011 2:19 pm

I don't get something. If banks loan out money that doesn't exist, then why do they have strict requirements on who qualifies for loans? Why wouldn't they just give everyone a loan who asks for it, since they have nothing to lose?
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Postby momopi » Sun Oct 16, 2011 4:41 pm

Didn't you used to work at a bank?

All major currencies today are created ex nihilo. The Tang Dynasty were the first to use paper fiat money, though some claim that it's the later Song Dynasty:

http://numismondo.com/pm/chn/index.html ... 20catalogs

For those who can't read Chinese, scroll to the bottom of this page -- they have 2 Ming paper note with English translation:

http://www.numismondo.com/pm/chn/ming/

The Swiss Franc was the last major currency backed by gold, and even then it was only 40% backed. There are no gold-backed major currencies today, but there are some minor (sub-national) gold currencies in circulation:

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

==================================

http://money.howstuffworks.com/personal ... /bank1.htm

Banks create money in the economy by making loans. The amount of money that banks can lend is directly affected by the reserve requirement set by the Federal Reserve. The reserve requirement is currently 3 percent to 10 percent of a bank's total deposits. This amount can be held either in cash on hand or in the bank's reserve account with the Fed. To see how this affects the economy, think about it like this. When a bank gets a deposit of $100, assuming a reserve requirement of 10 percent, the bank can then lend out $90. That $90 goes back into the economy, purchasing goods or services, and usually ends up deposited in another bank. That bank can then lend out $81 of that $90 deposit, and that $81 goes into the economy to purchase goods or services and ultimately is deposited into another bank that proceeds to lend out a percentage of it.


The amount of money that a bank can loan is limited, and they make a profit from the interest payments. Lending requirements ensure that the borrower has good credit and will likely (or hopefully) repay his/her loan. The amount of interest and fees that can be charged is regulated by State usury statutes & varies from State to State. For California:

http://ag.ca.gov/consumers/general/usury.php

"The California Constitution allows parties to contract for interest on a loan primarily for personal, family or household purposes at a rate not exceeding 10% per year."

"In the absence of an agreement, the rate of interest upon a loan or forbearance (an agreement not to collect until later for money already owed) of any money or goods or accounts (after demand) is 7% per year."



There are various exceptions to State Usury laws (see your credit card bill!) and it's beyond the scope of this discussion. But for those looking to make a small profit from P2P lending, please note that State Usury laws may affect the amount of interest that you can charge for a P2P loan if there was ever a dispute and it reaches the courts:

http://www.p2ploancorp.com/interestrates.php


For those unfamiliar with P2P lending, it's a great way to bypass the banks. See here:

http://www.prosper.com/
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Postby Winston » Sun Oct 16, 2011 5:51 pm

Momopi,
I worked as a Data Entry Clerk for Bank of America before, but I didn't work in the bank itself. All I did was process loan applications by entering them into the database.

So is the conspiracy theory regarding the Federal Reserve being a scam true or false? And to what degree?

If it was really privatized and unaccountable to even the government, wouldn't everyone know about it, especially everyone in the Congress and Senate?
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Postby ErikHeaven » Sun Oct 16, 2011 9:04 pm

It is all true. I read the book Money Mechanics printed by the FED. Its in their own publications. They practice what is called Fractional banking. Money is created by your signature and debits and credits are just created in a computer. They never loaned you (Money) in the first place. Research what money really is according to the Constitution. Please read the book The Miracle on Main Street. You can have all sorts of State so-called obligations cancelled by knowing what is Legal Tender.
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Postby gsjackson » Sun Oct 16, 2011 10:57 pm

Most "money" in circulation is created when banks make loans. Only ten percent or less of the loaned funds is actually on hand at the bank, the rest is new money created from scratch (as are the amounts made available on credit cards). Federal reserve notes and coins constitute less than 5 percent of the outstanding money supply; the rest is just accounting entries, created primarily through loans.

You don't need "evidence" that a substantial portion of the federal budget goes to service debt, much of it to banks in the federal reserve system. That's a simple fact. Federal Reserve banks do get tax dollars paid as interest on money they create as loans, but I believe that in the last few years of quantitative easing, the government has not effectively been charged interest on new money from the Fed. (When people start sniffing around this scam because of a tanking economy, i'ts best to lie low with the most egregious aspects.)

Think about it: The US has maybe upwards of 35 percent of the population that is either unemployed or underemployed, people who want to work more. And there are no shortage of jobs needing to be done in this country, starting with a crumbling infrastructure. Yet the would-be workers and jobs can't go forward for lack of something called "money," which is controlled by a system of private banks. Something's wrong with this picture. The US government is given the power to coin money by the Constitution. That's what it ought to be doing instead of remaining at the mercy of the blood-sucking middlemen.
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Postby Adama » Mon Oct 17, 2011 1:49 am

The answer is yes. Even Matt Damon states this in his documentary on the Wall Street financial collapse. Then listen to that criminal Bernie Madoff. He knows what going on.
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Postby momopi » Mon Oct 17, 2011 9:25 am

Winston wrote:Momopi,
I worked as a Data Entry Clerk for Bank of America before, but I didn't work in the bank itself. All I did was process loan applications by entering them into the database.
So is the conspiracy theory regarding the Federal Reserve being a scam true or false? And to what degree?
If it was really privatized and unaccountable to even the government, wouldn't everyone know about it, especially everyone in the Congress and Senate?


(Congress includes both the Senate and the House, so you're probably trying to say "House and Senate" and not "Congress and Senate".)

The Federal Reserve Act of 1913 established the Federal Reserve, and the Banking act of 1935 established the Federal Reserve Board of Governors must be appointed by the US President and approved by the Senate with every appointment (no automatic 2nd terms). The Chairman of the board is required to report to Congress twice a year and the Federal Reserve is subject to audits by GAO (Federal Banking Audi Act of 1978). Sample GAO audit:
http://www.gao.gov/new.items/d11696.pdf

The Federal Reserve is under Congressional Oversight, and as a matter of public law/policy, it does not qualify as a scam or some hidden conspiracy.
http://en.wikipedia.org/wiki/Congressional_oversight

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Postby Winston » Mon Oct 17, 2011 9:55 am

gsjackson wrote:Most "money" in circulation is created when banks make loans. Only ten percent or less of the loaned funds is actually on hand at the bank, the rest is new money created from scratch (as are the amounts made available on credit cards). Federal reserve notes and coins constitute less than 5 percent of the outstanding money supply; the rest is just accounting entries, created primarily through loans.

You don't need "evidence" that a substantial portion of the federal budget goes to service debt, much of it to banks in the federal reserve system. That's a simple fact. Federal Reserve banks do get tax dollars paid as interest on money they create as loans, but I believe that in the last few years of quantitative easing, the government has not effectively been charged interest on new money from the Fed. (When people start sniffing around this scam because of a tanking economy, i'ts best to lie low with the most egregious aspects.)

Think about it: The US has maybe upwards of 35 percent of the population that is either unemployed or underemployed, people who want to work more. And there are no shortage of jobs needing to be done in this country, starting with a crumbling infrastructure. Yet the would-be workers and jobs can't go forward for lack of something called "money," which is controlled by a system of private banks. Something's wrong with this picture. The US government is given the power to coin money by the Constitution. That's what it ought to be doing instead of remaining at the mercy of the blood-sucking middlemen.


Ok several questions then.

Why does the government claim that our tax money is used to build roads and schools then?

Why don't banks just give loans to everyone who wants one, even those with bad credit, since they have nothing to lose?

Why doesn't the Fed help the economy by cancelling out some of the debt owed by the US government? Wouldn't that reverse the impending economic collapse?
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Postby Winston » Mon Oct 17, 2011 10:00 am

momopi wrote:
Winston wrote:Momopi,
I worked as a Data Entry Clerk for Bank of America before, but I didn't work in the bank itself. All I did was process loan applications by entering them into the database.
So is the conspiracy theory regarding the Federal Reserve being a scam true or false? And to what degree?
If it was really privatized and unaccountable to even the government, wouldn't everyone know about it, especially everyone in the Congress and Senate?


(Congress includes both the Senate and the House, so you're probably trying to say "House and Senate" and not "Congress and Senate".)

The Federal Reserve Act of 1913 established the Federal Reserve, and the Banking act of 1935 established the Federal Reserve Board of Governors must be appointed by the US President and approved by the Senate with every appointment (no automatic 2nd terms). The Chairman of the board is required to report to Congress twice a year and the Federal Reserve is subject to audits by GAO (Federal Banking Audi Act of 1978). Sample GAO audit:
http://www.gao.gov/new.items/d11696.pdf

The Federal Reserve is under Congressional Oversight, and as a matter of public law/policy, it does not qualify as a scam or some hidden conspiracy.
http://en.wikipedia.org/wiki/Congressional_oversight

You don't have to like it, you simply have to live with it.


Wait. How do you know all that isn't just a cover though? The government lies all the time. Anyone can say anything or print it on paper even, without it being true.

Also, wasn't the Federal Reserve Act of 1913 signed on Christmas, when no one was there to dispute it? That's what I heard. If so, wasn't that an underhanded move for obvious reasons? Shouldn't it have been illegal for them to pass an act when everyone was home for Christmas?

If Congress audits the Federal Reserve, then why did Ron Paul say otherwise? And why did Alan Greenspan say on TV that the Fed is unaccountable and above the law? Listen to what he said in this interview below.

[youtube]http://www.youtube.com/watch?v=3QkmLnNEvdU[/youtube]

I'm just trying to get to the bottom of this.
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Postby momopi » Mon Oct 17, 2011 11:10 am

Winston wrote:Wait. How do you know all that isn't just a cover though? The government lies all the time. Anyone can say anything or print it on paper even, without it being true.
Also, wasn't the Federal Reserve Act of 1913 signed on Christmas, when no one was there to dispute it? That's what I heard. If so, wasn't that an underhanded move for obvious reasons? Shouldn't it have been illegal for them to pass an act when everyone was home for Christmas?
If Congress audits the Federal Reserve, then why did Ron Paul say otherwise? And why did Alan Greenspan say on TV that the Fed is unaccountable and above the law? Listen to what he said in this interview below.
I'm just trying to get to the bottom of this.



1. Before the Federal Reserve Act can be signed, it must pass both the House and the Senate with majority vote. The President can either sign or veto, and Congress has the power to override the Presidential veto. The House voted 298:60:76 (yea/nay/abstain) and the Senate voted 43:25:27. It passed, the President signed it, end of story.

2. Congress itself does not audit the Federal Reserve. GAO (Government Accountability Office) audits the Federal Reserve and provide audit reports to Congress.

3. To the best of my knowledge, Ron Paul has never stated that the Federal Reserve is not audited. He sponsored the Federal Reserve Sunshine Act of 2009, which states:
"..."to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported".

In order to reform an existing audit process, there must be an existing audit process to begin with. The dispute is over the scope of GAO's audits, not if the audit took place.


Alan Greenspan can blab anything he likes, but ultimately he had to answer to the President and the Senate for his job. The Federal Reserve Board requires appointment and approval for each and every term.
Last edited by momopi on Tue Oct 18, 2011 4:06 am, edited 3 times in total.
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Postby Winston » Mon Oct 17, 2011 11:41 am

Ron Paul talks about auditing the Fed here:

[youtube]http://www.youtube.com/watch?v=Jhibv3N1GF8[/youtube]
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