A Chain Mail I'm Starting - The Modern Monetary System: What you DON'T know

[theonewhowaskazu]

Pass it on!

Before you read what I'm sending you, try taking this quick quiz. Then, see if I lied to you, when I told you you DIDN'T know what I'm about to tell you. Because, if I were to tell you this, face-to-face, that this system, say, was implemented behind closed doors when the debt ceiling was raised, you would say "No, that can't be true, you're just a crazy conspiracy theorist." And, you'd be partially right: It wasn't implemented behind closed doors when the debt ceiling was raised. Rather, it already exists, and has, for nearly 100 years. If you read this e-mail, and find the system as corrupt as I, please forward it to your contacts. Still, less than 0.0001% of Americans understands this system. If they did, then surely, they'd feel as strongly about breaking free of it as I do.

Quiz Time:

1) Which organization(s) is responsible for the largest increase of the money supply in the United States of America?
(A): The Federal Reserve
(B): The Treasury
(C): The Financial Sector
(D): Government Agencies

2) Which of the following is NOT owned by the United States Government:
(A): The Internal Revenue Service
(B): The Federal Reserve
(C): The Treasury
(D): The Securities and Exchange Commission

3) Income Tax was created so that the government could pay for...
(A): Education & Infrastructure.
(A): War.
(B): Interest on Debt
(C): Government Administrators

4) This agency or organization receives a share of any profit earned by the Federal Reserve.
(A): The Bank of England, HSBC & Barclay's
(B): The Treasury
(C): The chairman of the Federal Reserve, and his board.
(D): Fannie Mae

Lets get down to business.

Lets get down to the beginning of the Dollar, shall we?

The US Dollar began not as a federally issued currency, but as a form of measurement. You see, the founding fathers had encountered a little problem: There was a ton of national debt, and much of it was 'inherited' from individual states, and each state happened to have a different currency, some of which no longer existed. Since they wanted to make sure confidence in the government remained intact, the pledged to repay such debt, despite the underlying currency no longer existing. To do so, they standardized all debt, mandating  that all debts, individual and public, be payable in the most widely used currency in America at that time: The Spanish Silver Dollar. However, at the time, the founding fathers did NOT want to corrupt politics with wealth, and did not want to create a central bank, specifically not one that was located in a foreign nation (Spain). Thus, they took the silver content of the silver dollar, measured it, and declared that unit of measure equal to one dollar. Thus, a "dollar" is equal to 24.057g Ag.

The War Between Government  & Banks

Banks, as they normally do, figured "hey, a new asset type, quick, issue as much unsecured debt denominated in it as possible." So, they began to issue debt instruments (paper money) denominated in the above. However, such paper money was of course not real silver, but subject to the credit worthiness of the issuing bank. They were worth slightly differing amounts due to this problem. This became the government's problem when people attempted to use them to pay taxes, and the government couldn't actually collect the silver because the bank did not have it. Mr. Hamilton, proposed a solution. A National Bank will be created, standardizing the credit worthiness of a paper note of a dollar, as well. So, they only accepted Silver and Gold payments, which could then be converted to dollars. This eventually caused a huge depression with over 33% unemployment, but eventually it reverted to normal.

In this lull, banks were quietly finding new, more innovative ways of screwing people over. These activities included more excessive fractional reserve banking (for those of you who don't know how this works, its effectively using debt as payment to issue more debt, I'll explain in more detail later). Since the dollar was primarily denominated in silver at the time, banks hoarded gold while fractionally reserving silver. This caused the effective money supply of silver to decrease compared to gold, screwing the United States government who was accepting both gold and silver & exchanging between the two, since the exchange rate was no longer constant. In response to this problem, Congress set up the gold standard - now only gold was accepted as legal tender, and gold was standardized.

Bankers Strike Back

Fractional reserve banking is still strong and well, and bankers know this is how they will ultimately win the war. So, they turn it onto hyper-drive mode. They fractional reserve - actually, that's a lie, they actually didn't keep any reserve - to generate more and more debt to use as money up until, finally, the huge ponzi scheme went bust in 1907, and there was a bank run which banks could not pay - at least not with the BANK'S money. You see, while the banks were operating, doing hyper-drive fractional reserve lending, their owner's became immensely wealthy as they siphoned off profits. With his personal wealth along with some of his buddies, J.P. Morgan (the actual guy, not the company) could bail out the banks. But, like any good banker, Good 'Ol J.P. wanted a return on his investment. He wanted power.

Looking back, I found a rather fun quote from Forbes (again, the guy, not the magazine) posted on Wikipedia.

"Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written"

Seems legit. Nobody knows what happened. All anybody knows is, that Congress and President Woodrow Wilson immediately sprang into action with such speed one would think the government was actually functional. Seriously, it must be like, the quickest decision in the history of America. Within a single day, Congress passed the Federal Reserve Act & it was signed by the president, effectively endorsing fractional reserve banking. The same year, Income Tax was, for the first time, imposed on Americans, and a new lending bubble forms, ending in the great depression. A few years later, the law is changed so that the dollar may be devalued. This devaluation was at first kept finite, however, soon it was shown that it is impossible to stop inflation once it starts. A series of devaluations began to occur, until finally, in 1976, Congress quietly removed the definition of "dollar" from the law entirely.

Now, you're probably wondering, "What the hell did J.P. bargain for?" Well, since nobody really knows, we can only piece together the information, by looking at the laws Congress passed shortly thereafter. In short, J.P. got the modern, corrupt banking system, to be a thing. Now I'm not blaming all of this on J.P. I doubt even he could conceive the scale of corruption going on today. However he got the banker's toe-hold on the government, and it was all downhill from there. J.P. got the government to officially sponsor the Federal Reserve Bank - a PRIVATE institution (NOT federal) - to be officially sponsored by the US government. 6% of all profits - its a for-profit institution - are paid out to shareholders - in the form of dividends. Before you ask who are the shareholders... I don't bloody know! Its 'top secret' We do know the original shareholders, however. The original shareholders were a group - a very large group, originally, too large for me to list - of carefully selected banks throughout the states.

The Modern System

Now that you know how we got here, let me explain how the system currently works. Starting, with the Federal Reserve. The Federal Reserve has three jobs: (1) To make money for its shareholders, (2) to lend money to banks so they don't go bankrupt and most recently (3), to buy bonds. Additionally, it is granted the exclusive right to write what I like to call 'VOODOO CHECKS.' These checks are written directly from the US treasury, and their amount is only restrained by the amount of dollars in the ENTIRE TREASURY. Only, there isn't any definition for "dollar" in US law anywhere, anymore. So, in other words, the Federal Reserve gets to write checks so large that the US treasury has to print money in order to make sure they don't bounce.

The system starts when the US Government goes into debt. It has promised to pay some workers, but it can't. So what does it do? It writes bonds. These bonds, it sells to banks, at auctions. The banks, in turn, re-sell the bonds on the markets after a mark-up which they take as profit. The Federal Reserve, whose job is to buy bonds, goes and writes a VOODOO CHECK to buy those bonds. Now, the US Government owes money to the bondholder, which is the Federal Reserve, plus interest. In this way, the US Government is effectively paying the Bankers, and the Federal Reserve, money, only so the Federal Reserve can order the Government to pay the Federal Reserve to loan to the Government, so that the government can finally pay its workers.

Now, those workers go, and get their money, and go right back to the banks, to deposit it. And now we see, the same process repeated on an individual scale. The deposit is then lent out to another person, so that person can buy something from a business, so that  business can deposit the money back into the bank, so the bank can again re-lend the same money back to someone else, so that person can buy a car, so the owner of that car can deposit the money back into the bank again, etc... And, of course, on each successive loan, the bank collects interest. And, when the original depositor wants out, but all the bank's money is lent out? The bank goes right back to the federal reserve, who loans the bank money effectively interest-free, using yet another VOODOO CHECK, so the bank can pay back the depositor.

But remember those bonds that the US Government sold, to the bankers, who then sold it to the Federal Reserve. The US Government has to pay those back, with interest, as well. So what happens? Either higher taxes, in the form of, remember, Income Tax - or more debt, in more bonds, to sell to more bankers, for more voodoo checks. And if income tax is raised, then individuals won't have enough money, so they have to go back to the bank to borrow money to pay the tax, now leaving THEM paying interest as well. In none of these scenarios is a single dime of debt actually destroyed. More debt is merely created, since the government can't print its own money, it has to ask the Federal Reserve to do so, who won't just give them the newly printed money it made at no expense through a VOODOO CHECK, but will charge interest.

What we have here, is something very special. We have debt, debt that can, by the very nature of the system, never be paid off. Debt, by the government, which is either passed to the people in the form of taxation, or through the form of inflation, and still only may increase further. There is a name for such unpayable, unending debt. Slavery.

Thanks for reading,
Kazu - Bitcoin address: 1MvV5AMcNXD6cgzbto3Db81xV7WpQUB9GY.
(Because there are no Voodoo Bitcoin Checks)

Answers to quiz questions:
Question (1): C, the Financial Sector. Fractional Reserve Banking is responsible for over 95% of the money supply in the United States.
Question (2): B, the Federal Reserve. The Federal Reserve is owned by a group of banks, not by the United States Government.
Question (3): B, Interest on Debt. Income Tax was created in the same year as the Federal Reserve, in fact.
Question (4): A, the Bank of England. Due to a complex series of mergers in the financial sector, English banks now control a large number of shares of the United States Federal Reserve which pays 6% of its income to shareholders.

Tips appreciated.

[1715294416]

1715294416

[maursader]

To be honest, given the length of this email, most of my contacts would have skipped this email by the second or third paragraph... and they're pro bitcoin. I like it, but.. it's very long..

Just saying.

If you could sum it up into something more concise.. it'd be easier to spread. Most people only read emails that take 60-120 seconds to read (short attention span) or they check their emails via smartphone mainly. Either case, this is not short or smartphone friendly lol.

But good information.. it's the information I saw from this thread's youtube link.

You could just email them that video link.. and even that video is pretty long.. just tell them that its a 29 minute video, and you'll spare them the trouble of reading so much. haha

[davidgdg]

This is also not accurate. The Fed returns interest on bonds back to the Treasury. So once the Fed owns Govt Debt the debt has for all practical purposes been monetised. The Fed is not some external entity. It is basically a dept  of the Treasury. Don't confuse form with substance.

[Buffer Overflow]

Way too much text to read.

[fattypig]

Pass it on!

Before you read what I'm sending you, try taking this quick quiz. Then, see if I lied to you, when I told you you DIDN'T know what I'm about to tell you. Because, if I were to tell you this, face-to-face, that this system, say, was implemented behind closed doors when the debt ceiling was raised, you would say "No, that can't be true, you're just a crazy conspiracy theorist." And, you'd be partially right: It wasn't implemented behind closed doors when the debt ceiling was raised. Rather, it already exists, and has, for nearly 100 years. If you read this e-mail, and find the system as corrupt as I, please forward it to your contacts. Still, less than 0.0001% of Americans understands this system. If they did, then surely, they'd feel as strongly about breaking free of it as I do.

Quiz Time:

1) Which organization(s) is responsible for the largest increase of the money supply in the United States of America?
(A): The Federal Reserve
(B): The Treasury
(C): The Financial Sector
(D): Government Agencies

2) Which of the following is NOT owned by the United States Government:
(A): The Internal Revenue Service
(B): The Federal Reserve
(C): The Treasury
(D): The Securities and Exchange Commission

3) Income Tax was created so that the government could pay for...
(A): Education & Infrastructure.
(A): War.
(B): Interest on Debt
(C): Government Administrators

4) This agency or organization receives a share of any profit earned by the Federal Reserve.
(A): The Bank of England, HSBC & Barclay's
(B): The Treasury
(C): The chairman of the Federal Reserve, and his board.
(D): Fannie Mae

Lets get down to business.

Lets get down to the beginning of the Dollar, shall we?

The US Dollar began not as a federally issued currency, but as a form of measurement. You see, the founding fathers had encountered a little problem: There was a ton of national debt, and much of it was 'inherited' from individual states, and each state happened to have a different currency, some of which no longer existed. Since they wanted to make sure confidence in the government remained intact, the pledged to repay such debt, despite the underlying currency no longer existing. To do so, they standardized all debt, mandating  that all debts, individual and public, be payable in the most widely used currency in America at that time: The Spanish Silver Dollar. However, at the time, the founding fathers did NOT want to corrupt politics with wealth, and did not want to create a central bank, specifically not one that was located in a foreign nation (Spain). Thus, they took the silver content of the silver dollar, measured it, and declared that unit of measure equal to one dollar. Thus, a "dollar" is equal to 24.057g Ag.

The War Between Government  & Banks

Banks, as they normally do, figured "hey, a new asset type, quick, issue as much unsecured debt denominated in it as possible." So, they began to issue debt instruments (paper money) denominated in the above. However, such paper money was of course not real silver, but subject to the credit worthiness of the issuing bank. They were worth slightly differing amounts due to this problem. This became the government's problem when people attempted to use them to pay taxes, and the government couldn't actually collect the silver because the bank did not have it. Mr. Hamilton, proposed a solution. A National Bank will be created, standardizing the credit worthiness of a paper note of a dollar, as well. So, they only accepted Silver and Gold payments, which could then be converted to dollars. This eventually caused a huge depression with over 33% unemployment, but eventually it reverted to normal.

In this lull, banks were quietly finding new, more innovative ways of screwing people over. These activities included more excessive fractional reserve banking (for those of you who don't know how this works, its effectively using debt as payment to issue more debt, I'll explain in more detail later). Since the dollar was primarily denominated in silver at the time, banks hoarded gold while fractionally reserving silver. This caused the effective money supply of silver to decrease compared to gold, screwing the United States government who was accepting both gold and silver & exchanging between the two, since the exchange rate was no longer constant. In response to this problem, Congress set up the gold standard - now only gold was accepted as legal tender, and gold was standardized.

Bankers Strike Back

Fractional reserve banking is still strong and well, and bankers know this is how they will ultimately win the war. So, they turn it onto hyper-drive mode. They fractional reserve - actually, that's a lie, they actually didn't keep any reserve - to generate more and more debt to use as money up until, finally, the huge ponzi scheme went bust in 1907, and there was a bank run which banks could not pay - at least not with the BANK'S money. You see, while the banks were operating, doing hyper-drive fractional reserve lending, their owner's became immensely wealthy as they siphoned off profits. With his personal wealth along with some of his buddies, J.P. Morgan (the actual guy, not the company) could bail out the banks. But, like any good banker, Good 'Ol J.P. wanted a return on his investment. He wanted power.

Looking back, I found a rather fun quote from Forbes (again, the guy, not the magazine) posted on Wikipedia.

"Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written"

Seems legit. Nobody knows what happened. All anybody knows is, that Congress and President Woodrow Wilson immediately sprang into action with such speed one would think the government was actually functional. Seriously, it must be like, the quickest decision in the history of America. Within a single day, Congress passed the Federal Reserve Act & it was signed by the president, effectively endorsing fractional reserve banking. The same year, Income Tax was, for the first time, imposed on Americans, and a new lending bubble forms, ending in the great depression. A few years later, the law is changed so that the dollar may be devalued. This devaluation was at first kept finite, however, soon it was shown that it is impossible to stop inflation once it starts. A series of devaluations began to occur, until finally, in 1976, Congress quietly removed the definition of "dollar" from the law entirely.

Now, you're probably wondering, "What the hell did J.P. bargain for?" Well, since nobody really knows, we can only piece together the information, by looking at the laws Congress passed shortly thereafter. In short, J.P. got the modern, corrupt banking system, to be a thing. Now I'm not blaming all of this on J.P. I doubt even he could conceive the scale of corruption going on today. However he got the banker's toe-hold on the government, and it was all downhill from there. J.P. got the government to officially sponsor the Federal Reserve Bank - a PRIVATE institution (NOT federal) - to be officially sponsored by the US government. 6% of all profits - its a for-profit institution - are paid out to shareholders - in the form of dividends. Before you ask who are the shareholders... I don't bloody know! Its 'top secret' We do know the original shareholders, however. The original shareholders were a group - a very large group, originally, too large for me to list - of carefully selected banks throughout the states.

The Modern System

Now that you know how we got here, let me explain how the system currently works. Starting, with the Federal Reserve. The Federal Reserve has three jobs: (1) To make money for its shareholders, (2) to lend money to banks so they don't go bankrupt and most recently (3), to buy bonds. Additionally, it is granted the exclusive right to write what I like to call 'VOODOO CHECKS.' These checks are written directly from the US treasury, and their amount is only restrained by the amount of dollars in the ENTIRE TREASURY. Only, there isn't any definition for "dollar" in US law anywhere, anymore. So, in other words, the Federal Reserve gets to write checks so large that the US treasury has to print money in order to make sure they don't bounce.

The system starts when the US Government goes into debt. It has promised to pay some workers, but it can't. So what does it do? It writes bonds. These bonds, it sells to banks, at auctions. The banks, in turn, re-sell the bonds on the markets after a mark-up which they take as profit. The Federal Reserve, whose job is to buy bonds, goes and writes a VOODOO CHECK to buy those bonds. Now, the US Government owes money to the bondholder, which is the Federal Reserve, plus interest. In this way, the US Government is effectively paying the Bankers, and the Federal Reserve, money, only so the Federal Reserve can order the Government to pay the Federal Reserve to loan to the Government, so that the government can finally pay its workers.

Now, those workers go, and get their money, and go right back to the banks, to deposit it. And now we see, the same process repeated on an individual scale. The deposit is then lent out to another person, so that person can buy something from a business, so that  business can deposit the money back into the bank, so the bank can again re-lend the same money back to someone else, so that person can buy a car, so the owner of that car can deposit the money back into the bank again, etc... And, of course, on each successive loan, the bank collects interest. And, when the original depositor wants out, but all the bank's money is lent out? The bank goes right back to the federal reserve, who loans the bank money effectively interest-free, using yet another VOODOO CHECK, so the bank can pay back the depositor.

But remember those bonds that the US Government sold, to the bankers, who then sold it to the Federal Reserve. The US Government has to pay those back, with interest, as well. So what happens? Either higher taxes, in the form of, remember, Income Tax - or more debt, in more bonds, to sell to more bankers, for more voodoo checks. And if income tax is raised, then individuals won't have enough money, so they have to go back to the bank to borrow money to pay the tax, now leaving THEM paying interest as well. In none of these scenarios is a single dime of debt actually destroyed. More debt is merely created, since the government can't print its own money, it has to ask the Federal Reserve to do so, who won't just give them the newly printed money it made at no expense through a VOODOO CHECK, but will charge interest.

What we have here, is something very special. We have debt, debt that can, by the very nature of the system, never be paid off. Debt, by the government, which is either passed to the people in the form of taxation, or through the form of inflation, and still only may increase further. There is a name for such unpayable, unending debt. Slavery.

Thanks for reading,
Kazu - Bitcoin address: 1MvV5AMcNXD6cgzbto3Db81xV7WpQUB9GY.
(Because there are no Voodoo Bitcoin Checks)

Answers to quiz questions:
Question (1): C, the Financial Sector. Fractional Reserve Banking is responsible for over 95% of the money supply in the United States.
Question (2): B, the Federal Reserve. The Federal Reserve is owned by a group of banks, not by the United States Government.
Question (3): B, Interest on Debt. Income Tax was created in the same year as the Federal Reserve, in fact.
Question (4): A, the Bank of England. Due to a complex series of mergers in the financial sector, English banks now control a large number of shares of the United States Federal Reserve which pays 6% of its income to shareholders.

Tips appreciated.

To lengthy, it will be in junk mail in no time...

[uMMcQxCWELNzkt]

So basically you want everyone to spam their contacts with a wall of text followed by your Bitcoin address? Great idea!

[fattypig]

So you basically you want everyone to spam there contacts with a wall of text followed by your Bitcoin address? Great idea!

Ha, I didn't know there is a Bitcoin address inside. Was to lengthy to even notice.

[histman]

This post shows the real barrier to mass bitcoin adoption. Average Joe will never read or process something long and detailed like this.  People have had PCs for 20 years and 99% don't know (or care) what an Ethernet cable is. We need to stop trying to get the general public to "understand" how BTC works. It will never happen.
Start talking about the blockchain and you get glazed eyes really fast.  People don't care. They want to push a few buttons and see it work without having to think.

Develop apps and ways for people to use them that are, in their daily lives, better than dollars.  That's how it will happen.

[Kaiji]

Youtube! If you narrate what you just wrote with various well placed pictures then you can get far more eyes than a long email.

[Behemot]

So basically you want everyone to spam their contacts with a wall of text followed by your Bitcoin address? Great idea!

This. Chain mails are evil.

[steelhouse]

1) none of the above.  Individuals put money in banks or mutual funds.  If nobody put money in banks, they would have no money to loan.  As shown in Cyprus, a checking account really is not money.  you are a creditor to a bank.  If things get bad they may only give you 75c on the dollar.  The problem is the government in the United States insures deposits.

2) Federal Reserve

3) All of the above.  The congress wanted an income tax to give them more power to run wars, more pay, give out more goodies for votes, ...

4) A, B, and C  Bernanke wages are part of the expenses and profits of the fed.  The Federal Reserve shows a profit and does not cost taxpayers anything.  94% of the profits go to the treasury.  The federal reserve buys federal bonds and mortgages and the interest is sent to the government.

http://www.huffingtonpost.com/2013/03/15/federal-reserve-record-profit_n_2884366.html

A. may also be incorrect as the taxes and personal income taxes from these member banks may exceed their profits.   Thus they are net taxpayers and the treasury gets it all.

[theonewhowaskazu]

This is also not accurate. The Fed returns interest on bonds back to the Treasury. So once the Fed owns Govt Debt the debt has for all practical purposes been monetised. The Fed is not some external entity. It is basically a dept  of the Treasury. Don't confuse form with substance.

And you clearly don't know what you're talking about.

Read past all the fancy text, and look at the bare facts of how things work. The Federal Reserve System is in fact a bunch of carefully set up loopholes.

First, there is Federal Reserve stock, and this stock pays dividends. The stock is held by banks. This stock does not grant the power to the stockholders to elect members of the board of governors (this is done by Congress), but instead it gives them a power worth much more: The power to manage, as shareholders, the 'district' Reserve Bank in which they operate. For example, if I'm a california bank, I, along with other shareholders in District 12, will have the power to manage The Federal Reserve Bank of San Francisco. Now, what happens if I am bought out by bank from New York? Then the New York bank gets  represented in both District 12, and District 1. Through such a gradual accumulation of power, the stock of the Federal Reserve Bank has accumulated into the control of the few.

The Fed does return interest on bonds back to the Treasury... wait for it... after paying all expenses. Dividends are treated as expenses. As such, all the Federal Reserve has to do in order to make sure that it constantly sucks money out of the government, rather than ever contribute any to it, is manage their balance sheets that they never make too big of a profit and instead stick to a 6% profit each year (6% is the rate paid out in dividends). Since the Fed's balance sheets are never audited because, obviously, it is controlled by the banks and why would they want to audit themselves, this is an extremely easy thing to do.

What you have to understand is that this debt, by definition, can never be monetized. You see, in order for a new dollar to come into existence, it has to be done so with the authority of the fed. But the fed won't just make the dollar and give it to the Government, it will only lend it to the government, at interest. In order to pay back that debt, they would have to return all dollars in existence to the Federal Reserve, because thats how many dollars the Federal Reserve lent to them, because they can never make their own money. But, hold up! There is also interest on that debt. Since there is no more dollars in existence to pay back this interest, the only way to avoid default is to borrow MORE from the fed, just to pay back the existing debt. The entire debt can never, ever, be paid off. The Federal Reserve just keeps on collecting on its always-increasing debt. These interest payments are passed on to the American people in the form of Income Tax, a tax which never existed before the Federal Reserve was formed.

Then, why doesn't the Federal Reserve show up as having made a huge profit and have to return some of that to the Treasury? Simple, because it uses the excess money to buy even more bonds, at even higher prices. The Treasury never sells bonds directly to the Federal Reserve. Instead, it sells bonds to the banks that own the Federal Reserve. The banks take a cut, and raise the prices of the bonds, and re-sell them to the Federal Reserve. That's why interest rates are so low, because the debt has increased so much, that if interest rates were any higher, then the Federal Reserve might have to return some of its profits to the Treasury. But they keep it low enough so that they are always able to 'leak' some of the excess profits back to the banks through bond mark-ups.

[theonewhowaskazu]

1) none of the above.  Individuals put money in banks or mutual funds.  If nobody put money in banks, they would have no money to loan.  As shown in Cyprus, a checking account really is not money.  you are a creditor to a bank.  If things get bad they may only give you 75c on the dollar.  The problem is the government in the United States insures deposits.

Uh, I don't see how this says that Bank's aren't increasing the money supply. Clearly they are. All you're saying is that we couldn't do so if we didn't deposit money into banks/

4) A, B, and C  Bernanke wages are part of the expenses and profits of the fed.  The Federal Reserve shows a profit and does not cost taxpayers anything.  94% of the profits go to the treasury.  The federal reserve buys federal bonds and mortgages and the interest is sent to the government.

Not necessarily true. The shareholders receive a flat 6% dividend, not 6% of profits. This means that 0% goes to the treasury, if the Fed's profits are low enough. I admit I worded the question wrong though, I should have said which of the following parties are guaranteed a share of the profits.

[Nancarrow]

Mmm. Everybody loves chain emails.  

Seriously, just put it all up in a blog. If anyone asks you about your thoughts on the modern monetary system, send them a link. Christ.

Oh, also I'm English. So if your fourth point is true (no fucking idea, I have too many video games to play) then... yay us, I suppose.

[steelhouse]

1) none of the above.  Individuals put money in banks or mutual funds.  If nobody put money in banks, they would have no money to loan.  As shown in Cyprus, a checking account really is not money.  you are a creditor to a bank.  If things get bad they may only give you 75c on the dollar.  The problem is the government in the United States insures deposits.

Uh, I don't see how this says that Bank's aren't increasing the money supply. Clearly they are. All you're saying is that we couldn't do so if we didn't deposit money into banks/

4) A, B, and C  Bernanke wages are part of the expenses and profits of the fed.  The Federal Reserve shows a profit and does not cost taxpayers anything.  94% of the profits go to the treasury.  The federal reserve buys federal bonds and mortgages and the interest is sent to the government.

Not necessarily true. The shareholders receive a flat 6% dividend, not 6% of profits. This means that 0% goes to the treasury, if the Fed's profits are low enough. I admit I worded the question wrong though, I should have said which of the following parties are guaranteed a share of the profits.

6% dividend of what?  revenues or profits?  I am really surprised no one has asked for a complete shareholder list and dividends payments per share.  furthermore, reading online, many of these shareholders might be outside the United States, which is a really strange concept.  Furthermore the Rothchilds might be the largest shareholder, which is rather strange since the made their original fortune selling soldiers to fight for the British in the revolutionary war.

[maursader]

1) none of the above.  Individuals put money in banks or mutual funds.  If nobody put money in banks, they would have no money to loan.  As shown in Cyprus, a checking account really is not money.  you are a creditor to a bank.  If things get bad they may only give you 75c on the dollar.  The problem is the government in the United States insures deposits.

Uh, I don't see how this says that Bank's aren't increasing the money supply. Clearly they are. All you're saying is that we couldn't do so if we didn't deposit money into banks/

4) A, B, and C  Bernanke wages are part of the expenses and profits of the fed.  The Federal Reserve shows a profit and does not cost taxpayers anything.  94% of the profits go to the treasury.  The federal reserve buys federal bonds and mortgages and the interest is sent to the government.

Not necessarily true. The shareholders receive a flat 6% dividend, not 6% of profits. This means that 0% goes to the treasury, if the Fed's profits are low enough. I admit I worded the question wrong though, I should have said which of the following parties are guaranteed a share of the profits.

With all due respect, your chain mail (though chain mails are frowned upon in today's internet world) nonetheless is too long for most people to digest, and wouldn't succeed. Not to mention the inclusion of your bitcoin wallet address makes it all the less motivating to spread. It's nothing personal. I think your intentions were good.. just could use a little work to slim it down and perhaps not include your bitcoin address (if you're looking to spread it around).

These days, people are used to reading as much information as they can find in a tweet (140 characters), or a maximum of 2-3 paragraphs (being generous here).

It's long. Reduce it by 90% and take out your wallet address. Please update the OP.

[goxed]

It would be good to start with a blog, and just send the questionnaire and link to blog in the chainmail

[maursader]

First prior to opening the thread, I thought he meant he was literally starting some chainmail:



Halloween's around the corner, which is why I chuckled a bit. Would take a while to finish a full set of armor in chainmail!

[davidgdg]

This is also not accurate. The Fed returns interest on bonds back to the Treasury. So once the Fed owns Govt Debt the debt has for all practical purposes been monetised. The Fed is not some external entity. It is basically a dept  of the Treasury. Don't confuse form with substance.

And you clearly don't know what you're talking about.

Read past all the fancy text, and look at the bare facts of how things work. The Federal Reserve System is in fact a bunch of carefully set up loopholes.

First, there is Federal Reserve stock, and this stock pays dividends. The stock is held by banks. This stock does not grant the power to the stockholders to elect members of the board of governors (this is done by Congress), but instead it gives them a power worth much more: The power to manage, as shareholders, the 'district' Reserve Bank in which they operate. For example, if I'm a california bank, I, along with other shareholders in District 12, will have the power to manage The Federal Reserve Bank of San Francisco. Now, what happens if I am bought out by bank from New York? Then the New York bank gets  represented in both District 12, and District 1. Through such a gradual accumulation of power, the stock of the Federal Reserve Bank has accumulated into the control of the few.

The Fed does return interest on bonds back to the Treasury... wait for it... after paying all expenses. Dividends are treated as expenses. As such, all the Federal Reserve has to do in order to make sure that it constantly sucks money out of the government, rather than ever contribute any to it, is manage their balance sheets that they never make too big of a profit and instead stick to a 6% profit each year (6% is the rate paid out in dividends). Since the Fed's balance sheets are never audited because, obviously, it is controlled by the banks and why would they want to audit themselves, this is an extremely easy thing to do.

What you have to understand is that this debt, by definition, can never be monetized. You see, in order for a new dollar to come into existence, it has to be done so with the authority of the fed. But the fed won't just make the dollar and give it to the Government, it will only lend it to the government, at interest. In order to pay back that debt, they would have to return all dollars in existence to the Federal Reserve, because thats how many dollars the Federal Reserve lent to them, because they can never make their own money. But, hold up! There is also interest on that debt. Since there is no more dollars in existence to pay back this interest, the only way to avoid default is to borrow MORE from the fed, just to pay back the existing debt. The entire debt can never, ever, be paid off. The Federal Reserve just keeps on collecting on its always-increasing debt. These interest payments are passed on to the American people in the form of Income Tax, a tax which never existed before the Federal Reserve was formed.

Then, why doesn't the Federal Reserve show up as having made a huge profit and have to return some of that to the Treasury? Simple, because it uses the excess money to buy even more bonds, at even higher prices. The Treasury never sells bonds directly to the Federal Reserve. Instead, it sells bonds to the banks that own the Federal Reserve. The banks take a cut, and raise the prices of the bonds, and re-sell them to the Federal Reserve. That's why interest rates are so low, because the debt has increased so much, that if interest rates were any higher, then the Federal Reserve might have to return some of its profits to the Treasury. But they keep it low enough so that they are always able to 'leak' some of the excess profits back to the banks through bond mark-ups.

1. In 2012 the Federal Reserve received interest of 80 billion dollars out of which it retained 4 billion by way of operating expenses and distributed total dividends of 1.7 billion. The balance of ~ 74 billion dollars was sent straight back to the Treasury. 

2. The debt is monetised because there is no prospect of the Fed ever selling its Treasury holdings. It will simply roll them over indefinitely whilst rebating 95% of the interest back to the Treasury.

In effect the Federal Reserve system is simply a fancy way for the Treasury to print money. The fact that it is semi-privately held is pretty much irrelevant. Dividend payments of less than 2 billion USD are absolutely trivial in the scale of things.

The real scandals are:

1. The Fed is continuing to bail out the banks by buying up sub-prime mortgage paper at far in excess of market-clearing prices.

2. By keeping interest rates at near zero, the Fed enables banks to prop trade with near infinite-leverage.
 

[histman]

First prior to opening the thread, I thought he meant he was literally starting some chainmail:

http://renfairshoppe.com/images/mail_coif.jpg

Halloween's around the corner, which is why I chuckled a bit. Would take a while to finish a full set of armor in chainmail!

Let's be honest.  I think this is a bit more accurate:

http://quenpompo.com/wp-content/uploads/2012/04/demotivational-posters-sir-cheeto-of-mountain-dew.jpg

[knight22]

Let's start a chainmail way more shorter.
Here how it goes:



Do you want to know the biggest secret in the history of mankind? Take 30 minutes of your time that will change your life by watching this:

http://www.youtube.com/watch?v=iFDe5kUUyT0

Pass the word.

[knight22]

This debunk page is just a big piece of trash full of idiots too afraid of the truth.