Insights
Barr None
Barr None
Ronald Gordon
Feb 5, 2025
The Federal Reserve has always been politicized whether we’d like to admit it or not. They are called upon for any debt ceiling increases as well as any bailouts. The winners are usually the large financial institutions and the losers are always all of us. And right on time, that’s already happening before President-elect Donald Trump is even sworn in.
The Federal Reserve Board announced recently that Michael S. Barr will step down from his position as Federal Reserve Board Vice Chair for Supervision, effective February 28, 2025, or such earlier time as a successor is confirmed. Barr will continue to serve as a member of the Federal Reserve Board of Governors.
Barr, who has served as vice chair for supervision since July 19, 2022, submitted his letter of resignation to President Joseph R. Biden. But why? What is pressuring Barr to do so and what is also pressuring Powell to consider the same fate?
Some of the nation’s biggest banks and industry groups are suing the Federal Reserve over the annual “stress tests” it uses to determine how much cash banks are required to keep on hand in case of economic turmoil.
The Bank Policy Institute, an industry group representing JPMorgan, Goldman Sachs, Citigroup and others, joined the American Bankers Association and other major groups to file the suit. The groups said they don't oppose stress tests but that the Fed's “lack of transparency” around how it conducts them translates to “significant and unpredictable volatility” for banks, according to the suit filed Tuesday in the U.S. District Court for the Southern District of Ohio.
“When banks are forced to hold excess capital — not to protect against the risk of loss, but instead to guard against the volatility of the Board’s undisclosed and ever-changing criteria — it reduces credit availability, hinders economic growth, and harms the American consumer,” the suit states.
The suit comes as regulators like the Federal Reserve are facing pressure from a second Trump administration to “regulate with a lighter touch,” Bloomberg reported. On Dec 23rd2024, the Fed announced it was evaluating major changes to the formula it uses for its stress tests.
Two days before Christmas, the Federal Reserve announced plans to essentially give large financial institutions freedom from the annual stress tests that were put in place after the Great Recession to ensure banks don’t fail. Big banks teamed up to sue the agency by claiming the tests violated the Administrative Procedure Act because the Federal Reserve wasn’t making public (and allowing for comment by interested parties) details before they were administered.
If you have ever taken a test you should be able to see the flaws in the banks’ argument. Making a test public before you give it defeats the purpose of testing. Rather than learning the material, students will learn the answers to the questions they know they will see on the exam. Similarly, financial institutions will avoid risks that will be penalized by regulators, while taking on others that are easier to hide. We all wish the Federal Reserve was proctoring our exams throughout our formal education years.
But why does the Federal Reserve want to keep a tight grip on the capital requirements? And why do the banks want such loose oversight and control over how solvency is considered? To answer these questions we must explain what Fractional Reserve Banking is.
You’ve probably heard the term ‘fractional reserve banking’ but chances are you don’t know what it is. And if you don’t know what it is, you might not have thought through its implications. Maybe that’s the point of its bland, too-many-syllables, corporate tone. But the fact is fractional reserve banking is the biggest and most successful scam ever devised, it underlies our economic system, and it’s made modern prosperity possible — it’s also what will likely bring it down.
Money is created in two ways in our system. It is either ‘printed’ by the Federal Reserve (in cash or digital form) or it is created by private banks in the form of credit, or loans. When the Fed prints money it is either spent on a government program or lent to private banks at a certain interest rate (which is what you hear being talked about as interest rates in the news). Banks can then create money out of thin air when they extend loans to consumers and businesses under the condition that they hold a fraction of the value of the loan in reserve in the form of Fed printed cash. This is what fractional reserve banking means. Banks must hold a small fraction in reserve of the trillions of dollars they create from nothing and earn interest on.
In modern times, you cannot tell the difference between money created by the bank or that printed by the Federal Reserve because you typically only see money as ones and zeros on a computer screen. It appears to be entirely accessible to you and not some form of IOU. But that’s exactly what most of it is. Simple IOUs.
To simplify the concept and its origins, imagine a wealthy businessman in Renaissance Venice who had learned the black art of accounting. He now made his money by storing gold for merchants and wealthy citizens who couldn’t risk holding so much valuable metal themselves, loaned small portions of it out to credit worthy citizens to finance their ventures, and charged extremely high interest rates to compensate him for the risk of not being paid back. When debtors couldn’t pay him back, he would have to chase him down for his money, break some kneecaps, and try to sell their collateral to compensate for his loss. If his depositors (the people who stored their gold with him) wanted their gold back, he was pretty certain to have it available. The problem was that collecting interest, his real business, was high effort and risky.
At some point this guy figured out that he held so much gold, nobody doubted that they would be able to get their deposits back from him when needed. He also realized that gold is inconvenient and risky to carry. So he decided to offer paper contracts, in lieu of physical gold, with the expectation that whomever had possession of the contract could exchange it for gold at any time. This worked out great for everyone. The paper was light and easy to carry, it was accepted by merchants who knew it could be converted to gold, and everyone’s real gold was safely locked up in the businessman’s vault. This was more or less the first form of paper money and technically the first derivative (the contract was derived from gold). So long as the businessman was honest, there was little risk to his depositors.
But the lending was still high effort and risky for the businessman because he had to make sure he got back every ounce of gold he lent out, plus interest, to make a profit. So, he came up with a very simple and clever solution. Since people rarely asked for their actual gold back, he simply began writing contracts for more gold than he actually had and charged interest on his contracts as he always had. He was getting paid for just handing out paper!
Nobody was the wiser and people took his paper fully confident it could be exchanged for gold. They could still trade it with others as they had before, just like gold. But in reality, the new banker was running an enormous scam. To illustrate the scale of such a potential con, let’s say he stored 500 lbs of gold in his vault. In his new scheme, he decided to write contracts worth 20,000 lbs of gold, against which he charged interest, which continued to be exchanged in the local market with the understanding that they were as ‘good as gold’. The people holding his paper had no idea how many contracts the banker had created or how much gold he actually had available, but they believe that if there were 20,000 lbs of gold in contracts floating around, there must be 20,000 lbs of gold in a vault. Which of course, there wasn’t.
Now there was a new risk for this banker (or con artist). If every person holding a contract came to the banker one day and demanded the gold promised by their pieces of paper (totally 20,000 lbs of promised gold), he wouldn’t be able to deliver. He only has a small fraction in reserve — 500 lbs. Luckily for him, this rarely happened. But every once in a while, it does. This is called a ‘bank run’.
When some panic finally set in and the locals made a run on the bank, you can imagine how the banker might find himself in a bit of trouble. Hordes of angry merchants had just discovered they’ve sold their valuable goods for worthless paper with his name on it and wealthy leading citizens had just learned their fortunes had been stolen! Maybe it was at this point that the outrage of the king’s wealthy supporters and the unrest in the streets forced the king to intervene.
The kingdom’s wealth and economy rested now on this credit scheme, the king’s supporters required that it continued to salvage their fortunes, and why shouldn’t the royals get in on such a lucrative scam themselves! The king had the means to store gold securely for depositors, even more so than the banker. If the king were to issue paper contracts, he could also reap the phenomenal rewards of fractional reserve lending, all while having the personal security of his army and the prestige of the state to underlie the perceived value of his paper money. But the risk of a bank run remained and putting down an angry crowd of defrauded subjects and nobles might have been a bit too unseemly for the monarch or cost him the more nuanced political capital he needed to remain in power. So, he decides to get in on the game with a little more plausible deniability.
The king came to the rescue of all. He declared that the state had all the gold needed to cover the banker’s notes and would issue state paper (backed by state gold, of course) to the banker to pay his angry contract holders. Now that the bank paper was backed by state paper and presumably by state gold, everyone was satisfied and went about their business. The prestige of the state would convince the people that all the paper had value and the king would require that the banker hold enough of the royal currency to pay back anyone holding the banker’s paper. The state has saved the day and the money scheme has taken on a new dimension.
The banker was now the middleman. The king could engage in the same game of lending to the banker (with a fraction of gold actually in reserve) and the banker lent his own paper to the people while holding a fraction of his loans in the king’s currency in reserve. The next time the banker got himself in trouble, the king would simply bail him out by printing more currency. Since the system was so obscured from the public at this point, nobody complained and the currency was generally considered sound.
The new currency system was essentially on a gold standard but essentially detached from gold itself. This new dynamic opened up the possibilities of even more financial derivatives like company stocks, traded on the stock market. These assets were valued in units of currency (their expected sales value in the stock market) but no new currency, let alone gold, actually existed as these stocks gained value. As the public mind associated money less and less with the existence of physical gold, it occurred to governments that there may be no need to hold a fraction of circulating currency in reserve as gold at all. And so, the United States abandoned the gold standard in 1933 in order to increase the amount of money in circulation during the Great Depression. Monetary policy was now simply a matter of printing and setting interest rates for banks.
The result was free-floating fiat currency. It was tied to nothing and was no longer even a derivative of a physical gold. In the case of the US dollar, some measures were taken to stabilize the currency such as ensuring oil could only be purchased in dollars (a similar concept to tying it to gold), but in reality the dollar’s value was backed by nothing more than the confidence in and influence of the US government. There was nothing to stop the Fed, and the banks who own it, from creating any amount of money out of thin air. And increasingly, that’s exactly what they have done right up to the present day.
The Federal Reserve has always been politicized whether we’d like to admit it or not. They are called upon for any debt ceiling increases as well as any bailouts. The winners are usually the large financial institutions and the losers are always all of us. And right on time, that’s already happening before President-elect Donald Trump is even sworn in.
The Federal Reserve Board announced recently that Michael S. Barr will step down from his position as Federal Reserve Board Vice Chair for Supervision, effective February 28, 2025, or such earlier time as a successor is confirmed. Barr will continue to serve as a member of the Federal Reserve Board of Governors.
Barr, who has served as vice chair for supervision since July 19, 2022, submitted his letter of resignation to President Joseph R. Biden. But why? What is pressuring Barr to do so and what is also pressuring Powell to consider the same fate?
Some of the nation’s biggest banks and industry groups are suing the Federal Reserve over the annual “stress tests” it uses to determine how much cash banks are required to keep on hand in case of economic turmoil.
The Bank Policy Institute, an industry group representing JPMorgan, Goldman Sachs, Citigroup and others, joined the American Bankers Association and other major groups to file the suit. The groups said they don't oppose stress tests but that the Fed's “lack of transparency” around how it conducts them translates to “significant and unpredictable volatility” for banks, according to the suit filed Tuesday in the U.S. District Court for the Southern District of Ohio.
“When banks are forced to hold excess capital — not to protect against the risk of loss, but instead to guard against the volatility of the Board’s undisclosed and ever-changing criteria — it reduces credit availability, hinders economic growth, and harms the American consumer,” the suit states.
The suit comes as regulators like the Federal Reserve are facing pressure from a second Trump administration to “regulate with a lighter touch,” Bloomberg reported. On Dec 23rd2024, the Fed announced it was evaluating major changes to the formula it uses for its stress tests.
Two days before Christmas, the Federal Reserve announced plans to essentially give large financial institutions freedom from the annual stress tests that were put in place after the Great Recession to ensure banks don’t fail. Big banks teamed up to sue the agency by claiming the tests violated the Administrative Procedure Act because the Federal Reserve wasn’t making public (and allowing for comment by interested parties) details before they were administered.
If you have ever taken a test you should be able to see the flaws in the banks’ argument. Making a test public before you give it defeats the purpose of testing. Rather than learning the material, students will learn the answers to the questions they know they will see on the exam. Similarly, financial institutions will avoid risks that will be penalized by regulators, while taking on others that are easier to hide. We all wish the Federal Reserve was proctoring our exams throughout our formal education years.
But why does the Federal Reserve want to keep a tight grip on the capital requirements? And why do the banks want such loose oversight and control over how solvency is considered? To answer these questions we must explain what Fractional Reserve Banking is.
You’ve probably heard the term ‘fractional reserve banking’ but chances are you don’t know what it is. And if you don’t know what it is, you might not have thought through its implications. Maybe that’s the point of its bland, too-many-syllables, corporate tone. But the fact is fractional reserve banking is the biggest and most successful scam ever devised, it underlies our economic system, and it’s made modern prosperity possible — it’s also what will likely bring it down.
Money is created in two ways in our system. It is either ‘printed’ by the Federal Reserve (in cash or digital form) or it is created by private banks in the form of credit, or loans. When the Fed prints money it is either spent on a government program or lent to private banks at a certain interest rate (which is what you hear being talked about as interest rates in the news). Banks can then create money out of thin air when they extend loans to consumers and businesses under the condition that they hold a fraction of the value of the loan in reserve in the form of Fed printed cash. This is what fractional reserve banking means. Banks must hold a small fraction in reserve of the trillions of dollars they create from nothing and earn interest on.
In modern times, you cannot tell the difference between money created by the bank or that printed by the Federal Reserve because you typically only see money as ones and zeros on a computer screen. It appears to be entirely accessible to you and not some form of IOU. But that’s exactly what most of it is. Simple IOUs.
To simplify the concept and its origins, imagine a wealthy businessman in Renaissance Venice who had learned the black art of accounting. He now made his money by storing gold for merchants and wealthy citizens who couldn’t risk holding so much valuable metal themselves, loaned small portions of it out to credit worthy citizens to finance their ventures, and charged extremely high interest rates to compensate him for the risk of not being paid back. When debtors couldn’t pay him back, he would have to chase him down for his money, break some kneecaps, and try to sell their collateral to compensate for his loss. If his depositors (the people who stored their gold with him) wanted their gold back, he was pretty certain to have it available. The problem was that collecting interest, his real business, was high effort and risky.
At some point this guy figured out that he held so much gold, nobody doubted that they would be able to get their deposits back from him when needed. He also realized that gold is inconvenient and risky to carry. So he decided to offer paper contracts, in lieu of physical gold, with the expectation that whomever had possession of the contract could exchange it for gold at any time. This worked out great for everyone. The paper was light and easy to carry, it was accepted by merchants who knew it could be converted to gold, and everyone’s real gold was safely locked up in the businessman’s vault. This was more or less the first form of paper money and technically the first derivative (the contract was derived from gold). So long as the businessman was honest, there was little risk to his depositors.
But the lending was still high effort and risky for the businessman because he had to make sure he got back every ounce of gold he lent out, plus interest, to make a profit. So, he came up with a very simple and clever solution. Since people rarely asked for their actual gold back, he simply began writing contracts for more gold than he actually had and charged interest on his contracts as he always had. He was getting paid for just handing out paper!
Nobody was the wiser and people took his paper fully confident it could be exchanged for gold. They could still trade it with others as they had before, just like gold. But in reality, the new banker was running an enormous scam. To illustrate the scale of such a potential con, let’s say he stored 500 lbs of gold in his vault. In his new scheme, he decided to write contracts worth 20,000 lbs of gold, against which he charged interest, which continued to be exchanged in the local market with the understanding that they were as ‘good as gold’. The people holding his paper had no idea how many contracts the banker had created or how much gold he actually had available, but they believe that if there were 20,000 lbs of gold in contracts floating around, there must be 20,000 lbs of gold in a vault. Which of course, there wasn’t.
Now there was a new risk for this banker (or con artist). If every person holding a contract came to the banker one day and demanded the gold promised by their pieces of paper (totally 20,000 lbs of promised gold), he wouldn’t be able to deliver. He only has a small fraction in reserve — 500 lbs. Luckily for him, this rarely happened. But every once in a while, it does. This is called a ‘bank run’.
When some panic finally set in and the locals made a run on the bank, you can imagine how the banker might find himself in a bit of trouble. Hordes of angry merchants had just discovered they’ve sold their valuable goods for worthless paper with his name on it and wealthy leading citizens had just learned their fortunes had been stolen! Maybe it was at this point that the outrage of the king’s wealthy supporters and the unrest in the streets forced the king to intervene.
The kingdom’s wealth and economy rested now on this credit scheme, the king’s supporters required that it continued to salvage their fortunes, and why shouldn’t the royals get in on such a lucrative scam themselves! The king had the means to store gold securely for depositors, even more so than the banker. If the king were to issue paper contracts, he could also reap the phenomenal rewards of fractional reserve lending, all while having the personal security of his army and the prestige of the state to underlie the perceived value of his paper money. But the risk of a bank run remained and putting down an angry crowd of defrauded subjects and nobles might have been a bit too unseemly for the monarch or cost him the more nuanced political capital he needed to remain in power. So, he decides to get in on the game with a little more plausible deniability.
The king came to the rescue of all. He declared that the state had all the gold needed to cover the banker’s notes and would issue state paper (backed by state gold, of course) to the banker to pay his angry contract holders. Now that the bank paper was backed by state paper and presumably by state gold, everyone was satisfied and went about their business. The prestige of the state would convince the people that all the paper had value and the king would require that the banker hold enough of the royal currency to pay back anyone holding the banker’s paper. The state has saved the day and the money scheme has taken on a new dimension.
The banker was now the middleman. The king could engage in the same game of lending to the banker (with a fraction of gold actually in reserve) and the banker lent his own paper to the people while holding a fraction of his loans in the king’s currency in reserve. The next time the banker got himself in trouble, the king would simply bail him out by printing more currency. Since the system was so obscured from the public at this point, nobody complained and the currency was generally considered sound.
The new currency system was essentially on a gold standard but essentially detached from gold itself. This new dynamic opened up the possibilities of even more financial derivatives like company stocks, traded on the stock market. These assets were valued in units of currency (their expected sales value in the stock market) but no new currency, let alone gold, actually existed as these stocks gained value. As the public mind associated money less and less with the existence of physical gold, it occurred to governments that there may be no need to hold a fraction of circulating currency in reserve as gold at all. And so, the United States abandoned the gold standard in 1933 in order to increase the amount of money in circulation during the Great Depression. Monetary policy was now simply a matter of printing and setting interest rates for banks.
The result was free-floating fiat currency. It was tied to nothing and was no longer even a derivative of a physical gold. In the case of the US dollar, some measures were taken to stabilize the currency such as ensuring oil could only be purchased in dollars (a similar concept to tying it to gold), but in reality the dollar’s value was backed by nothing more than the confidence in and influence of the US government. There was nothing to stop the Fed, and the banks who own it, from creating any amount of money out of thin air. And increasingly, that’s exactly what they have done right up to the present day.
Present day Monetary Policy
All monetary policy decisions of the Federal Reserve—including buying and selling securities—are made independently of the borrowing decisions of the federal government and are intended solely to fulfill the mandate set out for the Fed by law: maximum employment and stable prices.
The Fed purchases Treasury securities held by the public through a competitive bidding process. The Fed does not purchase new Treasury securities directly from the U.S. Treasury, and purchases of Treasury securities from the public are not a means of financing the federal deficit.
The federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly. The Fed does not participate in competitive bidding at Treasury auctions.
How does the Federal Reserve's buying and selling of securities relate to the borrowing decisions of the federal government?
All monetary policy decisions of the Federal Reserve—including buying and selling securities—are made independently of the borrowing decisions of the federal government and are intended solely to fulfill the mandate set out for the Fed by law: maximum employment and stable prices.
The Fed purchases Treasury securities held by the public through a competitive bidding process. The Fed does not purchase new Treasury securities directly from the U.S. Treasury, and purchases of Treasury securities from the public are not a means of financing the federal deficit.
The federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly. The Fed does not participate in competitive bidding at Treasury auctions.
What Is a Primary Dealer?
A primary dealer is a bank or other financial institution that has been approved to trade securities with a national government. In many countries, primary dealers are the only entities who can make a bid for newly-issued government securities. A primary dealer in the U.S. may thus underwrite new government debt and act as a market maker for the U.S. Federal Reserve, commonly referred to as the Fed.
This system was established in 1960 by the Federal Reserve Bank of New York (FRBNY) to implement monetary policy on behalf of the Fed.
Primary government securities dealers must meet specific liquidity and quality requirements. These are often large investment banks or financial institutions. As such, primary dealers also provide a valuable flow of information to central banks about the state of domestic and global markets.
By purchasing securities in the secondary market through the FRBNY, the government increases cash reserves in the banking system. The increase in reserves raises the money supply in the economy. Conversely, selling securities results in a decrease in cash reserves. Lower reserves mean that fewer funds are available for lending, so the money supply falls. In effect, primary dealers are the Fed’s counterparties in open market operations (OMO).
Primary dealers bid for government contracts competitively and purchase the majority of Treasury bills, bonds, and notes at auction.
Primary government securities dealers sell the Treasury securities that they buy from the central bank to their clients, creating the initial market. They are required to submit a meaningful bid at the new offering. Key word, REQUIRED!
Present day Monetary Policy
All monetary policy decisions of the Federal Reserve—including buying and selling securities—are made independently of the borrowing decisions of the federal government and are intended solely to fulfill the mandate set out for the Fed by law: maximum employment and stable prices.
The Fed purchases Treasury securities held by the public through a competitive bidding process. The Fed does not purchase new Treasury securities directly from the U.S. Treasury, and purchases of Treasury securities from the public are not a means of financing the federal deficit.
The federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly. The Fed does not participate in competitive bidding at Treasury auctions.
How does the Federal Reserve's buying and selling of securities relate to the borrowing decisions of the federal government?
All monetary policy decisions of the Federal Reserve—including buying and selling securities—are made independently of the borrowing decisions of the federal government and are intended solely to fulfill the mandate set out for the Fed by law: maximum employment and stable prices.
The Fed purchases Treasury securities held by the public through a competitive bidding process. The Fed does not purchase new Treasury securities directly from the U.S. Treasury, and purchases of Treasury securities from the public are not a means of financing the federal deficit.
The federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly. The Fed does not participate in competitive bidding at Treasury auctions.
What Is a Primary Dealer?
A primary dealer is a bank or other financial institution that has been approved to trade securities with a national government. In many countries, primary dealers are the only entities who can make a bid for newly-issued government securities. A primary dealer in the U.S. may thus underwrite new government debt and act as a market maker for the U.S. Federal Reserve, commonly referred to as the Fed.
This system was established in 1960 by the Federal Reserve Bank of New York (FRBNY) to implement monetary policy on behalf of the Fed.
Primary government securities dealers must meet specific liquidity and quality requirements. These are often large investment banks or financial institutions. As such, primary dealers also provide a valuable flow of information to central banks about the state of domestic and global markets.
By purchasing securities in the secondary market through the FRBNY, the government increases cash reserves in the banking system. The increase in reserves raises the money supply in the economy. Conversely, selling securities results in a decrease in cash reserves. Lower reserves mean that fewer funds are available for lending, so the money supply falls. In effect, primary dealers are the Fed’s counterparties in open market operations (OMO).
Primary dealers bid for government contracts competitively and purchase the majority of Treasury bills, bonds, and notes at auction.
Primary government securities dealers sell the Treasury securities that they buy from the central bank to their clients, creating the initial market. They are required to submit a meaningful bid at the new offering. Key word, REQUIRED!
Why Do Economies Need Primary Dealers?
Because most modern economies rely on fractional reserve banking, when primary dealers purchase government debt in the form of Treasury securities, they are able to increase their reserves and expand the money supply by lending it out. This is known as the money multiplier effect.
How Do Primary Dealers Make Money?
Primary dealers buy bonds directly from the government and then resell them to clients and investors at a slight mark-up. This small difference in price is how primary dealers earn a profit.
Most of us will have a mortgage at some point in our lives. The mechanism of having a deed holder of that mortgage is the representation of ownership. You may pay a monthly mortgage payment to one day complete ownership of the home but frankly until it is paid in full, you do not own the home. The bank or mortgage company who owns the deed does.
So take that concept in consideration. If the private banks are required to buy the debt issued by the US government that allows it to print new money every time its bills are due and the bank essentially sells the government bonds to its clients who are the general public. Then the general public through its pension funds, 401k, or Mutual funds owns the US government. Sounds fair but consider this. If the government does not own the bonds, the banks that are required to buy the bonds every time the government issues them don't own the bonds, then neither of the two have much of a stake in the value of the bonds sold. But what they do have a stake in is the mechanism that allows the government to continue to print money whenever they deem it necessary. And a bank who gets to be bailed out at any point their lending decision bankrupt them because essentially they are in it together. Congress and the banks.
Why Do Economies Need Primary Dealers?
Because most modern economies rely on fractional reserve banking, when primary dealers purchase government debt in the form of Treasury securities, they are able to increase their reserves and expand the money supply by lending it out. This is known as the money multiplier effect.
How Do Primary Dealers Make Money?
Primary dealers buy bonds directly from the government and then resell them to clients and investors at a slight mark-up. This small difference in price is how primary dealers earn a profit.
Most of us will have a mortgage at some point in our lives. The mechanism of having a deed holder of that mortgage is the representation of ownership. You may pay a monthly mortgage payment to one day complete ownership of the home but frankly until it is paid in full, you do not own the home. The bank or mortgage company who owns the deed does.
So take that concept in consideration. If the private banks are required to buy the debt issued by the US government that allows it to print new money every time its bills are due and the bank essentially sells the government bonds to its clients who are the general public. Then the general public through its pension funds, 401k, or Mutual funds owns the US government. Sounds fair but consider this. If the government does not own the bonds, the banks that are required to buy the bonds every time the government issues them don't own the bonds, then neither of the two have much of a stake in the value of the bonds sold. But what they do have a stake in is the mechanism that allows the government to continue to print money whenever they deem it necessary. And a bank who gets to be bailed out at any point their lending decision bankrupt them because essentially they are in it together. Congress and the banks.
Now consider that the Federal Reserve is a private institution. Congress just appoints directors. Now consider those directors come from the private banking industry that ‘borrows’ from the Fed. And consider Congress' prevalent need to always expand the debt limit to pay its bills. And imagine that these same people know exactly when new money will be created and can use it to buy property with real world value before anyone else realizes the money has lost value. And imagine how they might be able to bail themselves out every time their scheme gets out of hand by simply lending those banks whatever money they need for free.
Probably nothing to see here…
Now consider that the Federal Reserve is a private institution. Congress just appoints directors. Now consider those directors come from the private banking industry that ‘borrows’ from the Fed. And consider Congress' prevalent need to always expand the debt limit to pay its bills. And imagine that these same people know exactly when new money will be created and can use it to buy property with real world value before anyone else realizes the money has lost value. And imagine how they might be able to bail themselves out every time their scheme gets out of hand by simply lending those banks whatever money they need for free.
Probably nothing to see here…
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QUICK LINKS
GET IN TOUCH
LEGAL
Terms of Use
Privacy Policy
All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes, and may not reflect actual future performance. Clearing and custody of securities provided by Colonial Scrip LLC.
© 2024 — Copyright