OK. Good I see your understanding of the fed is beginning to evolve a bit in the right direction away from the "Creature from Jekyll Island" image. That's a step in the right direction. But you still have one big major hurdle to over come. You still somehow think the fed is privately owned. Once you realize that the fed
is the government. If you were to examine the books of the Treasury and the fed side by side you would learn that the Treasury and fed are really one giant operation separated into two parts by statutory law. But these two operations are by necessity coordinated on a day to day basis. Nevertheless it is true that sometimes the Treasury does things that make the fed's job harder and vice versa.
If you go back to ~ pre 2010 posts that I made regarding the fed you will find some errors. That's because I once thought the same way many others did, except for oddballs like yourself who insisted the fed was a privately owned, for profit operation. Approximately 2005 I begin to make a serious study of economics and that took me necessarily into details of central bank operation. I was very fortunate in that I had a close personal friend who was a well known economist that could steer me in the right direction, and who could answer questions that are not satisfactorily answered in standard texts. At some point I acquired enough knowledge that I could read the primary literature so long as it was not highly specialized. I learned that some of the information regarding money in all of the standard texts was simply mistaken. For example the common treatment of the so-called money multiplier is incorrect. Also the commonly held idea among the public that the government should balance its books and pay off its debt I learned would be disastrous for the economy. It is understandable, however, why most people think this way. After all what they believe
is true as far as their personal finances are concerned. But where they go wrong is thinking that government finances work the same way. They don't; not at all!
You are right to point out that I was wrong about saying the government does not "print" money. But your understanding of what I actually said, is probably incorrect. What I actually said, which I learned from reading an incorrect article by an economist, is that the government did not print money created out of thin air because the money it created was linked to Treasury liabilities, i.e., bonds. I liked to contrast that with a government, such as Zimbabwe's, that just printed money to pay their debts without linking it to new treasury liabilities. That was necessitated of course because there was virtually no demand for Zimbabwe's debt in the private sector leaving only their central bank as a customer for their bonds in the secondary market. What I thought re the U.S. Central Bank -Treasury operation at that time was wrong however. The U.S. regularly does create money out of thin air and only later links it to Treasury liabilities, but this delayed linking to new debt does not necessarily have to be one to one. In other words bonds are not issued for the purpose of matching new Treasury liabilities to newly created money. In fact, I learned bonds serve an entirely different purpose than what we citizens, and many economists too, think they serve.
Here is another place where you still have some evolving to do, and you have misrepresented entirely the truth of what I have actually said, which, by the way, is exactly what the fed website says about this.
You say:
"You know damn well the FED has private shareholders. The FED says so on its website. You don't deny that."
So of course, I have never denied that. You have stupidly, I must say, insisted that the required ownership of fed stock implies ownership rights of the fed as it would were the fed a private sector corporation. That stock, a crazy artifact of the old pre-1930s fed, is not like private sector corporate stock. The fed also makes that very clear on its website. If you want to know where a entities ownership lies all you have to do is ascertain where the profits go.
You also, say this, jem:
"
The Fed has given out trillions of its own according during Covid.
2.2 trillion at least of its own accord without specific authorization from Congress.
But if you don't think the member banks make massive money from the FED operations you are nut job.
The FED buys trillions in bonds and lets the member banks take commissions.
They even let them front run sometimes.
and the FED sometimes lends them trillions at below market rates.
The Fed has given out trillions of its own according during Covid.
2.2 trillion at least of its own accord without specific authorization from Congress.
But if you don't think the member banks make massive money from the FED operations you are nut job.
The FED buys trillions in bonds and lets the member banks take commissions.
They even let them front run sometimes.
and the FED sometimes lends them trillions at below market rates. "
jem, what can I say to this. Clearly much more evolving is needed from you. You can do it. I know you can.
All of those things immediately above that you state are correct! But your tone suggests you would have us believe you think the fed should not provide money to banks a below market rates -- how jem would a bank make money were they to pay retail prices for the money they lend?????
And of course banks , big ones at least, make billions (not trillions -- unless you are projecting their individual aggreghate profits over the next millenium.) Isn't that just whats so wonderful and amazing about capitalism!
And of course the fed loans money to banks at wholesale rates, secured by collateral of course. Then the banks take that money and loan it out to you at retail rates. That what the fed is for and what banks do for a living. Is their something wrong with that?
jem, you just amaze me at times!
