"market correction, as much as 90%"
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Right, fine, let's play this game again a bit...
1. Fed did lend trillions, yes. To be exact, the actual amounts lent were between $1.2trn and $1.5trn, depending on how you account for the various bits and pieces. $7.77trn reflects Fed's maximum commitment (i.e. the max amount it could have lent), rather than the actual amount it did in fact lend. The Fed did this like all other central banks in its role as a lender of last resort. This particular aspect of the central bank's function has been in place at least since the beginning of the 19th century (elaborated by Henry Thornton and Walter Bagehot). Pls note that the amount actually lent by the Fed as a %age of GDP was actually a bit smaller than what other banks, such as the RiksBank in Sweden, did.
2. When you say "the Fed is a private bank", you need to be more specific. What particular aspect of a central bank's operations and/or structure determines whether it's "private" or "public"? Please do not spare any detail in your explanation, as I would like to understand the logic.
3. You also need to be specific when you talk about "fed did not support the market". Do you mean direct interventions in the equity mkts? Do you mean the various crisis programs? Or is it something else altogether?
1. so your anecdote about hiding assets was rightly called out by me. The fed can create trillions.
2. The fed is a private bank in that it is owned by the regional fed banks. We don't know who owns or controls those banks. The only control Congress seems to have is the ability to pull the charter. Otherwise we see a song an dance but no control
and for the real question...
Don't be fooled by the misdirection below. Focus on the question who owns and controls the Fed system.
Answer... not the govt... not the voters.
http://www.federalreserve.gov/faqs/about_14986.htm
The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution.
As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
3. Former Clinton advisor George Stephanopoulos verified the existence of The Plunge Protection Team (as well as its methods) in an appearance on Good Morning America on Sept 17, 2000. Stephanopoulos said:
Well, what I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets . . . perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally . . . I don�t know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall.
http://www.dissidentvoice.org/Mar07/Whitney04.htm
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
2. The fed is a private bank in that it is owned by the regional fed banks. We don't know who owns or controls those banks. The only control Congress seems to have is the ability to pull the charter. Otherwise we see a song an dance but no control
and for the real question...
Don't be fooled by the misdirection below. Focus on the question who owns and controls the Fed system.
Answer... not the govt... not the voters.
http://www.federalreserve.gov/faqs/about_14986.htm
The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution.
As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
3. Former Clinton advisor George Stephanopoulos verified the existence of The Plunge Protection Team (as well as its methods) in an appearance on Good Morning America on Sept 17, 2000. Stephanopoulos said:
Well, what I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets . . . perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally . . . I don�t know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall.
http://www.dissidentvoice.org/Mar07/Whitney04.htm
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
1. Since when does the verb "create" has the same meaning as the verb "hide"? The assets/liabilities that were created in the course of the Fed lending are there, for everyone to see (if they bother). This is a fact.
2. What do you mean "we don't know who owns or controls those banks"? Commercial banks and S&L's (all nationally-chartered ones and some state-chartered ones) collectively "own" the Reserve Banks. These banks control certain aspects of the function of the Reserve Banks and appoint a certain number of directors (6 out of 9). Again, this "private" aspect of the Fed's structure is also there for everyone to see. If you're familiar with how corporations are organized (which I assume you do, given this is a forum for traders), you shouldn't have a problem with this.
Now, in order to get to the crux of the issue, let me ask you a different question. Which part of the "private" arrangement is not to your liking? What specific part of the Fed's function is compromised, in your opinion, by the ownership structure of the regional Federal Reserve Banks?
3. Right, I am confused, because you didn't answer my specific questions. Instead, as some sort of "proof", you gave me a quote from some former Clinton official, which, I confess, is a little disappointing. The quote in question is a) outdated; b) says nothing about actual intervention, but rather refers to a possibility of intervention. I mean Clinton himself said things like "I did not inhale" and "I did not have sexual relations with that woman". Do you believe those statements also? Choosing to believe some statements and not others would suggest that it's more about your preconceived notions than facts, as you claim.
So let's try to get back to facts. What particular sort of Fed intervention in the markets are you referring to? How specifically did the Fed support the market? When approximately did these interventions occur?
2. What do you mean "we don't know who owns or controls those banks"? Commercial banks and S&L's (all nationally-chartered ones and some state-chartered ones) collectively "own" the Reserve Banks. These banks control certain aspects of the function of the Reserve Banks and appoint a certain number of directors (6 out of 9). Again, this "private" aspect of the Fed's structure is also there for everyone to see. If you're familiar with how corporations are organized (which I assume you do, given this is a forum for traders), you shouldn't have a problem with this.
Now, in order to get to the crux of the issue, let me ask you a different question. Which part of the "private" arrangement is not to your liking? What specific part of the Fed's function is compromised, in your opinion, by the ownership structure of the regional Federal Reserve Banks?
3. Right, I am confused, because you didn't answer my specific questions. Instead, as some sort of "proof", you gave me a quote from some former Clinton official, which, I confess, is a little disappointing. The quote in question is a) outdated; b) says nothing about actual intervention, but rather refers to a possibility of intervention. I mean Clinton himself said things like "I did not inhale" and "I did not have sexual relations with that woman". Do you believe those statements also? Choosing to believe some statements and not others would suggest that it's more about your preconceived notions than facts, as you claim.
So let's try to get back to facts. What particular sort of Fed intervention in the markets are you referring to? How specifically did the Fed support the market? When approximately did these interventions occur?
1. you brought up the hiding gdps worth of assets with your snarky comment.
I replied why would they hide assets when they create unlimited amounts. You agree they created trillions.
2. I said show (mis typed as should) me the fed is not a private bank... because I called it a fact.
you admit the regional fed banks are owned and controlled by banks which have shareholders.
So this whole time you knew the Fed is owned by the regional fed banks. And that those regional banks are owned by banks which are owned by individuals... not the govt.
The structure not to my liking is now a new question.
But, I will answer... I am not sure any structure is not to my liking. I know I would like it a lot more if I were an owner.
note... i would like them to tell the politicians to balance the budget through spending caps or cuts.
So why the heck are you arguing this point. The fed is a private bank. fact.
3. I also gave you this link...
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,[1] signed on March 18, 1988 by United States President Ronald Reagan.
The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".[1]
As established by Executive Order 12631, the Working Group consists of:
The Secretary of the Treasury, or his/her designee (as Chairperson of the Working Group);
The Chairperson of the Board of Governors of the Federal Reserve System, or his/her designee;
The Chairperson of the Securities and Exchange Commission, or his/her designee; and
The Chairperson of the Commodity Futures Trading Commission, or his/her designee.
I replied why would they hide assets when they create unlimited amounts. You agree they created trillions.
2. I said show (mis typed as should) me the fed is not a private bank... because I called it a fact.
you admit the regional fed banks are owned and controlled by banks which have shareholders.
So this whole time you knew the Fed is owned by the regional fed banks. And that those regional banks are owned by banks which are owned by individuals... not the govt.
The structure not to my liking is now a new question.
But, I will answer... I am not sure any structure is not to my liking. I know I would like it a lot more if I were an owner.
note... i would like them to tell the politicians to balance the budget through spending caps or cuts.
So why the heck are you arguing this point. The fed is a private bank. fact.
3. I also gave you this link...
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,[1] signed on March 18, 1988 by United States President Ronald Reagan.
The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".[1]
As established by Executive Order 12631, the Working Group consists of:
The Secretary of the Treasury, or his/her designee (as Chairperson of the Working Group);
The Chairperson of the Board of Governors of the Federal Reserve System, or his/her designee;
The Chairperson of the Securities and Exchange Commission, or his/her designee; and
The Chairperson of the Commodity Futures Trading Commission, or his/her designee.
Awwwww, does that mean we can't stay friends, you and I?Quote from Tsing Tao:
I'd suggest the same is true of you, Fed Apologist!
Erm, no... It all started with you suggesting that "you wouldn't know if the fed is not supporting the stock market" and "it's not like they open the books..." (from your post on page 4). Was I incorrect in interpreting this as an assertion that the Fed could be intervening, but then concealing the results of the interventions?
If you actually think that these created assets/liabilities are visible, then I am in full agreement and we have no argument.
Erm, no, you're being very frivolous and careless with what I said. Note that I never stated that the regional Reserve Banks are controlled by the individual member banks. You see, this is precisely why I asked you to be very clear. If you take the time to read the Federal Reserve Act (specifically, section 4), you will realize that, while member banks officially own the regional Reserve Banks and can elect directors to the Reserve Bank's boards, they do NOT control these boards. The Federal Reserve Act makes it clear that control does not rest in the regional Federal Reserve Boards, nor are they independent, but they take instruction and are controlled by the Board of Governors of the Federal Reserve System. Now, as we know, the Board of Governors IS a federal government agency whose members are appointed by the President and confirmed by the Senate. In light of the above, I assert that the Federal Reserve System is NOT a private bank, but rather a hybrid entity, where putative ownership and control functions are split between member banks and the federal government respectively.
So here's my specific question to you. If an entity is owned, but not controlled by private individuals, is it private, public, both or neither?
You don't have to answer this question, really, as I was just trying to get to the point I made above.
In terms of your idea of the Fed "telling" the politicians what to do... We are talking about the same politicians who are responsible for appointing the Fed board and overseeing them, right? Doesn't it feel to you that this is a little bit of a chicken and egg situation?
As to your "fact", I am afraid I have to disagree. You may wish to look into your "facts" a wee bit further.
Yes, I have seen this link. The response that I have given in my previous post and the questions I asked still apply.
Martinghoul! Hey, missed you around here.
Anyway, not that that chowderhead would know, but the problem with this structure is actually specific to the New York Federal Reserve, which has on its board any number of folks from the New York banks. Note this has nothing to do with the alleged "private bank" bit about the Fed, which is always a flag you're dealing with an ideological fool (does jem know he agrees with the anarchist David Graeber? Does he even know who he is? Betcha no on both).
What it has to do with is the more mundane problem of regulatory capture. This is why I considered Geithner to be hopelessly compromised from the start, for instance.
Anyway, I have always maintained that the Fed needs to be made a subsidiary of the FDIC. It's been obsolete ever since Glass-Steagall. The FDIC did what they failed to do: stop bank runs. They also do, as a matter of course, far better audits of banks, because as an insurer, they have to. Which was FDR's logic all along.