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To: Sequoyah101
So what is in this for the Fed? What am I missing?

Interest.

My (flawed) understanding:

The Fed is the only business allowed to write a random number in their balance sheet. The guy in charge writes "$1,000,000,000,000" in the Assets column, and "-$1,000,000,000,000" in the Liabilities column. It all adds up to $0, you see. They then loan out that vast new asset, and charge interest on that loan. Oh, sure, the interest rate is something absolutely pathetic like 1% ... but one percent of one trillion dollars is a cool ten billion dollars. The trillion-dollar loan eventually gets repaid*, the trillion-dollar liability gets erased, the "$1,000,000,000,000" in the Assets column and "-$1,000,000,000,000" in the Liabilities column vanish into $0 sum, and the business enjoys its nifty new $10,000,000,000 profit. Not bad a few seconds of writing and a little interim bookkeeping.
(* - meh, at that kind of interest income for that size a loan, nobody cares if it's never paid back so long as the interest payments keep rolling in.)

20 posted on 09/17/2012 11:57:12 AM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: ctdonath2; Darth Reardon; zeestephen

I thought that was it, huge interest and it cost them nothing and no risk to get it.

Huge amounts of funny money all for nothing. Big rents on worthless assets for very little overhead.

Meanwhile, the money loaned keeps the people that allow it to stay in power and stay on the big tit. What a wonderful arrangement.

This is as good an explanation as any.


21 posted on 09/17/2012 12:21:00 PM PDT by Sequoyah101 (Half the people are below average, they voted for oblabla.)
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