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With Amazon minting currency, Fed at risk
MarketWatch ^ | Feb. 13, 2013 | Matthew Lynn

Posted on 02/13/2013 5:38:26 PM PST by george76

The euro may well be on the road to a chaotic collapse, taking some of the world’s biggest banks with it. A currency war may break out between Japan, the U.S. and Europe. Printing money has run out of steam, but there is still little sign of the global economy returning to the kind of growth rates it saw before the credit crunch.

But in the long term what they should perhaps be most worried about is losing their monopoly on issuing money. A new breed of virtual currencies are starting to emerge — and some of the giants of the web industry such as Amazon... are edging into the market.

...

Of course, governments and central banks will try to stop it. They won’t give up their monopoly over money without a struggle. A virtual currency will never be legal tender. But the online universe is very hard to regulate. Governments haven’t managed to stop spam, or pornography, or terror chat rooms, or any of the other online activities they don’t like. There is little reason to imagine they can prevent virtual currencies circulating either.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Government; Japan; News/Current Events
KEYWORDS: amazon; amazoncurrency; currency; fed; minting; mspoints; paypal
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1 posted on 02/13/2013 5:38:32 PM PST by george76
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To: george76

The national governments should perhaps worry about this.

A corporate currency would be tied to the corporations products. So and Exxon “Petro” or Amazon “Booker” would, in effect have an intrinsic value based upon the value of the product being marketed because corporations could not issue more of the currency than could be redeemed for the products they provide.

That would make them safer currencies in many ways.


2 posted on 02/13/2013 5:46:14 PM PST by Fai Mao
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To: george76

Quite an interesting story.

Unfortunately in my view, all the competing entities he mentions are also in league with the progressives.


3 posted on 02/13/2013 5:47:24 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
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To: nascarnation
all the competing entities he mentions are also in league with the progressives.

Maybe we need a FReepcoin.

Of course, these days, 22lr rounds probably work better than anything else as a currency with real value.
4 posted on 02/13/2013 6:03:40 PM PST by chrisser (Senseless legislation does nothing to solve senseless violence.)
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To: chrisser

Will the goesinto’s be based on length or caliber?


5 posted on 02/13/2013 6:10:15 PM PST by going hot (Happiness is a momma deuce)
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To: george76

What garbage.

Government needs to be the coiner of money.

The exact trouble with governments that have central banks, like the Fed, is that money creation has been turned over to the private sector, specifically, a very small group that engineered the establishment of “central banks”.

That small group now is loan shark, I mean, lender, to the government, instead of the government creating money that it has every right to.

And now the people find their government beholden to this money-monopoly, allowing their associates to puppetmaster the whole country.

Any government that does not create its own money is forced to borrow when reaches the limits of taxation and finds that it still needs more money. And the lender certainly will do everything he can to make sure the government outspends its taxing capability.


6 posted on 02/13/2013 6:26:38 PM PST by PieterCasparzen (We have to fix things ourselves)
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7 posted on 02/13/2013 6:35:03 PM PST by RedMDer (Support Free Republic)
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To: chrisser

well said!


8 posted on 02/13/2013 6:40:52 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
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To: george76
From the article:

Of course, governments and central banks will try to stop it. duh They won’t give up their monopoly over money without a struggle. double duh A virtual currency will never be legal tender. credit cards are legal and virtual But the online universe is very hard to regulate. Governments haven’t managed to stop spam, no incentive or pornography, lost first amendment battle and I wonder how much porn the Chinese have access to? or terror chat rooms, and give up their easy to get publicity entrapments? or any of the other online activities they don’t like. I wonder how megadownload owner is feeling? How's online poker working out for you? There is little reason to imagine they can prevent virtual currencies circulating either.

9 posted on 02/13/2013 6:48:24 PM PST by Diplomat
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To: Fai Mao

Everything old is new etc. Until the 1930s most paper money in Canada was issued by private banks; the two largest banks here continued to issue notes until 1944.


10 posted on 02/13/2013 7:00:26 PM PST by Squawk 8888 (True North- Strong Leader, Strong Dollar, Strong and Free!)
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To: PieterCasparzen

All money has to come from somewhere. If the currency issued by the government is not backed with real wealth (borrowed or taxed) then it becomes worthless, the most striking examples being Weimar Germany and Zimbabwe.


11 posted on 02/13/2013 7:04:32 PM PST by Squawk 8888 (True North- Strong Leader, Strong Dollar, Strong and Free!)
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To: george76

Microsoft has already started something similar to their own currency, with MS Points.


12 posted on 02/13/2013 7:17:14 PM PST by Ellendra (http://www.ustrendy.com/ellendra-nauriel/portfolio/18423/concealed-couture/)
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To: george76
Amazon can't mint “currency”, only the government can determine what can be used to pay taxes and satisify contracts.

However if the Amazon “Money” holds value better than the Federal Reserve notes, then it will have great appeal. People can easily redeem Amazon Money for Dollars as they need to pay taxes, etc

13 posted on 02/13/2013 7:27:49 PM PST by desertfreedom765
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To: george76

You disregard the largest export nation on earth?

(China)


14 posted on 02/13/2013 7:30:30 PM PST by Cringing Negativism Network
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To: george76; Cringing Negativism Network

China trade now bigger than US
http://www.freerepublic.com/focus/f-news/2987190/posts


15 posted on 02/13/2013 7:56:57 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: Squawk 8888

If you borrowed the money you did not create it.

Get it ?

If fovernment borrows, government has to pay back.

That means government did not create money, it borrowed it.

The U.S. government does not exercise its power to create money. It borrows.

So when it spends $1T more than it takes in in taxes, it has promised to someday pay back the $1T plus interest.

But it is not creating any money ! So it will have to get it from taxes.

“Backing” money is completely unnecessary - it’s meaningless.

Think about it - if the Treasury actually wanted to have 1 ounce of gold for every $1500 it created - it would have to buy the ounce of gold from someone and pay them $1500 they printed.

Just to back the dollars that exist right now, the government would need to acquire an utterly enormous amount of gold at current prices.

Seeing as how the government has no dollars now (most dollars are out in circulation), they’d need a huge amount of gold somehow for free, just to back the dollars out in circulation now. Of course, they wouldn’t get the gold for free. And they could not print new dollars to buy the gold, because they would all need to be backed by the gold they were exchanged for. Necessarily, the price of gold would skyrocket. And the international bankers would profit immensely, to say the least.

Then the government would have to keep its gold on hand, so all spending would have to come from taxation and borrowing anyway.

It would be the same scam as we have now - Treasury needing bankers.

What gives money a stable value is if it is very hard to counterfeit (the orginal purpose of using precious metal for coins), and the supply of money is simply adequate for people and businesses to have the cash on hand that makes it possible to do business without a liquidity crunch and yet also without a lot of excess cash on investor’s balance sheets with nothing to invest in.

We have to bear in mind that population increases, and, if a nation gets wealthier over time, i.e., the amount of “nice stuff” the private sector has, per capita, increases over the generations, the total money supply should stay about the same proportion to total national wealth in terms of assets on the balance sheet.

The more money creation far outpaced or fell short of the need, depending on how much and how it entered the economy, the worse consequences there would be.

But if the money supply increased simply as necessitated by the economy, if government simply spent the new money into the economy that would work fine, like a boost on tax revenue.

If we’re worried about Congress creating too much money, we should consider that right now they’re allowing the Fed to create over $1T per year and the Treasury is spending that into the economy. The only difference from the Treasury simply creating it is that taxpayers have the $1T per year adding to their future tax bills.

IMHO, I don’t think that will be faced by our children and grandchildren, I think our generation will see that debt blow up in our face.

The private sector should never be allowed to create money, of course, because, like counterfeiting, the motivation is then to create money instead of produce and earn the money.

Government should only do the bare essentials, and tax if money creation is not sufficient for it’s spending needs. With how much government spends now, of course, and how slow the economy is growing (or actually shrinking), money creation should be close to zero, which, if government does not borrow, means that spending needs to be cut to tax levels or less.


16 posted on 02/13/2013 8:37:28 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: desertfreedom765; george76

All these silly things we’re talking about here are not money, they are accounts.

You know, like customer accounts, I credit my customer $100, customer pays $150.

That’s the whole confusion with fractional reserve banking.

After the 1st deposit, the model is talking about customer accounts. At the end of all the deposit / lending, if you started with 100 dollar bills, you’d still have 100 dollar bills. You’d also have customer deposit accounts at all the banks and loan instruments, but that’s not money.

Economists then mumbo-jumbo with “near-money”, m1, m2, etc. A deposit account is a deposit account and a dollar is a dollar.


17 posted on 02/13/2013 8:44:20 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: nascarnation; chrisser

Bitcoin is promoted by libertarians, not progressives. All kinds of things are getting out of government control. We live in interesting times.


18 posted on 02/13/2013 9:05:19 PM PST by Pining_4_TX (All those who were appointed to eternal life believed. Acts 13:48)
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To: george76
At the time of the launch of the iPhone 5, there was speculation that Apple AAPL -0.19% would include a banking function, and perhaps even a currency — an iCoin would, of course, be much the same as everyone else’s money except twice as expensive and really cool to look at.

LOL!

19 posted on 02/13/2013 10:24:17 PM PST by Slings and Arrows (You can't have IngSoc without an Emmanuel Goldstein.)
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To: george76

It’s wildcat banking all over again.


20 posted on 02/13/2013 10:55:30 PM PST by Moonman62 (The US has become a government with a country, rather than a country with a government.)
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To: PieterCasparzen
That small group now is loan shark, I mean, lender, to the government, instead of the government creating money that it has every right to.

That's awful! What does the loan shark do with their profits?

21 posted on 02/14/2013 6:44:32 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Why, reinvest them, of course, either bank in US Treasuries or in some other investment.

Trouble with US Treasury debt, from an economic perspective, is that it is not an investment in a business enterprise (which produces goods and services), but an investment in future tax revenue that is sucked out of productive Americans.


22 posted on 02/15/2013 6:03:07 AM PST by PieterCasparzen (We have to fix things ourselves)
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To: george76

He overlooked PayPal.

PayPal is truly the upsetter technology use. The currency is in reality a PayPal loan. Paypal issues a short term loan that effectively adds to the money supply. Your purchases via Ebay are made on credit. Trade is facilitated with money that is created by Pay Pal. The money doesn’t exist except on the electronic PayPal ledgers.

The interesting thing is that PayPal has gone international. Your direct purchase to a Hong Kong or Taipei merchant is paid via payPal, the shipment is made via UPS or US Mail assigned a tracking number. Shipment is made when the shipping document is recorded and money actually transferred when the delivery receipt is made. Currency differentials are absorbed into the PayPal ledger system and are transparent to the buyer and seller.

Pay Pal is now duplicating in seconds by the two parties to the transaction what the big international banks do in and xpensive and time consuming manner.

Orlin G Grabbe was correct but about 10 years ahead of his time. His Rand could probably gain transaction today.


23 posted on 02/15/2013 6:21:19 AM PST by bert ((K.E. N.P. N.C. +12 .....The fairest Deduction to be reduced is the Standard Deduction)
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To: PieterCasparzen
Why, reinvest them, of course, either bank in US Treasuries or in some other investment.

They roll over all their profits? Are you sure? They never distribute any?

24 posted on 02/15/2013 6:59:44 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Do firms and funds that invest in Treasuries, as well as many other investments, earn profits for their shareholders ? Yes.

But that does not automatically mean that government borrowing is a good thing.

Of course, the fact that a company or a shareholder makes a profit does not justify anything that the company wants to do. For example, illegal businesses may be profitable, but that does not make them acceptable.

In the case of government borrowing, if the government does not simply create its own money, its only other sources of cash are taxes and borrowing. Cash from taxes could be called Revenue; borrowing, however, is of course a liability that must be paid back.

Ergo, once government debt gets so large that there’s no practical way for it to ever be able to retire the debt, it’s at that point that government is running a ponzi scheme.

Now we have to ask ourselves, if firms such as the major banks that are the primary dealers of Treasury debt, e.g., J P Morgan Chase, are indeed financially brilliant, would they not know a government debt ponzi scheme when they see one, and would they not know that it is potentially a disastrous thing ? Makes me wonder when the next potential “collapse” “comes along”, how much they will ask the government for.

On the other hand...

If a government simply creates money instead of borrowing or taxing, what that means to the unit value of their money mostly depends on how much it creates, relative to the size of its private sector economy, and how it spends or invests the money it creates.

If it created money to build a transportation system - where there was NO transporation system before - and the project was not a boondoggle, but it succeeded at growing the economy enough, it could actually make the unit value of the governments money actually increase, as the increased economic activity would offer people and businesses greater opportunity to profit and therefore increase aggregate private sector income and wealth. This, of course, allows for higher tax revenues with no rate increases.

If the created money is wasted, of course, the positive wealth-building effects are muted. We continually hear today of government “infrastructure” projects, but at this point in our technological development, government spending on this type of project, beyond regular maintenance and moderate expansion as appropriate, is invariably a boondoggle.


25 posted on 02/15/2013 9:24:30 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen
But that does not automatically mean that government borrowing is a good thing.

I never said it was good. Never.

Of course, the fact that a company or a shareholder makes a profit does not justify anything that the company wants to do.

Never said that either.

In the case of government borrowing, if the government does not simply create its own money, its only other sources of cash are taxes and borrowing. Cash from taxes could be called Revenue; borrowing, however, is of course a liability that must be paid back.

Of course.

Ergo, once government debt gets so large that there’s no practical way for it to ever be able to retire the debt, it’s at that point that government is running a ponzi scheme.

Huh?

Now we have to ask ourselves...

Huh?

26 posted on 02/16/2013 6:48:11 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: PieterCasparzen
Why, reinvest them, of course, either bank in US Treasuries or in some other investment.

They roll over all their profits? Are you sure? They never distribute any?

27 posted on 02/16/2013 6:50:03 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Some profits are distributed.


28 posted on 02/16/2013 8:10:33 AM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen

What the fed is doing to strong arming and extorting money from others. They go to other countries and say if that country doesn’t “buy” more of our debt then they face all our debt becoming worthless and their economy will crash, too. In fact, we forced people to pay the fed, that’s right, pay the fed, 0.25% interest at one point. Can you believe that: We forced people to loan us money and pay us for doing so under threat that if they didn’t the debt they held would become worthless.

The fed is going to banks and money laundering, an illegal act. They tell the bank they’ll buy their parking lot for $1 billion but the bank has to loan them that $1 billion, then the fed “prints” an extra billion and places that number into the computer as additional cash, then loans out that $1 billion to others. The fact is most of our debt is not actually secured by anyone. It is a Ponzi scheme, an empty house of cards not held up by any assets.


29 posted on 02/16/2013 9:06:03 AM PST by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off.)
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To: PieterCasparzen
Some profits are distributed.

Who gets them? How much do they get?

30 posted on 02/16/2013 10:01:21 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: CodeToad
In fact, we forced people to pay the fed, that’s right, pay the fed, 0.25% interest at one point.

When did that happen?

The fed is going to banks and money laundering, an illegal act. They tell the bank they’ll buy their parking lot for $1 billion but the bank has to loan them that $1 billion,

The Fed bought parking lots? Where? When?

31 posted on 02/16/2013 10:05:20 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Gosh, toddly, I thought you claimed to be the all knowing, super-smart Internet guru of finance and could google anything. Talking with you is always a waste of time because we’re always having to educate you time and time again. So, no, I won’t be doing your homework for you again. You alway challenge people and when proven wrong you challenge again and again and again. We’ve been through this with you before, so go back to all those old threads and re-read them.


32 posted on 02/16/2013 10:17:18 AM PST by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off.)
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To: CodeToad

I never claimed to be all knowing.
Never heard your silly claims before, wondered if you had any proof?
I guess you don’t.


33 posted on 02/16/2013 10:52:29 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

I’ll let Mike Cavanagh, CEO, Treasury & Securities Services of J P Morgan answer that, regarding JPM’s business, in an excerpt from his part of the 2011 JPM annual report:

“In 2011, Treasury & Securities Services (TSS) made solid progress toward a long-term performance target that is unchanged – a 25% return on equity (ROE), which equates to a 35% pretax margin. Although the operating environment continues to be a serious challenge for our growth and
profitability, I am proud of what we accomplished in 2011, and I could not be more confident about where the business is headed.

J.P. Morgan is a leading global provider of both treasury and securities services – and we have the capacity to continue investing to advance that market leadership as demand for these services grows.

From any angle, this is a great business to be in. We provide essential financial functions like trade finance and securities servicing that keep global commerce and financial markets running. The business generates steady earnings, good margins and high return on capital. These are businesses that are built over decades and require huge scale – making for high barriers to entry.

TSS delivers services that are integral to the development of strong, long-term client relationships across the firm’s institutional businesses. In fact, nearly 80% of TSS’ top clients are shared with the Investment Bank – underscoring this unique attribute of the J.P. Morgan franchise. Our expanding partnership with the Investment Bank already is yielding good results, and there’s a great deal more potential to be realized. From a firmwide perspective, TSS is a significant source of liquidity, providing an average of roughly $320 billion in deposit(a) balances in 2011.

2011 Results: Revenue and Net Income Up, with Meaningful Increase in International Revenue

In 2011, TSS reported net income of $1.2 billion, up 12% from 2010, and a return on equity of 17%. Net revenue was nearly evenly divided between each business: $3.9 billion in Worldwide Securities Services (WSS) and $3.8 billion in Treasury Services (TS).

Our investment in global expansion yielded positive results: International revenue rose 17% and comprised 55% of total revenue, up from 49% in 2010. In WSS, 62% of revenue was generated outside North America, and 47% of TS revenue came from outside North America.

...”

So we can conclude that JPM is one company that earns profits from its participation in government debt markets. Other companies have similar operations, as well. JPM and many of these other companies - out of all the profits they earn, not just these profits - return dividends to their investors.

So as far as “who” gets them, many companies and individuals profit from government debt operations.

As far as “how much”, I think you can see that the profits are significant, even in a low interest rate environment.


34 posted on 02/16/2013 11:10:58 AM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen
So as far as “who” gets them, many companies and individuals profit from government debt operations.

Primary dealers? I thought you were talking about the Fed.

35 posted on 02/16/2013 11:18:47 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

That’s nice, kid, no go try to hump someone else’s leg and prove to them how smart you are.


36 posted on 02/16/2013 11:22:12 AM PST by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off.)
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To: CodeToad
Tell me again about the parking lots.
37 posted on 02/16/2013 11:28:58 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Ah, you’re referring to the profits of the Federal Reserve that are returned to the Treasury.

The $77 billion, those are some great profits, that get returned to the Treasury - “the taxpayer”.


38 posted on 02/16/2013 12:15:19 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: Toddsterpatriot; CodeToad

IMHO, I think Mr. Toad is simply referring to “Treasury debt that the private sector (worldwide) simply will not purchase” as a “parking lot”, i.e., a piece of junk.

Right now, I believe the Fed is “buying” about 90% of new issues, which it does not mind doing since it has the authority to “increase the money supply”, i.e., create dollars if it needs to.

Seeing that no one in the private sector wants to buy it with dollars that they had to earn, I’d say it’s pretty junky, and I personally kind of like the parking lot analogy.


39 posted on 02/16/2013 12:23:53 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen
The $77 billion, those are some great profits, that get returned to the Treasury - “the taxpayer”.

Compared to the money some people think the Fed costs the Treasury, yeah, that's a great profit.

40 posted on 02/16/2013 12:29:08 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

The Fed does not charge the Treasury directly.

The largest cost to the Treasury is interest on its debt. That was $220 billion in a recent year.

The Fed is a mechanism put in place as the brainchild of the banking syndicate. The banking syndicate cares not if it makes a penny off the Fed’s operations directly; the syndicate has its own operations, that, as you saw above, have the ultimate enhancement as primary dealers in Federal debt.

The Treasury ceded its right to create dollars to the Fed.

The banking syndicate has a few other advantages: it is the sole provider of lending to the government (it has a monopoly on government borrowing). Government bonds represent a claim on taxes, the most powerful form of debt collection. As the sole lenders to government, the syndicate has considerable political influence. The syndicate extends beyond banking into foreign policy. It also extends into the foundation system. It has a monopoly on the capital markets that is enforced by the SEC. The list goes on...

The $77 billion is like cash back on your Discover Card.


41 posted on 02/16/2013 12:53:25 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: Toddsterpatriot

Ah, the Fed also sets government benchmark interest rates; rather nice tool for a banking syndicate.


42 posted on 02/16/2013 12:57:59 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen
The Fed does not charge the Treasury directly.

Neither does any other holder of government debt.

The largest cost to the Treasury is interest on its debt. That was $220 billion in a recent year.

How recent? Last year the interest was just under $360 billion.

The Treasury ceded its right to create dollars to the Fed.

Just under 100 years ago.

The banking syndicate has a few other advantages: it is the sole provider of lending to the government (it has a monopoly on government borrowing).

That's not true. You can go here, http://www.treasurydirect.gov/govt/apps/apps.htm and lend to the government anytime you'd like.

The $77 billion is like cash back on your Discover Card.

Yeah, free money.

43 posted on 02/16/2013 1:21:51 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: PieterCasparzen
Ah, the Fed also sets government benchmark interest rates

Only overnight rates.

rather nice tool for a banking syndicate.

Syndicate? What do you mean?

44 posted on 02/16/2013 1:24:22 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot
The Fed does not charge the Treasury directly.

Neither does any other holder of government debt.


Treasuries pay interest to whoever owns them.

The largest cost to the Treasury is interest on its debt. That was $220 billion in a recent year.

How recent? Last year the interest was just under $360 billion.


That's even worse, right ? I believe that's more than the total of Federal Corporate Income Tax collected.

The Treasury ceded its right to create dollars to the Fed.

Just under 100 years ago.


I don't what what you're trying to convey by telling me what I already know, that this happened just under 100 years ago. It's not like a good wine, the idea does not get better with age.

re: monopoly vs. treasury direct

Sorry, I wasn't specific enough. The banking syndicate is made up of banks. In terms of which banks can participate as primary dealers, that is not open to every bank.

The $77 billion is like cash back on your Discover Card.

Yeah, free money.


Hardly, if you look at the whole picture, instead of looking at the Fed by itself, the government is in debt over $16,000,000,000,000. And that number is expanding by over $1,000,000,000,000 per year - and that's with the interest rate on that debt being kept ridiculously low.

I don't know where you're going with this discussion, seems like you are in favor of increases to Federal government debt.
45 posted on 02/16/2013 2:55:52 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: Toddsterpatriot
Ah, the Fed also sets government benchmark interest rates

Only overnight rates.


Fed interest rates are benchmark rates, I'm sure you understand the significance of benchmarks.

rather nice tool for a banking syndicate.

Syndicate? What do you mean?


I don't have time to explain that; I can recommend the book "Shadows of Power" by James Perloff.
46 posted on 02/16/2013 3:00:16 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen
The banking syndicate is made up of banks.

If you're talking about members of the Fed, there are hundreds. Not sure why you'd call them a syndicate.

Yeah, free money.

Hardly, if you look at the whole picture, instead of looking at the Fed by itself, the government is in debt over $16,000,000,000,000.

What does the whole picture have to do with the Fed. The Fed doesn't force the Treasury to borrow. The Fed did allow the Treasury to borrow $77 billion less last year than they would have otherwise. About $300 billion less since the crisis.

I don't know where you're going with this discussion, seems like you are in favor of increases to Federal government debt.

I don't know where you got that idea.

I'm in favor of cutting government spending, a lot.

Privatizing Social Security. Eliminating farm subsidies, sugar subsidies and ethanol mandates. Sealing the border and booting 10 million illegals, to start. Drilling in ANWR and off California and Florida. I can give you more, if you're still confused about where I'm coming from.

47 posted on 02/16/2013 3:57:43 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: PieterCasparzen
Fed interest rates are benchmark rates, I'm sure you understand the significance of benchmarks.

I can't think of a single case where the overnight rate is used as a benchmark. You have any examples?

48 posted on 02/16/2013 3:59:11 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Don’t you think that folks who set the prime rate use the Fed funds rate as a benchmark to a large extent ?


49 posted on 02/16/2013 4:29:17 PM PST by PieterCasparzen (We have to fix things ourselves)
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To: PieterCasparzen

Looks close.

50 posted on 02/16/2013 4:50:42 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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