emanuel wrote:
To respond to your comments... First, the Money as Debt video is not about the Federal Reserve specifically. It is about the history of money and how money is created in general.
Here is a brief history of money systems from a mainstream liberal point of view: Myth: The gold standard is a better monetary system. Fact: The gold standard causes deflation and depressions. . Despite its title, this article is about more than just the gold standard; it contains a brief history of money systems in general. I would be interested in your comments on it. Does it agree with your understanding of the history of money? If not, what are your points of disagreement?
Perhaps Nicholas, or someone else here, can refer us to a good history of money from a Marxist point of view? (and preferably an online written source, not a video?)
emanuel wrote:
What you are referring to is only the interest from the "member banks" reserve deposits.
See my previous post for my response to our misunderstanding on this point.
So, for example, if you and I wanted to start a bank, we would fill out an application for the FED, send it in with our initial deposit money. We are now a "member bank". We are not allowed to earn interest on this money. But then, the FED (i.e., the 12 "reserve banks"), starts loaning us money they create out of thin air... WAY MORE money than our initial deposit or "reserves." We pay interest to the FED on this money, which does NOT go to the Treasury.
Judging by the Fed's financial statements, it would seem that a significant part of it does go to the Treasury.
We profit not from our initial deposits, which were minor, but rather from re-loaning the new money the FED loaned us to companies and consumers. Our profit is the differential in interest rates between what we charge our debtors and what the FED charges us.
That is indeed correct, I think.
The system only works (meaning makes us and the 12 Federal reserve banks profit) when the companies and consumers we lend the money to are out there working and making real money in the "real economy" (distinguished from the "financial economy"). This can only happen when the overall real economy is growing, which is dependent on cheap and plentiful oil. It's a system based on the myth of perpetual growth on a finite planet, and it institutionalizes the destruction of the planet.
Yep, that is indeed a fundamental problem.
But what false claims are you referring to?
The claim (which I thought you were making -- perhaps I misunderstood you?) that the Fed is a profit-making enterprise from whose profits go directly into the pockets of member banks. Also the claim that the Fed is a "private" profit-making enterprise.
Also, it is wrong to imply that the basic (and correct) critique of the perpetual-growth-based financial system, and even the basic (and correct) critique of the FED, "have been popularized by Jew-haters." This is not true. These critiques have been popularized by intelligent, concerned, non-racist activists. For the most part, it is not us who are repeating their claims. It is them who are repeating our claims.
I agree with you regarding the basic critique of a growth-based economy. But that's different from the claim that the Fed is a private profit-making enterprise whose profits go into the pockets of member banks.
In any practical sense it is private. It took over the responsibility of creating money from the US Government, and now loans the US Government money, effectively reducing the US government to a subserviant debtor.
Well, sort of. As already noted, most of the interest on said loans to the Treasury gets returned to the Treasury.
Regarding the power of the Fed chairman:
And what power is that? To adjust the interest rates to member banks?
To stabilize the money supply, which benefits almost everyone, not just the banks -- albeit within the context of the current growth-based system, with its inherent larger problems.
Call it "quasi-public" if you want, but it doesn't change the fact that the capitalist financiers hijacked the financial system of the United States... slowly over it's history, and completely in 1913.
The "capitalist financiers," along with other wealthy folks, have always been on top in the U.S. economy; they didn't "hijack" a previously pristine system. What happened in 1913 was simply a banker-approved variant of the monetary reforms that many other people had been calling for as well, to smooth out the business cycle and eliminate the frequent depressions that had been plaguing the economy on a regular basis.
And indeed the Federal Reserve system has been largely (though not completely) successful in its mission to stabilize the economy, once the people running it finally got the hang of it during World War II. Since then, we've had plenty of recessions, but no full-fledged Great Depression since the 1930's, whereas crises like the Great Depression had previously been commonplace. If anything, it has perhaps been too successful, insulating us against longterm dangers.