What would happen if the US simply stopped paying the interest on its loans from the federal reserve?
Or not pay on the loans anymore at all?
What do you think will really happen? Would the benefits outweight the down sides?
Who would be there to force them to pay/ Collect?
When a person is so burried in debt, that they can not crawl out, we have the ability to declare bankrupcy. to start with a clean slate...
Answer:
What would happen if we stopped paying the Fed or abolished it altogether?
Assuming that there were no political assassinations, (a BIG assumption!) the economy would make a tremendous rebound. A few mega-rich elites would be mildly less profitable because their private cash-cow got butchered.
There would be suffering because of economic depression. As always, the poor and middle class will be hurt the most, …but not for long. The economy would stabilize within months not years. Real bedrock money would replace the fake economic balloon. The crime syndicate that controls our country would have to find other ways to corrupt our currency and our constitution.
In a nutshell, that’s about it…
If you seek deeper understanding, read on.
Remember! ALL the so-called money that the Fed loaned ..is a fiction. That money never really existed. Fiat money is nothing more than a lie; An electronic ghost of real money, backed by nothing except the future enslavement of your children, and represented by a piece of paper that says “In God We Trust.”
The Federal Reserve is neither “Federal” nor does it have any “reserves.”
The word “Federal” in Federal Reserve Bank, has no connection to federal government, at least in terms of oversight or law. In fact, the Fed is a private insurance company created solely to protect the mega wealthy. It is a type of insurance fraud, except the rich get the money, while working people pay for it. “Federal” is only a meaningless name.
The word “reserve” in ‘Federal Reserve’ is also a cruel joke. Even when they maintained reserves, the most they ever held was only ten percent of what they “loaned.”
This is the ultimate in leverage… Loan, ten times more fake money than you really have, charge interest on it, take the interest PLUS the real value of the labor and property that “pays back” the principle.
Americans are an amazingly resourceful and resilient people, despite how it looks to outside observers. We cannot be blamed for not understanding the Federal Reserve's arcane secret practices…
Very few TV shows expose the Fed.
You never hear the real story on mass media news.
No state-funded high school teaches the truth about our banking system, although the elegant simplicity of this crime is easily understandable, even to grade-school children.
The ‘Fed’ makes fake money appear out of thin air! They print it.
Now, they don’t even have to print it. They simply “create credit” electronically…
…BILLIONS of dollars a week!
Even Penn & Teller can’t perform that trick!
If you would like to learn more, please visit the video links provided. They are listed from short to long. The most relevant links first. Ancillary background information afterwards. If you do not understand the Federal Reserve, these videos will open your eyes!
The US would make the federal reserve angry?
The law makers get paid by the federal reserve, as do many of their and others buisnesses that trade services with the government. Do you really think that any law maker would pass anything that would stop them from getting paid on someone elses tab?
What would I care if I bought a stereo on your credit card?
Well, we are paying something like 300 billion in interest on *all the debt* of a a 7 trillion dollar economy and a 2-3 billion dollar budget - or something like that.
In any event, the 300 billion is insignificant in size to the economy or the US budget. The amount of interest we pay just to increase the money supply is just a fraction of the 300 billion, so really we are talking about peanuts.
Of course, it is peanuts to the economy, the budget, the deficit (take your pick), but to any one person, no one would want to buy a treasury without getting some interest on it. So, the government would have to print its own money, which it can do. But the government would have one less incentive to make the dollar attractive for people to invest in, so the government might be tempted to print too much money.
Of course, there are political constraints - people get upset when there is too much inflation, so I doubt there would be much of a difference in the end, except a transfer of some payments from the rich bankers to the government accounts.
The quick truth is that if the US did not pay interest on it loans it would be in default. Debt is a contract in which the borrower agrees to repay a lender both the principal borrowed and interest for the use of the money. The US would be in breech of the agreement if it did that.
The ultimate price is that the US would no longer be able to go out on the capital markets and borrow money.
This would also impact our foreign trade. The US runs a trade deficit. Our trading partners invest in the US more than offsetting that trade deficit. Defaulting on US loans woud throw a monkey wrench into this. Our partners would slow or stop investment in this country.
There is no one that could force us to repay but the market impact would be so destablizing to our economy, it would not be worth doing.
Suplement:
If the real question is about Open Market Operations see the Federal Reserve website on monetary policy:
http://www.federalreserve.gov/paymentsys...
Surprisely very little would happen.
Today by law, all 'profit' from the Federal Reserve is given to the Treasury. That means that the Federal Reserve already returns 90% of the interest it receives on T-bills to the Treasury. Last year, it retained only $2.9B of the debt interest to cover dividends and expenses.
But the interest is still the primary source of income of income for the Federal Reserve. so it would have to come up with some other way to cover the $2.9B in expenses.
The short quick answer is that if the Treasury stopped paying interest to the Fed, that $2.9B would be covered in increased user fees and taxes from (guess where) the Treasury.
However, the Fed might then turn to buying other types of interest bearing bonds such as munis. Then the Treasury would have to sell bonds to parties who do not return interest.
So you think about it, with the Fed returning 90%+ of the interest earned, that's the best deal the Treasury gets on any T-bills sold.
"Anyone have a link, showing what law, bill or agreement that shows the fed is to return 90% of the profit?
Who audits their books, to verify the profit they claim?
Who keeps the 10%?
Anyone with exact numbers?"
No problem. The Federal Reserve System is regulated by TITLE 12, CHAPTER 3 of the U.S. Code. http://www.law.cornell.edu/uscode/html/u...
http://www.law.cornell.edu/uscode/html/u...
BTW, the Federal Reserve only holds about 7% to 9% of the total debt. This can be verified by looking at a couple of reports. First, we'll look at the Treasury Bulletin. Inside of the bulletin, there is a document titled, "Ownership of Federal Securities". On the last page, it indicates that for the quarter ending Mar 2007, the total debt is $8.9 trillion. Of that amount, $4.58 trillion is held by the Federal Reserve and other Government accounts.
http://www.fms.treas.gov/bulletin/index.
To determine how much is held by just the federal reserve, we can look at the history of the public debt at http://www.treasurydirect.gov/np/npgatew...
There, it tells us that the intragovernmental holdings is about $3.8 trillion. Subtract that from the $4.58 trillion amount in the treasury bulletin, that leaves about $780 billion held by the Federal Reserve. Divide $780 billion by $8.9 trillion and that equals about 8.76%, which is within the range I mentioned earlier.
The amount that the Federal Reserve system keeps goes to pay expenses and dividends. The dividends are paid to the member banks so they can pay expenses. Also, a small amount is put into a surplus account for stabilization of the system.
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Who would be there to force them to pay/ Collect?
When a person is so burried in debt, that they can not crawl out, we have the ability to declare bankrupcy. to start with a clean slate...
Answer:
What would happen if we stopped paying the Fed or abolished it altogether?
Assuming that there were no political assassinations, (a BIG assumption!) the economy would make a tremendous rebound. A few mega-rich elites would be mildly less profitable because their private cash-cow got butchered.
There would be suffering because of economic depression. As always, the poor and middle class will be hurt the most, …but not for long. The economy would stabilize within months not years. Real bedrock money would replace the fake economic balloon. The crime syndicate that controls our country would have to find other ways to corrupt our currency and our constitution.
In a nutshell, that’s about it…
If you seek deeper understanding, read on.
Remember! ALL the so-called money that the Fed loaned ..is a fiction. That money never really existed. Fiat money is nothing more than a lie; An electronic ghost of real money, backed by nothing except the future enslavement of your children, and represented by a piece of paper that says “In God We Trust.”
The Federal Reserve is neither “Federal” nor does it have any “reserves.”
The word “Federal” in Federal Reserve Bank, has no connection to federal government, at least in terms of oversight or law. In fact, the Fed is a private insurance company created solely to protect the mega wealthy. It is a type of insurance fraud, except the rich get the money, while working people pay for it. “Federal” is only a meaningless name.
The word “reserve” in ‘Federal Reserve’ is also a cruel joke. Even when they maintained reserves, the most they ever held was only ten percent of what they “loaned.”
This is the ultimate in leverage… Loan, ten times more fake money than you really have, charge interest on it, take the interest PLUS the real value of the labor and property that “pays back” the principle.
Americans are an amazingly resourceful and resilient people, despite how it looks to outside observers. We cannot be blamed for not understanding the Federal Reserve's arcane secret practices…
Very few TV shows expose the Fed.
You never hear the real story on mass media news.
No state-funded high school teaches the truth about our banking system, although the elegant simplicity of this crime is easily understandable, even to grade-school children.
The ‘Fed’ makes fake money appear out of thin air! They print it.
Now, they don’t even have to print it. They simply “create credit” electronically…
…BILLIONS of dollars a week!
Even Penn & Teller can’t perform that trick!
If you would like to learn more, please visit the video links provided. They are listed from short to long. The most relevant links first. Ancillary background information afterwards. If you do not understand the Federal Reserve, these videos will open your eyes!
The US would make the federal reserve angry?
The law makers get paid by the federal reserve, as do many of their and others buisnesses that trade services with the government. Do you really think that any law maker would pass anything that would stop them from getting paid on someone elses tab?
What would I care if I bought a stereo on your credit card?
Well, we are paying something like 300 billion in interest on *all the debt* of a a 7 trillion dollar economy and a 2-3 billion dollar budget - or something like that.
In any event, the 300 billion is insignificant in size to the economy or the US budget. The amount of interest we pay just to increase the money supply is just a fraction of the 300 billion, so really we are talking about peanuts.
Of course, it is peanuts to the economy, the budget, the deficit (take your pick), but to any one person, no one would want to buy a treasury without getting some interest on it. So, the government would have to print its own money, which it can do. But the government would have one less incentive to make the dollar attractive for people to invest in, so the government might be tempted to print too much money.
Of course, there are political constraints - people get upset when there is too much inflation, so I doubt there would be much of a difference in the end, except a transfer of some payments from the rich bankers to the government accounts.
The quick truth is that if the US did not pay interest on it loans it would be in default. Debt is a contract in which the borrower agrees to repay a lender both the principal borrowed and interest for the use of the money. The US would be in breech of the agreement if it did that.
The ultimate price is that the US would no longer be able to go out on the capital markets and borrow money.
This would also impact our foreign trade. The US runs a trade deficit. Our trading partners invest in the US more than offsetting that trade deficit. Defaulting on US loans woud throw a monkey wrench into this. Our partners would slow or stop investment in this country.
There is no one that could force us to repay but the market impact would be so destablizing to our economy, it would not be worth doing.
Suplement:
If the real question is about Open Market Operations see the Federal Reserve website on monetary policy:
http://www.federalreserve.gov/paymentsys...
Surprisely very little would happen.
Today by law, all 'profit' from the Federal Reserve is given to the Treasury. That means that the Federal Reserve already returns 90% of the interest it receives on T-bills to the Treasury. Last year, it retained only $2.9B of the debt interest to cover dividends and expenses.
But the interest is still the primary source of income of income for the Federal Reserve. so it would have to come up with some other way to cover the $2.9B in expenses.
The short quick answer is that if the Treasury stopped paying interest to the Fed, that $2.9B would be covered in increased user fees and taxes from (guess where) the Treasury.
However, the Fed might then turn to buying other types of interest bearing bonds such as munis. Then the Treasury would have to sell bonds to parties who do not return interest.
So you think about it, with the Fed returning 90%+ of the interest earned, that's the best deal the Treasury gets on any T-bills sold.
"Anyone have a link, showing what law, bill or agreement that shows the fed is to return 90% of the profit?
Who audits their books, to verify the profit they claim?
Who keeps the 10%?
Anyone with exact numbers?"
No problem. The Federal Reserve System is regulated by TITLE 12, CHAPTER 3 of the U.S. Code. http://www.law.cornell.edu/uscode/html/u...
http://www.law.cornell.edu/uscode/html/u...
BTW, the Federal Reserve only holds about 7% to 9% of the total debt. This can be verified by looking at a couple of reports. First, we'll look at the Treasury Bulletin. Inside of the bulletin, there is a document titled, "Ownership of Federal Securities". On the last page, it indicates that for the quarter ending Mar 2007, the total debt is $8.9 trillion. Of that amount, $4.58 trillion is held by the Federal Reserve and other Government accounts.
http://www.fms.treas.gov/bulletin/index.
To determine how much is held by just the federal reserve, we can look at the history of the public debt at http://www.treasurydirect.gov/np/npgatew...
There, it tells us that the intragovernmental holdings is about $3.8 trillion. Subtract that from the $4.58 trillion amount in the treasury bulletin, that leaves about $780 billion held by the Federal Reserve. Divide $780 billion by $8.9 trillion and that equals about 8.76%, which is within the range I mentioned earlier.
The amount that the Federal Reserve system keeps goes to pay expenses and dividends. The dividends are paid to the member banks so they can pay expenses. Also, a small amount is put into a surplus account for stabilization of the system.
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