Punchinello’s Chronicles

March 27, 2009

We’re Co-Signing on Federal Reserve Loans?

Filed under: Surely a Jest? — Punchinello @ 4:03 am
Tags: , ,

I was listening to Coast-to-Coast tonight, hearing from Andre Eggelletion all about the Federal Reserve System. That’s “The Fed” to most of us who hear about things on the news at the top of the hour. Frankly, I’ve never paid much attention to the Federal Reserve. Actually, none at all.

I took out a $1 bill and really looked at it. By gosh, it’s issued by none other than the Federal Reserve! So what is this thing?

I’m still not sure. It’s a semi-private organization, basically the Central Bank of the United States. But nobody really reports to anyone in the government. Oh, there’s “oversight” by some congressional and senate committees, but what if the people running the Fed (Board of Governors) don’t feel like explaining anything?

Nothing we can do about it.

Then I got to looking at how the Fed controls our money system. In fact, the Federal Reserve tells the US Treasury that it wants X amount in money (coins and bills). The Treasury, through the US Mint, creates those coins and money. They sell it to the Fed, and charge only about 4-cents/dollar for the labor and work.

Now all this X amount of money goes into the bank. That’s the Federal Reserve bank. When my bank needs new money, it gets it from the Fed. When I go and get $10 from my bank’s ATM machine, it spits out Federal Reserve notes.

What’s that money backed by? Nothing, really, other than some sort of vague calculation as to how much the Gross Domestic Product (GDP) is rumored to be. At the moment, the entire US is worth about $51-trillion. At least that’s what somebody at the Federal Reserve calculates. Who, and how do they make that calculation? Who knows?

Oh, and by the way, the New York regional Federal Reserve bank holds about 80% of the loans and other stuff in the overall balance sheet. That means that whatever was or is majorly important in New York (like Wall Street), somehow is sucking money out of the Federal Reserve System.

How or what? Nobody knows. It’s a mystery.

Good stuff. So now I know that my money isn’t really American money. It’s Federal Reserve notes, theoretically guaranteed by the US economy.

Then I figured I’d go see how much money currently the Feds have “lent” to somebody. Who? Nobody knows, it’s a mystery. When Congress asked Federal Reserve Chairman where this money went, Ben Bernanke pretty much told them to take a flying leap. He doesn’t have to report to anyone, so “Nobody’s the Boss of Me” was the main idea.

But could we at least know how much?

$11.6 Trillion Dollars!

Holy Crap! I thought we were dealing with only about $2-3 trillion from the bailout packages and junk? Apparently not.

When the Fed decides to lend money to other banks and companies, it basically is saying that we, the taxpayers, are going to guarantee that loan. That means you and I co-signed on the loans. We’re liable for that money if it doesn’t get paid back by “whomever.”

I think I’m gonna have to read a book about the Federal Reserve. It’s so weird, so complicated, and so incomprehensible, it’s nervous-making. If 12 people can set the total amount of money floating around in the entire economy, and they don’t report to anybody, what then?

Well, I guess then they’d be like the Illinois Tollway Authority. They’re not elected either, and nobody controls any of the decisions they make either. So what, the entire United States is being run by, like, 50 people who nobody knows and who don’t report to anybody? Yikes!

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