[Occupymendocino] FractionalReserve Banking and the Federal Reserve

[agnes at mcn.org]

www.nolanchart.com/article10049-lets-nationalize-the-federal-reserve.html

One of the most common misconceptions that most Americans have is that the
Federal Reserve is actually an agency of the government, but that could
not be farther from the truth. This excerpt from the Fed’s own website*
tells you all you need to know regarding who’s really in charge and whose
interests the Fed is really concerned about:

"The twelve regional Federal Reserve Banks, which were established by
Congress as the operating arms of the nation’s central banking system, are
organized much like private corporations – possibly leading to some
confusion about "ownership." For example, the Reserve Banks issue shares
of stock to member banks. However, owning Reserve Bank stock is quite
different from owning stock in a private company. The Reserve Banks are
not operated for profit, and ownership of a certain amount of stock is, by
law, a condition of membership in the System. The stock may not be sold,
traded, or pledged as security for a loan; dividends are, by law, 6
percent per year."

So, what we learn is that the Fed, by their own admission, is currently
structured as a privately owned banking cartel that has an obligation to
its shareholders first and foremost. So, now the question that we must ask
is this; how does the Fed turn a profit? Once again, the answer can be
found on the Fed’s own website:

"The income of the Federal Reserve System is derived primarily from the
interest on U.S. government securities that it has acquired through open
market operations."

The "open market" operations by which the Fed acquires Treasury Securities
is the way which the Fed expands the monetary base; by issuing electronic
"money" to the U.S Treasury Department, who then print the currency and
circulate it while exchanging Treasury securities for the "right" to use
these Federal Reserve notes. It’s no coincidence that the interest the U.S
government is charged for the right to circulate each dollar is at 6%, the
same rate of interest the Fed is obligated to pay its shareholders in
dividends. Now, the Fed tries to cover up this gruesome reality in many
mischievous ways:

"After it pays its expenses, the Federal Reserve turns the rest of its
earnings over to the U.S. Treasury."

Don’t be fooled by this; this is only the profit the Fed makes off the M0
money supply (total amount of physical currency in circulation), which
totals about $2.6 trillion. The rest of the money in circulation is
created by a process known as fractional reserve banking, by which the
Federal Reserve and their member banks create new money by issuing
electronic loans that are about 10 times greater than the actual physical
supply of currency in reserve. In other words, if you go to the bank and
deposit a $100, the Fed and their member banks can create new money by
issuing a loan of about $190 to the next customer, so long as they remain
within the Fed’s 10:1 ratio. The Federal Reserve does not have to turn the
profits made on this money over to the Treasury Department, which is why
$1.4 trillion dollars of our national debt is owed to, you guessed it, the
Federal Reserve. This number will only continue to get higher if we
continue with this financial system. The Federal Reserve is a perpetual
debt machine and as long as it remains in the hands of private bankers, we
will never pay off the national debt.

Despite the gruesome reality of the very structure of our current Federal
Reserve System, the recent statistics above show that central banking can
indeed play a positive role in stimulating economic recovery. So, why
don’t we nationalize the Federal Reserve? After all, if we manage to
nationalize the Federal Reserve, we can instantly reduce the national debt
by $1.4 trillion dollars and, more importantly, begin issuing debt-free
money. The U.S would once again gain the ability to coin its own money
like the Constitution intended and we could finally begin paying off the
national debt while maintaining our promises regarding Social Security,
Medicare, and other entitlement programs. Let’s take back our country,
let’s end the cycle of debt. Let’s nationalize the Federal Reserve.

*This excerpt originally appeared on the Federal Reserve's website, but
was later removed.