Treasury Securities, National Debt and the Federal Reserve?
If you search the internet these days, you hear a lot about our national debt and how the Federal Reserve is ripping off the American public. Most of these articles say that when the US government needs to borrow money, it goes to the Federal Reserve who prints money out of thin air (or uses accounting tricks) and lends it the US government at interest. I thought the US debt was created thru the sale of treasury securities in an open market. Are these people just trying to spread disinformation, or does the Fed really do this in some form or another? ex. Issuing treasury securities that are transferred to a member bank at no cost.
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Tagged with: accounting • disinformation • federal reserve • member bank • money • national debt • thin air • treasury securities • us government
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They really do it! That is why the US is in debt way over it’s head
The "Fed" really does this. The federal reserve is about as federal as federal express. There is no money in America, only debt. Your dollar "bill" is a federal reserve "note" not money. Bill and note are both evidence of debt. The whole "world" is helping the USA with the creation of these debts. Why do you think China is "letting" its people own land through debt financing? Look in the US Code and you will find the definition of money to be "gold and silver coin" as related in the constitution of the US. Woodrow Wilson, in 1913, sold you into slavery (you just think you are ‘free’).
The more you have of these "dollar bills" the farther in debt you are, as you are the one that needs to eventually pay these back to the Federal Reserve. After all The Federal Reserve owns each and every one of the bills. They put their name on each one.
The people who’ve answered this question so far are completely wrong. The Federal Reserve controls the supply of money, but has nothing to do do with the debt, or the debt-ceiling. Both of these are controlled by Congress. Here’s how the system works.
The Federal Reserve has a sworn enemy: INFLATION, which can be defined roughly as "Too many dollars chasing too few goods." To keep inflation in check the Fed controls several key interest rates. When they wish to put the brakes on the economy, and slow the progress of dollar creation, they raise interest rates. Thus, it costs customers more to borrow money from banks. As economic activity slows, dollars "dry up," and the money supply returns to a more stable level.
Contrary to popular belief, the Fed does not create money, it only creates dollar bills. The actual money supply is created by people who borrow money. Let’s say you borrow $1,000, and with interest, you pay back $1,250. Your borrowing actually created $250 of monetary value. You did this, not the Fed. The government does not borrow money from the Fed, because the Fed has no money to lend. When government borrows money, it borrows it from private banks, foreign governments and investors who purchase government securities. Part of this borrowing is from the American people, and since the 1980s, a larger percentage has come from foreign governments and investors who purchase American T-Bills.
The Fed has nothing whatsoever to do with borrowing or the debt. These things are entirely controlled by Congress which must authorize the sale of securities. The debt limit is set by Congress.
Sad, very sad.