@DI wrote:
The banks get it's money from the Federal Reserve. The Federal Reserve get it's money from the Government. And the Govenment get it's money from the people. And the people foot all the expenses in between.
I am not trying to be argumentative, but I do want to correct the above statement.
Banks do not get their money from the Federal Reserve. The Federal Reserve is where banks put (deposit) their reserve funds. Banks can borrow money under certain conditions from the Fed or Treasury, but the money a bank has comes from various deposit accounts, capital (equity), loans or bonds.
The Federal Reserve does not get it's money from the Government. The government chartered the Federal Reserve and gave it authority over the banking sector. In fact, the Federal Reserve loans money to the US Government. When the US Government sells bonds or other securities, it often sells a certain portion to the Fed (who holds them as assets of the Fed Reserve).
The process of the Fed buying and selling government securities is just one way in monetary policy to influence or control the supply of money and interest rates, because many things tie back to the Treasury Bill rates in the investment world, just as lending often goes off of Prime or other index rates.
All money is originated as a debt (Reserve Note), since it is not issed as a certificate of value (such as was the case when we were on the gold standard and they issued gold and silver certificates, not reserve notes). But obviously there isn't enough gold and silver to cover the supply of money, plus our economy is not commodity based any more, it is fluid and the value behind it is the same value that stocks have....the apparent economic health of the backing company. In the case of money, it is the apparent health of the US economy, the GDP, debt & surpluses, trade deficits or surpluses, etc. Money no longer represents a tangible value, but is the vehicle or carrier of transactions and really isn't anything more than Visa or MasterCard is....a form of financial instrument which allows the easy exchange of products or services, and to store those values yet to be exchanged.
@Anonymous wrote:
@DI wrote:
The banks get it's money from the Federal Reserve. The Federal Reserve get it's money from the Government. And the Govenment get it's money from the people. And the people foot all the expenses in between.
I am not trying to be argumentative, but I do want to correct the above statement.
Banks do not get their money from the Federal Reserve. The Federal Reserve is where banks put (deposit) their reserve funds. Banks can borrow money under certain conditions from the Fed or Treasury, but the money a bank has comes from various deposit accounts, capital (equity), loans or bonds.
The Federal Reserve does not get it's money from the Government. The government chartered the Federal Reserve and gave it authority over the banking sector. In fact, the Federal Reserve loans money to the US Government. When the US Government sells bonds or other securities, it often sells a certain portion to the Fed (who holds them as assets of the Fed Reserve).
The process of the Fed buying and selling government securities is just one way in monetary policy to influence or control the supply of money and interest rates, because many things tie back to the Treasury Bill rates in the investment world, just as lending often goes off of Prime or other index rates.
All money is originated as a debt (Reserve Note), since it is not issed as a certificate of value (such as was the case when we were on the gold standard and they issued gold and silver certificates, not reserve notes). But obviously there isn't enough gold and silver to cover the supply of money, plus our economy is not commodity based any more, it is fluid and the value behind it is the same value that stocks have....the apparent economic health of the backing company. In the case of money, it is the apparent health of the US economy, the GDP, debt & surpluses, trade deficits or surpluses, etc. Money no longer represents a tangible value, but is the vehicle or carrier of transactions and really isn't anything more than Visa or MasterCard is....a form of financial instrument which allows the easy exchange of products or services, and to store those values yet to be exchanged.
Very Zeitgeist of you.....all it's missing is a sinister plot to defraud the American people