Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Federal Reserve System Cliff Notes

admin by admin
August 28, 2011
in Uncategorized
0
0
SHARES
9
VIEWS
Share on FacebookShare on Twitter

printingmoney-tbi by Guest Author Roger Erickson

Let me try to explain the origins of an increasingly bizarre and buggy system in need of complete overhaul. In 1913 congress outsourced to the quasi-private Fed – our Central Bank, or “CB” – the responsibility for monitoring and managing an equitable supply of currency nationwide.  Up to this point money in the U.S. had been a mix of private bank notes and government-issued notes.  Under the new CB system and all others like it, public governance accounts for public finances by creating currency and injecting it into a double-entry accounting system, but only as a one-sided entry. This then requires inventing ways to drain the inevitable “bank reserves” created as a consequence of double-entry bookkeeping – the Holy Grail of banking methodology.

Such bank-reserve drains typically take the arbitrary form of pretending to “sell” Treasury Security bonds to the CB, to mitigate the consequence of injecting single entries into a double-entry system.

As an arbitrary method of paying the salaries of the private CB staff doing the actual bookkeeping, an extra surcharge is added to the Treasury Securities, making the bonds, in effect, interest-bearing.   The size of that surcharge has sometimes been fixed by Congress, and sometimes allowed to float at auctions where our Fed re-sells the bonds to it’s private bank members instead of simply holding them in house.

These comical arrangements led to instances where the surcharge earned by the Fed grossly outraced public decency of salaries, triggering the bizarre “solution” where net fiat currency “profit” earned by the Fed yearly is “returned” to the U.S. Treasury, the issuer of fiat currency – untouched and unused by the public!   Surely all agree that a fiat currency issuer has no need to receive it’s own fiat as pretend revenue – or fiat profit!  To legends of Emperors without clothes, we may add, courtesy of our Fed, the legend of Fiat Issuers without Fiat Profits (or with, if you prefer; it hardly matters).

To streamline this comical scenario, couldn’t the Central Bank accountants – who were once required but are themselves now replaced by spreadsheets – simply be salaried employees in a department of the Treasury Agency?  And, couldn’t the pretend “bonds” required to satisfy double-entry accounting methods simply bear zero-interest?  Bingo!

Why wasn’t that simple scenario pursued from the start?  Habit, lack of imagination, and, certainly most importantly, the self-interest of an active banking lobby accustomed to salaries much higher than those of public servants.

By current bizarre practice standards, the only way to acquire the currency surcharge to pay off the invented public bonds, with interest, is to sell extra public bonds to the Central Bank.  This entirely explains the so-called national debt, and why that dimensionless number grows constantly.  It is a semantic oddity arising entirely from archaic design – in short, a system bug.

Debt is actually a completely incorrect name for it.  What that number actually represents is the accumulating difference between the amount of fiat currency that’s been put into circulation and the amount that’s been taken back out via taxes.  It’s not ‘owed’ to anyone, it’s just the accumulating record of fiat currency supply growth required by a $US-using population (foreign & domestic) growing in both size and per capita transaction rate.

Astute readers could come up with endless, far leaner, more elegant, ways of handling public accounting for public fiat currency supplies, but that’s a topic I will leave to others to explore.

Related Articles

Casting Sunlight on the National Debt Fraud by Roger Erickson

Coin Seigniorage: One Solution to Debt Ceiling by Joseph M. Firestone

Coin Seigniorage and Inflation by Scott Fullwiler

Understanding the Modern Monetary System by Cullen Roche (at Pragmatic Capitalism)

Money and Trading 101 by Stephanie Kelton

A Bum Debt Deal – The Morss Antidote by Elliott Morss

Bank Capital is Illusory by Raihan Zamil


Previous Post

Rare Japan CPI Rise in July

Next Post

The Week Ahead: A Deluge of Data

Related Posts

Riot Blockchain’s BTC Mining Productivity Lost 28% YOY Amid Record Texas Heat
Business

Riot Blockchain’s BTC Mining Productivity Lost 28% YOY Amid Record Texas Heat

by John Wanguba
August 8, 2022
Musk Challenged Twitter CEO To Public Debate On Bots
Business

Musk Challenged Twitter CEO To Public Debate On Bots

by John Wanguba
August 8, 2022
BlackRock Partners With Coinbase
Business

BlackRock Partners With Coinbase

by John Wanguba
August 7, 2022
Bank Of Thailand To Unleash Retail CBDC Pilot
Economics

Bank Of Thailand To Unleash Retail CBDC Pilot

by John Wanguba
August 6, 2022
Obscure Fintech (AMTD Digital) Reaches $310B Valuation In GameStop-Style Explosive Surge
Business

Obscure Fintech (AMTD Digital) Reaches $310B Valuation In GameStop-Style Explosive Surge

by John Wanguba
August 5, 2022
Next Post

The Week Ahead: A Deluge of Data

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China Coinbase crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum finance funding inflation investment market analysis markets Metaverse mining NFT NFTs nonfungible tokens nonfungible tokens (NFTs) price analysis regulation Russia social media technology Tesla the US Twitter

Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Riot Blockchain’s BTC Mining Productivity Lost 28% YOY Amid Record Texas Heat
  • Musk Challenged Twitter CEO To Public Debate On Bots
  • BlackRock Partners With Coinbase

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish