Billions of Dollars pumped in overnight? Where is it coming from?

by restrangled 76 Replies latest jw friends

• 

  restrangled

  What I gathered was the Fed's release banks from having to hold on to the current minimum cash requirements, which allows them to loan out more cash reserves.

  From: http://www.msnbc.msn.com/id/20218020/

  One of the broadest tools the Fed can apply to the supply of money in the system is raising or lowering the amount of reserves that banks are required to hold in their accounts. Raising reserves means banks have to hold onto more money, which tends to tighten credit. This works fine as long as the borrowing you’re trying to manage is coming from banks. These days, much of the credit at the center of the current financial turmoil is coming not from banks but from the global money markets, where bonds are bought and sold and the market sets interest rates.

  That’s where the other two main weapons in the Fed’s arsenal come in: 1. raising or lowering short-term interest rates and, 2. what are called “open market” transactions.

  Setting interest rates is the most visible and important tool because it essentially sets the “wholesale” cost of money. If you make money cheaper, it tends to move more quickly through the system. So if the economy is sluggish, a rate cut perks things up. If the economy is strong, raising rates is supposed to prevent the economy from picking up too much speed. Under those circumstances, too much money in the system feeds inflation.

  Open market transactions are more limited, but have a more immediate impact. That’s why the Fed turns to these when the financial markets get into trouble, as it did on Friday. The specific mechanics of open market moves are pretty simple.

  The Fed operates a trading desk in New York through which is can buy or sell bonds. If it buys bonds, the broker-dealer that sold them gets cash in return. That cash then flows through the system. If the Fed wants to soak up money, it sells bonds from its account — taking cash from the dealer that bought them and taking it out of the system (or "draining" money.) The Fed maintains its own account, so any money being “injected” into the system is not coming directly from the tax dollars collected by the Treasury.

  Considering that the Federal government is in debt for more than 9 Trillion dollars..(as of March 2008) isn't this just playing with cash that really doesn't exsist? They allow the banks to deplete their cash reserves for loans, they don't get paid back and then the Fed has to bail them out?

  I know this is over simplified, but in the end isn't this what is happening? Similar to using one credit card to make a payment on another, or gambling in Las Vegas.

  Does anyone have a better understanding of all of this?

  r.
• 

  daniel-p

  They're all "playing with cash that doesn't exist." Banks lend money that doesn't exist in order to acquire real assets. That's the game that runs the world.
• 

  drwtsn32

  The feds print more money...increases rate of inflation. The national debt increases...it's just more money we will have to pay through taxes. I also dislike the "tax relief" checks... the government can't just pull money out of its ass; they get all their money from taxpayers. That means we're just going to have to pay it back later one way or another.
• 

  Brother Apostate

  The Federal Reserve (The Fed) is not:
  

  - Federal (It is privately owned by many of the world's Billionaires)
  - Reserve (They pay $0.02 for each note they tell the Treasury Department to print, be it a $1.00 note, or a 5, 10, 20, 50, or $100.00 note. They then charge "the Federal Reserve rate" (currently around 2%)in interest on that money.)

  In other words, the create money of thin air, "Fiat Money".

  Once the money is printed, say, 10 billion dollars, it is then portioned up to the five (actually 12) regional Fed Reserve banks. Let's say each gets 2 billion to keep the math simple. Each of the five regional Fed Reserve banks can then make loans to all the US banks in the amount of 10 times what they have on deposit, so in this case, each of the five regional Fed Reserve banks can loan out 20 billion to all the US banks.

  Now, all the US banks can loan out 20 times what they have on deposit.

  To summarize, the "Fed" pays 2 cents to print each note, and in the end, loans are made by banks that total 200 times what has been printed.

  In other words, it's a ponzi scheme. It is also unconstitutional. The elite Billionaires paid three senators to stick around and sign the bill after all the other senators left for Christmas break in 1913.

  There's nothing behind the currency but faith.

  Oh, and by the way, your dollar just got seriously devalued by the bailing out of AIG, Fannie Mae, Freddie Mac, etc.

  Plan on roughly 1,000 banks failing by the end of 2009.

  BA- And that, folks, is the truth.

  PS- I forgot to mention that these crooks at the Fed get paid that interest on the money they told the Treasury to print. Yes, the Fed, a privately held corporation, owned by the elite, gets PAID interest on all these transactions. Most of the Federal debt is paid to BILLIONAIRES. Don't ya love it?
• 

  snowbird

  True that, Brother Apostate.

  Interestingly, the Democrats were in favor of the creation of a Federal Reserve System.

  I think this is just the beginning of pangs of distress. Who said that?

  Sylvia
• 

  BurnTheShips

  Where is it coming from?

  Very good question.

  Answer.

  Out of thin air.

  I started a thread on the subject.

  http://www.jehovahs-witness.com/14/165552/1.ashx

  Here is a video that explains it very well, if you have the time.

  http://www.youtube.com/watch?v=iYZM58dulPE

  This is why we are in so much trouble. You can't get something for nothing. I am somewhat of a hard money advocate--you can't make gold.

  BTS
• 

  BurnTheShips

  Oh, and by the way, your dollar just got seriously devalued by the bailing out of AIG, Fannie Mae, Freddie Mac, etc.

  Probably. But at least in the case of AIG, the 18 billion dollar loan has an 11% interest rate. Also, the Feds are holding 80% of AIG as collateral. AIG is a trillion dollar company, so that is good security. The Feds might actually profit off this in the end. Let's hope so.

  BTS
• 

  restrangled

  Brother Apostate:

  I looked up what you said and it seems to be very true..... for those doubting see the following link.

  http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm

  I'm not a big fan of Keith Olbermann on MSNBC, but he was really nailing Rupert Murdoch for saying it was good for these banks to be suffering losses. Perhaps he is one of the owners of the Federal Reserve.

  Frightening stuff!

  My mom and Dad grew up during the Great Depression. Their Mantra was pay off your home as soon as possible and stay out of debt. They kept their money out of the stock market. They followed their own advice. My father is gone but my mom at 74, is very financially secure....home paid for and no worries of losses in the market.

  r.
• 

  SacrificialLoon

  you can't make gold.

  I know the secret to making gold.

  First you need lots of hydrogen, then you let gravity take over and form a star much larger than the sun. Cooking time will depend on the size of the star, the larger the star the less time needed, figure a few tens of millions of years. Once the star goes nova you can harvest the gold from the debris. It's simple!
• 

  BurnTheShips

  I'm not a big fan of Keith Olbermann on MSNBC, but he was really nailing Rupert Murdoch for saying it was good for these banks to be suffering losses.

  Murdoch is right, these banks made bad decisions, they should pay the price. Loss and failure. This is how the market punishes. It rewards success (profit) and punishes failure (loss). When there is the perception that the government will bail you out of your stupidity, this only encourages more bad decisions. We have separation of Church and State in this country. We need separation of Money and State. Before 1913 there was no Federal Reserve, and neither were there these deep depressions. Control of the currency and banking is used as a tool of state power. Guess what, it is real hard to finance unnecessary wars when you can't print your own cash.

  Their Mantra was pay off your home as soon as possible and stay out of debt. They kept their money out of the stock market. They followed their own advice. My father is gone but my mom at 74, is very financially secure....home paid for and no worries of losses in the market.

  Good mantra. The key to happiness: LIVE WITHIN YOUR MEANS.

  BTS