How The Evil Federal Reserve REALLY Works

[SnerpGoodWord]

Originally Posted by Brutha

$1.4 billion isn't "nothing" but much more money flows through 1) and 5).
In a perfect world I don't think those $1.4 billion should be payed to the banks but it's not a sum of money that's a really big deal.

It's definitely an odd policy - the entire concept of having Fed member banks buy non-voting Fed stock really isn't a necessary part of the system.. It's just a political holdover. In most economic circumstances the member banks would rather be rid of the Fed stock since their target return on capital is > 6%. That's why banks try to avoid being federally chartered in the US if possible.

However, if you're going to force them to buy Fed stock, the dividend seems like reasonable compensation. It's really buying the stock in the first place that's unnecessary.

[Brutha]

It's really buying the stock in the first place that's unnecessary.

I agree on that point.

In most economic circumstances the member banks would rather be rid of the Fed stock since their target return on capital is > 6%.

As the government get's it's money for less than 6% the government should also be happy to get rid of the rule. If the banks really wanted to they probably could get rid of the rule.

[SnerpGoodWord]

Originally Posted by Brutha

I agree on that point.
As the government get's it's money for less than 6% the government should also be happy to get rid of the rule. If the banks really wanted to they probably could get rid of the rule.

I think it's just one of those government oddities that everyone has to agree is silly, but it's not worth messing with. I can understand reluctance to mess with the structure of the Fed - with public understanding at a seeming low, and lots of active disinformation occurring on the internet, it would be dangerous to open up the topic.

[Brutha]

I can understand reluctance to mess with the structure of the Fed - with public understanding at a seeming low, and lots of active disinformation occurring on the internet, it would be dangerous to open up the topic.

At the end maybe all the members of the FOMC would be appointed by the president.
Nobody would want that to happen, wouldn't they?

[SnerpGoodWord]

Originally Posted by Brutha

At the end maybe all the members of the FOMC would be appointed by the president.
Nobody would want that to happen, wouldn't they?

I wouldn't be so concerned about that - the FOMC chair has carried every single vote in the past 30 years. So there's only one appointment that matters, and the president already makes it.

What would concern me is some sort of attempt to change the basic method of FOMC operation - go to a target money supply instead of a target inflation & growth number, for example. I'd also be worried about what would happen to the Fed's bank regulatory function. While it hasn't been very good in the last 5 years, I could envision it being far worse.

[Spinoza]

Originally Posted by Brutha

Those $1.4 billion are money that Snerp mentioned under 3): "paying dividends to fed member banks"

$1.4 billion isn't "nothing" but much more money flows through 1) and 5).
In a perfect world I don't think those $1.4 billion should be payed to the banks but it's not a sum of money that's a really big deal.
I don't want to explore all the points in this thread. I have written about them in the past on this forum.
A simple solution that would be to replace the current US central bank with something that looks like the pre-Euro Bundesbank with the transparency rules of the Japanese central bank.

Hmmm..Ill admit here I'm not an expert in anyway shape or form with how the pre-Euro Bundesbank worked but from reading the wikipedia entry it doesn't seem significantly different from the Fed. Is there some structural difference that is notably important? Transparency is always good and I agree more is better. Is the Fed doing somethings that isn't very transparent? Is there insider information being inappropriately used?

[Brutha]

I wouldn't be so concerned about that - the FOMC chair has carried every single vote in the past 30 years.

That's his job, isn't it? Even when he disagrees in private he is supposed to be publically defending the decision of the board.
The FOMC chair would lose a lot of his reputation if he would openly oppose the FOMC decisions.

Is there some structural difference that is notably important?

You don't have regional banks like the New York Fed where a majority of the board votes comes from people who are chosen by banks instead of being chosen by someone who's democratically legitimated.

Transparency is always good and I agree more is better. Is the Fed doing somethings that isn't very transparent?

It's giving trillions in dollar as loan for low interest rates to publically unknown organisations while using publically unknown criteria to determine which organisations are elligible to get how much money.

There some justification for not releasing data about troubled institutions who need credit immidieatly.

There however no good justification for refusing to release such data with a time delay.

When looking back into the past I don't know whether the FOMC chair who was active 20 years ago spoke in favor of the decision inside the FOMC that it took 20 years ago and then publically defended the decisions of the FOMC or whether he supported those decisions internally.

There no publically available information that allows me to judge whether those 12 FOMC votes matter or whether it's chair makes all the decisions in practice.

If I remember right the Japanese Fed releases such information with a 10 year time delay.

I'd also be worried about what would happen to the Fed's bank regulatory function. While it hasn't been very good in the last 5 years, I could envision it being far worse.

What kind of decisions do you think they will mess up?

What would concern me is some sort of attempt to change the basic method of FOMC operation - go to a target money supply instead of a target inflation & growth number, for example.

While such a change would probably be bad I don't see the danger of congress passing it. It's technical and there are a lot of lobbist running around in Washington to explain why it may be bad.

I'd also be worried about what would happen to the Fed's bank regulatory function. While it hasn't been very good in the last 5 years, I could envision it being far worse.

Could you give examples?

[Still Growing]

Originally Posted by SnerpGoodWord

There's error number two. The Federal Reserve is in fact federal - it's created by federal law passed by congress (the Federal Reserve Act, the text of which you can easily find by googling).

This subject of whether the "Fed" is private or not is quite confusing. I see both superfoodist and also your points. When one says "Federal Reserve" its important to understand which Federal Reserve you are talking about. The Bank or the Board.

The Federal Reserve Bank of New York which is the Central controlling Bank of the Private Federal Reserve banking system is: FEDERAL RESERVE BANK of NEW YORK
The Federal Reserve Board of Governors or federalreserve.gov is a government institution and oversees the private Federal Reserve banking system.

Most critics of "The FED" are talking about the Federal Reserve itself. The non critics are calling "The FED" the board of governors.

My viewpoint is the Federal Reserve is the bank. The term itself indicates that there is money being held in reserve and therefore is the backing of the US Dollar. A board of governors are an oversight group that is supposed to regulate the "Private Federal Reserve" system.

I've watched countless biographies on JP Morgan, read Ron's Paul's book, listened to Congress debates, gathered info from the Wall Street Journal and done quite a bit of research on this subject.

What makes it more confusing is that the Federal Reserve Bank of NY is not a C Corp, an S Corp nor an LLC. The Federal Reserve Act of 1913 basically gives them special classification that makes sure that they cannot be audited by the IRS but it also gives them protection from the intrusion that would come from being a governmental entity.

If you come to the realization (and the simple fact) that our Federal Reserve Bank is private then ask yourself "Who are the owners and what do they have to gain from being owners if not profit?" Influence possibly?

One argument is that these private banks which are members of the private Federal Reserve banks operate as a "banking cartel" and that they influence the flow of capital and since they have a seat on the Board of Governors they also influence the interest rates. Certainly you can see the possible conflicts of interest that could arise.

If you look at the latest banking fiasco involving US housing, did anyone gain out of this mess? Well Goldman Sachs benefited by derivatives and now one of the managing partners is the new president of the private Federal Reserve central bank. William C. Dudley
Coincidence? What if you found out that Goldman's owned shares of the NY Fed, would this be a conflict of interest?

If you do tons of research on this subject you will find more and more evidence to support that something is off with the US system. Whether its the topic of campaign finance reform, how the FDA operates, our private Federal Reserve, our two party political system, the revolving door between the private and public sector. Was it a coincidence that Halliburton won the Iraq war GC role with Dick Chaney as the former President of Halliburton and then becoming VP of the US? Coincidence?

I own several large businesses and I travel a lot around the world. I feel that I have a good understanding for business and also my news sources are very broad. The entire world discusses these topics but the topics are rarely discussed in the US mainstream media. What if you found out that the media companies had huge blocks of shares owned by the same owners of the fed? I can't say they are as a fact but I also cannot say that they aren't. Does GE Capital own shares in the Federal Reserve? I don't know, if they did I think it would be a conflict for them to also own NBC in my humble opinion.

Maybe Ron Paul and others in Congress are calling for the audit of the Federal Reserve not to find their profits but to find out who they are owned by... Interesting if you think about it. My opinion is that the Federal Reserve will never be audited in our lifetime... Who has the authority to audit them? Obama. Would Obama cross Goldman Sach's when through Goldman Sachs employees they donated over 1 million to Obama's campaign?

With all I've just said above against the private Fed, I now come to the question "If the US government ran the Federal Reserve Banks, would they do any better?" So there you have it. Where do we go from here? Business as usual of course.

[SnerpGoodWord]

Originally Posted by Still Growing

Most critics of "The FED" are talking about the Federal Reserve itself. The non critics are calling "The FED" the board of governors.

This distinction, while more nuanced, is still in error. The monetary policy being engaged in by the Fed is controlled by the board, and by the FOMC which is dominated by board members. When the Fed expanded the monetary supply with so called "quantitative easing" that was a decision made by the board. The actual implementation was done by traders working for the New York Fed's open market desk, who in turn contracted it out to the primary T-bond dealers. But the decision rested with the board, and realistically with the chair since the chair always carries board/FOMC votes.

The distinction you are making is only relevant if you confine your objections to Fed actions that do NOT appear in the minutes of the board/FOMC. And you're not going to find many of those.

In addition, there are no conventional "owners" of the Fed since Fed stock does not behave like conventional stock. Ownership of a corporation consists of two things: voting control and access to dividends and proceeds of sale. The fed board has voting control. A small dividend is paid to all US banks for historical reasons, but as has been repeatedly pointed out in this thread the vast bulk of the profits of the Fed are remitted to the US Treasury. Since the voting control of the Fed is in the hands of executive appointments, and the profits of the corporation are given to the Treasury (a portion of the executive branch) it is impossible by any reasonable definition to conclude that the Fed is owned by any entity other than the executive branch if it has an owner at all.

The rest of your post is conspiracy theory nonsense stemming from those two errors.

[SnerpGoodWord]

Originally Posted by Brutha

Could you give examples?

I can give one - during the Latin American debt crisis, the Fed decided to engage in what was at the time called "regulatory forbearance" which was a euphemism for reducing the capital requirements for banks during the crisis. This turned out to be a very good decision - no money center banks failed, all involved banks were able to raise capital from private sources (no tax payer dollars were required), all losses fell on the equity stakes of firms that made bad decisions (discouraging moral hazard), and the whole thing basically blew over.

Were congress to mandate a regulatory environment more hostile to banks, it's easy to imagine a chain of forced failures and messy mergers (much like 2008) resulting from a limited crisis like the Latin debt crisis where they weren't required.

[Still Growing]

Snerp, I see how you are drawing your conclusions.. Really places like Wikipedia, for example, are misleading. Constantly on TV and wikipedia they refer to "The Fed" while talking about the entire system or the BOG. Please don't let this mislead you. Our Federal Reserve is private and IS NOT a government institution.

If you go to the Federal Reserve Bank's own website
The Founding of the Fed - Federal Reserve Bank of New York
it will tell you how they got capitalization, when they opened for business, etc. Also their Board of Directors are not government employees or elected. Board of Directors - New York's Main Office - Federal Reserve Bank of New York

I think you are confusing the FMOC or the Board of Governors which oversees the Private Federal Reserve system. Think of these as an oversight committee that work between the government and the private Federal Reserve.

When you said "there are no conventional "owners" of the Fed since Fed stock does not behave like conventional stock". This is something that you cannot say without doubt.

Ask yourself, if the Federal Reserve Bank of NY was a governmental institution then why would Congress debate on whether to audit them? On the other hand, if it were a private organization / company or whatever you wish to call it then certainly we cannot say without doubt that it has no ownership.

[SnerpGoodWord]

Originally Posted by Still Growing

Snerp, its really not a debate. The Federal Reserve banks are privately owned, they are not government entity.

This is simply false. You saying it repeatedly doesn't make it true. Both by voting control and by destination of profits, the Fed is "owned" by the executive branch of the US government. Both the composition of the board and the destination of Fed profits are matters of public record and Federal law, and arguing with them just makes you look silly.

[Still Growing]

Originally Posted by SnerpGoodWord

This is simply false. You saying it repeatedly doesn't make it true. Both by voting control and by destination of profits, the Fed is "owned" by the executive branch of the US government. Both the composition of the board and the destination of Fed profits are matters of public record and Federal law, and arguing with them just makes you look silly.

Hahahah., you're saying my statements are false and that I look silly? Throwing around insults doesn't make your arguments more valid, nor does it show that you can debate ideas without emotion.

On the Federal Reserve's website it says that its board is comprised of Class A, B and C, none of which are employees of the government. Secondly each membership bank DOES own shares in the Federal Reserve Bank of New York and receive by law 6% a year return on their investment. So there is a profit taken by private banks who own shares and this information is available through their annual reports. Plus it mentions it on the Federal Reserve's own website. Here's a list of the Board of Directors:



CLASS A
elected by member banks to represent member banks
Richard L. Carrión (bio) 2013
Chief Executive Officer and Chairman
Banco Popular de Puerto Rico

Charles V. Wait (bio) 2011
President, Chief Executive Officer and Chairman of the Board
The Adirondack Trust Company

Jamie Dimon (bio) 2012
Chairman of the Board and Chief Executive Officer
JPMorgan Chase

CLASS B
elected by member banks to represent the public

Glenn H. Hutchins (bio) 2012
Co-Founder and Co-Chief Executive
Silver Lake

James S. Tisch (bio) 2013
President and Chief Executive Officer
Loews Corporation

Terry J. Lundgren (bio) 2011
Chairman, President and Chief Executive Officer
Macy's, Inc.

CLASS C
appointed by Board of Governors to represent the public

Lee C. Bollinger (bio) Chair, 2012
President
Columbia University

Kathryn S. Wylde (bio) Deputy Chair, 2013
President and Chief Executive Officer
Partnership for New York City

Emily K. Rafferty (bio), 2011
President
The Metropolitan Museum of Art

On the Federal Reserve's website it also states "the Federal Reserve derives its authority from the Congress of the United States (via the Federal Reserve Act of 1913). It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."

So on their website they state that they DO NOT report to the Executive Branch nor the President of the United States which completely goes against what you are saying.

But I'm not going to say you look silly because I have respect for you and your argument. The things you are saying are partially true. I mean, they are not a private company in the sense that most private companies are founded so you then therefore draw an incorrect conclusion that they are governmental. The Executive Branch is over the FMOC so you then draw the incorrect conclusion that since they oversee the Federal Reserve that the Federal Reserve reports to the Executive Branch. These are all honest mistakes by your part.

I think we both can agree that the Federal Reserve is not a government entity, has private shareholders and pays dividends to private shareholders while also paying ending profits back to the government. We can also agree that the Board of Directors within the board are in fact not government employees and in no way receive salaries from the government so the Federal Reserve's day to day functions are ran by a private board while its overseen by a governmental board.

[SnerpGoodWord]

Originally Posted by Still Growing

On the Federal Reserve's website it says that its board is comprised of Class A, B and C, none of which are employees of the government.

You're looking at the wrong thing. Here is the makeup of the Federal Reserve's board, as stated in Federal law:

Federal Reserve Act, Section 10.1: (emphasis mine)

The Board of Governors of the Federal Reserve System (hereinafter referred to as the "Board") shall be composed of seven members, to be appointed by the President, by and with the advice and consent of the Senate, after the date of enactment of the Banking Act of 1935, for terms of fourteen years except as hereinafter provided...

It's very simple and clearly stated. The "board" of the New York Fed branch is not what's of interest here. The branch boards are not capable of making open market decisions (that falls by law on the FOMC, which is controlled by the Board of Governors). The branch boards make no decisions that affect the currency supply, and retain no profits. In fact, by law they can make no decisions that go against the Board of Governors. They in essence serve a regulatory function at most except for the NY Fed, which also has the open market operation desk. Now, the branches aren't irrelevant by any means, but it's far from the grand conspiracy claimed and the idea that they override the appointed governors is absurd to anyone who watches the Fed operate day in and day out, which I do. In addition, even on the local boards, the class C directors are appointed by people appointed by the president.

If you have any doubt that the Board of Governors trumps the local banks, I refer you to FRA Section 11 which enumerates the powers of the Board of Governors:

Suspension or Removal of Officers and Directors of Reserve Banks
(f) To suspend or remove any officer or director of any Federal reserve bank, the cause of such removal to be forthwith communicated in writing by the Board of Governors of the Federal Reserve System to the removed officer or director and to said bank.
...
Supervision Over Reserve Banks
(j) To exercise general supervision over said Federal reserve banks.

In other words, the Board of Governors can fire the locals at any time for any reason as long as it is stated, and exercises full supervision over them. The local boards are a red herring in this argument - they have no control over the system and serve at the pleasure of the Board of Governors.

[Still Growing]

Oh Snerp, you and I both know we are talking about the Federal Reserve central bank and then you use quotes about the BOG as evidence to prove your point. Thats using a quote out of context.

If you shift the topic then how can we be discussing the same thing?

The players here are;

1. The Federal Reserve main central Bank in New York
2. The 12 member banks under the Federal Reserve
3. The Board of Governors over the Federal Reserve system which oversee the private Federal Reserve banks
4. The FMOC which is comprised of the BOG, The NY Fed President, and 4 other member bank presidents

Again, I see how you've made your mistake.
"The Fed" is a loose term which can mean the entire system, or it can mean the BOG or it can mean the actual Federal Reserve. I see them do this on TV all the time; throwing out the use "The Fed" constantly when referring to the BOG. So you're not alone in your mistake here. The problem is too many people get into arguments online and they are both arguing different points because neither understands how the system actually works and neither even realizes that one is speaking about #1 which is a private entity and the other is speaking about #3 which is a government entity and therefore has government employees. The actual Federal Reserve does have oversight by #3 and #4 however the correct term of the Federal Reserve itself refers to #1.

As I stated earlier, taken directly from #1's website, "The Federal Reserve is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government"

You say my sourcing is wrong yet you are getting all of your quotes from the BOG website. Really its an honest mistake from someone who doesnt understand the system.

You know Ron Paul brought up the point that most of Congress doesn't even know the difference between the Federal Reserve and the BOG so should you be blamed for not knowing the difference?

You have to remember that this original system was created by JP Morgan, among others, who was financially one of the most brilliant men that ever walked this earth. Could it be that the term Federal Reserve is supposed to confuse people in order to maintain it?

There is an excellent documentary on JP Morgan you can watch on Netflix. This will give you a lot of the background and financial times that led up to the early 1900s. Also I recommend Andrew Carnegie's book by David Nassaw.

[SnerpGoodWord]

If, despite repeatedly being shown the law in question, you continue to stick your head in the ground and ignore what you've read, I guess that's your prerogative. It's silly, but there's really nothing more to be done.

Just goes to show how effective this particular conspiracy theory is as separating people from their wits.

[SnerpGoodWord]

Originally Posted by Still Growing

You know Ron Paul brought up the point that most of Congress doesn't even know the difference between the Federal Reserve and the BOG so should you be blamed for not knowing the difference?

Having read the law, I know the difference. The Board of Governors is the governing organization of the Fed. The local boards are populated by people who serve at the Board of Governors' pleasure and who can be fired at any time for any reason (as long as that reason is stated), who are supervised by the Board of Governors, and who are required by law to follow the directives of the Board of Governors and Open Market Committee.

It's all very clearly stated in the relevant law. All you have to do is read. And since I copied the law into this thread, the only excuse you have for not knowing is willful ignorance.

[SnerpGoodWord]

Another key little section of the Federal Reserve Act:

Section 12A.b

Participation of Reserve Banks; Regulations of Committee
(b) No Federal Reserve bank shall engage or decline to engage in open-market operations under section 14 of this Act except in accordance with the direction of and regulations adopted by the Committee.

In other words, the Fed banks don't do anything unless the FOMC tells them to - they can't buy or sell anything on the open market without FOMC direction.

It ALL stems from the Board of Governors and FOMC.

[Solipsist]

Section 7. Division of Earnings

Dividends and Surplus Fund of Reserve Banks


(a)

1. 1. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.
   2. The entitlement to dividends under subparagraph (A) shall be cumulative.
2. That portion of net earnings of each Federal reserve bank which remains after dividend claims under subparagraph (1)(A) have been fully met shall be deposited in the surplus fund of the bank.

Exemption from Taxation

(c) Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.

[Acting Like Godot]

Originally Posted by Still Growing

So on their website they state that they DO NOT report to the Executive Branch nor the President of the United States which completely goes against what you are saying.

I don't really know much about how the Federal Reserve is organised, but I just thought I would point out that in many countries, it is not at all uncommon for some government bodies not to report to the executive branch or to the president.

It's how democracies are run. Power is divided up according to the constitution. This creates checks and balances.

Eg the Supreme Court does not report to the executive branch nor to the President. That doesn't mean that the Supreme Court is not a government body.

[Acting Like Godot]

Originally Posted by superfoodist

If I loaned you 1$, but expected 2$ back, and I'm the only one that makes money, how would you EVER pay back the extra 1$?

Well, I guess I have to make some money too.

With the one dollar you loaned me, I'd buy some ingredients, bake a cake and sell it for $5. I'd pay you back your $2, and keep $2 for myself. $1 goes to the guy who sold the ingredients.

[Solipsist]

Section 7. Division of Earnings

Dividends and Surplus Fund of Reserve Banks


(a)

1. 1. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.
   2. The entitlement to dividends under subparagraph (A) shall be cumulative.
2. That portion of net earnings of each Federal reserve bank which remains after dividend claims under subparagraph (1)(A) have been fully met shall be deposited in the surplus fund of the bank.

Exemption from Taxation

(c) Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.

[Brutha]

As I stated earlier, taken directly from #1's website, "The Federal Reserve is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government"

The US supreme court also is independent and it's decisions don't have to be ratified by the president or congress.

At the same time I think we both agree that the US supreme court isn't a private institution but a public one.

(a) 1.
1. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.

That's the ~1.4 billion per year that we talked about above.

As far as the surplus fund goes it's not that big:
"The Federal Reserve Board’s policy of maintaining the capital surplus account at the
same level as that of the paid-in capital account has resulted in the capital
surplus account growing from $4.5 billion in 1996 to $7.3 billion in 2001.7"
In contrast to the amount of money that the Fed pay as profits to the treasury those numbers aren't that big.

You skipped the part about the transfers to the treasury.

(c) Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.

The Federal police also doesn't have to pay state taxes when it operates within a state.

[Still Growing]

Originally Posted by SnerpGoodWord

Having read the law, I know the difference. The Board of Governors is the governing organization of the Fed. The local boards are populated by people who serve at the Board of Governors' pleasure and who can be fired at any time for any reason (as long as that reason is stated), who are supervised by the Board of Governors, and who are required by law to follow the directives of the Board of Governors and Open Market Committee.

It's all very clearly stated in the relevant law. All you have to do is read. And since I copied the law into this thread, the only excuse you have for not knowing is willful ignorance.

I have also read the law and I agree that the BOG has the right to fire a board member of any private bank in the Federal Reserve system. State governments possess the right to revoke a lawyer's licence too but that doesn't mean they are partners in his firm.

We are debating about whether the Federal Reserve Bank of New York is a private entity or as you state a government entity that is directly under the Executive Branch.

Giving quotes about the power of the BOG and diverting attention away from the topic then CALLING ME IGNORANT shows nothing. I would implore you to lay off the insults, stick to the topic of conversation and debate like a mature adult rather than a child.

[Still Growing]

Originally Posted by SnerpGoodWord

You're looking at the wrong thing. Here is the makeup of the Federal Reserve's board, as stated in Federal law:

We are discussing the Federal Reserve Bank of New York which is the Federal Reserve. It is you who are looking at the wrong thing which is the Board of Governors.

Originally Posted by SnerpGoodWord

It's very simple and clearly stated. The "board" of the New York Fed branch is not what's of interest here.

You say its not of interest yet that is what we've been discussing. You simply do not understand that New York is not a branch it is the Central Bank. The other 12 member banks are branches.

Originally Posted by SnerpGoodWord

The branch boards are not capable of making open market decisions (that falls by law on the FOMC, which is controlled by the Board of Governors).

The President of the Private Federal Reserve Bank of New York has a perminent seat on the FOMC... So correct the Reserve Bank itself does not make open market decisions; however thats not the topic.

[Still Growing]

Originally Posted by Acting Like Godot

I don't really know much about how the Federal Reserve is organised, but I just thought I would point out that in many countries, it is not at all uncommon for some government bodies not to report to the executive branch or to the president.

It's how democracies are run. Power is divided up according to the constitution. This creates checks and balances.

Eg the Supreme Court does not report to the executive branch nor to the President. That doesn't mean that the Supreme Court is not a government body.

The Federal Reserve is not a government body, their employees are not government employees and they have their own Board of Directors comprised of private individuals who work for member banks who are also private.

Really this is the topic of debate between Snerp and I.

He has made a bunch of correct statements about the power of the BOG and the FOMC and then says that since they have that power that this automatically means that the Federal Reserve Bank itself is a government entity.

What is confusing is that the Federal Reserve Bank its not a corporation yet it is not a government entity. It operates in its own special designation under an Act of Congress which is the Federal Reserve Act of 1913.

[Still Growing]

Originally Posted by Brutha

The US supreme court also is independent and it's decisions don't have to be ratified by the president or congress.

At the same time I think we both agree that the US supreme court isn't a private institution but a public one.

The 12 member banks in the Federal Reserve system each own shares in the central Federal Reserve bank and they receive by law a 6% dividend on their capital investments into the Federal Reserve Bank of New York.

The US Supreme Court does not have shares and there are no dividends paid out so I'd say thats different.

[SnerpGoodWord]

I'm not joking when I say this is one of the most deep seated delusions I've ever seen

You've been presented with incontrovertible evidence repeatedly, and just ignore it and make up random garbage instead. I guess there's nothing more to be done.

[Solipsist]

Section 7. Division of Earnings

Dividends and Surplus Fund of Reserve Banks

(a)

1. 1. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.
   2. The entitlement to dividends under subparagraph (A) shall be cumulative.
2. That portion of net earnings of each Federal reserve bank which remains after dividend claims under subparagraph (1)(A) have been fully met shall be deposited in the surplus fund of the bank.

Exemption from Taxation

(c) Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.

[Still Growing]

Originally Posted by SnerpGoodWord

I'm not joking when I say this is one of the most deep seated delusions I've ever seen

You've been presented with incontrovertible evidence repeatedly, and just ignore it and make up random garbage instead. I guess there's nothing more to be done.

I am delusioned by saying that the Federal Reserve Bank of New York is a private entity and not a governmental agency?.... HA !

You have provided no evidence and ALL of your quotes come from how the BOG regulates the Federal Reserve banks. And thats your sole argument that said banks are governmental agencies?

I should say to you that its only a matter of time before you are warned by a moderator for your use of insults and personal attacks.

Even another person, Solopist, gave the quote directly from Section 7 on Divisions of Earnings "stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock"

Since when do Governmental Agencies have private shareholders?

You say its pointless to argue with me; I say you want to run because you cannot stand that I can back up my facts. You know the other person has lost an argument when they divert attention to a new topic of debate and then result in using insults and personal attacks. You have done both.

I am here if you want to keep debating but I'm sure you have nothing else new to say.
Well lets agree to disagree.

In the end, I have no personal issue with you just because you disagree with me...its really not a big deal. And I refuse to hurl insults back at you; its not the way to learn nor to grow.