Calling The Federal Reserve

[PolyNewbie]

August 1991:Otherwise, your post was a breath of sweet reason in a thread of rank gibberish.

What gibberish ? Everything I said is absolutely true. Many people just don't realize it because the education system and mainstream media keeps this hidden from public knowledge.

[Riverwind]

Which question ?

Why do mortgage rates go up when the BOC raises rates? We have plently of competition in the mortgage market in Canada so you cannot argue that the market is rigged. Answer: the BOC controls the price that the banks are allowed to charge when they create this money from nothing.

Why do bank profits actually go down when interest rates go up? If it costs them nothing to create the money then higher interest rates should mean more profit but this is clearly not the case. Answer: banks must pay the BOC for the money they create and banks only make their profit on the difference between what the BOC charges and what they can charge the consumer.

[PolyNewbie]

These central banks are not the banks you deal with. I don't know anything about how branches operate.

If you do not wish to believe that the banks create money from nothing that is fine with me. There is plenty of information on it. No one denies this fact that I have ever heard of - certainly not economists. I talked to a world class economist personally for 45 minutes a few weeks ago to confirm that my simplifications were valid.

You should stop trying to believe what comforts you and learn about the facts. This is a problem with too many people - they come up with arguements to maintain their beliefs rather than look into facts.

The fact is the central banks do create money from nothing and they lend it to you at full face value. Believe it or not. I don't care. There are enough people around who recognise that truth seekers must seek the truth from sources other than mainstream sources and that the world doesn't work the way we are lead to assume.

You should take a look at the tutorial on the Canadian Action Party website. Remember that this banking system is something under which your branches operate. Mortgage policy at different branches is far below this level. Many people that work at branches do not know how money comes into existence.

[PolyNewbie]

banks must pay the BOC for the money they create

No, they do not borrow their money from BoC. Period. That is dead wrong and its an assumption you make because it sounds good and comforts you and means you don't have to learn anything.

[Riverwind]

If you do not wish to believe that the banks create money from nothing that is fine with me. There is plenty of information on it. No one denies this fact that I have ever heard of - certainly not economists.

Banks create money from nothing but they cannot do it with impunity. Why don't you ask that same world class economist how the BOC is able to control the interest rates that banks charge? The BOC can do this - this is a _fact_ that you are ignoring. I will concede that I don't know the exact mechanism that the BOC uses to force mortgage rates up when it raises the prime rate. However, I know that there must be a mechanism because I have never heard of a bank offering mortgage rates below prime to bring in new business.

You should stop trying to believe what comforts you and learn about the facts. This is a problem with too many people - they come up with arguements to maintain their beliefs rather than look into facts.

If banks really had the ability to create money with impunity then they would be a lot more profitable than they are, they would never go bankrupt and and their profits would go through the roof when interest rates go up. None of these statements are true but they should be according to your explanation. That means your explanation is not complete. Most likely because your are omitting facts that do not support the conclusions that you want to draw.

The fact is the central banks do create money from nothing and they lend it to you at full face value.

I thought we are talking about private banks - not central banks (which are publically owned). Central banks do create and vaporize money all of the time as part of their monetary policy - no argument there. They also theoretically have to power to eliminate all gov't debt tomorrow but they don't because they know it would lead to hyper inflation. (Aside: the central bank of Japan has been vaporizing Japanese gov't debt for years because Japan had a big problem with _deflation_. It is not doing that anymore)

The BOC forces the gov't to pay interest on pubic debt because that is the only way to keep politicians honest. If politicians had access to an infinite supply of free money they would spend it. This would inevitably lead to hyperinflation. The CAP and other fringe groups don't understand the need to keep politicians in check. Fortunately, the people responsible for protecting the value of our savings do understand this.

In any case, why don't you read the BOC website. Its explainations are a lot more useful that the CAP site:

In recent years, just over $35 billion in notes has been in circulation. The interest revenue of the Bank of Canada has fluctuated between $1.7 and $2.2 billion per year. A small portion of this—$130 million, on average—has been used to finance the Bank's general operating expenses. The remainder has been paid to the Receiver General. Seigniorage revenue thus allows the federal government to finance a portion of its expenditures without having to collect taxes.

Translation: no private business benefits from seigniorage revenue. http://www.bankofcanada.ca/en/backgrounders/bg-m3.html

Commercial banks and other financial institutions provide the greater part of assets used as money through loans made to individuals and businesses. In that sense, financial institutions are creating money.

The Bank of Canada manages the rate of money growth indirectly through the influence it exercises over short-term interest rates. When these rates change, they carry other interest rates — such as those paid by consumers for loans from commercial banks — along with them. When interest rates rise, consumers and businesses are apt to hold less money, to borrow less, and to pay back existing loans. The result is a slowing in the growth of M1 and the other broader monetary aggregates.

Translation: the BOC stops the banks from creating too much money by raising interest rates. http://www.bankofcanada.ca/en/backgrounders/bg-m2.html

[August1991]

I assumed that not having a specific reserve target is not the same as having no requirement.

Too many negatives in that phrase to understand what you mean.

It appears that the BOC feels it can control the money supply by increasing interest rates so it does not need rigid reserve requirements any more. I guess this works because raising interest rates is a way to force the banks to raise their prices which in turn reduces demand for credit.

Private banks decide on their own what reserves to keep since they are best placed to decide what the reserves should be. Mulroney got rid of government (Bank of Canada) regulated reserve requirements so that Canadian banks could be competitive internationally.

The Bank of Canada still exerts control over the base money supply as before and hence influences nominal interest rates.

[Riverwind]

Too many negatives in that phrase to understand what you mean.

Banks still have to have a reserve even if the exact percentage is not required by law. If a bank lets it go too low then it would face consequences in the stock market and from the BOC.

The Bank of Canada still exerts control over the base money supply as before and hence influences nominal interest rates.

It is not clear to me how exactly the BOC exerts this inflluence. I assume it is because the BOC rate is a 'cost' to the bank which forces it to raise its prices to remain profitable.

[Higgly]

Any country's currency is a commodity. Its value is what the market is willing to pay.

The market buys currencies when it buys bonds, stocks, real-estate, and other currency-denominated assets. When the value of those rises, so does the currency. Hence the rise in the Loonie with the rise in the value of natural resources stocks and the decline in the national debt. The loonie is not rising because the US dollar is sinking. It is rising because our country has something of value to sell into the world market. It is currently a good thing to hold assets denominated in Canadian dollars. This is why there were recently so many bidders for Inco from all over the world.

Gold is really out of the picture unless you are counting on a complete economc collapse. In that case, you may be better off holding cans of tomatoes, which people can eat, although sooner or later you will need a currency - how, for example, do you trade canned tomatoes for bolts of cotton? This is the reason why gold has its greatest value in countries with primitive economies - and especially with those who have little other esources to offer - India, China, ... It may very well be that the economies which most value gold are the ones that are the least stable.

The central bank makes currency more expensive when it raises interest rates. It is staking this power on a trust that it will not print money to solve economic problems, which is why inflation becomes such a bugaboo. When inflation rises, it is because the money supply is growing faster than the supply of goods and services, so the value of the currency falls. The central bank then must raise rates to prop up the currency. Sooner or later, you are running faster than your feet can carry you.

The international money markets help guarantee that nobody can ever get away with anything, or at least it can let us know who is trying to. A central bank loses power rapidly once the currency starts to decline beyond control. At that point, extraneous resources have to be brought in to lend assets (in the form of a large loan denominated in a credible foreign currency) and prop up the system.

The major source of loans to countries in the west at the moment is the World Bank (now controlled by Paul Wolfowitz - the architect of the Iraqi invasion). Wolfowitz was appointed by George Bush junior. Wolfowitz's appointment was particularly troubling because it showed that the US was leaning more towards political and military, rather than economic, exigencies in the operation of the World Bank. Because the US provides most of the money that the World Bank loans out, this is important. If the US economy declines rapidly, or goes into collapse, the World Bank will become useless and the entire western economy will lose its backstop. This is one of the reasons that I feel George Bush is a very serious threat to our way of life.

The World Bank frequently imposes great hardship to right any given country's economical ship. Once the World Bank comes in, it is time to get out, or preferrably before that, because the World Bank may just bring about a freeze on bank deposits in which case, you lose everything you have, such as has happened on more than one occasion in Latin America.

In Europe this is done by the IMF, or International Monetary Fund. In Asia, it is supposed to be done by the Asian Development Bank.

In summation: a country's currency is that country's stock on a world-wide stock exchange. It goes up because the country's economy and prospects are rising, and it goes down because they are in decline. You can try to cheat the system, as Malaysia did in the 1990s but sooner or later some son-of-a-bitch like George Soros comes in and makes a killing off of your stupidity.

[August1991]

Higgly, that was one of the most remarkable posts I have ever read on Maple Leaf Forum.

Even Homer Simpson couldn't explain it better than you have.

[PolyNewbie]

The bank of Canada creates about 5 % of the money supply, the rest comes from a Federal Reserve bank in the US.

Canadian banking is more confusing because of this. Most of the info on money pertains to the Federal Reserve because USA is so much bigger than we are.

The point of the thread was that private banks create the currency they lend therefore banking is extremely profitable and there is a weight on our backs that shouldn't be there. The fact that we rent most of our money from private bankers rather than use government created money proves that they are in control of governments, not the other way around.

Private bankers do not protect the deposits of the Fed, the taxpayers do through the FDIC. If banks lend out too much compared to the reserves, the tax payers pay the difference to bail out the bank.

[Riverwind]

The bank of Canada creates about 5 % of the money supply, the rest comes from a Federal Reserve bank in the US.

What are you talking about? In Canada 100% of the C$ money supply is created by the BOC.

The point of the thread was that private banks create the currency they lend therefore banking is extremely profitable and there is a weight on our backs that shouldn't be there.

A point that you have failed to prove. I asked you questions about the relationship between interest rates and banks - you have not answered them.

[PolyNewbie]

Riverwind:What are you talking about? In Canada 100% of the C$ money supply is created by the BOC.

Thats not true at all. They only print the money we have in cash- coins & bills. In the 70's they printed half of it. If the bank of Canada prints the money then why do we have a national debt ? Why is the biggest expenditure out of your income tax interest ? Where did you get the idea that BOC creates all of our money?

All Western democracies are under the private central banks. I listed lots of references. I can't give you a math proof of this. I would like to see any single source that says BOC creates 100% of our money.

A point that you have failed to prove. I asked you questions about the relationship between interest rates and banks - you have not answered them.

I do not know who determines the interest rates. In the States people think the government has a say in it but it does not. The Federal Reserve determines interest rates and money supply independently.

If the bank of Canada started printing all our money we would be labeled a rogue nation by the states and likely be taken over or bombed into the stone age. Rogue nations are nations not yet controlled by the same group of private bankers. (Robert Gaylon Ross) You can find Ross' video on Google.

[Riverwind]

If the bank of Canada prints the money then why do we have a national debt ?

Eliminating the national debt would increase the money supply and would cause inflation and interest rates to go up. If the BOC wanted to increase the money supply and interest rates were already low (i.e. like in Japan) then the BOC could absorb some gov't debt. It could never absorb all of it because that would cause hyperinflation and a currency collapse.

Why do you insist on believing that it is possible to get something for nothing? Life is not like that - every action has a consequence. Increasing the money supply by elminating gov't debt would have numerous negative consequences as countries like Argentina have found out.

Why is the biggest expenditure out of your income tax interest ?

Because we elected dumb politicians in the 70s and 80s who insisted on spending more than they collected in tax revenue.

I do not know who determines the interest rates. In the States people think the government has a say in it but it does not. The Federal Reserve determines interest rates and money supply independently.

The BOC and the Federal Reserve are owned by the gov't. They are run as private institutions because their day to day operations need to be free of political influence.

[August1991]

I do not know who determines the interest rates. In the States people think the government has a say in it but it does not. The Federal Reserve determines interest rates and money supply independently.

PolyNewbie, just out of curiousity, are you referring to real or nominal interest rates here?

[Jerry J. Fortin]

95% of the money supply in Canada was in fact brought into existence as interest bearing debt. It is not hard currency as in paper and coinage, but it is in fact simply credit issued by private banks.

Monetary supply is regulated by private industry, the interest rates are set by central banks. The fiat currency which is the backbone of our monetary system has no true value because it has not been backed by hard assets since the gold standard was eliminated. What we truely have is a financial system designed to transfer wealth from the many to the few. Granted that our society has benefited from this arrangement and great advances have been made in terms of economics and productive capacity, yet society as a whole has not realized the benefits to the same extent as have the few at the other end of the scale.

Most citizens merely pay their taxes and bills and live their lives as wage slaves. There are some citizens who become part of the entrepeneurial class and achieve affluent status, but most do not. The current system is designed to provide the means of accumulating wealth through transfer.

Both the IMF and the World Bank are wholly owned private interests of US citizens. Both are designed to utilize leverage in the financial sector. There are many horror stories about the application of credit through these organizations.

There are other ways of doing things, we just need to think outside of the box.

[August1991]

Monetary supply is regulated by private industry, the interest rates are set by central banks.

I'll ask you the same question Jerry as I asked PolyNewbie.

When you refer to "interest rates", do you mean real interest rates or nominal interest rates?

[PolyNewbie]

PolyNewbie, just out of curiousity, are you referring to real or nominal interest rates here?

I'm not getting that technical. I don't know the difference between the two- and its not relevant. Look at the big picture here.

I'm trying to explain that our society is run by those who print money for nothing. I'm trying to show that because a few people can do this and our government cannot do anything about it and the fact that if gov started printing the money instead, many aspects of society would be far better - from health care to education & the media. Governemnt is something that is owned by the bankers - we know this because of how the system is set up. The elections are just a dog & pony show.

The bankers direct society through their financial powers. Rockefeller bought all the cancer clinics in the States in the 30's with his profits. They control education, medacine, as well as many other aspects of society such politicians & policy. Our society and all other Western democracies are essentially owned and operated by the bankers. We know this because our governments let them print money for nothing. The rest of us would get arrested for that. No one would willingly let them do that or vote for it.

The Federal Reserve act was signed on Christmas eve 1913, when many congress people were home for Christmas. Corrupt governments sign laws into existence when those who would object are not present. Bush does a lot of this late at night in congress.

Wars since the end of ww2 have been fought so that the IMF can impart the same degree of control over other societies. The war in Haiti is nothing more than an attempt to install a central bank and a corrupt government so that our private bankers can collect income tax from Haitians.

We have put currupt governments in both Haiti and Afganistan for this reason. Its common knowledge that the installed governments after these wars are often war criminals. They throw out legitimate governments for the people to install brutal dictators. And people think the wars are about freedom when in reality they are about enslaving foreign populations.

People need to wake up to the fact that we are one of the most controlled societies that ever existed. The Chinese want to put a TV in every home for the same reason. We are not free but we are rich because of an abundance of resources, not because we have governments "for teh people by the people". We have bankers and governments for bankers by the bankers.

It doesn't matter who wins the next election in USA. Rockefeller sponsors both parties. We had a fake terror attack when Clinton was in power. There is absolute undeniable proof that Oklahoma was an inside job - they found 3 other bombs inside the building that didn't go off as shown in police &fire reports as well as local mainstream media!!!

Soon we will have Internet 2 because the truth is comming out on the internet and the oligarchy doesn't like the fact that a large number of people know about the planned mass executions and have seen videos on the rail linked FEMA camps that have gas furnaces and gas systems used for aphyixiation. This has been shown by multiple independent journalists yet people are conditioned not to believe the truth. Chomsky said "tell the truth and it sounds like you are from Neptune".

[Higgly]

Higgly, that was one of the most remarkable posts I have ever read on Maple Leaf Forum.

Even Homer Simpson couldn't explain it better than you have.

Sure it is. And your point?

[Charles Anthony]

I'm trying to explain that our society is run by those who print money for nothing.

That is wrong.

The money supply can not be controlled nor regulated by any agent. The central banks can have a major influence by the actions they take -- but not control.

Let me illustrate a simple example whereby growth of money is out of the hands of the central bank: home equity loans.

Pretend I bought a house for $100,000 three years ago and now I get a home equity load. A bank gives me a line of credit worth $75,000 from which I draw credit and I spend money. One year later, the prices of houses in my neighborhood double and then they triple in the next year. Now, my house is worth $300,000 on the market. My bank increases my credit to $200,000 and I spend more from this line of credit. The real money supply has increased and the central bank could not stop us.

Try to extrapolate this simple example to outside the real estate market and consider all of the industries are able to do similar things but in much more complicated manners. It is foolish to say that a central bank can control or regulate the money supply in modern economies.

[Higgly]

I'm trying to explain that our society is run by those who print money for nothing.

That is wrong.

The money supply can not be controlled nor regulated by any agent. The central banks can have a major influence by the actions they take -- but not control.

Let me illustrate a simple example whereby growth of money is out of the hands of the central bank: home equity loans.

Pretend I bought a house for $100,000 three years ago and now I get a home equity load. A bank gives me a line of credit worth $75,000 from which I draw credit and I spend money. One year later, the prices of houses in my neighborhood double and then they triple in the next year. Now, my house is worth $300,000 on the market. My bank increases my credit to $200,000 and I spend more from this line of credit. The real money supply has increased and the central bank could not stop us.

Try to extrapolate this simple example to outside the real estate market and consider all of the industries are able to do similar things but in much more complicated manners. It is foolish to say that a central bank can control or regulate the money supply in modern economies.

Would the central bank not put a damper on things by raising interest rates? Would you borrow the extra $200,000 if the interest rate had gone up substantially? Even if it had gone up a little, might you tend to try to get by with, say, $190,000?

I agree that absolute control of the money supply is a stretch, but fine-tuning can be enough with early and prudent intervention.

I do not agree our economy is run by those who print money for nothing, though. Economies like that don't last long.

[PolyNewbie]

My bank increases my credit to $200,000 and I spend more from this line of credit. The real money supply has increased and the central bank could not stop us.

In that sense you are right but suppose the banks raised the interest to a point where the payments could not be made. You would lose your house.

Regulation of currency requires that it be done to regulate the economy. They regulate the economy to maximize control of it.

When private wealth becomes accessive, they cause recessions and claw back that wealth through repossesions of property.

Bankers own an unbelievable amount of property in the middle of the USA. US citizens cannot go to these nature reserves. Its banker territory. Some places even have restricted fly overs.

The bankers are actually doing a "pinky & brain" style world takeover and they are not the first to attempt it. The fourth reich is comming into existance.

[PolyNewbie]

I do not agree our economy is run by those who print money for nothing, though. Economies like that don't last long.

If the country isn't run by those who print money for nothing, how do you suppose that they are allowed to print money for nothing ? Would anyone sane vote for this ? Would a leader of a country that represents the people stand for this ? - no way. The only way they could get away with this is if they were running things.

We will not last long. We have been here for 200 years or so and as you have seen by the destruction of the constitution that another civilization is being born here. Cameras everywhere and you will work a lot harder for a lot less and the cameras will prevent you from doing anything about it.

Indonesia is what they want here because thats what they created in Indonesia. All that bad stuff is comming here because the kings want more control and the technology of our society is such that fewer people are needed to serve the oligarchy.

[PolyNewbie]

The world hasn't changed much. Propoganda has gotten more sophisticated and weapons are more powerful but men are the same as they were 2000 years ago. Give them an inch and they will take a mile if you let them.

Civilization today has the same problems as it did 2000 years ago - money changers. Every leader thats even been assasinated has spoken against the money changers. This is Jesus Christ, Caesar, Kennedy, the list goes on.

Many third world leaders have been assasinated because of this. De Gaulle had 200 attempted assasinations. Of course the history books show other reasons but the money changers control what gets into history. Jesus Christ said " Chase the money changers from the temple" - same as Kennedy.

[Jerry J. Fortin]

Monetary supply is regulated by private industry, the interest rates are set by central banks.

I'll ask you the same question Jerry as I asked PolyNewbie.

When you refer to "interest rates", do you mean real interest rates or nominal interest rates?

There are no real interest rates, they are all nominal. Real interest rates are the concern of central banks and federal reserves as they attempt to calculate the ongoing economic activities and factor in inflation. Having said that there is no real application to this economic nonsense because it is all based upon projection and speculation.

Rating right up there with government budgets and business accounting, economic theory is like a very large pile of male bovine excrement. You can trace the problems back to the creation of the bank of England. Before the creation of the bank the British government had no debt but within years the government created a debt that it has not yet repaid after centuries of the application of credit. This ties in chronologically with the creation of the "corporation" to limit the liability of business owners and investors. Go figure.

[Riverwind]

You can trace the problems back to the creation of the bank of England. Before the creation of the bank the British government had no debt but within years the government created a debt that it has not yet repaid after centuries of the application of credit.

OK - in 1694 the government of England needed money. it had two choices: it could either raise taxes or go into debt. Both approaches had their downside but the English Government choose to go try something different. In the following centuries England grew into the foremost economic power in the world and you expect people to believe that it had absolutely nothing to do with the montary and legal polices adopted by the English Government in the late 17th century?

I agree that gov't debt is bad but I think it is rediculous to suggest that any of the alternatives would be a pain free ticket to infinite wealth and happiness. If it was that simple some country in the world would have gone the route you suggested and they would have demonstrated why the current system sucks. That has not happened which suggests are current system is better than the alternatives.