# Questions about the federal reserve **URL:** \ **Category:** Great Debates\ **Created:** [November 29, 2008, 3:27pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928 "2008-11-29T15:27:56Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [November 30, 2008, 9:03pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/21 "2008-11-30T21:03:51Z")
> [@siggma](#): > > It had to be a constitutional amendment. The original constitution forbid the government from any banking whatsoever. 😕 No, it didn’t. What section are you referring to? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [December 1, 2008, 11:28pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/22 "2008-12-01T23:28:33Z")
> [@siggma](#): > > If you’re beginning to see gross dishonesty in the entire concept you’re not alone. The fact is, we as US citizens are being “farmed” by the FRB board and it’s stockholders, I’m sure none of which are US citizens. Do you have a cite for that? ---
**Author:** ![siggma](https://avatars.discourse-cdn.com/v4/letter/s/da6949/32.png) [@siggma](https://boards.straightdope.com/u/siggma)\ **Post date:** [December 2, 2008, 6:23am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/23 "2008-12-02T06:23:51Z")
> [@BrainGlutton](#): > > Do you have a cite for that? One man’s fact is another mans fiction. Do I need to site an opinion? There have been numerous documentaries on the FRB and its ‘less than honest’ relationship both with the US public and with the Federal Reserve System. PBS did one on NOVA some years back and there are many, many others. Some claim an active conspiracy while others claim some kind of secret Illuminati magic nonsense. Still others stick to historical facts. Netflix is a one of many resources for such documentaries. Here’s a page with several links. Since I can’t watch them for you you’ll have to watch one of them to see for yourself. > **[Watch Conspiracy: The Secret History: The Secret Birth of the Federal Reserve...](https://www.netflix.com/title/70025761)** > > This provocative documentary posits that the creation of the Federal Reserve in 1913 wasn't just a move to centralize banking in the United States; it was also a deliberate attempt to clean out the country's private bank vaults. If this is an objection to my opinion or interpretation, why do you care what I think? If it’s to ‘debunk’ my ‘misinformation’ or prevent others from reading opinions other than moderator approved censorship, does that mean you find my posts influential? -Tom ---
**Author:** ![siggma](https://avatars.discourse-cdn.com/v4/letter/s/da6949/32.png) [@siggma](https://boards.straightdope.com/u/siggma)\ **Post date:** [December 2, 2008, 6:42am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/24 "2008-12-02T06:42:26Z")
> [@BrainGlutton](#): > > 😕 No, it didn’t. What section are you referring to? Many many people believe the original constitution intended to prevent the formation of a governmental bank or banking system. See the [letter of transmittal from George Washington’s cabinet](http://constitutionus.com/#transmitcongress) for a reference. I believe the Federal Reserve System is the way our politicians collectively dealt with the issue over the past 100 years. They created a governmental body that was intended to oversee the financial health of the US economy. However, they did not create a bank. Does anyone have a site on the incorporation of any government owned or operated BANKS? Where are it’s _ **profit** _ and _ **loss** _ statements? Banks earn profit. Where are the _Federal Reserve Bank_ financial statements? The Federal Reserve _System_ is not a bank, it uses the congressional charter granted the FRB via the Federal Reserve Act by and through it’s 12 independent reserve banks but the _government itself does not own or profit from them_, unfortunately. There are few financial references to the actual bank or it’s primary stockholders. Why? Since it’s not a US corporation, it’s not required to post it’s financial statements. -Tom ---
**Author:** ![siggma](https://avatars.discourse-cdn.com/v4/letter/s/da6949/32.png) [@siggma](https://boards.straightdope.com/u/siggma)\ **Post date:** [December 2, 2008, 6:51am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/25 "2008-12-02T06:51:05Z")
> [@Exapno\_Mapcase](#): > > You should continue to have missed. There is no such thing as the Federal Reserve Bank. There are twelve regional Federal Reserve Banks and they comprise the Federal Reserve System. They’re the banks that actually operate and move money to and from individual member banks. They do provide financial and consulting services, but you’d kinda expect that of a central bank. > > The FRS and the FRBs are inseparable and indistinguishable. You’re providing further blatant misinformation. > > We’re beyond irony at this point. And you know this to be a fact? Where are the FRS financial statements? \*\*Why does the FRB charge interest but not report that interest to the public as a public gain? \*\* Where do all those billions in interest go? -Tom ---
**Author:** ![siggma](https://avatars.discourse-cdn.com/v4/letter/s/da6949/32.png) [@siggma](https://boards.straightdope.com/u/siggma)\ **Post date:** [December 2, 2008, 6:58am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/26 "2008-12-02T06:58:36Z")
> [@](#): > > **Since the Federal Reserve has considerable discretion in carrying out its responsibilities, to whom is it accountable?** > > The Federal Reserve’s ultimate accountability is to Congress, which at any time can amend the Federal Reserve Act. Legislation requires that the Fed report annually on its activities to the Speaker of the House of Representatives, and twice annually on its plans for monetary policy to the banking committees of Congress. Fed officials also testify before Congress when requested. > > To ensure financial accountability, the financial statements of the Federal Reserve Banks and the Board of Governors are audited annually by an independent outside auditor. In addition, the Government Accountability Office, as well as the Board’s Office of Inspector General, can audit Federal Reserve activities. > **Are the Federal Reserve System and Reserve Banks ever audited?** > > The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act (enacted in 1978 as Public Law 95-320), which authorizes the Comptroller General of the United States to audit the Federal Reserve System, the Government Accountability Office (GAO) has conducted numerous reviews of Federal Reserve activities. In addition, the Board’s Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board’s Annual Report (before 2002, the reviews were listed in the Board’s Annual Report: Budget Review). > > The Board’s financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the OIG. The financial statements of the Reserve Banks are also audited annually by an independent outside auditor. In addition, the Reserve Banks are subject to annual examination by the Board. The Board’s financial statements and the combined financial statements for the Reserve Banks are published in the Board’s Annual Report. We all know that every year a budged is reviewed, fought over and passed. But where is the text of the Board’s yearly review, _including a profit and loss statement for the FBR and it’s branches_? A P&L contains asetts and liabilities as an equation but no such document exists for the FRS or FRB. Unless I’m blind. -Tom ---
**Author:** ![siggma](https://avatars.discourse-cdn.com/v4/letter/s/da6949/32.png) [@siggma](https://boards.straightdope.com/u/siggma)\ **Post date:** [December 2, 2008, 7:15am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/27 "2008-12-02T07:15:28Z")
Just so there’s no more “misinformation”, this is a link to a real Bank Profit and Loss Summary statement. [http://www.bank.lv/eng/main/all/pubrun/lbgadaparsk/lb1998gp/lb1998finpars/profitloss/](http://www.bank.lv/eng/main/all/pubrun/lbgadaparsk/lb1998gp/lb1998finpars/profitloss/) As far as I’ve been able to surmise, no such thing exists for the FED. Why? Could it be that it’s not a bank? Perhaps this is what the Libertarians are upset about? -Tom ---
**Author:** ![whorfin](https://avatars.discourse-cdn.com/v4/letter/w/6f9a4e/32.png) [@whorfin](https://boards.straightdope.com/u/whorfin)\ **Post date:** [December 2, 2008, 7:23am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/28 "2008-12-02T07:23:47Z")
> [@siggma](#): > > Unless I’m blind. Well, it was easy enough to find volumes of releases by the fed about their assets, holdings, and general status. Google really is your friend. > **[Federal Reserve Balance Sheet: Factors Affecting Reserve Balances - H.4.1 -...](https://www.federalreserve.gov/releases/h41/Current/)** > > The Federal Reserve Board of Governors in Washington DC. Please don’t take this as in any way an acceptance/willingness to engage with ron paulian bank conspiracy theories. It just happens that sometimes, it’s easier to answer a question than to resolve the issue any other way. ---
**Author:** ![DMC](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dmc/32/18049_2.png) [@DMC](https://boards.straightdope.com/u/DMC)\ **Post date:** [December 2, 2008, 7:30am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/29 "2008-12-02T07:30:25Z")
> [@siggma](#): > > Just so there’s no more “misinformation”, this is a link to a real Bank Profit and Loss Summary statement. > > [http://www.bank.lv/eng/main/all/pubrun/lbgadaparsk/lb1998gp/lb1998finpars/profitloss/](http://www.bank.lv/eng/main/all/pubrun/lbgadaparsk/lb1998gp/lb1998finpars/profitloss/) > > As far as I’ve been able to surmise, no such thing exists for the FED. > > Why? > Could it be that it’s not a bank? Or perhaps such a [thing](http://www.federalreserve.gov/boarddocs/rptcongress/annual07/sec6/c3.htm) exists, not that that’s going to slow down your wild imaginings. > [@](#): > > Perhaps this is what the Libertarians are upset about? Perhaps Libertarians simply suffer from poor Google-Fu. ---
**Author:** ![whorfin](https://avatars.discourse-cdn.com/v4/letter/w/6f9a4e/32.png) [@whorfin](https://boards.straightdope.com/u/whorfin)\ **Post date:** [December 2, 2008, 7:37am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/30 "2008-12-02T07:37:36Z")
And just to be completist, a press release about the fed’s income and expenditures. [Federal Reserve Board - Reserve Bank income and expense data and transfers to the Treasury for 2005](http://www.federalreserve.gov/newsevents/press/other/20060110a.htm) You may note that the report describes how [QUOTE=da fed] The Federal Reserve Board on Tuesday released figures that indicate the Federal Reserve Banks distributed approximately $21.454 billion of their $30.246 billion total income to the U.S. Treasury during 2005. [/QUOTE] I think that answers the following question. [QUOTE=siggma] Where are the FRS financial statements? Why does the FRB charge interest but not report that interest to the public as a public gain? Where do all those billions in interest go? [/QUOTE] So, now that we’ve conclusively shown that the fed does issue such things, were you mistaken in your assertions? Or are you going to argue that the Fed isn’t a true scotsman? (In fact, the fed isn’t a true scotsman in many ways—But going into detail about that would overcomplicate things when it seems clear that the contentions you have made have been rebutted sufficiently, it’s 2AM, and I have better things to do). ---
**Author:** ![siggma](https://avatars.discourse-cdn.com/v4/letter/s/da6949/32.png) [@siggma](https://boards.straightdope.com/u/siggma)\ **Post date:** [December 2, 2008, 9:37am UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/31 "2008-12-02T09:37:49Z")
From: [Federal Reserve Board - Reserve Bank income and expense data and transfers to the Treasury for 2005](http://www.federalreserve.gov/newsevents/press/other/20060110a.htm) > [@](#): > > Federal Reserve System income is _derived primarily_ from interest earned on U.S. government securities that the Federal Reserve has acquired through open market operations. This income amounted to $28.959 billion in 2005. Additionally, income from fees for the provision of priced services to depository institutions totaled $901 million. The remaining income of $386 million includes earnings on foreign currencies, earnings from loans, and other income. You can’t possibly believe the US treasure only earned $386 million dollars in loan proceeds for the entire year of 2005, but earned 28 billion in proceeds from “securities” alone, can you? And that $901 million is less than paltry for banking service fees for the \>$13 trillion GNP of the US Government. Hell, there are small companies in the downtown area of the city in which I live that earned more than $328 million in interest income in 2005. > [@](#): > > Net deductions to income amounted to $3.577 billion, primarily representing unrealized losses on assets denominated in foreign currencies that are revalued to reflect current market exchange rates. And the income was depreciated by “reevaluation of foreign currency” lowering the overall income even more, not to mention that’s a small statement with a big hole in it. The statement could apply equally to people, money, fixed assets or someone’s idea of their personal worth. Where is the balance sheet? Without a balance sheet to show collectible government debts and other assets those income numbers are meaningless. From Wikipedia:[Economy of the United States - Wikipedia](http://en.wikipedia.org/wiki/Economy_of_the_United_States) > [@](#): > > The economy of the United States is the largest national economy in the world.[10] Its gross domestic product (GDP) was estimated as $13.8 trillion in 2007. The report states the government derived interest from [government securities](http://www.cftech.com/BrainBank/FINANCE/USGovSecur.html) “acquired through open market operations”. The purpose of a balance sheet is so you can easily see how much it **cost** to **earn** that interest. And, you all still ignored the actual question. Neither link is a profit and loss statement. The 2006 report for fiscal 2005 is a report that still fails to account for the vast dollar value of interest earned on monies loaned from the FRS to private banks. Something is missing somewhere especially in a multi-trillion dollar economy. The FED charges member and private banks a prime interest rate for the use of it’s capitol, or should I say “our” capitol but where does that interest go? If the government lists 28 billion in interest earned on [securities](http://en.wikipedia.org/wiki/Securities), why is there so little interest earned on loans to member or private banks when in fact it’s lever, the prime interest rate is the single most important number in the entire economy. Did you all read the report or just find it and post a link. Is this thread all about _debunking misinformation_, who’s right or wrong, or are y’all really interested in how the economy operates. Perhaps it’s just an opportunity to fortify a sagging ego. -Tom ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 2, 2008, 2:29pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/32 "2008-12-02T14:29:30Z")
> [@siggma](#): > > There have been numerous documentaries on the FRB and its ‘less than honest’ relationship both with the US public and with the Federal Reserve System. PBS did one on NOVA some years back and there are many, many others. Do you have any information about this NOVA documentary? Because when I watched the show regularly as a kid, I found that NOVA was a science-oriented series, so I would be surprised to see an episode about the Fed. ---
**Author:** ![jayjay](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jayjay/32/6765_2.png) [@jayjay](https://boards.straightdope.com/u/jayjay)\ **Post date:** [December 2, 2008, 2:41pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/33 "2008-12-02T14:41:04Z")
> [@DMC](#): > > Perhaps Libertarians simply suffer from poor Google-Fu. I’ve noticed that poor Google-Fu is among the less dire impairments most Libertarians suffer from… ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [December 2, 2008, 3:32pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/34 "2008-12-02T15:32:39Z")
> [@siggma](#): > > One man’s fact is another mans fiction. > Do I need to site an opinion? :rolleyes: Even with the qualifier you are making an assertion of fact – i.e., WRT something verifiable. If it is true that all the FRB stockholders are foreigners, that certainly would have been reported in the media, in fact, would be common knowledge in the business community. It’s not unreasonable to ask for a cite. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [December 2, 2008, 3:46pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/35 "2008-12-02T15:46:57Z")
> [@siggma](#): > > Many many people believe the original constitution intended to prevent the formation of a governmental bank or banking system. :rolleyes: The [First Bank of the United States](http://en.wikipedia.org/wiki/First_bank_of_the_united_states) was chartered in 1791. By the **First** Congress. When the Constitutional Convention still was fresh in everyone’s minds and Convention delegates were still active in politics. Hamilton effectively answered all questions raised about its constitutionality, and Washington came down on his side (as against Jefferson’s). The courts have never ruled otherwise. I believe this comes under the general heading of [“Idiot Legal Arguments.”](http://www.adl.org/mwd/suss1.asp) > [@siggma](#): > > See the [letter of transmittal from George Washington’s cabinet](http://constitutionus.com/#transmitcongress) for a reference. :dubious: Nothing in that letter supports your position. ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [December 2, 2008, 3:55pm UTC](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928/36 "2008-12-02T15:55:07Z")
> [@siggma](#): > > Who said the “FRB does not loan money to the US treasury”? > There is even an index on the Wiki… Of course the FRS (comprised of multiple FRBs) loans money to the U.S. So do you and I every time we buy a U.S. Treasury bond. Bonds are how the U.S. government borrows money. And, by the way, saying “the Wiki” is less than helpful. There are many thousands of wikis out there. I probably use half a dozen or more on a weekly basis. I presume you mean Wikipedia, but if you do, say it. > [@siggma](#): > > Read a bit of history beyond the pubic propaganda and Wiki hype and you discover many interesting things. Relying on an advertising agency like Google, Yahoo, MSN, Fox, CNN, TNT etc. or a public Wiki for all your information is at the very least, uninformative. Granted, the Web sites and news media that you listed derive the majority of their information from advertising. That said, referring to them as “advertising agencies” is disingenuous at best. Businesses like MSNBC, CNN, and Fox select what “news” to present to us, and they present it through a filter. They each have their own bias, although I don’t believe they’re sufficiently organized to be part of a massive propaganda engine. Search engines like Google, on the other hand, are merely tools for finding information presented by other people. Google doesn’t create the information that it helps you find, and it, in and of itself, is a useful citation only for statistics. I don’t see how you can consider it uninformative. Public wikis are yet another animal entirely. Judge their accuracy and truthfulness exactly as you’d judge a multi-author blog or a Web site. It’s true that certain pages on Wikipedia end up as propaganda simply because people give up on fighting the battle, but it’s a great place to begin your research and often contains links to highly useful information. > [@siggma](#): > > One man’s fact is another mans fiction. No. I don’t want to play semantic or philosophical games with word definitions, but facts are facts. You may recite fiction and claim it to be fact, but that doesn’t make it so. > [@siggma](#): > > Do I need to site an opinion? No, you need to cite an opinion. A site is a location. A cite is a citation. You may use a Web site as your cite, but they aren’t the same thing. > [@siggma](#): > > Many many people believe the original constitution intended to prevent the formation of a governmental bank or banking system. See the [letter of transmittal from George Washington’s cabinet](http://constitutionus.com/#transmitcongress) for a reference. It’s a short letter. I read it three times. I seem to be missing the part where it says the constitution was intended to prevent the formation of a governmental bank or banking system. You may be referring to the paragraph that says > [@](#): > > The friends of our country have long seen and desired that the power of making war, peace, and treaties, that of levying money, and regulating commerce, and the correspondent executive and judicial authorities, should be fully and effectually vested in the General Government of the Union; but the impropriety of delegating such extensive trust to one body of men is evident: hence results the necessity of a different organization. but that seems to imply that the “different organization” to which they refer (our current form of government, based on the Constitution that was delivered with this letter) would get involved in money and commerce in unspecified ways, and doesn’t explicitly or implicitly rule out establishment of a central banking system. > [@siggma](#): > > > [@](#): > > > > Federal Reserve System income is derived primarily from interest earned on U.S. government securities that the Federal Reserve has acquired through open market operations. This income amounted to $28.959 billion in 2005. Additionally, income from fees for the provision of priced services to depository institutions totaled $901 million. The remaining income of $386 million includes earnings on foreign currencies, earnings from loans, and other income. > > You can’t possibly believe the US treasure only earned $386 million dollars in loan proceeds for the entire year of 2005, but earned 28 billion in proceeds from “securities” alone, can you? And that $901 million is less than paltry for banking service fees for the \>$13 trillion GNP of the US Government. You’re not even reading what you’re quoting to us, are you? The U.S. Treasury issues bonds, upon which it pays interest. The Fed purchased a big pile of those bonds, upon which it earned interest. The $29 billion is _FRS_ income from the U.S. Treasury, not the other way around. And the $328 million is FRS income from sources other than the U.S. Government. On one hand, you’re trying to convince us that the FRS isn’t part of the U.S. Government, and on the other, you’re trying to convince us that FRS income = U.S. Treasury income. > [@siggma](#): > > Hell, there are small companies in the downtown area of the city in which I live that earned more than $328 million in interest income in 2005. Really? A _small_ business earning more than $328 million in interest? At today’s interest rates, it takes assets in the tens of billions of dollars to earn that kind of interest. Any business with billions of dollars in cash laying around to invest in bonds and other interest-bearing securities hardly qualifies as a “small” company. Even a bank, credit union, or loan shark that’s loaning out other people’s money at usurious rates would be far from “small” with those earnings. [Previous page](https://boards.straightdope.com/t/questions-about-the-federal-reserve/474928.md?page=1)