From: "Perry E. Metzger" <perry@snark.imsi.com>
Date: Mon, 2 May 94 12:04:23 PDT
To: werner@mc.ab.com
Subject: Re: The American money capture
In-Reply-To: <9405021837.AA14710@werner.mc.ab.com>
Message-ID: <9405021903.AA26802@snark.imsi.com>
MIME-Version: 1.0
Content-Type: text/plain



None of this is a cypherpunk topic and I don't intend to post after
this on the topic.

werner@mc.ab.com says:
> On this subject (really from the original post about money), I have several
> times tried to convince people that the Federal Reserve Bank is a private
> deal.  I don't know where I got this impression, but no one will believe
> me.

Thats because it isn't true.

> Are there some conspicuous facts that I could quote in support of this
> position?

No.

> Or, perhaps, an easily obtained and authoritative document which
> explains just what the heck the Fed really is?

The Fed is pretty easy to understand. Although its set up to be
quasi-independant, it more or less the government body that regulates
the banking industry and controls the money supply. It does this
by setting the discount rate (fairly small importance), by open-market
purchases of treasury securities, by making deposits in member banks,
and by altering the reserve requirements of U.S. banks. The Fed also
is supposed to act as "lender of last resort" in order to stop banking
panics by loaning money in extreme situtations to member banks.

Technically, its not part of the government the way Amtrak, the
Resolution Trust Company, and other quasi-independant bodies aren't
part of the government. However, this is largely just an illusion. Its
as much a part of the government as the post office.

Its just a central bank, like every other central bank in most
respects.

Central banks are very bad things in my opinion, however, they aren't
some evil conspiracy of the Illuminati, conspiring in the back room to
take over the world. The Fed earns no "profits". It has no
"shareholders".  Its not a "bank" in the conventional sense.

> I know the head is apppointed by the US gov, but my impression was that the
> rest of it was just a consortium of bankers to whom the national debt is
> owed.

The national debt isn't owed to "bankers". Its owed to the holders of
U.S. government bonds. This includes everyone who's ever bought a
savings bond, lots of individuals, pension plans, money market funds,
insurance companies, corporations, banks, and lots of others.

Besides, if the debt was owed to "bankers", that would just be
shorthand for saying that the beneficial owner of the debt securities
would be the depositors of the bank, meaning the public at large.


Perry