From: "Perry E. Metzger" <perry@piermont.com>
Date: Mon, 8 Apr 1996 14:40:35 +0800
To: Alan Horowitz <alanh@mailhost.infi.net>
Subject: Re: e$ Signorage
In-Reply-To: <Pine.SV4.3.91.960407214309.2856A-100000@larry.infi.net>
Message-ID: <199604080206.WAA29767@jekyll.piermont.com>
MIME-Version: 1.0
Content-Type: text/plain



Alan Horowitz writes:
> > Date: Sun, 07 Apr 1996 12:20:11 -0400
> > From: Perry E. Metzger <perry@piermont.com>
> > 
> > whatever makes no difference to the amount of fake interest earned. I
> > say "fake interest" because it isn't real income to the government at
> > all.
> 
>     When the Fed buys government bonds, the interest income goes to the 
> owners of the Federal Reserve Bank.

Nope, sorry. Some of the interest is used to fund the Fed overhead
itself -- salaries, heat, electricity and the like. The rest is
"returned" to the treasury (actually, it was never paid out in the
first place and it was all funny money to begin with.)

> The Federal Resreve Bank is _not_ a 
> government agency - it is privately owned by the member banks..

Also false. All of the board of governors of the Fed are government
appointees. In some theoretical sense the Fed isn't part of the
government, but in all practical terms it is. Greenspan has to worry
about whether Bill Clinton is going to reappoint him and congress will
reconfirm him, not about whether the member banks think he's doing a
good job.

The myth that the fed is a private entity is an enduring one in
conspiracy theory circles, but its trivial to check that it isn't the
case.

Perry