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Honest question about the FED and how debt functions.

 
Manu-Koelbren
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User ID: 27871403
Spain
11/18/2012 03:53 PM
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Honest question about the FED and how debt functions.
So the other day I read from a legit link that the interest on the money the FED prints actually is deposited back into the treasury. This means basically that the FED makes no profit and only keeps enough to pay for their expenses.

Now we all know how the FED has done shady business bailing out financial entities all over the world and surely they must be making some corrupt profits all over the place, but if they return the interest they make to the treasury then where does all the debt come from? I've always thought the debt America had came from printing too much money and owing compound interests to the central bank. I am a little bit lost right now regarding this issue.
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Northman

User ID: 1101299
United States
11/18/2012 04:10 PM

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Re: Honest question about the FED and how debt functions.
The Fed makes money up, lends it to the treasury and charges the treasury interest. It's a little game you see. The idea is to create "a convenient meduim of exchange" so that you can have "Business." Hundreds of trillions of dollars have been created to produce a myriad of goods and services. In modern times many people make the most money by just manipulating money and not producing anything. So essentially you wind up with a lot of happy rich people who can buy whatever they want but are incapable of creating or producing anything themselves. At the same time you get a lot of pissed off poor people who are tired of producing everything but barely make enough money to survive.
Anonymous Coward
User ID: 20901334
United States
11/18/2012 04:12 PM
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Re: Honest question about the FED and how debt functions.
The FED does not create "money" only congress has that authority "to coin money and set the value thereof".

The FED creates CREDIT which is actually debt. It is an accounting system were the FED issues CREDIT to the United States.

There is no return of money to the FED to pay this Credit back, the payment is Title rights to ALL goods and services produced with the credit to the FED.

That is right, everything produced, used or provided in the US is OWNED by the FED, you only have permission to USE those goods and services if you obey their rules.

The so called "return" you are asking about is simply CREDITS re issued to the Treasury to produce more goods and services for the FED, collected by income and other TAXES.

That is why you have to register your cars, homes and children with the Government, they are all property of someone else (The FEDERAL RESERVE).

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