Mouood Mouood English Edition
Who Owns The Federal Reserve?
Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.
The Federal Reserve (or Fed) has assumed sweeping new powers in the last year. In an unprecedented move in March 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar. The deal was particularly controversial because Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and participated in the secret weekend negotiations.1 In September 2008, the Federal Reserve did something even more unprecedented, when it bought the world’s largest insurance company. The Fed announced on September 16 that it was giving an $85 billion loan to American International Group (AIG) for a nearly 80% stake in the mega-insurer. The Associated Press called it a “government takeover,” but this was no ordinary nationalization. Unlike the U.S. Treasury, which took over Fannie Mae and Freddie Mac the week before, the Fed is not a government-owned agency. Also unprecedented was the way the deal was funded. The Associated Press reported:
“The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs.”
This is extraordinary. Why is the Treasury issuing U.S. government bonds (or debt) to fund the Fed, which is itself supposedly “the lender of last resort” created to fund the banks and the federal government?
Normally, the Federal Reserve swaps green pieces of paper called Federal Reserve Notes or US dollars for pink pieces of paper called U.S. bonds, in order to provide Congress with the dollars it cannot raise through taxes. Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Federal Reserve which allows the big banks members of Federal Reserve to improve their capital position so they can make new loans to people and government on interests. In its latest power play, on October 3, 2008, the Federal Reserve (Fed) acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. But the point to be noted that the Fed’s money comes ultimately from the US taxpayers, that means the taxpayers are paying interest to the banks on the banks’ own reserves – reserves maintained for their own private profit. Who owns the Federal Reserve, who actually controls it, where does it get its money, and whose interests is it serving?
The Federal Reserve was set up in 1913 as a “lender of last resort” to backstop bank runs, following a particularly bad bank panic in 1907. The Fed’s mandate was then and continues to be to keep the private banking system intact; and that means keeping intact the system’s most valuable asset, a monopoly on creating the national money supply. Except for coins, every US dollar in circulation USA and world is now created privately as a debt to the Federal Reserve or the banking system it heads.
The Federal Reserve is considered an private and independent central bank of USA because its decisions do not have to be ratified by the US President or anyone else in the executive or legislative branch of US government.
1. The Fed is privately owned.
Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.
2. The fact that the Fed does not get “appropriations” from Congress basically means that it gets its money from Congress without congressional approval, by engaging in “open market operations.”
Here is how it works: When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. When the Fed wants to “expand the money supply” (create money), it steps in and buys bonds from these dealers with newly-issued dollars acquired by the Fed for the cost of writing them into an account on a computer screen. These maneuvers are called “open market operations” because the Fed buys the bonds on the “open market” from the bond dealers. The bonds then become the “reserves” that the banking establishment uses to back its loans. In another bit of sleight of hand known as “fractional reserve” lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan. It was this money-creating process which has converted the Federal Reserve “a total money-making machine.” When the Federal Reserve writes a cheque for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing a cheque.
3. The Fed generates profits for its shareholders.
The interest on bonds acquired with its newly-issued Federal Reserve Notes (US dollars) pays the Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders. In addition to this guaranteed 6%, the banks will now be getting interest from the taxpayers on their “reserves.”
The basic reserve requirement set by the Federal Reserve is 10%. The website of the Federal Reserve Bank of New York explains that as money is redeposited and relent throughout the banking system, this 10% held in “reserve” can be fanned into ten times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans.
The banks earn these returns from the taxpayers for the privilege of having the banks’ interests protected by an all-powerful independent private central bank, even when those interests may be opposed to the taxpayers’ — for example, when the banks use their special status as private money creators to fund speculative derivative schemes that threaten to collapse the U.S. economy. Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. A long list of banks (but not other corporations) is also now protected from the short selling that can crash the price of other stocks.
If the Fed were actually a federal agency, the government could issue U.S. legal tender directly, avoiding an unnecessary interest-bearing debt to private middlemen, the present Fed which create the money out of nothing for themselves.
Too big to fail and too big to jail big banks role in money laundering and the Drug Trade
Mexico is in the grip of a murderous drug war that has killed over 150,000 people since 2006. It is one of the most violent countries on earth. This drug war is a product of the transnational drug trade which is worth up to $400 billion a year and accounts for about 8% of all international trade. The flood of illegal drugs into America continues unabated.
One thing the American government has not done is to prosecute the largest banks in the world like HSBC, Western Union, Bank of America, JP Morgan Chase&Co, Citigroup, Wachovia amongst many others for not complying with American anti-money laundering (AML) laws. The big banks support the drug cartels by washing billions of dollars of their blood stained money. As Narco sphere journalist Bill Conroy has observed banks are ”where the money is” in the global drug war.
“The Mexican drug cartels have caught the headlines again and again due to their murderous activities. The war between the different drug cartels and the war between the cartels and government security forces has spilled the blood of tens of thousands of innocent people. The drug cartels would find it much harder to profit from their murderous activity if they didn’t have too big to fail banks willing to wash their dirty money”.
This failure on the behalf of the US government to really crack down on the finances of the drug cartels extends to British banks as well. In July 2012 the US Senate Committee on Homeland Security and Governmental Affairs issued a 339 page report detailing an amazing catalogue of ”criminal ” behaviour by London based HSBC. This includes washing over $881 for the Mexican Sinaloa Cartel and for the Norte del Valle Cartel in Colombia. Besides this, HSBC affiliated banks such as HBUS repeatedly broke American AML laws by their long standing and severe AML deficiencies which allowed Saudi banks such as Al Rajhi to finance terrorist groups that included Al-Qaeda. HBUS the American affiliate of HSBC supplied Al Rajhi bank with nearly $1 billion in US dollars.
On 4 March 2013, HSBC announced profits of $20.6 billion in 2012 while it paid out a $3 million bonus to its CEO. This outrageous state of affairs beggars belief after HSBC has been clearly caught out engaging in activity on behalf of murderous drug lords and terrorist financing banks.
The big banks that has quite clearly been caught out helping murderous drug criminals, terrorist groups, and all sorts of criminal characters are let off freely. No criminal prosecutions or even a mention of criminal behaviour due to the fears that to do so would put the world economy in jeopardy. So there you have it. Banksters who engage in such behaviour that is regarded as criminal by the vast majority of people on the planet are not only too big to fail they are also too big to jail.
150,000 people estimated by US Secretary of Defence have been killed in Mexico’s drug war and hundreds of thousands of Mexican citizens who have been forced to flee their homes and escape theviolence by going to the United Sates or moving to other parts of Mexico.
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