Two Federal Reserve Myths That Need Debunking

NEW YORK (Fortune) -- There are two things you may have heard about the Federal Reserve Board, both of which are wrong.

The first is that the Fed controls U.S. interest rates.

The second is that the Fed has made so many commitments that it's in danger of running out of cash or Treasury securities. Which would mean it couldn't carry out its declared policy of putting cash into the world financial system or its undeclared policy of keeping institutions that it deems worthy afloat. Let me show you why both of these beliefs are myths, not reality.

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Read the latest on the Huffington Post's Ben Bernanke big news page.

Comments

[FatJoe]

When I need a myth debunked, the LAST place I go is Fortune Magazine. Or any other part of the go-go business press that embraces every bubble that comes along, then pretends to have seen the crash coming and denies having participated in the frenzy that led to it.

[caliwebman]

Correction, I meant that all this took place in 1913, not 1933.

My Apolgies.

Oh, and keep your eyes posted, it's coming, and it's coming from far left of west and with speed - http://www.americanrevolution2.com

[caliwebman]

The fact of the matter IS that the fed reserve was slipped into our system during congrssional christmas vacation in late decemeber 1933. The other fact is that Benjamin Franklin did say, "It is due to the privately owned and managed "Central Bank of England" that was the main reason the American Revolution came about. Last fact is this, that during this same Congressional Christmas vacation of 1933 the IRS and Income Tax was slipped into the law books and the income tax system was NEVER legitatmetlety voted into the house and neither was it legally passed. . . and if indeed you ask ANY IRS agent or rep to show you where it states in the laws that one MUST PAY INCOME TAX that NONE of them will be able to show you the legal amendment which states one must pap such tatxes.

Also, tell me this, why can't our corrupt political leadership across the board NOT answer the question as to where all the billions in income tax collection revenue is spent? Its LOST each year. I would say it is time for the people to come together, prepare to change things and above and beyond all, prepare to stop any further injustice of our untruthful, corrupt leaders to take our free-will, freedoms and privacies away any more. Period. This comes to you from a recently Service COnnected Disabled War VEteran.

[FZliveson]

The Canis Rufus has proximity to your abode and has an appetite which, from you, he will sate.
(The wolf is at your door and is going to eat you)
The linguistically convoluted article cloakes the truth of the organization it purports to discuss in the exact same way as the first two sentences of this post. There's truth there, but it is not made clear; who pays and who benefits.

[letsgetsmart]

Ok, so let's talk about the fed influence on interest rates. The fed controls the cost of funds index and the over night bank exchange rate. Adjusting these has a benefit or impact on businesses. If it is an impact the businesses can choose to absorb it or pass it along to the consumer based on their expectations of what others in the market will do or how large the change is.When you hear that the fed has adjusted rates, generally you see an immediate impact to prime rate. Prime is an index that has a direct effect on consumer products like credit card rates and home equity lines of credit. The fed loosens up or tightens up the ability and willingness of consumers to spend money above their incomes by changing prime. This can be a nasty trap for consumers if they see a progressive decline in prime and do add some debt to variable products. Prime has a habit of coming down slowly and jumping up fast. It is true that mortgage loans such as a fixed 30 or a 5/1 arm are not impacted by these changes in a month in month out basis but it can have an effect if we have a consistent month to month increase by the fed. Anyone who has a loan on the books currently of these two types is not impacted, it is the ones shopping for a loan who are.

[Bobleblah1]

All you have to do is stand back and look at what this is to understand.

It is an unsustainable scam that too many people are getting hip to.

[funkalicious]

The mess that the FED and the bankers have led us to mmakes one wonder why?
Why do we support a system of private bankers the power to create money and lend it to the American people?
Why do we allow the creation of our money supply to rest in private hands?

Why do we pay them interest on money creation?

Why don't private banks pay the American people interest for the privilege of operating in this great country?

Whyare we enslaved to bankers?

Why aren't the bankers working for us?

[realityisbetter]

And why is all money created as a debt instead of an asset? When it's a debt, the positive equity is gradually eaten by the interest.

[Sundialsvc4]

We do not live in an isolated nation. We live as a society of about 300 million people in a world of about 6 billion people.

"We print money." So does everyone else. But money is not, and has never been, value. It is only a medium of exchange.

In the last 60-odd years, we have had ruinous inflation caused in part by a treaty negotiated by Henry Kissinger, which said that oil transactions would only be denominated in US Dollars. This became "a license to print money," which we now do to the tune of about $1 million a minute. An enormous bubble of faux prosperity resulted. Its major export happens to be War.

History looks upon nations with a baleful, familiar stare. Nations rise, and nations fall, and for each and every nation the life cycle (and the cause-of-death) is always just about the same. Eventually the citizens just seem to get tired of it all. They cede all power and responsibility to a tiny minority ... their elected officials ... those people drive the nation right off the precipice (their arms stuffed with gold, which falls to the ground) ... and nearby people, seeing and seizing the opportunity, begin the cycle all over again.

[letsmakesense]

The Fed is controlled by a secret society known as the Masons or Illuminate or as we call them today THE NEW WORLD ORDER> Their current plan is to wipe out the middle class. Ron Paul is the candidate who would abolish the Fed as Jackson did and Lincoln and Kennedy tried. What you did not know why Kennedy and Lincoln were murdered? You thought a loan deranged gunman did it? Would you buy in to a little Trade Tower pancake theory? Kill the Fed not our best Presidents.

[RTIII]

The fed wasn't created until the 20th century... 1913, IIRC.

How is it that Lincoln and Jackson tried to kill the fed?
.

[Rule Of Law]

The precursor to the FED as we now know it would be any of the central banks that have been established over the course of our history. Typically they were all put in place with sundown provisions and each time the President threatened to allow a central bank to lapse, funny, but something bad would happen...

If you do your research you'll find that the Bank of England--based in large part on the Rothschild fortune--has been behind most of the moves toward a US central bank, as they were in 1913 when the current ED was created.

As for the Mason link--I'm not too sure. Most of the Founders were Masons and violently opposed to banks and corporations in general. Read Madison or Jefferson on banks and corporations--the hatred and fear is palpable!

Kennedy, Lincoln, Andrew Jackson (almost), Garfield, killed or nearly because they opposed the new world order that the financial elites want to impose. Hope this helps.

[Erdgeist]

Acording to legislation, the Federal Reserve's mandate is "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."

[Micah616]

This was a worthless article. It should never have even been posted here. The Fed does, in fact, control interest rates. Ask yourselves the question, "If the Fed can print as much money as it needs, where does the money come from?" It comes from nowhere, thus the term '"fiat currency," or "let there be money." Since the money comes from nowhere, the money is worthless. Actually, it's less than worthless, as it devalues existing currency. If inflation is the rise in cost of goods and services over time, and fiat currency devalues existing currency, then isn't one of the primary reasons for inflation directly tied to fiat currency? Thus, does the Fed not control interest rates, however indirectly?

For those who are interested, look up fractional reserve banking.

[MetalCanuck]

A central bank is a communist system that gives the power over the value of money to a group of people or a state. Its a crooked system where the population is fooled in to thinking they are earning something real.

They are draining your pockets by printing more money to pay for things they do not have the money for, thats why the prices are going up on everything. Prices do not double in a year because of demand all of a sudden.

[leftLibertarian]

Like the Fed, when I run out of money, I print my own.

[jukesgrrl]

When my pre-school age niece heard me say I wasn't buying something because I couldn't afford it, she said, "Why don't you go get some money from one of those machines?" Why, indeed?

[BlackbirdHighway]

Learn the truth about how our banking system really works, and why it's not sustainable.

Watch Grignon's video, "Money as Debt":

http://video.google.com/videoplay?docid=-9050474362583451279

Very easy to understand, very informative, very eye opening!

[gretchenart]

NUMBER THREE MYTH: The Federal reserve is NOT a Federal Bank, it is a group of PRIVATE banks, whose chairman is appointed by the President. Most people assume, incorrectly, that the Federal Reserve is actually a government owned institution. Our money supply is effectively controlled by corporations, not the government. Watch the movie "From Freedom to Fascism" sometime to understand this concept a little better. Plus see the court ruling that the Federal Reserve is a PRIVATE FINANCIAL INSTITUTION!!
http://www.globalresearch.ca/index.php?context=va&aid=8518

[deepintheheartoftejas]

MYTH NUMBER THREE-POINT-ONE, it's not a bank, it's not a group of banks, it's not public, it's not private, overall. The federal reserve system is not any one of those things. Private banks are part of the system, as are the federal reserve banks, which are owned by the the banks in whose district they reside, and are run somewhat like a corporation, but operate not-for-profit according to government regulation. No one but banks can own shares in it and they aren't transferrable. Banks that are members of the system and own shares of their district bank must conform with extensive banking regulation.

The Board of Governors of the Federal Reserve is part of the government. Members are appointed by the president, confirmed by the senate, and are government employees. The Open Market Committee is another part of the federal reserve that's part of the government.

It's a hybrid system that's part governmental, part private.

[Mogamboguru]

Okay, so who is getting all the marbles and who is carrying the deficit?

Ah - thought so: Profits are to be privatized and shared among the shareholders, while deficit is to be socialized and carried by the public.

As you said: It's a perfectly set-up hybrid system that's part governmental, part private.

This makes me sick.

[CaptainHowdy]

But, that's NOT a myth. It's a fact!