Prof. Bill Woolsey teaches economics at The Citadel in Charleston, S.C. He wrote an article several years ago on the ownership of the Fed, addressing claims that it is privately owned.
Prof. Woolsey concludes:
Who owns the Fed? The owners of a business typically have ultimate authority over operations and serve as residual claimant. Stockholders elect directors, who appoint top management. Stockholders receive the profits — excess revenues after all other claims on funds are paid.
For the Fed, final authority is in the hands of the politicians. They appoint the Board of Governors, who dominate the Federal Reserve banks. Further, any earnings of the Federal Reserve banks beyond expenses, including the 6% dividend to the member banks, goes to the U.S. Treasury. Since the U.S. government has final authority and serves as residual claimant, the most reasonable view is that the Federal Reserve system is government-owned.
The conspiracy theorists' claim that private owners of the Fed are making bundles of money is false. The conventional view among economists (including libertarian ones) that the Fed is a government operation that partially finances fiscal deficits by money creation is fundamentally correct. The live question among libertarians is how to get the government out of the banking system — perhaps by truly privatizing the Fed's operations — in a way that prevents inflation and macroeconomic instability.
Bill Woolsey – October 1, 2004 - The Heartland Institute
Prof. Woolsey is a member of the Libertarian Party.
Libertarian Bill Woolsey elected Mayor in SC
It should be noted, however, that the regional federal reserve banks are privately owned by their member banks. However, it is erroneous to equate them with other private corporations in that they do not function according to the same institutional rules.
It should be noted, however, that the regional federal reserve banks are privately owned by their member banks. However, it is erroneous to equate them with other private corporations in that they do not function according to the same institutional rules.
The political problem (opportunity?) is debt service. Sure the Fed refunds to Tsy interest on T-bonds it holds, but the govt paying net interest interest on all the other T-bonds (auctioned off by the New York Fed) thattees people off. Its $200B this year (the President's payroll tax cut costs $120B a year) and is projected to rise with interest rates to $500B in 2016 ($4.5 Trillion over next decade per latest CBO report).
ReplyDeleteTake net interest off-budget by paying it with fiat money (platinum coins, T-bonds, hell, pass a law making it the Fed's problem), the bond traders could keep on keeping on and yet suddenly those deficit scare charts don't look so scary.
http://www.americanthinker.com/entitlements_08-850.jpg
Sorry I meant to say US NOTES and not T-bonds, but actually either of those would be on-budget, so it really would have to be paid out of the Mint or the Fed.
ReplyDeleteCertainly the Fed Board of Governors, at least, is part of the government. I can prove it. Go the the Board of Governors web site and look at the URL.
ReplyDeletewhy would they(libertarians)want to get the government out of banking, by privatizing it? so we could get screwed over that much more? seems to me that our government should take a more active role in banking, such as regulation.
ReplyDeleteThe question of the balance between liberty and authority is basic to political philosophy as the question of the balance between radicalism (social experimentation) and reactionaryism (sticking to tradition). These are the poles of the political compass.
ReplyDeletePeople plot at all points over the compass, and the same person will plot differently at different stages of life.
The various positions are normative and there is no absolute criterion to rank norms. Entire societies can be organized around any point to the degree that its members agree on those norms. Of course, the social outcomes will be very different in many cases.
In general, there is a mixture in societies of any complexity. The radicals provoke the change needed for progress, and the reactionaries slow the process of change down so that society doesn't run into territory that angels fear to tread.
Similarly, the libertarians keep authoritarianism in check and the authoritarians added enough organization to keep society running.
It's a cooperative venture, even though messy at times as different factions butt heads in playing their role by advancing their pole.