Perhaps the uninformed anti-Federal Reserve conspiracy theory email I just got is just fan mail from a Ron Paul Freeper….\u00a0 but it contained so much wrong information<\/p>\n
When the US Treasury needs to borrow money by selling securities, it has several ways to do that:<\/p>\n
The agreement with the US Treasury is that whatever interest the Federal Reserve would be paid for the Treasury Securities it holds is rebated back to the US Treasury<\/span> as a “fee” for the right of the Federal Reserve to “print money”.\u00a0 The information is both on the Federal Reserve’s financial statements and the US Government Budget and US Treasury Department’s financial statements.\u00a0 Any claim that this is secret or hidden information just means the person who is saying it doesn’t know where to look or what it means.<\/p>\n FRB Accounting Manual<\/a><\/p>\n 60.20 Interest on Federal Reserve Notes<\/strong> The Federal Reserve plays no role in the sale of US Government Securities<\/strong><\/span> beyond transferring the money between the Treasury and the Primary Dealers – in the same sense when you buy something with your checking account.<\/p>\n There are currently 20 primary dealers<\/strong> (List<\/a>).\u00a0\u00a0 Each time there is a sale of US Treasury instruments, those dealers submit competitive bids<\/strong> on how little interest they are willing to take, and the dealers who offer the cheapest rates get the Bonds.<\/p>\n Here is the list as of the end of May:<\/p>\n United States<\/strong>: Canada<\/strong> UK<\/strong>: France<\/strong>: Germany:<\/strong> Switzerland:<\/strong> Japan:<\/strong> After they buy the bonds, they then run the Secondary Market<\/strong> in securities, in the same way that NASDAQ or the NYSE are where you go buy and sell stocks.\u00a0\u00a0\u00a0 There is nothing “Evil” <\/strong>about investment banks making a profit buying and selling US Government Securities.<\/p>\n The New York Fed DOES participate in what are called “Open Market Operations” – buying and selling securities in the secondary market to implement the policies of the FOMC (Federal Open Market Committee<\/a>).\u00a0 Member banks of the Federal Reserve are required to hold a certain percentage of their deposits as reserves, kept on deposit at their Federal Reserve Branch.\u00a0\u00a0\u00a0 The Fed then invests those funds in “safe” US Government securities and pays the banks the Fed Funds rate on their money.\u00a0\u00a0 As the reserves of banks go up and down, the Fed goes into the public market to buy more securities or sell securities.\u00a0\u00a0 They are trading with the market for existing securities, the US Treasury is not a party to those transactions, no more than GM is involved if you go to Merrill Lynch and sell your GM stock.<\/p>\n","protected":false},"excerpt":{"rendered":" Perhaps the uninformed anti-Federal Reserve conspiracy theory email I just got is just fan mail from a Ron Paul Freeper….\u00a0 but it contained so much wrong information When the US Treasury needs to borrow money by selling securities, it has … Continue reading
\nSince 1947, the Board of Governors has required that the Reserve Banks remit to Treasury, as interest on Federal Reserve notes, all net earnings after providing for dividends and the amount necessary to equate surplus with capital paid-in. Effectively, this policy sets Reserve Banks surplus levels and requires, as a nondiscretionary expense, each Reserve Bank to remit all residual net earnings to the Treasury.<\/strong><\/p><\/blockquote>\n
\nCitigroup Global Markets Inc.<\/a>
\nGoldman, Sachs & Co.<\/a>
\nCantor Fitzgerald & Co.<\/a>
\nJP Morgan Securities<\/a>
\nMerrill Lynch, Pierce, Fenner & Smith Incorporated<\/a>
\nJefferies & Company, Inc.<\/a>
\nMF Global Inc.<\/a>
\nMorgan Stanley & Co. LLC<\/a><\/p>\n
\nRBC Capital Market<\/a>s, LLC<\/p>\n
\nBarclays Capital Inc.<\/a>
\nHSBC Securities (USA) Inc.<\/a> (London\/Hong Kong) <\/strong>
\nRBS Securities Inc.<\/a><\/p>\n
\nBNP Paribas Securities Corp.<\/a>
\nSG Americas Securities<\/a>, LLC<\/p>\n
\nDeutsche Bank Securities Inc.<\/a><\/p>\n
\nUBS Securities LLC.
\nCredit Suisse Securities (USA) LLC<\/a><\/p>\n
\nDaiwa Capital Markets America Inc.<\/a>
\nMizuho Securities USA Inc.<\/a>
\n<\/a>Nomura Securities<\/a> International, Inc.<\/p>\n