I suppose inflation is paying for it, but I get the feelings that the semantics around whether inflation is "paying" for things have changed recently (or maybe I've been hearing too many ardent MMT evangelists).
When we "borrow" money from the Fed it is at interest. We have created a debt based system where everything is a borrow.
Fiat currencies are based on the value of the peoples ability to create value. When the people owe the banks more value than they can generate they are bankrupt. When the people and the govt ( the people ) owe money to the banks to the point they cannot generate enough value to cover the debts what will happen ?
I think we will see soon :)
It's still a part is the government, just one with extra layers of separation from the executive. Like the FBI.
1. Applications for membership by State banks -- Any bank incorporated by special law of any State, operating under the Code of Law for the District of Columbia, or organized under the general laws of any State or of the United States, including Morris Plan banks and other incorporated banking institutions engaged in similar business, desiring to become a member of the Federal Reserve System, may make application to the Board of Governors of the Federal Reserve System, under such rules and regulations as it may prescribe, for the right to subscribe to the stock of the Federal reserve bank organized within the district in which the applying bank is located.
[edited for formatting]
The same website you linked to has an FAQ page dedicated to clearing up this misconception: https://www.federalreserve.gov/faqs/about_14986.htm
> The Federal Reserve System is not "owned" by anyone. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest.
> Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
That is like saying any corporation publicly traded yet regulated by the govt is now part of the govt.
Any bank can apply to become a member and buy shares of the federal reserve. They simply are regulated by the govt.
Why does it have to be publicly traded? Corporations are exercises of government power by which people (who may themselves be corporations) are revocably delegated special powers created by government. They are, in a very real sense, aspects of the chartering government.
To the extent that they are permitted to serve basically unconstrained private purposes, that's not because they aren't part of the government, but because of what the hosting society believes about the proper application of government power.
Publicly traded companies area still owned by private people and organizations. The publicly traded nature subjects them to additional oversight, but they're still private enterprises.
Where can I buy stake in the Federal reserve? What was it's stock price history?
We can't because nobody "owns" the federal reserve, just like nobody "owns" the FBI or the Navy.
A corporation with employees becomes a member of the Federal Reserve. The job is to generate money from nothing, and get paid for it.
So as a federal reserve bank you create money, charge for doing so and then you change hats from federal reserve to local private bank and loan that money to the private sector charging profits for doing so.
You charge fees coming and going get salaries for both jobs and have no exposure for doing so.
Bonus if your bank fails you are insured by the people who are borrowing money from you.
And you think they are part of the govt
Here's yet another page from the federal reserve website that explicitly says that it's part of the government: https://www.federalreserve.gov/faqs/about_12799.htm
> The Federal Reserve, like many other central banks, is an independent government agency but also one that is ultimately accountable to the public and the Congress.
It says right there that it is a government agency. Independent, yes, but ultimately accountable to the government. It's leadership is appointed by the government.
we are getting closer.
Now... lets say a company was allowed to buy shares in the govt and be able to act as a govt agency while remaining a private company.
So they contract themselves to do some work, pay themselves for setting up the contract, switch hats then do the work. Bonus if they don't do the job right they simply aren't liable.
They don't "buy shares in the government". I'm not even sure what that even means. Nobody can buy shares in the government because the government isn't a company. I guess you might be referring to government bonds. But those aren't shares, they're contracts to get paid a greater amount when the bond reaches maturity. The whole concept of "shares of the government" is just not valid because nobody owns the government. At least not in the US, there are some monarchies where all government assets are owned by the royal family.
Bonuses and salaries of bankers are quite expensive