Archive for the ‘National bank’ Category

Who Pays the Federal Reserve? Cui Bono?

January 19, 2010

Murray Rothbard discusses the operations of the banking interests and the roles that Rockefeller and J P Morgan played in setting up the central bank in 1913.

Today almost one hundred years later the Fed goes from crisis to profit in an instant:

The LA Times: The Federal Reserve reported a side benefit to its massive intervention into the financial system a record profit of $46.1 billion last year on the central bank’s investments.

CNN: The Federal Reserve banks made a $52 billion profit in 2009, reaping extra income on the government securities they bought in an effort to stabilize the financial system.

High risk, but easy money in the meantime:

Much of the higher earnings arose due to the Fed’s aggressive program of buying bonds, aiming to push interest rates down across the economy and attempting to stimulate growth. As 2010 begins, the Fed owns $1.8 trillion in U.S. government debt and mortgage-related securities, up from $497 billion a year earlier. The interest income on those investments was a major source of Fed profits — though that income comes with risks, as the central bank might lose money if it later sells those securities in order to attempt to reduce the money supply.

The Fed also made money on its emergency loans to banks and other firms and on special programs to prop up lending, such as one that supports credit cards, auto loans, and other consumer and business lending. Those programs impose interest and fees on participants, with the aim of ensuring that the Fed does not lose money.