US Debt Clock

[mikey_the_redneck]

Originally Posted by yads

The Fed is not a private corporation. It is independent from the government so as to not be swayed by the ruling party. It is still subject to government oversight and the governors are appointed by the president of the US.

Also any profits the Federal Reserve makes are returned into the treasury so in fact the Federal government pays interest to itself on their own securities held by the Federal Reserve.

Is this why the Fed has never been audited?

Is this why the Fed has zero transparency?

It amazes me that the single biggest factor that drives the economy never gets any blame. Ron Paul introduced an audit the Fed bill, but it never passed.

BTW Money Masters is a great film on banking.

[yads]

Currency devaluation would actually be good for the US as it would make their exports cheaper and imports more expensive. This would allow them to rectify their trade imbalance and start paying down some of their debt.

The only problem with the plan is that so much of their debt is owned by foreign interests. If the dollar gets devalued they will be none too pleased and may start dumping their US bonds which will raise interest rates and you not only get currency devaluation you get massive inflation.

[yads]

Originally Posted by mikey_the_redneck

Is this why the Fed has never been audited?

Is this why the Fed has zero transparency?

It amazes me that the single biggest factor that drives the economy never gets any blame. Ron Paul introduced an audit the Fed bill, but it never passed.

Never been audited? First page on this document http://www.federalreserve.gov/moneta...instmt2009.pdf

Originally Posted by Deloitte & Touche

Independent auditor's report

[CaptainCrunch]

Yes but Deloitte is owned by the Lizard Men

[mikey_the_redneck]

Originally Posted by yads

Never been audited? First page on this document http://www.federalreserve.gov/moneta...instmt2009.pdf

60 pages of mostly text....

That looks more to me like a half-assed summary you would pass to a Congressman or media outlet than a full audit.

The Fed serves the same Wall Street banks that created it in the first place.

[macker]

Originally Posted by yads

Never been audited? First page on this document http://www.federalreserve.gov/moneta...instmt2009.pdf

True, but the Government Accountability Office - the auditing office of the federal government - is legally restricted from some types of audits. Open all the books!

[To Be Quite Honest]

Speaking about auditing the Government, didn't Nenshi announce something to this effect on city spending?

[moncton golden flames]

Originally Posted by yads

Never been audited? First page on this document http://www.federalreserve.gov/moneta...instmt2009.pdf

first page from your link.....

"The Reserve Banks are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting."

so, deloitte audited the numbers provided by the federal reserve, but could not audit how they attained those numbers or whether or not the numbers are factual.

furthermore....

"As described in Note 4 to the combined financial statements, the Reserve Banks have prepared these combined financial statements in conformity with accounting principles established by the Board of Governors of the Federal Reserve System, as set forth in the Financial Accounting Manual for Federal Reserve Banks, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America."

essentially, the fed has it's own accounting rules that are not similar to any other means of accounting deemed acceptable in america.


"Although the Federal Reserve Bank claims not to be private as their website claims, the clearly operate under terms that no other "government institution" operates by. For example, they are not required to submit financial information and are not subject to IRS audits, nor do they even publish the amount of money they print to the American public. So given these terms it's hard to believe the Federal Reserve's claims that they are a government institution providing a genuine service to the American people. A commonly held position not mentioned on their website is that The FED is a privately owned central bank. Central banks are supposed to implement a country's fiscal policies. They monitor commercial banks to ensure that they maintain sufficient assets, like cash, so as to remain solvent and stable. Central banks also do business, such as currency exchanges and gold transactions, with other central banks. In theory, a central bank should be good for a country, and they might be if it wasn't for the fact that they are not owned or controlled by the government of the country they are serving. Private central banks, including the United States FED, operate not in the interest of the public good but for profit.

There have been three central banks in the nation's history. The first two, while deceptive and fraudulent, pale in comparison to the scope and size of the fraud being perpetrated by the current FED. What they all have in common is an insidious practice known as "fractional banking."

Who really owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York.

The FED is the only for-profit corporation in America that is exempt from both federal and state taxes? The FED takes in about one trillion dollars per year tax free! The banking families listed above get all that money. Forty cents in every dollar of US taxes."

[moncton golden flames]

Originally Posted by yads

Maybe you can provide a clarification on why you think it is. I think the fact that its board of governors is appointed by the President and it being subject to Congressional oversight is a pretty good indicator that it is not a private corporation.

exerpts from a court ruling, finding the federal reserve banks are"independent, privately owned and locally controlled corporations"

[macker]

The Fed has become another TARP that Jim Rogers compares to a pawn shop..... http://dailybail.com/home/jim-rogers...shop-clip.html
The printing they are doing today is going to cost everyone eventually....still no free lunch...Not sure they can be stopped though...

[Slava]

Originally Posted by macker

The Fed has become another TARP that Jim Rogers compares to a pawn shop..... http://dailybail.com/home/jim-rogers...shop-clip.html
The printing they are doing today is going to cost everyone eventually....still no free lunch...Not sure they can be stopped though...

Just curious as to which camp you're in macker? The "let them fail and reap what you sow" or the "bail out and debt relief" side fo things?

[yads]

The federal reserve banks are not the same as the Federal Reserve board of governors. They act as central banks for the regions in the country. The banks that own stock in them cannot sell them nor do they get to control said federal reserve banks. They do, however, get to elect 6 of 9 governors. Their profits are not taxed, because I'm guessing due to the Federal Reserve act their profits belong to the US government. Doesn't make sense to tax your self. Are the IRS profits taxed?

As for your quotes from the audit statement. Do you purposefully omit sections to make your argument? Right above the line you quoted it says:

We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

So while they didn't audit the internal controls over the Fed's reporting they were required to "obtain reasonable assurance" that the numbers they were given were not fabricated.

As for the accounting practices being different. Read Note 4.

Accounting principles for entities with the unique powers and responsibilities of a nation's central bank have not been formulated by accounting standard-setting bodies. The Board of Governors has developed specialized accounting principles and practices that it considers to be appropriate for the nature and function of a central bank. These accounting principles and practices are documented in the Financial Accounting Manual for Federal Reserve Banks ("Financial Accounting Manual" or "FAM"), which is issued by the Board of Governors. The Reserve Banks are required to adopt and apply accounting policies and practices that are consistent with the FAM and the combined financial statements have been prepared in accordance with the FAM.
Limited differences exist between the accounting principles and practices in the FAM and generally accepted accounting principles in the United States ("GAAP"), primarily due to the unique nature of the Reserve Banks' powers and responsibilities as the nation's central bank. The primary difference is the presentation of all SOMA securities holdings at amortized cost rather than the fair value presentation required by GAAP. Treasury securities, GSE debt securities, Federal agency and GSE MBS, and investments denominated in foreign currencies comprising the SOMA are recorded at cost on a settlement-date basis rather than the trade-date basis required by GAAP. The cost basis of Treasury securities, GSE debt securities, and foreign government debt instruments is adjusted for amortization of premiums or accretion of discounts on a straight-line basis. Amortized cost more appropriately reflects the Reserve Banks' securities holdings given the System's unique responsibility to conduct monetary policy. Accounting for these securities on a settlement-date basis more appropriately reflects the timing of the transaction's effect on the quantity of reserves in the banking system. Although the application of fair value measurements to the securities holdings may result in values substantially above or below their carrying values, these unrealized changes in value have no direct effect on the quantity of reserves available to the banking system or on the prospects for future Reserve Bank earnings or capital. Both the domestic and foreign components of the SOMA portfolio may involve transactions that result in gains or losses when holdings are sold prior to maturity. Decisions regarding securities and foreign currency transactions, including their purchase and sale, are motivated by monetary policy objectives rather than profit. Accordingly, fair values, earnings, and gains or losses resulting from the sale of such securities and currencies are incidental to the open market operations and do not motivate decisions related to policy or open market activities.
In addition, the Reserve Banks have elected not to present a Combined Statement of Cash Flows because the liquidity and cash position of the Reserve Banks are not a primary concern given the Reserve Banks' unique
powers and responsibilities. Other information regarding the Reserve Banks' activities is provided in, or may be derived from, the Combined Statements of Condition, Income and Comprehensive Income, and Changes in Capital. There are no other significant differences between the policies outlined in the FAM and GAAP.
Preparing the combined financial statements in conformity with the FAM requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Certain amounts relating to the prior year have been reclassified to conform to the current-year presentation. The classification of certain variable interest entities ("VIE") assets have been reclassified as follows: RMBS and non agency CMOs have been reclassified as Non-agency RMBS and agency CMOs and TBA commitments have been reclassified as Federal agency and GSE MBS. Unique accounts and significant accounting policies are explained below.

The only thing that stands out is due to some elements of the FAM. Management has to make certain estimates/assumptions. They do however amend the numbers in next year's report once the numbers become available.

Furthermore, the US Fed does not print money. That's what the US Treasury does. They do however, buy/sell US T-bills on the open market and hold these types of securities. That's one of the tools they have to set the monetary policy of the country.

[Locke]

Originally Posted by macker

Maybe that is why the US is stockpiling Gold and currently are the Saudi Arabia of Gold reserves with 8,000 Tons worth $325 Billion by todays price. By comparison Germany has a little over 3,000 Tons and China claims to have 200 Tons. Guess Greenspan knew what he was talking about in 1966 when he wrote "Gold and Economic Freedom" http://www.lewrockwell.com/north/north204.html

Alright, I've heard this argument before where they want to stockpile Gold in order to either re-attach its' value to currency or in order to mortgage against the national debt.

2 things:

First of all, even if they got market value for their stockpile, its such a pitiful drop in the bucket its not even worth discussing.

Second of all, if they were to drop 8000 tons of Gold on the market they'd get pennies to the dollar, even if they did it gradually, and in fact, do so much harm to the market that I cant even think of most of the ramifications.

[moncton golden flames]

Originally Posted by yads

The federal reserve banks are not the same as the Federal Reserve board of governors. They act as central banks for the regions in the country. The banks that own stock in them cannot sell them nor do they get to control said federal reserve banks. They do, however, get to elect 6 of 9 governors. Their profits are not taxed, because I'm guessing due to the Federal Reserve act their profits belong to the US government. Doesn't make sense to tax your self. Are the IRS profits taxed?

As for your quotes from the audit statement. Do you purposefully omit sections to make your argument? Right above the line you quoted it says:



So while they didn't audit the internal controls over the Fed's reporting they were required to "obtain reasonable assurance" that the numbers they were given were not fabricated.

As for the accounting practices being different. Read Note 4.



The only thing that stands out is due to some elements of the FAM. Management has to make certain estimates/assumptions. They do however amend the numbers in next year's report once the numbers become available.

Furthermore, the US Fed does not print money. That's what the US Treasury does. They do however, buy/sell US T-bills on the open market and hold these types of securities. That's one of the tools they have to set the monetary policy of the country.

so you've conceded that the federal reserve is a private corporation?

sure, the treasury prints the money, but only at the request of the fed. so really, what's the difference? the fed controls the printing of money, plain and simple.

so what is a 'reasonable assurance'? is it bernanke saying "yes, those numbers are real". if an auditor cannot verify the numbers, there is something to hide. how can you take an audit seriously if estimates & assumptions are being provided by the fed, and the auditor has to take them as fact. would this really pass in any other business audit?

[macker]

Originally Posted by Slava

Just curious as to which camp you're in macker? The "let them fail and reap what you sow" or the "bail out and debt relief" side fo things?

Right now the markets....in the four weeks ended November 5, 2010, US economic data beat market expectations by the largest margin since mid-September 2009. Stronger than expected reports on manufacturing and services-sector activity and a larger than expected gain in US private-payroll employment. Retail spending has also really picked up again. These reports augur well for the economy/market to kick it up a notch in the fourth quarter. Still though....the Federal Reserve decision to purchase $600 billion of US Treasury bonds by the end of the second quarter of 2011 is excessive/reckless/dangerous/troublesome and many other words as images of other short-sighted decesions last seen on the individual level take hold on the grandest level.....like a Cupcake things will be great for the next little while but much of it is artificial and with that come consequences that we have likely never seen before....The Fed = The Brick "don't pay a cent event"....it could work out for awhile and you have to be in this market....

[macker]

Originally Posted by Locke

Alright, I've heard this argument before where they want to stockpile Gold in order to either re-attach its' value to currency or in order to mortgage against the national debt.

2 things:

First of all, even if they got market value for their stockpile, its such a pitiful drop in the bucket its not even worth discussing.

Second of all, if they were to drop 8000 tons of Gold on the market they'd get pennies to the dollar, even if they did it gradually, and in fact, do so much harm to the market that I cant even think of most of the ramifications.

True enough...in a 14 Trillion Economy it is a drop in the bucket....It may happen at some point though as with the amount of paper currency printing we are seeing there is always enough Gold it is just a matter of price...A lot of stability in world trade could be acheived....We had a Gold Standard for over 200 years starting in the 17th century and Gold Standard actually has a much longer and more succesful track record then paper money. There are lots of ways this could be structured and you could have a new sort of global super currency sponsored by the IMF and peg it to the price of Gold or have a basket approach as Brazil come out with last night...China, Russia, Germany etc. aren't going to just stand by and let the Fed print,print,print when on any given day of the week the Fed could be broke/banrupt and we wouldn't even know it....

[afc wimbledon]

The value of gold is just as arbirtary as the value of paper, you might just as well have a potato standard.

[moncton golden flames]

you think the federal reserve is doing the right thing? just wait for the inflation to hit!

national inflation association projections

[macker]

Originally Posted by afc wimbledon

The value of gold is just as arbirtary as the value of paper, you might just as well have a potato standard.

The law of diminishing returns says the more you do something the less good it does you. The law of marginal utility tells you that when you get more and more of something, each additional unit has less value than the one that came before it. The record is pretty clear as the Fed's money has been losing ground against natures money for the last ten years. Over this time Gold has gained five times the purchasing power vs the US dollar. Again....nothing new here.....from 1944-1971 Bretton Woods : the dollar was pegged to Gold and all the other currencies were pegged to the dollar so indirectly they were pegged to Gold...the US abused this privilege by printing too much money and running too large deficits and are trying to debase the dollar to the point where people don't trust it....US has gone from Victim to Villian in the currency wars in a very short period of time....I am only a mild gold bug though....I agree that the outlook for potatoes, sugar, wheat and most any commodity is great and likely even better vs Gold as they will have great value going forward. This is one of the effects of QE2 that the Fed can't control and this is the real impact of what is happening. The question is if consumers are going to accept these prices when they get passed down and this is something Bernanke didn't factor in with his QE2 cure all plan...

[oilyfan]

Originally Posted by macker

The law of diminishing returns says the more you do something the less good it does you. The law of marginal utility tells you that when you get more and more of something, each additional unit has less value than the one that came before it. The record is pretty clear as the Fed's money has been losing ground against natures money for the last ten years. Over this time Gold has gained five times the purchasing power vs the US dollar. Again....nothing new here.....from 1944-1971 Bretton Woods : the dollar was pegged to Gold and all the other currencies were pegged to the dollar so indirectly they were pegged to Gold...the US abused this privilege by printing too much money and running too large deficits and are trying to debase the dollar to the point where people don't trust it....US has gone from Victim to Villian in the currency wars in a very short period of time....I am only a mild gold bug though....I agree that the outlook for potatoes, sugar, wheat and most any commodity is great and likely even better vs Gold as they will have great value going forward. This is one of the effects of QE2 that the Fed can't control and this is the real impact of what is happening. The question is if consumers are going to accept these prices when they get passed down and this is something Bernanke didn't factor in with his QE2 cure all plan...

This comparison is completely wrong, gold is in an investment not a currency, so it need to be compared to other investments.

"From 1802 to 2001 a dollar invested would have grown to: (Amounts have been adjusted for inflation.)

• Stocks: $599,605
• Bonds: $952
• Bills: $304
• Gold: $0.9"

Even with the past few years massive slides in the market stocks are a better bet than gold. Yes there have been periods of time in the last century where gold has outperformed stocks, but in other times it has been the opposite.

http://money.cnn.com/2010/10/18/pf/i...tune/index.htm