re: End the Federal Reserve and I applaud Arizona...

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You can start your own currency any time you want to. It's not illegal to start a new currency in the U.S.

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no, no, no.

that doesn't matter, because the narrative here is *we're being oppressed by the fed*. therefore, "competing currencies" are only valid if they're coined at the state level.

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The Treasury prints the money and then sells it to Fed

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Chongo what the hell is ^^^^^^^^^^

If I need to correct you I will. You dang loon.. the Treasury doesn't print money and sell it to the Fed, WTF?? The Treasury can mint coin, but they sell the fed BONDS, BILLS, NOTES.. You know, those things that aren't money?? They sell that to the Fed and the Fed credits their account.

Sorry, been at work. And, the magic is when they attach interest to that bond!! We put ourselves in debt to some private individuals who are so benevolent and loving and caring. They are so smart and so wise and cunning. Geniuses.

But, as you say, "That interest just goes back to the people". Let us play this game shall we.

I am the U.S. Government and I issue a $100 bond and sell it to the Fed; the trailing interest is 10% for 10 years. At the end of every year I pay $10 in interest and the last year I pay $110 to close out the Bond. Now, let us see how the American taxpayer did shall we? Let us say that the Fed every year just kept $1 out of the $10 in interest, giving the other $9 back to "the people". At the end of that 10 years how much money is back in the treasury?? I'll count it for you, 9 times 10 is $90 dollars. So, in the end the Treasury lost 10 dollars it otherwise could have issued with the original bond bypassing the Fed and that $100 dollars would not be short 10. Also, we could get into inflation, whether the government issues the bond to the people bypassing a central bank with interest or interest free; backed by gold, silver, donkeys, it doesn't matter. I know what you will say, "Well, that is us paying them to do their job". Actually, no it isn't their f'ing job and never intended to be their job. Read the founding fathers thoughts on private central banks. They hated them; abhorred them. They knew that they would be in cahoots with the government like the one in England forming a partnership that benefits both the government and the central banks and not the people.

America has been a lucky one to last this long with a central bank. Most countries fold up quick, but our currency is the world's reserve so we can do what we do for now. The day that ends... Well, it will be a dark day indeed. Just remember that NO fiat currency has ever survived. To think our problems in this nation are strictly fiscal, political, moral is irresponsible and just wrong. We never talk about the monetary side of things much in the media. They are just as much to blame in our current situation as the rest. Like Europe, America's demise doesn't just rest on the shoulders/backs of politicians, judges, corporations, and even the people themselves who have lost their way...the Fed is apart of it all too. They deserve more scrutiny and grilling. They aren't immune, and they sure as hell aren't benevolent.

In fact, I believe this will all just go over you head and you will absolutely kill me with ad hominem attacks and say "tinfoil, conspiracy" bullshite.

We could go on all freaking day with how deep this all goes regardless of ad hominem jokes.

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. the Treasury doesn't print money and sell it to the Fed, WTF??

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Umm yes they do. So the Treasury prints federal reserve notes (paper money) and when the Fed wishes to issue said notes, they post collateral for the notes, in addition to paying cash for the cost of producing the notes. When the Fed retires the note, they "sell" it back to the Treasury for the posted collateral. The Treasury acts as a pawn shop where it accepts collateral (the good) in exchange for the notes. Pawning something is essentially selling it. We're arguing over semantics. Regardless, the Fed pays roughly 4 cents for each note it receives from the Treasury. This is unequivocally buying money from the Treasury.

On to your bond nonsense. So the Fed has 3 tools at it's disposal for fulfilling its mandates. Your bond example falls under open market operations. This is where the Fed buys securities, generally government bills/bonds/notes on the OPEN MARKET. The Fed bids against other primary dealers to purchase these securities from the Treasury. Assuming the Fed wins the bid, they then pay the par value for the bond, and the Treasury is responsible for paying the interest on the bond to the Fed. So far so good, but here is where your example gets off track. The government needs a loan to raise capital, right. It's why it's selling these securities. Debt and leverage are generally useful so long as inflation is kept in check (time value of money and all). The problem is the Treasury cannot sell enough bonds on the open market, absent the Fed, to adequately fund our government spending without crazy interest rates. The demand for U.S. securities would be too low, since the Fed right now buys ~1 out of every 2 bonds issued by the Treasury.

Keeping everything in you hypo constant, if the Treasury strictly sold the securities on the open market, rather than the Fed giving the $9 back to "the people," the private purchaser would keep the $9... Not so good. Instead of the Fed using $10 dollars over 10 years to fund it's actives as the only "cost" associated with the debt financing, the cost would be the $100 coupon paid to the private purchaser of the Government security. At the end of 10 years, how much money is back in the treasury?? I'll count it for you, 0 times 10 is $0 dollars. $90>$0. Do you see why it is cheaper for the Treasury to sell bonds to the Fed than the open market? It's really important you understand this.

But everything in your hypo would not remain constant courtesy of supply and demand. So using your example, instead of a 10% "interest" (1000 bps is a crazy example unless Volcker gets another crack at the Chair, but for math's simplicity I'll accept it), the yield would crazy high, making the cost of borrowing for the US government too high to sustain. This would in turn cause all interest rates to skyrocket, home loans, SBA loans, student loans, etc. This would cause out of control inflation crippling economic growth, which is really, really bad. Just ask Germany post WWI. The only way to maintain an equilibrium would be for the government to cut its debt financing in half. We simply can't do that.

The only credible argument against the FOMC is that the government should not use debt financing. That's poor people shite. Virtually every company uses debt financing because they realize its utility. In capitalism, the government should be viewed as a corporation. It's nothing more than a legal arrangement between the entity (government) and its shareholders (the citizens), owing a fiduciary duty to said shareholders. The shareholders exercise certain voting rights based on the corporation's governing documents (the Constitution and laws passed under it). The corporation raises money by issuing bonds. Shouldn't it issue them at the lowest possible total cost (the Fed)?

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NO fiat currency has ever survived

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Yes, and no government has ever survived in perpetuity, so we should just give up on trying to have a government...

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They are just as much to blame in our current situation as the rest.

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Good. Our current "situation" is the best in human history. Never has the quality of life been so high. Virtually everyone in this Country has the opportunity to own property. Can it be improved, sure; we just haven't figured out how yet. You want to regress to the dark ages. Central banks are good. Without a central bank the US would have never been able to fund WWII, and we'd all be speaking German/Japanese. The Federal Reserve literally saved the free world.