re: What is your opinion of the Federal Reserve System?

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Well, it's a fact. Money supply =\= actual money. The treasury dept prints money and banks create and destroy money with loans. Of course, the fed dictates the money supply to the banks.

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Actually it's not a fact. The Fed orders money from the treasury.

Also, when the fed is buying billions of dollars in treasuries and mortgage backed securities from the market, where do you think that money goes?
Besides that banks are not making anywhere near as many loans as they would like. They're having to invest into bonds which are at yields that are so low that banks are having a hard time making money right now. I'm mostly talking about regional and community banks.

I understand what you're saying but it is an absolute fact that the fed doesn't print money. It's all good though, no need to argue semantics.

Those bonds and stuff go to control inflation/deflation and help dictate whether we need a contractionary or expansionary policy at the time. I agree with you and touched on that in a reply earlier in regards to the interest rate on those bonds. They really need to be raised because I think they're sitting at about 1% right now and you're right, banks can't make money off that.

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I agree with you and touched on that in a reply earlier in regards to the interest rate on those bonds. They really need to be raised because I think they're sitting at about 1% right now and you're right, banks can't make money off that.

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Couple of things..

The only rate set by the Fed is the Federal Funds Rate. When the Fed talks about raising and lowering rates, that's what they are talking about. It's the rate they charge to banks they send money to. Having a low federal funds rate is actually really good for banks. Those banks can still charge whatever they want to their borrowers.

Treasury bond rates are set by the US Treasury. These are traded by yield, rather than rate, because the bond market includes not only brand new bonds, but existing bonds. On the bond market, you can buy an older bond from someone else who bought a 30 yr bond five years ago. Therefore, if the 10 yr bond rate offered by the treasury 5 years ago was 6%, and the same bond today was offered "brand new" for 2%, why the hell would you buy a new bond? At the same time, why would a seller sell you their 6% bond at face value when the offering rate today is only 2%? He's going to charge a premium. Without getting more complex, that's why bonds are traded on yield rather than the printed rate of return on the bond.

The yield on the 10yr Treasury bond is what dictates mortgage rates, because mortgage securities are backed by the federal government same as Treasury bonds, so the risk profile is identical. Why would an investor buy mortgage backed securities with a 3 % return if they can buy the same risk profile for a 5% return? And vice versa. The 10 yr T-bill yield dictates mortgage rates in the market.


That's all I wanted to say at this point. Yall carry on.

Money Supply since 1/2010

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The Board of Governors (the Board), as the issuing authority for Federal Reserve notes, approved and submitted its fiscal year (FY) 2015 order for 7.2 billion Federal Reserve notes, valued at $188.7 billion, to the U.S. Treasury Department’s Bureau of Engraving and Printing (BEP) on July 22, 2014.1

The 7.2 billion notes included in the FY 2015 order reflect the Board’s estimate of net demand for currency from domestic and international customers. The print order is determined, by denomination, based on historical payments to and receipts from circulation, destruction rates, and also to build inventories of new-design notes before issuance. Historically, most of the notes that the Board orders each year replace unfit currency that Reserve Banks receive from circulation.2 The estimated number of notes that Reserve Banks will destroy accounts for nearly 85 percent of the proposed FY 2015 print order and includes both unfit currency, as well as all old-design $100 notes received from circulation. The expected growth of Reserve Bank net payments (payments less receipts) to circulation primarily accounts for the remainder of the notes in the FY 2015 print order. The table below reflects the denominational breakdown of the Board’s FY 2015 order.3

Denomination Number of Notesa
(000s of pieces) Dollar Value
(000s of dollars)
$1 2,451,200 $2,451,200
$2 32,000 $64,000
$5 755,200 $3,776,000
$10 627,200 $6,272,000
$20 1,868,800 $37,376,000
$50 220,800 $11,040,000
$100 1,276,800 $127,680,000
Total 7,232,000 $188,659,200

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I really am not trying to argue but to say the Fed doesn't creat money is just wrong. Treasury prints it for the Fed.

Just one more. If you weren't aware the Fed is still in the mkt buying paper. $5.91B+ last week

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Gross purchases from June 11 through June 17: $5,910 million
Sales (dollar rolls) from June 11 through June 17: $0 million
Net purchases from June 11 through June 17: $5,910 million

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I was also reading earlier that they are still leaving the fed fund rates the same, thus further increasing the supply of money and continuing the expansionary approach.

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Yes, the announcement was y-day. Left both the Federal discount rate and the fed funds rate the same.

The Fed actually controls two rates.

Discount Rate is: The interest rate set by the Federal Reserve that is offered to eligible commercial banks or other depository institutions in an attempt to reduce liquidity problems and the pressures of reserve requirements. The discount rate allows the federal reserve to control the supply of money and is used to assure stability in the financial markets.

Fed funds is: a rate of interest for short-term interbank loans, adjusted periodically by a committee of the Federal Reserve System

The discount rate is 0.00% and the Fed funds rate is 0.25%

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Dollars would still be used online. Bitcoin only exists for illegal activity. Criminals need currency too, and until recently governments can't/wont regulate it. Can't get busted for money laundering if you are using bitcoins, et al.

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That's not true at all... It was the scare tactic the Feds used in trying to kill it but, it's visionary and in all our futures in some evolved form.

Bitcoin is a safe way to do business in the third world and actually get paid....

Check out Bayside Corp
OTCMKTS: BYSD - sometime and get smart.

Now our country has held different currency types before. Gold and Silver certificates were common place pre 1964.

Why not base a currency on our global military capability instead of the GNP?

Every country owes us a percentage of its GNP for the last seventy years based on the security we have and still provide for free....

They won't pay us willingly and we won't use our influence at the world bank in making them accountable so, base a new currency on what we project.

We are the only country in the world with so many options available bar none.