Understanding The Federal Reserve - Khan Academy

[Broke Wave]

Have a mike's hard lemonade, fakkit.

I don't understand how a grown man can believe that there's an international conspiracy involving the Federal Reserve.

There are literally corporate collusions and conspiracies in plain site that are far more dramatic than the Fed printing money, and the Banks having access to low interest loans.

It's a rough deal that the banks get the low interest loans but whooptifukkingdo, it wasn't even a big deal until the banks started controlling everything within the last 10 years or so.

 

[Meta Reign]

Have a mike's hard lemonade, fakkit.

I can't front, it does get to me a bit mainly because this is so important and n!ggas (like you), just can't seem to see why it's so important to understand this and ultimately start using it against these trashbags. They got the wholw world by the balls off these scams. . . It's sick.

Mike's Hard Lemonade, though? Some b!tch sh!t, breh.

 

[Meta Reign]

I don't understand how a grown man can believe that there's an international conspiracy involving the Federal Reserve.

There are literally corporate collusions and conspiracies in plain site that are far more dramatic than the Fed printing money, and the Banks having access to low interest loans.

It's a rough deal that the banks get the low interest loans but whooptifukkingdo, it wasn't even a big deal until the banks started controlling everything within the last 10 years or so.

It's not really a ''conspiracy'' though. It's just an outright self-serving system, which they can easily rationalize being for the common good. I don't think of it like that (atleast not anymore). It's childish to think like that, infact.

 

[Broke Wave]

It's not really a ''conspiracy'' though. It's just an outright self-serving system, which they can easily rationalize being for the common good. I don't think of it like that (atleast not anymore). It's childish to think like that, infact.

Breh you think that the world would be a better place WITHOUT a federal reserve, while progressives believe it needs serious reform.


Which one of these seems like a less radical alternative?


You wan't the GOLD standard

 

[Meta Reign]

Breh you think that the world would be a better place WITHOUT a federal reserve, while progressives believe it needs serious reform.


Which one of these seems like a less radical alternative?


You wan't the GOLD standard

Tell me this. . . What reforms does the Fed need in your opinion?

And I can't say if we should have a gold standard or not. I do know that markets should be able to choose whatever it wants for money. If the market chooses gold, then so be it. The Constitution says that only gold and silver should be legal tender, I don't necessarily agree with that.

 

[Dusty Bake Activate]

I don't understand how a grown man can believe that there's an international conspiracy involving the Federal Reserve.

There are literally corporate collusions and conspiracies in plain site that are far more dramatic than the Fed printing money, and the Banks having access to low interest loans.

It's a rough deal that the banks get the low interest loans but whooptifukkingdo, it wasn't even a big deal until the banks started controlling everything within the last 10 years or so.

If you listen to Leyet's rant about the fed on the podcast, his general thesis about the reality-shaping power and plotting maliciousness of the fed was absurd.

When we were trying to tell him the fed wasn't sitting the plotting economic destruction, he said yes they are and there's a science to economics and they can control the economic system and create whatever outcome they want. My mic was fukked up but tried to cut across and tell him that econ is the softest science there is--it's called the dismal science for a reason--it's not physics, there are several competing theories and they are dependent upon the predicted rationale of millions of people.

Then after saying he understands this and knows it to be true, he responded to HHL4E's question about what economist or economic theory he would adhere to or agree with by saying "I don't know, I don't understand economics."

 

[zerozero]

the main thing I wish I'd responded to that occurred to me while I was listening to the show was his point about money not being destroyed, just transferred

the whole point of a bubble is that the money isn't there. All those houses built, sold etc were based on the hope that people would be able to buy them within 10, 20, 30 years but people couldn't even pay short term month to month installments. There was a huge amount of investment money spent chasing returns but those returns were never real

 

[Dusty Bake Activate]

Mike's Hard Lemonade, though? Some b!tch sh!t, breh.

Exactly. That's why I told you to have one.

 

[714562]

I understand this guy is just trying to cover the basics, but he leaves out a huge part to this in the third video. One being that the Fed is now (as of Oct 08' 09') paying the banks INTEREST ON RESERVES.

They're paying the banks interest on excess reserves because rates are 0%. Banks have to have some kind of incentive to lend to other banks.

The Fed began paying interest on excess reserves as a means to control the Fed funds overnight market. The sheer volume liabilities on the balance sheet at the Fed has pushed interest rates effectively at zero. But an interest rate of zero is the same as holding cash, and therefore can lend strength to a liquidity trap.

To ensure overnight bank lending can earn a stable (albeit low) rate of return, the Fed institutes a (semi!) hard floor by paying interest on excess reserves, and a very hard ceiling known as the discount window. What then occurs in the Fed funds market is rather interesting. No depository institution with access to the overnight Fed funds market (ONFFM) and the discount window will lend at any rate higher than the discount window, because no bank would have the reason to borrow at a higher interest rate than what is offered at the discount window (which is 0.75%) and... no bank would have the desire to lend lower than the amount paid on excess reserves. Hence, we have what is known as a "channel - corridor" system.

This furthers their incentive to not lend to the public. He also forgets to mention the banks' prop desks, where they take the 0% money from the Fed and quite literally go gambling with it via our stock market and huge leveraged bets in London (ex: JP Morgan Chase's latest fukk up).

...except it does. Because banks need to have some kind of incentive to lend to each other if they are to lend to other people.

Also, you don't know what prop trading is. I'm sorry. You just don't.



Cease fire on the fed, people. None (or very few) of you have the chops to discuss this with any meaningful insight.

 

[Robbie3000]

You dumb fukk, that's money from when the Fed buys treasuries from banks and others on the open market after those treasuries mature. If you read what I wrote again, I put in parenthesis that the Fed's MEMBER BANKS (Chase, Goldman, Cit, BofA etc.) are the ones who really lend directly to the government. The Fed lends at zero, the banks lend at 2% (or whatever a 30yr note is going for now) to the government. Before that debt has matured, the Fed BUYS back that debt from the banks (during ''quantitative easing''). When that debt matures, the Fed gives that money to the treasury (MINUS ''EXPENSES'', BECAUSE NOT ALL OF IT GOES TO THE TREASURY). . . Meaning what? That the government gets fleeced. . . Dikkhead.

Understand now, moron? You're talking about debt that has matured, when Bernanke buys treasuries from banks. I'm talking debt that's being sold from those same banks to the Federal government.

IT'S TWO COMPLETELY DIFFERENT THINGS. . . YOU DUMB FUKK.

Calm yo punk ass down bytch.

What I meant is the interest paid on the notes and is remitted back to the Treasury. Last year the Fed made profits of 82 billion and 79 billion was remitted back to the Treasury. This is a popular myt that does need debunking.

Now if you want to discuss monetary policy taken by the fed in lowering the interest rates down to almost zero we can talk about that. But it's important that everyone atleast get a basic understanding of the mission and function of the Federal Reserve before we delve into monetary issues. That was the purpose of this thread to educate.

Now go play somewhere you Zealot fakkit.

 

[Dusty Bake Activate]

They're paying the banks interest on excess reserves because rates are 0%. Banks have to have some kind of incentive to lend to other banks.

The Fed began paying interest on excess reserves as a means to control the Fed funds overnight market. The sheer volume liabilities on the balance sheet at the Fed has pushed interest rates effectively at zero. But an interest rate of zero is the same as holding cash, and therefore can lend strength to a liquidity trap.

To ensure overnight bank lending can earn a stable (albeit low) rate of return, the Fed institutes a (semi!) hard floor by paying interest on excess reserves, and a very hard ceiling known as the discount window. What then occurs in the Fed funds market is rather interesting. No depository institution with access to the overnight Fed funds market (ONFFM) and the discount window will lend at any rate higher than the discount window, because no bank would have the reason to borrow at a higher interest rate than what is offered at the discount window (which is 0.75%) and... no bank would have the desire to lend lower than the amount paid on excess reserves. Hence, we have what is known as a "channel - corridor" system.



...except it does. Because banks need to have some kind of incentive to lend to each other if they are to lend to other people.

Also, you don't know what prop trading is. I'm sorry. You just don't.



Cease fire on the fed, people. None (or very few) of you have the chops to discuss this with any meaningful insight.

Gedanken?

 

[714562]

Trash. Many people understand this already, and while I think fractional reserve banking is bad, it's certainly NOT the main reason the Fed is inherently bad for the economy.

Orly?

Alot of people don't understand this, but the Fed is INHERENTLY bad for the nation because of two reasons. The first because it (or should I say it's member banks) charges the government interest on money it lends (no, it's not money that we ''owe to ourselves''), and since the government can not create it's own interest free money it can only pay that interest back to the banks by either raising taxes on citizens (which is why everyone in this country is so over taxed) OR they can just continue borrowing from the Fed, which raises our national debt like crazy, and which ultimately has to lead to higher interest rates (the Fed is currently keeping those rates down by buying a majority of treasuries themselves, this CAN NOT last forever).

The Federal Reserve does not pay interest to member banks. It pays them a fixed 6% dividend based on the amount of stock they own. The banks can't really "sell" the stock to anyone either, so there's no profit to be had. There is no accumulating interest. After that paltry dividend is paid, the Fed takes any and all profit that it earns from its open market operations and sends it to the treasury.

So please, stop belittling people. You have no idea what you're talking about. I'll say it again: CEASE FIRE on this topic. You're not teaching anyone anything.

 

[714562]

Gedanken?

...why did you just say "thoughts" in German?

 

[Serious]

My mic was fukked up but tried to cut across and tell him that econ is the softest science there is--it's called the dismal science for a reason

knew something wasn't right.....

 

[Dusty Bake Activate]

...why did you just say "thoughts" in German?

I'm asking are you the sohh poster known as Gedanken. He had good economics knowledge and a habit of sonning Meta Reign into oblivion.