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Traktion

If The Fed Being A Private Central Bank Is The Problem

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With all of this talk about the Federal Reserve being private owned, it got me wondering. I did some research and noticed that the European Central Bank is also privately owned with various European banks being the main share holders. The Bank of England was privately owned, but then as of 1946, the then Labour government nationalised it.

This got me thinking some more. Firstly, I am now more anti-Euro than I ever have been before - I had assumed the ECB must be state owned in some way, but it isn't, just like the Federal Reserve isn't. Secondly, it made me wonder why on Earth the BoE borrows money from other countries. I mean - why would it!? If a government needs money, why would it not just get the BoE to print it up and make a public note of the fact, to keep it transparent to the population and other countries?

This made me wonder some more... is the use of QE a means of conditioning/educating the public that you can print money, as long is it is made public knowledge (transparency) and is on a promise to pay back? If you think about it, what difference does it make to inflation figures, as long as one day, it is paid back? Is this a test of fiscal responsibility for the treasury/government?

Essentially, we have already made the step which many in the US are trying to make and the Euro zone seems pretty much clueless about. As a country, we have control to borrow money from our own future productivity already. Is this the start of our debt jubilee through the back door?

All the government needs to do is use QE to monetise the debt, while simultaneously tightening up the reserve ratios (this is key, as without it, the private banks will have the ability to create yet more credit and more inflation). This would slowly neuter the private banks, while proving the case for the BoE and treasury to manage their own, interest free debt. Clearly, if this is the direction they are heading in, policy over how much the government can borrow (if any) from the future would need to be defined. The point is, we (or at least those we elect) could regain control of our own money supply and weaken the strangle hold of the private banks.

EDIT: typo

Edited by Traktion

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Guest UK Debt Slave
With all of this talk about the Federal Reserve being private owned, it got me wondering. I did some research and noticed that the European Central Bank is also privately owned with various European banks being the main share holders. The Bank of England was privately owned, but then as of 1946, the then Labour government nationalised it.

This got me thinking some more. Firstly, I am now more anti-Euro than I ever have been before - I had assumed the ECB must be state owned in some way, but it isn't, just like the Federal Reserve isn't. Secondly, it made me wonder why on Earth the BoE borrows money from other countries. I mean - why would it!? If a government needs money, why would it not just get the BoE to print it up and make a public note of the fact, to keep it transparent to the population and other countries?

This made me wonder some more... is the use of QE a means of conditioning/educating the public that you can print money, as long is it is made public knowledge (transparency) and is on a promise to pay back? If you think about it, what difference does it make to inflation figures, as long as one day, it is paid back? Is this a test of fiscal responsibility for the treasury/government?

Essentially, we have already made the step which many in the US are trying to make and the Euro zone seems pretty much clueless about. As a country, we have control to borrow money from our own future productivity already. Is this the start of our debt jubilee through the back door?

All the government needs to do is use QE to monetise the debt, while simultaneously tightening up the reserve ratios (this is key, as without it, the private banks will have the ability to create yet more credit and more inflation). This would slowly neuter the private banks, while proving the case for the BoE and treasury to manage their own, interest free debt. Clearly, if this is the direction they are heading in, policy over how much the government can borrow (if any) from the future would need to be defined. The point is, we (or at least those we elect) could regain control of our own money supply and weaken the strangle hold of the private banks.

EDIT: typo

My own take on this is that the Bank of England is really just a shell company. Its assets are really minimal but it's powers of seignorage are absolute. It's not really important whether it is privately owned or state owned because the real power behind it is almost certainly privately owned, as are all central banks. It's a global cartel. The shell company that is the Bank of England is really just a shadow money making instrument operating with the consent and conaivance of the ruling elite and our supposed (sham) elected representatives. It makes absolutely no difference whether it is privately or publically owned because it doesn't have any real assets to speak of.

The assets of central banks are US

as long as we are prepared to service fictional debt, the game goes on

Edited by UK Debt Slave

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Good question. I wasn't aware the BofE borrowed money from abroad, why would they need to?

Have you heard of the Ways and Means account? My (very limited) understanding of this is that its the overdraft the gov't hold with the BofE

This would involve using the Ways and Means bank account at the Bank to buy government securities and would, in effect, amount to printing cash

http://www.telegraph.co.uk/finance/economi...-injection.html

Can anyone buy shares in the ECB then? How much profit does it make?! And if they're owned by the big European banks as you say then there has to be some conflict of interest when they decide to load up on bad debts.

Edited by chefdave

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My own take on this is that the Bank of England is really just a shell company. Its assets are really minimal but it's powers of seignorage are absolute. It's not really important whether it is privately owned or state owned because the real power behind it is almost certainly privately owned, as are all central banks. It's a global cartel. The shell company that is the Bank of England is really just a shadow money making instrument operating with the consent and conaivance of the ruling elite and our supposed (sham) elected representatives. It makes absolutely no difference whether it is privately or publically owned because it doesn't have any real assets to speak of.

The assets of central banks are US

as long as we are prepared to service fictional debt, the game goes on

If you have the power of seigniorage, then as long as you wield that power responsively (ie. use it as a temporary loan), then why is there a need to borrow at interest from others? As they have to ask permission from the treasury to print, they cannot act independent of government control in this way - it has to be sanctioned by our elected representatives.

Of course, whether we can trust our current elected government is another problem, but at least we have a state owned central bank. Should we choose to use it responsibly and constructively, we need not be slaves to the private banking elite. This is at least some cause for hope...

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If you have the power of seigniorage, then as long as you wield that power responsively (ie. use it as a temporary loan), then why is there a need to borrow at interest from others? As they have to ask permission from the treasury to print, they cannot act independent of government control in this way - it has to be sanctioned by our elected representatives.

Of course, whether we can trust our current elected government is another problem, but at least we have a state owned central bank. Should we choose to use it responsibly and constructively, we need not be slaves to the private banking elite. This is at least some cause for hope...

The BoE is still privately owned.

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The Fed being a private bank is not the main problem - its anti-free market powers of interest-rate setting and money creation is.

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Guest UK Debt Slave
The BoE is still privately owned.

I suspect so........but try proving it!

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Good question. I wasn't aware the BofE borrowed money from abroad, why would they need to?

Unless I have confused something, foreign buyers of our issued gilts are essentially lending the government money at interest from abroad. Why would we offer this, when the BoE can just print it via QE? Of course, there is a need to repay this money, as otherwise it is inflationary, but this is no secret - monetary inflation leading to price inflation isn't a complicated concept for politicians and the general public to understand.

Have you heard of the Ways and Means account? My (very limited) understanding of this is that its the overdraft the gov't hold with the BofE

http://www.telegraph.co.uk/finance/economi...-injection.html

I've not heard of this Ways and Means account before, but isn't this what they are already doing by using QE to buy government gilts?

I noticed this in that link:

The main obstacle is that the policy could be found to conflict with European Union laws on how governments manage their budgets.

I wonder why such laws exist. If we wanted to debase our currency, why should the EU be bothered? Do I sense a whiff of the private banker's ink on this law?

Can anyone buy shares in the ECB then? How much profit does it make?! And if they're owned by the big European banks as you say then there has to be some conflict of interest when they decide to load up on bad debts.

I'm not sure... it took a bit of googling to find the information about it being privately owned at all. It seems to operate like the Federal Reserve, with the big banks holding a stake in it. This seems like a pretty cosy situation to me - what the private banks want, the private banks will likely get!

There is some discussion here, saying that it is the central banks of the member states who are shareholders. I am not sure which of these would be private and which would not be (if it's true!): http://www.answers.com/topic/central-bank

Does anyone else know more information about this?

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The BoE is still privately owned.

Are you saying it wasn't nationalised or are you saying that the private bankers pull the levers? Either way, the BoE can clearly be asked to use quantitative easing when required, but only at the permission of the treasury. Can the government instruct the BoE to use QE it the moment or does the BoE have to offer it?

The more I think about a lot of this "high finance", the less it makes sense. Is it me or do we live in a world which makes no sense at all? :blink:

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If you have the power of seigniorage, then as long as you wield that power responsively (ie. use it as a temporary loan), then why is there a need to borrow at interest from others? As they have to ask permission from the treasury to print, they cannot act independent of government control in this way - it has to be sanctioned by our elected representatives.

Of course, whether we can trust our current elected government is another problem, but at least we have a state owned central bank. Should we choose to use it responsibly and constructively, we need not be slaves to the private banking elite. This is at least some cause for hope...

It's pretty bloody obvious that our 'elected representatives DO NOT represent the people

Our democracy is a sham. Conservative/Labour/LibDem/Democrat/republican??????

It makes not one iota of difference, and that of course is precisely how it is supposed to work. The ruling elite creates an illusion of choice when none exists.

I always chuckle when I read people saying how much they think Cameron and his sham 'conservative' party will make any difference.....cos they wont. There'll be some shuffing around here and there, some minor redistributions of the tax burden but it will always result in further expansion of the state, more for 'them'......less for everyone else.

Meet the new boss, same as the old boss - Pete Townsend

Nothing will change until the people wake the fekk up......and they wont because the state will always make sure they are just content enough not to wake up.......for the time being anyway.....

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Are you saying it wasn't nationalised or are you saying that the private bankers pull the levers? Either way, the BoE can clearly be asked to use quantitative easing when required, but only at the permission of the treasury. Can the government instruct the BoE to use QE it the moment or does the BoE have to offer it?

The more I think about a lot of this "high finance", the less it makes sense. Is it me or do we live in a world which makes no sense at all? :blink:

Yes......but deliberately so.

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Are you saying it wasn't nationalised or are you saying that the private bankers pull the levers? Either way, the BoE can clearly be asked to use quantitative easing when required, but only at the permission of the treasury. Can the government instruct the BoE to use QE it the moment or does the BoE have to offer it?

The more I think about a lot of this "high finance", the less it makes sense. Is it me or do we live in a world which makes no sense at all? :blink:

In the "nationalisation" they just changed the names of everything - it's like the fed in that way.

It works like this - whatever the top people want to do, gets done. Reasons are made up on the fly to excuse whatever it is that's commanded at whim.

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It's pretty bloody obvious that our 'elected representatives DO NOT represent the people

Our democracy is a sham. Conservative/Labour/LibDem/Democrat/republican??????

It makes not one iota of difference, and that of course is precisely how it is supposed to work. The ruling elite creates an illusion of choice when none exists.

I always chuckle when I read people saying how much they think Cameron and his sham 'conservative' party will make any difference.....cos they wont. There'll be some shuffing around here and there, some minor redistributions of the tax burden but it will always result in further expansion of the state, more for 'them'......less for everyone else.

Nothing will change until the people wake the fekk up......and they wont because the state will always make sure they are just content enough not to wake up.......for the time being anyway.....

I know what you mean, but we are all capable of standing for election and the electorate can choose any of us - we are not that corrupted yet! Of course, people tend to vote between the big two parties and most who are elected tow the line, but this can be changed too.

If the house doesn't reform, I can only see more and more fringe parties being elected, until changes start to happen. Once people know why things are so bad and want to change it, the frame work is there for people to stand up and make a difference. While ever the apathy remains, the new guard will be much like the old.

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In the "nationalisation" they just changed the names of everything - it's like the fed in that way.

It works like this - whatever the top people want to do, gets done. Reasons are made up on the fly to excuse whatever it is that's commanded at whim.

But we don't have to stand for it - they are accountable to us.

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But we don't have to stand for it - they are accountable to us.

In your dreams.................... ;)

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Unless I have confused something, foreign buyers of our issued gilts are essentially lending the government money at interest from abroad. Why would we offer this, when the BoE can just print it via QE? Of course, there is a need to repay this money, as otherwise it is inflationary, but this is no secret - monetary inflation leading to price inflation isn't a complicated concept for politicians and the general public to understand.

Sure but you said that the BofE were borrowing money from abroad when in fact its the government that are doing so. They're two completely different institutions.

I've not heard of this Ways and Means account before, but isn't this what they are already doing by using QE to buy government gilts?

Again I'm no expert but I didn't think that the BofE were allowed to buy gilts directly from government. As far as I know there are rules set out in the Maastricht Treaty that prohibit this (as always do your own research on that one).

Buying gilts (Government debt)

How does it work? The Bank buys government debt off investors and banks rather than corporate debt. This is something the Bank had authorised by the Treasury yesterday. The aim is to bring longer-term interest rates down, ensuring that companies and lenders cut their own rates.

http://www.telegraph.co.uk/finance/finance...ive-easing.html

I wonder why such laws exist. If we wanted to debase our currency, why should the EU be bothered? Do I sense a whiff of the private banker's ink on this law?

Perhaps because Maastricht was written in the middle of the recession they were attempting to write economic stability into member states' law to ease the process of the single currency.

I'm not sure... it took a bit of googling to find the information about it being privately owned at all. It seems to operate like the Federal Reserve, with the big banks holding a stake in it. This seems like a pretty cosy situation to me - what the private banks want, the private banks will likely get!

There is some discussion here, saying that it is the central banks of the member states who are shareholders. I am not sure which of these would be private and which would not be (if it's true!): http://www.answers.com/topic/central-bank

Does anyone else know more information about this?

We could compile a of list of EU and Euro member states and their central banks to see if in the main they are privately owned institutions or public. That way we can see if there is a norm for this sort of thing.

Banque de France: Nationalised. http://www.banque-france.fr/gb/instit/histoire/histor3.htm

Edited by chefdave

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tightening up reserve ratios will have no effect while banks can legally value their assets at mark to model than to mark to market.

and while the BoE will lend then money against their impaired assets, they can keep going for as long as the BoE thinks necessary.

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