L.A. Liberty

A Libertarian in Leftywood

The Wolves of Constitution Ave

Here’s how it works. The Treasury sells bonds at interest. Some of these bonds are bought by private citizens, governments, or other central banks, and some are bought by the Federal Reserve. The Treasury pays interest on all these bonds, but the Fed sends the payment right back at year end. It’s like a free lunch.

But one of the certainties in economics is that “there ain’t no such thing as a free lunch.” Loosely stated, there is always a cost to an action. So who pays in the case of the Fed’s remittances?

If Congress is making money, you better believe it is coming from the pockets of Americans. The Fed earned the money it remitted back to Congress by buying bonds. The offsetting transaction is issuing money. Since 2008, a period during which the Fed remitted $400 billion back to the Treasury (probably more than it has remitted over its whole 100-year existence), the Fed increased its holdings of U.S. Treasuries from $800 billion to over $2.2 trillion. It paid for these bonds by, effectively, issuing money. …

As the old saying goes, the best way to make money is in the money business. Actually, this is only half true. The best way to make money is to be the institution that grants (and gets the kickback from) the monopoly powers over the nation’s money supply. Over the past ten years the U.S. Treasury has received over a half trillion dollars in distributions remitted back to it from the Federal Reserve.

Notes:

  1. alightinthenight reblogged this from laliberty
  2. bitchbetterhavemyhunny reblogged this from michaelangerlo
  3. michaelangerlo reblogged this from iamfedup00 and added:
    lol. You look at those charts and that post and that is the conclusion you come to? Time to start taking vitamins or...
  4. hoenigkoenig reblogged this from laliberty
  5. stuff-that-irks-me reblogged this from laliberty
  6. amphigoryglory reblogged this from laliberty
  7. chiarc-morn reblogged this from laliberty
  8. iamfedup00 reblogged this from laliberty and added:
    It is a shame that unregulated business got us into this situation.
  9. trillrashad reblogged this from laliberty
  10. laliberty posted this

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