So the Fed sells bonds. Now correct me if I'm wrong, my mind is not that strong when it comes to things like finance and what not, but aren't bonds a way for an entity to borrow money for a certain period of time and in return. pay back that bond holder a certain interest rate? Again, if I'm wrong, please stop me.
Great questions you are asking.
To increase money supply the US Treasury prints and sells Treasury Bonds, most are bought by the Federal Reserve, which is a private enterprise whose stock was all bought up by private individuals, corporations and European central banks (privately owned) by 1914 and have not been traded since. Of the original stock approximately 60% was bought by Europeans.
Who would trade away such a sweetheart deal?
The Treasury Bonds are backed by the ability and willingness of the people of the USA to repay through taxes.
The US government also pays for the printing of the Federal Reserve notes which are used to buy the T Bonds. The Treasury must pay interest plus the principle back when the bonds mature.
The Fed then holds or sells the Bonds, using money that was created out of nothing.
There is a stipulation in the original Federal Reserve Act that says the fed returns all profits to the Treasury.
However there have been over 300 amendments to the original act, each serving to strengthen the position of the fed.
For one thing we have zero capability of monitoring the interworkings of the fed, it has yet to ever have been audited.
We did recently get a GOA accounting of what happened to some of the recent emergency funding and found that 60% of $16 trillion went to foreign banks, mostly European but including Libya for instance.
One must understand a little about the BIS (Bank of International Settlements) to understand how the fed actually works.
The BIS is the clearing house for central (privately owned) banks on a worldwide basis.
That's a start.
