The Money Matrix - Who Owns the FED? by Jake TowneSubmitted by bobbyw24 on Tue, 11/17/2009 - 11:00
[Note: Jake Towne will speaking this Sunday, November 22nd in Philadelphia at the Constitution rEVOLution Tea Party event at City Hall and in front of the FED. Following the protest in the Independence Hall Visitor's Center I will give a talk entitled "END THE FED.... Then What? - The Transition to Sound Money." Details are here. My plank on the Federal Reserve can be read here.]
CARTEL - n. a combination of independent commercial or industrial enterprises designed to limit competition or fix prices (per Merriam-Webster's Dictionary) (emblem)
"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create deposits."
- Josiah Stamp, President of the Bank of England in the 1920s
[Note: This article is updated with more infomation and the March 2009 figures released from this February article in response to a couple press requests. The figures were calculated from the FED data here, using the same method described here.]
So, who owns the Federal Reserve? Well, it certainly is not the US government, as many would suppose. In fact, I have found that quite a few - including myself last year - who are roughly aware of how the FED works but believe that the owners of the FED is a secret. Well, it is not. The FED's Purposes and Functions (page 21/146) reads:
"As of March 2004, of the nation's approximately 7,700 commercial banks approximately 2,900 were members of the Federal Reserve Systema - approximately 2,000 national banks and 900 state banks. Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, half of which must be paid in while the other half is subject to call by the Board of Governors. The holding of this stock, however, does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations. It is merely a legal obligation of Federal Reserve membership, and the stock may not be sold or pledged as collateral for loans. Member banks receive a 6 percent dividend annually on their stock, as specified by law, and vote for the Class A and Class B directors of the Reserve Bank. Stock in Federal Reserve Banks is not available for purchase by individuals or entities other than member banks."
So, the owners of the FED are simply other national and state banks. What is rather interesting is that this is no normal company stock! First, they are paid a perpetual annual dividend of 6% per the Federal Reserve Act of 1913 which is not a "law" in the technical sense that the FED implies. Second, apparently this "stock" is part of each member bank's balance sheet as only half is "paid in" to the FED and the "other half is subject to call" by the FED. The FED restates this here.
While many become quite alarmed by the mandated 6% dividend paid, please understand that this is just a babbling brook when compared to the powerful monetary torrents of fractional reserve banking and FED Open Market Operation's money creation/destruction as explained in Part 6. As I described here, in 2007 the FED earned $40.3 Billion from its security holdings, but passed $34.6 Billion to the government. The FED spent $3.3 Billion to run itself. Taking into account its revenue stream, I estimate the FED paid out roughly "just" $3.9 Billion in dividends in 2007.
Why do the owners of the FED not matter?