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After slamming Ron Paul (every week now) and his effort to audit the Fed, radio show "Money-Talk" host Bob Brinker said today that the FED turned over billions of dollars to the US Treasury from its operations at the end of last year, implying that the FED is making money for the United States.

He continued to belittle Ron Paul and noted that he is a physician--NOT an economist, and therefore has no knowledege of economics, especially monetary policy.

I had never heard before that the FED actually pays money to the U.S Treasury. If this is true, how does the FED MAKE its money???

Personally I think it's an accounting trick where maybe they return some of the interest our tax dollars pay them each year and then claim it to be profits.

Any thoughts on this?

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I heard the show, Brinker

I heard the show, Brinker also said something about Ron Paul's audit the Fed purpose was so congress could take over control of the money and that He didn't think that would be good at all. Shortly after that a caller called in and said In the Constitution it says Congress has the power to coin money etc.. and that works as a safeguard because Congress can be voted out if need be, but the Federal Reserve can't be voted on by the people. I think thats a great point I really haven't heard before.

A few months ago, Bob had a show all about how the North American Union was made up and not true at all, than a short time after he admitted it was true and was against it. So there may be hope for Him if he gets the right info, and that would be a great asset to the cause.

MANY liberty callers have tried to set him straight...

But Brinker is too in love with the FED to see the light I'm afraid.

I called last week and suggested he read "The Creature From Jekyll Island."

He discounts that book and anyone who even mentions it.

His call-screener said that it's an outdated book, but I informed him that it's in its 25th printing and is very much up to date which surprised him.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

From what I understand, The

From what I understand, The Fed's income is used to pay for their operating budget and whatever is left over goes to Treasury.

"If this is true, how does the FED MAKE its money???"

The true power of the Fed comes from being able to pick the winners and the losers.

They get to decide which U.S. companies receive nearly interest free loans. They get to decide which foreign banks receive near interest free loans. They get to decide which nations get these loans, which foreign companies get these loans.... And they do it all in secrecy, right under the noses of our political representatives who, aside from a few, apparently could care less.

The Fed can manipulate our money supply and our interest rates. Those in the know, or their friends, or the friends' friends can take advantage of these facts and become incredibly wealthy. You can make money whether the markets go up or go down, so as long as the Fed can manipulate our money supply, interest rates and markets they will be able to take advantage of it.

The Fed pays interest to banks who hold many hundreds of billions of dollars with them in reserve. The interest, from what I recall, is a few percentage points higher than what those banks borrowed the money for (near zero, from us). Who pays that interest? Not only are the American People on the hook for all that bailout money, we're also paying the banks interest for depositing that money with the Fed (money that we lent them in the first place).

The interest income of the Fed, in my opinion, is small potatoes compared to the real power and benefits they receive.


With the fed doing such a great job....

Then there should be no issues when being audited. If there is nothing left to hide, then the books should be opened to build confidence with the American people. The protectionism for the fed is only showing those that have direct involvement or have a personal agenda in protecting the fed. Sounds like a great time for Dr. Paul to call this moron out for a debate.

Always remember:
"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." ~ Samuel Adams
If they hate us for our freedom, they must LOVE us now....

Stay IRATE, remain TIRELESS, an

Yes, the FED does pay "currency" into the treasury in the form

of their own Federal Reserve Notes or digital equivalents. They have never as far as I know, paid any "money" into the Treasury. (meaning gold and silver coin)

I believe the measure is a 6% "franchise" fee assessed on their profits. How exactly they obtain those profits is another story, but they do obtain them directly by paying for the costs of printing their notes to the BEP and then loaning them out at face value plus interest to the U.S. government. In short, this is a mere accounting gimmick that produces a slightly reduced net interest payment to the FED by the U.S. government.

Here's how it happens in a nutshell:

You print up 100 documents at 2¢ apiece and sell them to the FED. There is no profit made by you in this transaction, you charged them your cost.

Then you borrow $10,000 from the fed by selling them a negotiable instrument known as a "Treasury Bill" secured by your taxing authority. You promise to pay upon redemption at expiration of the loan say 3% interest or in this case $300.00.

The FED "pays" you with 100 of the documents they bought from you for 2¢ apiece. These documents are Federal Reserve Notes, and are merely bank notes of the FED which provide evidence that the you, the U.S. government owes the fed the amount printed on the face of the note, in this case $100 each.

You "spend" those notes into circulation as "payment" for the various goods and services you use as a government, including on the salaries of officials and other employees.

At the expiration of the term of the loan, or one year in this case, you "pay" the FED back the $10,000 you borrowed, plus the $300 in interest, by giving them 130 Federal Reserve Notes with a face value of $100 printed on them. (or their digital equivalent)

The FED, since it is a government chartered corporation, "pays" you 6% of its profits at the end of the year. What was it's profit?

Revenue: $10,300
Cost: $2 for the notes plus operating expenses.

What those expenses are, I'll leave as an exercise to you.

But this does leave enormous room for profit. And we can work backwards by taking the money paid by the FED as a "royalty" to the treasury, and see what their profit was.

But since this still doesn't account for the vast discrepancy noted above, this means their "profits" that they pay royalties on only include profits earned from certain sources. Profits earned from loaning phantom "money" that never existed are not included in this calculation but are pocketed by the shareholders of the FED.

Essentially the FED will pay back 6% of the $300 interest payment or $18.

Revenue for the Treasury: $2 + $18 = $20.
Cost to the Treasury for Borrowing: $300

Net cost to the Treasury: $280.

New "money" in circulation that dilutes purchasing power: $10,000

Amount We the People have lost in the deal: $280 plus loss of purchasing power. (the loss is due to taxation and inflation)

Notice that you printed 100 documents and had to return 130. Where did the other 30 come from? Those documents were printed earlier by you, the government, and given to employees or service and goods providers in lieu of payment. In essence, you injected 100 notes into the economy at a $10,000 face value, and then took out 130 notes at a face value of $10,300. An additional $20 was returned to you in royalties and as payment for the printing of the notes so the economy is at a net deficit of $280. "Growth" is a fiction that is spurred and made possible by the accounting gimmicks and only looking at one side of the equation as a "snapshot" in time.

In reality, little or no money circulates, and hardly anyone pays anyone for anything. But the FED does use this to exchange those worthless notes for real property and real money and services with you.

Of course this is simplified, and it happens on the scale of billions and trillions of dollars every year, but you get the picture in a nutshell.

All wrong. (Sorry)

The "franchise fee" that goes to the Treasury is ALL of the Fed's profits except for 6% of the capital investments of the member banks. The member banks do not keep even 6% of the Fed's profits. A member bank receives a maximum of 6% return on the money it has invested in Fed stock.

The original law required that all of the profits be retained by the Fed and its member banks, to help keep the dollar sound. The "franchise fee" is a way to skirt that. It's not really a fee. It's just another tax - a back door way to feed the beast.

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"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

reedr3v's picture

All of the hit jobs on our candidates

are going to keep this r3volutionary army very busy correcting misinformation.

Sorry, got the #'s backwards.

I stand corrected.

Sounds like MAGIC to me...

Money Magicians.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

I think he protests too much.

I think he protests too much. I heard him give the go-ahead to a guy who was considering buying a house right at the top of the bubble. It must hurt to be shown up by a mere physician and congressman.

He is right about the Fed making money for the treasury. The Fed gives the treasury all profits in excess of 6% of the member banks' capital investments. Is that a good thing? Or is it just another tax? If the member banks were allowed to keep all the profits, maybe they would lend the money to actual value-producing companies in the private sector. What matters is how much real goods and labor the government wastes, not where the Fed puts the computer bytes that say who has how much funny money. The Fed facilitates government waste and mal-investment. Without the Fed, the government would have to scale way back.

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"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

Yes, you made an important observation...

You said; If the member banks were allowed to keep all the profits, maybe they would lend the money to actual value-producing companies in the private sector.

And THIS is the HIDDEN part that we don't think about because it's hard to understand and never questioned by the average American.

This WHOLE FED system was DESIGNED to confuse and confound us so that we can't even ask intelligent questions.

These guys are money magicians from how I understand it but I really don't understand the whole system even though I've read a number of books on the subject.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul