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Comment by prometheus76 | Hacker News Reader

The Federal Reserve is a private company with a chair that is chosen by the President of the US with advice and consent from the Senate, and serves a four-year term. There is no term limitation for this office.

The reason the US government has a national debt is because that debt is owed to the Federal Reserve, which is a private bank that loans the US government money and that sets the US monetary policy.

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>>Federal Reserve is a private company with a chair that is chosen by the President of the US with advice and consent from the Senate, and serves a four-year term

Sorry but no... You can not be a "Private Company" and have your leadership appointed by the President like any other Government Agency

The Fed is a Government Agency,

>>The reason the US government has a national debt is because that debt is owed to the Federal Reserve,

Incorrect

Some of the Debt is owned by a Federal Reserve, more recently as no one want to buy US Debt any more but....

>>which is a private bank that loans the US government money

Again FALSE....

The Federal Reserve can not Loan the US Government anything

The US Dept of Treasury issues Bonds which are sold on the Open Market, 3rd parties then Buy these Bonds, then the Fed Buys them

The Fed can not legally buy Bonds directly from the US Government. How do you think Black Rock got to be do big...

The Fed is a contractor with pomp and circumstance to make it appear different. Any private group charter can require their club leader to be approved by the Pres. and the Pres. may or may not play along.

you may have an analogy if your "Any private group charter" was established by an act of Congress, where by the Appointment of the leader was required by law to be done by the president, with the advice and consent of congress

Show me "Any private group charter" that was established by such an act of congress and i will agree with you.

Yes, Congress passed a bill 110 years ago to give a private group broad authorities. The third central bank of the USA.

The Fed is the only entity in existence that can _create_ dollars out of thin air.

US Treasury is responsible for the printed paper dollars, but only the Fed can create "digital" ones.

This is a huge but common misunderstanding.

Every time a bank makes a loan, the dollars are "created out of thin air", and slowly "destroyed" as the loan is repaid.

When a private bank makes a loan, the dollars are not created out of thin air, no. They loan out depositor's cash.

That is not how things work in the US with banks and loans, they (banks) do actually create "money out of thin air" when they make loans:

https://www.investopedia.com/articles/investing/022416/why-b...

Read the section under the heading: "How Banks Make Loans in the Real World".

creating money in the sense of lending on margin is very different from the sense in which the Fed creates money.

That's incorrect. A bank can't give out more dollars than they receive from depositors. It can give out all kinds of paper that is _valued_ in dollars, but not the digital representation of banknotes with the pictures of dead presidents on the front.

In contrast, the Fed can create actual dollars. It can just buy an asset and pay for it with money that it has just created.

Parent and GP are using different definitions of "dollar."

GP is using a strict definition (only dollar-denominated liability of the Fed is a "true" dollar), parent is using a looser definition (a dollar-denominated liability of any bank is a dollar).

If you have a fractional reserve (e.g., a bank has $100M cash backing $100M deposits one day, then loans out $30M the next day), with the strict definition you still have $100M dollars ($70M controlled by the bank, $30M that was loaned out and used to purchase stuff). But with the loose definition you have $130M ($30M is still loaned out, depositors are $70M).

Essentially the depositors have made $100M of (debt) investments in the bank, and those investments are now 70% backed by cash and 30% backed by paper (mortgages or other kinds of IOU's from whoever they loaned the $30M to).

>The reason the US government has a national debt is because that debt is owed to the Federal Reserve, which is a private bank that loans the US government money and that sets the US monetary policy.

I'm pretty sure every holder of US Treasuries (including me) is owed money by the US government.

We are both correct.

Not only that but the cash swapped for bonds is also a liability of the government, so it is just swapping one liability for another.

What we call government debt is just an operational vestige.

... https://www.thebalancemoney.com/who-owns-the-u-s-national-de...

public / private is a false dilemma

trusts, foundations, and a host of other entities are ‘orphaned’ entities and is essentially a third category which is more accurate for the Federal Reserve as well

The Board of Governors is a public entity with an appointment, and the rest of the entity has a rotation of members and pretty full autonomy on how it runs on the inside at the employee level

It's a club funded by interest rate skimming with opaque structure and reporting requirements which don't conform to typical reporting requirements. CEO of Silicon Valley Bank was on BoD of SFO branch, which failed to adequately regulate SVB.

https://www.svb.com/news/company-news/svb-financial-group-ce...

"SVB Financial Group CEO Elected to the Board of Directors of the Federal Reserve Bank of San Francisco"

why do you think it was a regulatory failure? it's not the Fed's job to make sure every bank has a sane business plan and rock solid conservative riskless strategy.

its job is to make sure the entire system can take the stress of failing banks.

the FDIC did its job too.

It's their job.

https://www.federalreserve.gov/supervisionreg/topics/capital...

The private club Federal Reserve branch in SFO was supposed to regulate SVB which had C-level executive on BoD of the regulator. The regulator failed to take prompt corrective action when SVB had capital inadequacy. SVB subsequently, months later, had inadequate capital to continue operating.

> SVB had capital inadequacy

based on which criteria?

Did the Fed own significant treasuries prior to QE?

None of what you just said is true, it’s libertarian propaganda.

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