Special to L. Neil Smith’s The Libertarian Enterprise

Conspiracy theorists have a history of sullying the good name of the Federal Reserve. They even attempt to get legislation passed in Congress so that an audit can be authorized. Their efforts have been unsuccessful.

The Federal Reserve banks have claimed they are privately owned institutions and not subject to FOIA requests, and support the claim with two Federal court adjudications on other issues. Those court opinions specifically identify the holdings are restricted to the issues before the court.

FOIA requests directed to the Federal Reserve system are codified at 12 CFR 261. 12 CFR § 261.3 (a) identifies the Secretary of the Board of Governors as custodian of all Federal Reserve records. 12 CFR § 261.3 (c) directs service to the Secretary of the Board. Procedures for requesting records are detailed at 12 CFR § 261.12.(b) and (c). Bloomberg media received court support for their demand for FOIA access to Federal Reserve bank information:

"So long as records at the [Federal Reserve Banks] satisfy the plain language meaning of 12 C.F.R. § 261.2(i)(1), they qualify as agency records of the Board and are subject to FOIA requests. …[The CFR reads]: Records of the Board include . . . all information coming into the possession and under the control of the Board, any Board member, any Federal Reserve Bank, or any officer, employee, or agent of the Board or of any Federal Reserve Bank, in the performance of functions for or on behalf of the Board that constitute part of the Board's official files; or [records] [t]hat are maintained for administrative reasons in the regular course of business in official files in any division or office of the Board or any Federal Reserve Bank in connection with the transaction of any official business. .[provisions are to be broadly applied].The FRBs give all revenue in excess of expenses to the U.S. Treasury. 12 U.S.C. § 289." Bloomberg L.P. v. Board. of Governors of Federal Reserve System, 649 F. Supp. 2d 262, 274++ (S.D.N.Y. 2009), aff'd, 601 F.3d 143 (2d Cir. 2010). emphasis added.

But what records would be of interest? Well, it has been theorized that a considerable amount of funds from the Federal Reserve’s handling of government funds from auctions of Treasury securities disappears.¹ The FRBNY, as fiscal agent of the U.S. government, has exclusive management of disbursement of the funds and any related function they wish to claim.² The accounts currently handle over $10 trillion annually and no audit of the funds has been found.

TreasuryDirect identifies securities for redeeming market securities usually have an approximate 10% “new cash” allocation.³ That would appear to relate to deficit spending. Funds for redeeming securities are disbursed in large part to select Primary Dealers who collect designated securities. PDs also bid on securities. Transfer of funds for redeeming securities does not increase the currency in circulation (inflation) nor does it increase the National Debt.

If funds designated as “new cash” went to the government, they would have to purchase securities. There is no known government account that receives the approximate $1 trillion annual funds. If they purchased securities, they would eliminate any increase in currency in circulation (inflation) and would not increase the national debt. This obviously does not occur. Where do the funds go? It undoubtedly involves a scramble of CUSIP numbers.⁴

The above discussion should not be confused with QEs or non-QEs. Those involve collateralized credit [not to be confused with money] extended by the Federal Reserve authorized by 12 CFR § 201.3 (a) identified as loans and, in large part, have been paid back. Some pundits claim they were made to prevent an economic collapse; some same it was a postponement.⁵ If a commercial bank was doing it, it would be called fractional reserve lending without any reserve requirement; it is the key to rampant inflation.

It would appear that FOIA can be used to obtain the records maintained by the FRBNY as to the disbursement of “new cash’ funds and the consideration received for them from the identified recipients. Some pundits claim the central bank is owned by the Rothschild.⁶ Other pundits claim the BOG is a privately held corporation with shares owned by select Primary Dealers and others.⁷ Maybe FOIA can find out what is correct.

Failure to take any action has been prophesied to result in a Greek/Argentina oppression and collapse of society.⁸

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