Big Head Press

L. Neil Smith's
Number 798, November 23, 2014

There is no one in charge.
There are only lies.

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The Federal Reserve Embezzles $4 Billion from the U.S. Government—Daily
by Olde Reb

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Special to L. Neil Smith's The Libertarian Enterprise

A popular concept is that the government will "borrow" from the Federal Reserve for deficit spending. This involves giving a Treasury security (bill, bond, or note) to the Fed as collateral and the Federal Reserve Bank of New York will credit an account of the government in the amount of the security. The government will then buy military goods, fund social programs, pay government salaries, etc. with the book entry money.

(NOTE: The Fed does not "print" the money as Mr. Bernanke recently informed Congress. The Fed buys the FR notes [those things that are in our billfolds] from the U.S. Treasury for the cost of printing, i,e., four to nine cents each. The Fed only makes book entry money.)

Voila !! Additional (fiat) money has been injected into the economy of the Nation which, in the projection of Janet Yellen, may stabilize the economy. (Actually, it continues the exponential inflation of the bubble started in 1913 which is approaching rupture.)

Observe the Fed holds the collateral. When the collateral matures, government must pay the Fed to redeem the security. The fiat money spent by government must be re-acquired and paid to the Fed. But the government has already spent the money and the bank account is zero.

So the Fed can/did sell the collateral at the auctions of Treasury securities. If the funds went to the government, the Fed would essentially give up the security. Clearly, this does not happen.

Also, if the funds went to the government, the money would by law be used to pay off the debt of the security that had been issued. This would negate any increase of the (national) debt. Further, it would eliminate any inflation from increased currency in circulation. Since the national debt consistently increases and inflation is prevenient, the funds from securities sold for deficit spending cannot go to the government.

The Federal Reserve Bank of New York has the exclusive responsibility of handling all accounting and funds for auctions of Treasury securities. This fact has been confirmed from both government and Federal Reserve websites. The funds from deficit spending securities sales go into the FRBNY but they are not recorded as coming out. These accounts are not mentioned in the ANNUAL REPORT TO CONGRESS nor are they dispensed in any public record

Receipts from the 2010 auctions totaled $8.4 trillion. $7 trillion was used to roll-over preexisting securities (without increasing the national debt) and $1.4 trillion was received from deficit spending as detailed above. That $1.4 trillion ($4 billion every day—7/52) disappeared in the catacombs of the FRBNY. That is $4000 annually for every man, woman, and child in every state.

The funds from security auctions involve transactions with the Primary Dealers. It is a simple matter to co-mingle funds from the auctions of roll-over security sales with deficit spending sales. The embezzled profit for owners of the BOG is concealed among those transactions. Privately held corporations, such as the BOG, are not required to make their records public. The FRBNY accounts have never been audited. There is NO consideration put up by the BOG to receive this profit.

Profit of the Fed/BOG legally belongs to the government. Concealment of funds belonging to the government is identified as embezzlement and is subject to one year incarceration per each count.

[condensed from here and here ]

What do the owners of the Fed/ BOG do with the embezzled money? Ref: this ; or this ; or this.

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