Recently CNBC reported that the Federal Reserve bought aprox. 80% of the US Treasury securities issued in 2009.
What does that mean? Well, when the US government needs more money, they go to the Federal Reserve Bank (a PRIVATELY-owned bank, not government-owned bank). The Federal Reserve prints some greenbacks (Federal Reserve Notes... look in your wallet), and the US government issues US Treasury notes (called T-Bills) for the same amount in return.
Normally the Federal Reserve sells these Treasury notes, but last year no one wanted to buy many, so the Federal Reserve sold itself about 80% of them. Now, please note that the US Treasury notes are normally sold at a discount, but pay interest.
So the Ponzi scheme is this: the Federal Reserve creates 'money' out of nothing but a printing press and special paper. Then they loan those greenbacks to the US Government for interest, and 'buy' back the US Treasury notes which also pay interest. If they sell them, great. If they don't sell them, they are out some paper and ink, and the government still owes the full value plus interest.
Nice gig, eh?
When I decide to go be a lemming, I'll get a credit card and rack up a buncha debt. Then I'll get another couple of credit cards and get some fast-cash withdraws to pay that first credit card bill. I figure I can probably keep it up quite a few years.....
ReplyDeleteLOL, Lots of folks do just that!
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