19 replies to this topic

[PS:Annonymous]

http://www.usnews.co...h-the-most-debt




The 10 Countries With the Most Debt

The United States has the largest debt in the world but other countries face more dire situations


By Danielle Kurtzleben
January 28, 2011   RSS Feed Print

• The Republicans' Stunning Hypocrisy on the 'Fiscal Cliff'
  
• Congressional Brinkmanship Threatens Economic Recovery
  
• One Year Later, Some Upside to America's Debt Downgrade

As the United States inches closer to its current $14.3 trillion debtceiling, policymakers are renewing the public debate over government borrowing and spending. Earlier this year, White House economic adviser Austan Goolsbee warned that, if the ceiling is not raised, "The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008." Many top Republicans, meanwhile, are more cautious about such an increase. South Carolina Republican Sen. Lindsey Graham has expressed cautious support for raising the ceiling, but also has advocated for decreasing government spending to 2010 levels. South Carolina's junior Republican senator, Jim DeMint, is even more hawkish on the subject, calling for the passage of a balanced budget amendment. [See a slide show of the 10 countries with the most debt.]
Even accounting for inflation, the total U.S. public debt--the amount of treasury securities held outside the government, plus federal obligations for programs like Social Security--has increased more than fourfold since 1990, when it stood at just over $3 trillion. [See the 10 states with the largest budget shortfalls.]
While the United States total public debt is indeed the largest in the world, a broader context shows that other countries face even more dire debt situations. One way to put debt in perspective is to compare it to gross domestic product, or GDP. The debt-to-GDP ratio is one primary indicator of a country's economic health; a lower ratio is generally seen as more favorable, as it shows that a country is producing enough to eventually be able to repay its debts. According to figures from the International Monetary Fund, Japan has the largest debt-to-GDP ratio in the world, with government debt more than twice the size of its GDP. Also notable are Greece and Iceland, which have both suffered major recent financial crises and both have government debts that exceed their annual GDPs. The U.S. ratio of 92.7 percent is nearly 20 percentage points away from inclusion in the top 10 countries with the worst debt-to-GDP ratios, listed below:

Country Debt as Percent of GDP (2010 est.) Japan 225.9 St. Kitts and Nevis 196.3 Lebanon 139.0 Jamaica 135.7 Greece 130.2 Eritrea 129.7 Grenada 119.1
Italy 118.4 Iceland 115.6
Barbados 111.6

Of course, many countries with such high ratios, such as the Caribbean nations of Jamaica, and Barbados, are not among the world's economic powerhouses. A more apples-to-apples comparison is to look at the United States debt situation within the context of the other largest world economies. Among the 10 countries with the largest GDPs, the U.S. ranks third in terms of debt as a percentage of GDP, behind Japan and Italy. One major outlier on the list is China, whose 2010 GDP is estimated to be the world's second-largest, at roughly $5.7 trillion. The country's debts, however, only equal 19.1 percent of its GDP--well below the rates of nearly all other major world economies.

Country GDP (2010 est., USD) Debt as Percent of GDP (2010 est.) United States $14.6 trillion 92.7 China $5.7 trillion 19.1 Japan $5.4 trillion 225.9 Germany $3.3 trillion 75.3 France $2.6 trillion 84.2 United Kingdom $2.3 trillion 76.7 Italy $2.0 trillion 118.4 Brazil $2.0 trillion 66.8 Canada $1.6 trillion 81.7 Russia $1.5 trillion 11.1

Source: IMF World Economic Outlook Database, October 2010

[Bilal]

US has crossed 100% Debt to GDP ratio about 6 months ago... and there is no sign of it being stopped.

[SaudiArabian]

Bilal, on 05 August 2012 - 12:26 PM, said:

US has crossed 100% Debt to GDP ratio about 6 months ago... and there is no sign of it being stopped.

over half of that debt is owned by US govt institutions. its a misleading figure.

The US economy is far more powerful than what most people think. Its the Euro zone and China i'm more worried about in the long run.

[Bilal]

The balance is shifting, look at the trend of foriegn owned component of US debt, it is at ~47% but will change to a higher proportion due to a fundamentally weak economy...


"Until the 1970s foreigners owned less than 5% of the national debt. This began to change after the big run-up in oil prices. As oil exporters suddenly acquired vast financial resources they found it convenient to park them in Treasury securities, which provided liquidity and safety. By 1975 the foreign share of the national debt rose to 17%, where it stayed through the 1990s, when China began buying large amounts of Treasury bills. At the end of last year foreigners owned close to half of the publicly held national debt."

http://www.forbes.co...e-bartlett.html

[SaudiArabian]

Bilal, on 05 August 2012 - 03:27 PM, said:

The balance is shifting, look at the trend of foriegn owned component of US debt, it is at ~47% but will change to a higher proportion due to a fundamentally weak economy...


"Until the 1970s foreigners owned less than 5% of the national debt. This began to change after the big run-up in oil prices. As oil exporters suddenly acquired vast financial resources they found it convenient to park them in Treasury securities, which provided liquidity and safety. By 1975 the foreign share of the national debt rose to 17%, where it stayed through the 1990s, when China began buying large amounts of Treasury bills. At the end of last year foreigners owned close to half of the publicly held national debt."

http://www.forbes.co...e-bartlett.html

thats because these nations who bought into US debt have a problem. Their economies are incapable of incorporating that mass amount of wealth, The US economy can.

[clutch]

Why is this posted in the Pakistani Military & Strategic Discussion Forum section???

[PakSniper786]

SaudiArabian, on 05 August 2012 - 04:04 PM, said:

thats because these nations who bought into US debt have a problem. Their economies are incapable of incorporating that mass amount of wealth, The US economy can.

Wow.  What a load of #### statement, incapable?  I don't even know where to start to trash that statement.  I have my MBA from a Top 10 US Business school (University of Chicago - Booth School of Business), with the amount of wealth the Arabs are pumping out, their are many sectors they can develop internally and educate there population to contribute towards.  There are 300 million Arabs in the world, yet not a single country can build its own plane (for example), you can use your money to develop a infrastructure for Research and Development, create University programs and fund them - hire top of the industry instructors, Scholarships, etc,... and this is just one example - which can cost multi-billion and in the long run allow the countries involved to re-coop there costs and make profit.

[SaudiArabian]

PakSniper786, on 05 August 2012 - 04:59 PM, said:

Wow.  What a load of #### statement, incapable?  I don't even know where to start to trash that statement.  I have my MBA from a Top 10 US Business school (University of Chicago - Booth School of Business), with the amount of wealth the Arabs are pumping out, their are many sectors they can develop internally and educate there population to contribute towards.  There are 300 million Arabs in the world, yet not a single country can build its own plane (for example), you can use your money to develop a infrastructure for Research and Development, create University programs and fund them - hire top of the industry instructors, Scholarships, etc,... and this is just one example - which can cost multi-billion and in the long run allow the countries involved to re-coop there costs and make profit.

firstly watch your tongue,

secondly if you knew as much as you claim then why is your example talks as if there is nothing called "inflation" that could literally f-up the people's lives ?

you can not over-spend money and pour too much liquidity in an economy that can not take it without sustaining heavy inflation that could kill most of the real growth. Qatar is a prime example of this.

[PS:Annonymous]

SaudiArabian, on 05 August 2012 - 02:37 PM, said:

over half of that debt is owned by US govt institutions. its a misleading figure.

The US economy is far more powerful than what most people think. Its the Euro zone and China i'm more worried about in the long run.

Would you care to tell me which government owned "institute" you are talking about that owns the US debt?

[Bilal]

SaudiArabian, on 05 August 2012 - 04:04 PM, said:

thats because these nations who bought into US debt have a problem. Their economies are incapable of incorporating that mass amount of wealth, The US economy can.

When I showed you the trend of rising foriegn ownership of US national debt you came up with a new thing. Well let me explain this point too. The only reason why these countries re-invest in US bonds is because of the perceived value of the US dollar due to historic reasons, these include bretton Wood, US historically being the highest creditor and US being the largest trading partner of all major economies and economic blocks.

Now as we stand today, US is the largest debtor nation, its being gradually replaced by the Chinese in trade, that will only leave bretton Wood, which will be replaced as China turns rembini into a fully convertible currency and does currency swap treaties with more and more countries. The writing is on the wall its just a matter of time.

[SaudiArabian]

PS:Annonymous, on 06 August 2012 - 05:17 AM, said:

Would you care to tell me which government owned "institute" you are talking about that owns the US debt?

mainly the federal reserve. It is the Central Bank of the US.

[SaudiArabian]

Bilal, on 06 August 2012 - 05:49 AM, said:

When I showed you the trend of rising foriegn ownership of US national debt you came up with a new thing. Well let me explain this point too. The only reason why these countries re-invest in US bonds is because of the perceived value of the US dollar due to historic reasons, these include bretton Wood, US historically being the highest creditor and US being the largest trading partner of all major economies and economic blocks.

Now as we stand today, US is the largest debtor nation, its being gradually replaced by the Chinese in trade, that will only leave bretton Wood, which will be replaced as China turns rembini into a fully convertible currency and does currency swap treaties with more and more countries. The writing is on the wall its just a matter of time.

So let me get this straight, you wanna tell me that China is keeping around 2 trillion invested in US debt just because of the perceived value of the dollar ? so it has nothing to do with the fact that if China sold that stake and poured that money into its economy that it would fuel up inflation, increase Yuan value, sharply reduce Chinese exports and literally kill the Chinese real economic growth ?

[Bilal]

Why dont you tell me that if it weren't for the reserve currency status, would China and others be investing such amounts in US bonds?

[PS:Annonymous]

SaudiArabian, on 06 August 2012 - 10:13 AM, said:

mainly the federal reserve. It is the Central Bank of the US.

Who Owns The Federal Reserve?   
The Fed is privately owned. Its shareholders are private banks

by Ellen Brown
Global Research, October 8, 2008
webofdebt.com

Print this article

"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."

– The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s   

The Federal Reserve (or Fed) has assumed sweeping new powers in the last year. In an unprecedented move in March 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar. The deal was particularly controversial because Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and participated in the secret weekend negotiations.¹ In September 2008, the Federal Reserve did something even more unprecedented, when it bought the world’s largest insurance company. The Fed announced on September 16 that it was giving an $85 billion loan to American International Group (AIG) for a nearly 80% stake in the mega-insurer. The Associated Press called it a "government takeover," but this was no ordinary nationalization. Unlike the U.S. Treasury, which took over Fannie Mae and Freddie Mac the week before, the Fed is not a government-owned agency. Also unprecedented was the way the deal was funded. The Associated Press reported:
"The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs."²
This is extraordinary. Why is the Treasury issuing U.S. government bonds (or debt) to fund the Fed, which is itself supposedly "the lender of last resort" created to fund the banks and the federal government? Yahoo Finance reported on September 17:
"The Treasury is setting up a temporary financing program at the Fed’s request. The program will auction Treasury bills to raise cash for the Fed’s use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters."
Normally, the Fed swaps green pieces of paper called Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal government’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes. Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Fed! Perhaps the plan is to swap them with the banks’ dodgy derivatives collateral directly, without actually putting them up for sale to outside buyers. According to Wikipedia (which translates Fedspeak into somewhat clearer terms than the Fed’s own website):
"The Term Securities Lending Facility is a 28-day facility that will offer Treasury general collateral to the Federal Reserve Bank of New York’s primary dealers in exchange for other program-eligible collateral. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. . . . The resource allows dealers to switch debt that is less liquid for U.S. government securities that are easily tradable."
"To switch debt that is less liquid for U.S. government securities that are easily tradable" means that the government gets the banks’ toxic derivative debt, and the banks get the government’s triple-A securities. Unlike the risky derivative debt, federal securities are considered "risk-free" for purposes of determining capital requirements, allowing the banks to improve their capital position so they can make new loans. (See E. Brown, "Bailout Bedlam," webofdebt.com/articles, October 2, 2008.)
In its latest power play, on October 3, 2008, the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. Reuters reported on October 3:
"The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank."³
If the Fed’s money comes ultimately from the taxpayers, that means we the taxpayers are paying interest to the banks on the banks’ own reserves – reserves maintained for their own private profit. These increasingly controversial encroachments on the public purse warrant a closer look at the central banking scheme itself. Who owns the Federal Reserve, who actually controls it, where does it get its money, and whose interests is it serving?
Not Private and Not for Profit?
The Fed’s website insists that it is not a private corporation, is not operated for profit, and is not funded by Congress. But is that true? The Federal Reserve was set up in 1913 as a "lender of last resort" to backstop bank runs, following a particularly bad bank panic in 1907. The Fed’s mandate was then and continues to be to keep the private banking system intact; and that means keeping intact the system’s most valuable asset, a monopoly on creating the national money supply. Except for coins, every dollar in circulation is now created privately as a debt to the Federal Reserve or the banking system it heads.⁴ The Fed’s website attempts to gloss over its role as chief defender and protector of this private banking club, but let’s take a closer look. The website states:
* "The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations – possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."
* "[The Federal Reserve] is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."
* "The Federal Reserve’s income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. . . . After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury."⁵
So let’s review:
1. The Fed is privately owned.
Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.
2. The fact that the Fed does not get "appropriations" from Congress basically means that it gets its money from Congress without congressional approval, by engaging in "open market operations."
Here is how it works: When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. When the Fed wants to "expand the money supply" (create money), it steps in and buys bonds from these dealers with newly-issued dollars acquired by the Fed for the cost of writing them into an account on a computer screen. These maneuvers are called "open market operations" because the Fed buys the bonds on the "open market" from the bond dealers. The bonds then become the "reserves" that the banking establishment uses to back its loans. In another bit of sleight of hand known as "fractional reserve" lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan. It was this money-creating process that prompted Wright Patman, Chairman of the House Banking and Currency Committee in the 1960s, to call the Federal Reserve "a total money-making machine." He wrote:
"When the Federal Reserve writes a check for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing a check."
3. The Fed generates profits for its shareholders.
The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders. A mere 6% a year may not be considered a profit in the world of Wall Street high finance, but most businesses that manage to cover all their expenses and give their shareholders a guaranteed 6% return are considered "for profit" corporations.
In addition to this guaranteed 6%, the banks will now be getting interest from the taxpayers on their "reserves." The basic reserve requirement set by the Federal Reserve is 10%. The website of the Federal Reserve Bank of New York explains that as money is redeposited and relent throughout the banking system, this 10% held in "reserve" can be fanned into ten times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans. Federal Reserve Statistical Release H.8 puts the total "loans and leases in bank credit" as of September 24, 2008 at $7,049 billion. Ten percent of that is $700 billion. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually – this so that the banks can retain the reserves to accumulate interest on ten times that sum in loans.
The banks earn these returns from the taxpayers for the privilege of having the banks’ interests protected by an all-powerful independent private central bank, even when those interests may be opposed to the taxpayers’ -- for example, when the banks use their special status as private money creators to fund speculative derivative schemes that threaten to collapse the U.S. economy. Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. A long list of banks (but not other corporations) is also now protected from the short selling that can crash the price of other stocks.
Time to Change the Statute?
According to the Fed’s website, the control Congress has over the Federal Reserve is limited to this:
"[T]he Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute."
As we know from watching the business news, "oversight" basically means that Congress gets to see the results when it’s over. The Fed periodically reports to Congress, but the Fed doesn’t ask; it tells. The only real leverage Congress has over the Fed is that it "can alter its responsibilities by statute." It is time for Congress to exercise that leverage and make the Federal Reserve a truly federal agency, acting by and for the people through their elected representatives. If the Fed can demand AIG’s stock in return for an $85 billion loan to the mega-insurer, we can demand the Fed’s stock in return for the trillion-or-so dollars we’ll be advancing to bail out the private banking system from its follies.
If the Fed were actually a federal agency, the government could issue U.S. legal tender directly, avoiding an unnecessary interest-bearing debt to private middlemen who create the money out of thin air themselves. Among other benefits to the taxpayers. a truly "federal" Federal Reserve could lend the full faith and credit of the United States to state and local governments interest-free, cutting the cost of infrastructure in half, restoring the thriving local economies of earlier decades.
Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, and Forbidden Medicine. Her websites are www.webofdebt.com  and www.ellenbrown.com .
Ellen Brown is a frequent contributor to Global Research.  Global Research Articles by Ellen Brown

http://www.globalres...xt=va&aid=10489

[SaudiArabian]

PS:Annonymous, on 06 August 2012 - 03:53 PM, said:

Who Owns The Federal Reserve?   
The Fed is privately owned. Its shareholders are private banks

by Ellen Brown
Global Research, October 8, 2008
webofdebt.com

Print this article

"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."

– The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s   

The Federal Reserve (or Fed) has assumed sweeping new powers in the last year. In an unprecedented move in March 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar. The deal was particularly controversial because Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and participated in the secret weekend negotiations.¹ In September 2008, the Federal Reserve did something even more unprecedented, when it bought the world’s largest insurance company. The Fed announced on September 16 that it was giving an $85 billion loan to American International Group (AIG) for a nearly 80% stake in the mega-insurer. The Associated Press called it a "government takeover," but this was no ordinary nationalization. Unlike the U.S. Treasury, which took over Fannie Mae and Freddie Mac the week before, the Fed is not a government-owned agency. Also unprecedented was the way the deal was funded. The Associated Press reported:
"The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs."²
This is extraordinary. Why is the Treasury issuing U.S. government bonds (or debt) to fund the Fed, which is itself supposedly "the lender of last resort" created to fund the banks and the federal government? Yahoo Finance reported on September 17:
"The Treasury is setting up a temporary financing program at the Fed’s request. The program will auction Treasury bills to raise cash for the Fed’s use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters."
Normally, the Fed swaps green pieces of paper called Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal government’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes. Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Fed! Perhaps the plan is to swap them with the banks’ dodgy derivatives collateral directly, without actually putting them up for sale to outside buyers. According to Wikipedia (which translates Fedspeak into somewhat clearer terms than the Fed’s own website):
"The Term Securities Lending Facility is a 28-day facility that will offer Treasury general collateral to the Federal Reserve Bank of New York’s primary dealers in exchange for other program-eligible collateral. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. . . . The resource allows dealers to switch debt that is less liquid for U.S. government securities that are easily tradable."
"To switch debt that is less liquid for U.S. government securities that are easily tradable" means that the government gets the banks’ toxic derivative debt, and the banks get the government’s triple-A securities. Unlike the risky derivative debt, federal securities are considered "risk-free" for purposes of determining capital requirements, allowing the banks to improve their capital position so they can make new loans. (See E. Brown, "Bailout Bedlam," webofdebt.com/articles, October 2, 2008.)
In its latest power play, on October 3, 2008, the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. Reuters reported on October 3:
"The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank."³
If the Fed’s money comes ultimately from the taxpayers, that means we the taxpayers are paying interest to the banks on the banks’ own reserves – reserves maintained for their own private profit. These increasingly controversial encroachments on the public purse warrant a closer look at the central banking scheme itself. Who owns the Federal Reserve, who actually controls it, where does it get its money, and whose interests is it serving?
Not Private and Not for Profit?
The Fed’s website insists that it is not a private corporation, is not operated for profit, and is not funded by Congress. But is that true? The Federal Reserve was set up in 1913 as a "lender of last resort" to backstop bank runs, following a particularly bad bank panic in 1907. The Fed’s mandate was then and continues to be to keep the private banking system intact; and that means keeping intact the system’s most valuable asset, a monopoly on creating the national money supply. Except for coins, every dollar in circulation is now created privately as a debt to the Federal Reserve or the banking system it heads.⁴ The Fed’s website attempts to gloss over its role as chief defender and protector of this private banking club, but let’s take a closer look. The website states:
* "The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations – possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."
* "[The Federal Reserve] is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."
* "The Federal Reserve’s income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. . . . After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury."⁵
So let’s review:
1. The Fed is privately owned.
Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.
2. The fact that the Fed does not get "appropriations" from Congress basically means that it gets its money from Congress without congressional approval, by engaging in "open market operations."
Here is how it works: When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. When the Fed wants to "expand the money supply" (create money), it steps in and buys bonds from these dealers with newly-issued dollars acquired by the Fed for the cost of writing them into an account on a computer screen. These maneuvers are called "open market operations" because the Fed buys the bonds on the "open market" from the bond dealers. The bonds then become the "reserves" that the banking establishment uses to back its loans. In another bit of sleight of hand known as "fractional reserve" lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan. It was this money-creating process that prompted Wright Patman, Chairman of the House Banking and Currency Committee in the 1960s, to call the Federal Reserve "a total money-making machine." He wrote:
"When the Federal Reserve writes a check for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing a check."
3. The Fed generates profits for its shareholders.
The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders. A mere 6% a year may not be considered a profit in the world of Wall Street high finance, but most businesses that manage to cover all their expenses and give their shareholders a guaranteed 6% return are considered "for profit" corporations.
In addition to this guaranteed 6%, the banks will now be getting interest from the taxpayers on their "reserves." The basic reserve requirement set by the Federal Reserve is 10%. The website of the Federal Reserve Bank of New York explains that as money is redeposited and relent throughout the banking system, this 10% held in "reserve" can be fanned into ten times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans. Federal Reserve Statistical Release H.8 puts the total "loans and leases in bank credit" as of September 24, 2008 at $7,049 billion. Ten percent of that is $700 billion. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually – this so that the banks can retain the reserves to accumulate interest on ten times that sum in loans.
The banks earn these returns from the taxpayers for the privilege of having the banks’ interests protected by an all-powerful independent private central bank, even when those interests may be opposed to the taxpayers’ -- for example, when the banks use their special status as private money creators to fund speculative derivative schemes that threaten to collapse the U.S. economy. Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. A long list of banks (but not other corporations) is also now protected from the short selling that can crash the price of other stocks.
Time to Change the Statute?
According to the Fed’s website, the control Congress has over the Federal Reserve is limited to this:
"[T]he Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute."
As we know from watching the business news, "oversight" basically means that Congress gets to see the results when it’s over. The Fed periodically reports to Congress, but the Fed doesn’t ask; it tells. The only real leverage Congress has over the Fed is that it "can alter its responsibilities by statute." It is time for Congress to exercise that leverage and make the Federal Reserve a truly federal agency, acting by and for the people through their elected representatives. If the Fed can demand AIG’s stock in return for an $85 billion loan to the mega-insurer, we can demand the Fed’s stock in return for the trillion-or-so dollars we’ll be advancing to bail out the private banking system from its follies.
If the Fed were actually a federal agency, the government could issue U.S. legal tender directly, avoiding an unnecessary interest-bearing debt to private middlemen who create the money out of thin air themselves. Among other benefits to the taxpayers. a truly "federal" Federal Reserve could lend the full faith and credit of the United States to state and local governments interest-free, cutting the cost of infrastructure in half, restoring the thriving local economies of earlier decades.
Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, and Forbidden Medicine. Her websites are www.webofdebt.com  and www.ellenbrown.com .
Ellen Brown is a frequent contributor to Global Research.  Global Research Articles by Ellen Brown

http://www.globalres...xt=va&aid=10489

Interesting read

[Jazba-e-Kashmir]

Portugal, Spain, Italy, Greece and Cyprus are all western economies, they have severely harsh, bad and rotten economies!

E.g. the economies have effected so much in those countries that ie. women in Spain are selling themselves, yes becoming prostitutes that is!! Just to survive.

The social benefit system has failed and food-aid, which was intended to poor African countries, are being distributed in Spain!

The former middle class Spanish people are now seen on streets begging for money!

This is Spain, which is known for great football teams such as FC Barcelona and Real Madrid, Spanish food culture, culture tourism with a lot of Islamic Heritage and not least the warm Spanish weather which majority of europeans enjoy fully!


But seems like since it is interests of the western countries to live in a bubble world and to turn a blind eye for their own failures and self destructing decisions.

One advice to all: don't trade in euros and dollars, no one really knows when these two curriencies are going to decrease further and it is very potentiel they will do so.Funny thing is though, few years ago the irnoy was all western/european countries stood united supporting the ridiculating cartoons of Prophet Muhammad (SAWS) and in present time, every western/european country is ready to ditch to save their own individual economies! It's such a blood joke and disgrace, the western countries aren't really united but have prejudices against themselves and hate one another - calling rude names to every european country that is destroying their own economy. - The Germans are hating the South Europeans because they paid off their debt without having anything to do about it- The Germans have lost all of their trust in the Euro and want to use the old German Deutsche Mark  - The Brits are leaving Spain to return back to the UK and wont invest any longer in Spain. - The French are known for being rude so no one wants to have anything to do with them- Scandanavian countries don't have the euro and are mentally isolated from the rest of europe,- Easteuropean countries are known for being criminal, corrupt and incompetent; sending prostitutes to Northern Europe, smuggling weapons and stealing all kind of things from the other European countries.And still there is nothing wrong with western economies because that is how the white-western mindset is.

Peace

[blueazure]

barring maybe sweden and germany, much of europe is in a mess

JK, whats going on in spain ?

[Jazba-e-Kashmir]

blueazure, on 08 August 2012 - 02:02 AM, said:

barring maybe sweden and germany, much of europe is in a mess

JK, whats going on in spain ?

brother; a big economic mess. the Spanish govt. has passed higher taxes on everything and the prime minister does not hear his own people of what they want; financial governmental support of creating jobs.Instead the spainish govt. supported the banks because it thought by funding the banks more jobs and an improvement of the Spanish economy.But the banks became bankrupt and the spanish govt doesn't know how to retrieve back the money from the banks so the spanish people are becoming scapegoats and sacrificed in order to save the humiliating and embarrassing wrong decision of supporting the banks. And to protect the banks since they also have great influence in the spainish economy afterall.Wont be a surprise if the spanish people would do the same as it happend in greece; directign their anger and frustration at the banks.Peace

[PakShah]

blueazure, on 08 August 2012 - 02:02 AM, said:

barring maybe sweden and germany, much of europe is in a mess

JK, whats going on in spain ?

More women in Spain are turning to prostitution.

http://www.aljazeera...4948466393.html

[Jazba-e-Kashmir]

i read an article in a newspaper where it stood:

2/3 Germans stand for this:
- they think european union is waste of time
- no solidarity among europeans to stand together
- the euro isn't accountable, it's non-thrustworthy
- they want the Deutch Mark back again

Peace