Here’s how the Federal Reserve really operates.

OPERATION OF THE FEDERAL RESERVE

Submitted by an Anonymous Researcher

The narrative the public is told is the Federal Reserve buys a deficit spending Treasury security which gives the government funds to pay for goods and services. The purchase is made with a book-entry of fiat credit of the Fed. The Fed has no assets, assignable to the government, except that which has been received from the US government. The fiat credit received by the government is transferred to govt suppliers who deposit the vouchers in commercial banks. Inflationary credit is by this means added to the market.

The Treasury security, now the property of the Fed, is destined to be sold. It is moved to the department that the Fed uses to prepare government Treasury securities for redeeming the approximate annual current $16 Trillion of maturing securities in the market. Primary Dealers have a major role in the collecting of maturing securities.

Whether it becomes a component of future securities, or it is auctioned as a separate security, is a matter of speculation. The Fed does not wish to discuss it and the accounts have never been audited. The Federal Reserve Bank of New York has exclusive control of disbursements of the auction accounts and any related action to which it wishes to claim. Ref. 31 CFR § 375.3.

The ANNUAL REPORT TO CONGRESS audits the operational accounts of the Fed. The client accounts of securities are not included. The BOG sets the parameters for the audit.

The destination of the deficit spending value is never discussed. It is obviously an asset of the Fed. If it was used to buy Treasury securities in the market, that would negate any increase in the National Debt. Obviously that does not occur. No record that it has been gifted to the government has been found.

The Federal Reserve Board of Governors has total control over the 12 FR Bank franchises which are purchased by regional commercial banks. The BOG can terminate any of the 108 directors of the Banks without cause and without recourse. The BOG retains records of significant accounts of the franchised Banks. That the BOG operates as a closely held private corporation for profit with shareholders has never been denied. The classification of agency is not applicable to for-profit entities.

That the $36 Trillion value of auctioned deficit spending Treasury securities would be distributed to shareholders of the FRBOG, Inc., or some such corporation, appears suspect. All profit of the Fed legally belongs to the government.

The relevant records of sales/auctions of government Treasury securities appears to have been declared subject to audit by the GAO and to demand by FOIA in a Federal District Court case of Bloomberg v Federal Reserve and affirmed by the Second Circuit Appellate Court in 2010.

The Federal Reserve’s fiat credit used to buy the Treasury security from the government historically was identified as redeemable in gold, and then redeemable in lawful money. In 1933, by bogus legislation, it became identified as a legal tender. By this means, a debt of a private entity became a debt of the residents of the United States. Ref: 31 USC §462.

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