Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
... not for profit chartered banks. Their shareholders are their member banks (as the owners of a credit union are the credit union members).

Under their charter, substantial elements of their operations are under the governance of the Federal Reserve Board of Governors, who are nominated by the President and in an earlier, more innocent age confirmed by the Senate for seven year terms, one appointed each year.

The interest rates on Treasury bonds matter when the bonds are held by the public or the finance sector. At that point, the interest is in effect a transfer payment to the wealthy because they are wealthy.

The interest rates on Treasury bonds do not matter for those bonds held by the Federal Reserve Banks, since they are not-for-profit under their charters, and so a higher interest rate just results in a paper transaction of reserves from the Treasury account being transferred to the Fed operating account and then rebated directly back.

That's why the Fed buying newly issued bonds is referred to as monetising the debt.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Oct 14th, 2010 at 06:31:37 PM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Top Diaries

Occasional Series