How Do Federal Reserve Notes Go from Printing Press into Circulation?

The Australian way of printing money is vastly different than the US system. Australian money is printed by the Reserve Bank of Australia (RBA) which is owned by the government. The "private bank prints money and sells it to the government" process doesn't happen in Australia.

these latter answers your former question.

it doesn't "disappear" rather than just make the values back equal to 0. the loans on the feds books didn't cost them anything, so it is considered an asset. because they are owed that money plus interest.

and the bank considers the loan an asset because now they have money.

the two assets are equal, so once the "money" pays back the promissory financial instrument it's all back to 0 again. and the Fed still keeps the assets, doesnt matter if it's real printed money or an IOU from the bank.

the fed is never in the negative. get it?

THE PARABLE OF THE CARDS
Now hear the parable of the cards.

It came to pass that five men, strangers all, took ship for a distant land. And whilst the ship was in the way, a fierce storm overtook it, and it sank, and all aboard drowned, save the five passengers, who swam to a desert island.

And when they awoke, they traversed the whole island, and found fruit and game in abundance, but very little in the way of entertainment.

Wherefore the first stranger, whose name was Everyman, said to his companions, Industry, Finance, and Government, Go to! Truly, we will die of boredom in this place long before starvation gets us. Let us therefore play a game of cards!

And Industry and Finance and Government did smile on Everyman, and rejoiced at this pleasant suggestion. But then sadness overcame them, and their countenances darkened, and Industry said, "Alas, cards have we none."

Now the fifth stranger, Banker, stood eavesdropping in the coolness of the shadows, and when Industry discovered they had no cards, Banker stepped forward, out of the shadows, and whispered, Let not my brothers be downcast, neither let them fret for want of cards. For behold, said he, pulling a deck of cards from his pocket, See, cards have I in abundance, and I will lend freely, upon execution of certain necessary mortgages, notes, and encumbrances upon all your real and personal property.

And lo! The countenance of Everyman, Industry, Finance, and Government did brighten, and they rejoiced with one another, for they were simple men, and trusted themselves to Banker. For behold, said they, doth he not desire our good, and will he not freely lend us all things, even cards?

Then Banker did lend Everyman, and Industry, and Finance, and Government thirteen cards apiece, but upon this condition, that Everyman and Industry and Government and Finance might borrow the cards for but one hour only, and at the hour's end each must return to Banker fourteen cards or forfeit. And in return for the thirteen cards they were lent, every player did execute certain necessary mortgages, notes, and encumbrances upon all their real and personal property.

And Banker had them.

And Banker knew it, but Everyman, and Industry, and Finance, and Government had not a clue.

And lo, the hour did end, and Everyman had but ten cards, while Government, Industry, and Finance were possessed of fourteen apiece, and with great shew of sadness and brotherly commiseration Banker did dispossess Everyman, and foreclose upon him, and did take his duffle bag, and all his coconut shells, and his flip-flops, and all his clothing, until Everyman stood naked under the sun, as in the day he was born, without a card to his name, and verily, he was out of the game.

Yet were not Government, Industry, and Finance downcast by Everyman's loss, for in their haste to play cards, they forgot his need, and heeded not the warning of his downfall. So they clamoured to Banker, Give us cards again, that we may play, and make merry, and while away our time in this desert place.

And Banker came close, and said, Brothers, gladly will I lend again, only give me mortgages, notes, and encumbrances upon all your real and personal property. And they did execute the same.

And Banker did lend seventeen cards to Industry, and to Finance, and to Government, demanding at the hour's end the return of eighteen cards apiece. And lo, they did play, and when the game was over, alas, Industry had but fifteen cards, and Government and Finance had eighteen.

And so Banker did foreclose upon Industry, and did take his duffle bag, and his pocket knife wherewith he made clever things for his brothers, and his sandals, and all his clothing, until Industry stood naked under the sun, as in the day he was born, without a card to his name, and verily, he, too, was out of the game, and busted clean flat.

And Government and Finance must play yet again, and Banker must lend to them, and he did, and they did, and Finance met the same fate as Everyman, and Industry, and they gathered themselves together, naked and wretched, under a palm tree, watching Banker and Government play the last hand. And lo, Banker did win, and took from Government all he owned.

Then Government joined Everyman and Industry and Finance, naked under the palm tree, and they lamented the low estate whereunto their borrowing had brought them, and knew not what next to do.

Then Government asked, Brothers, why sit we here idle? For although we be poor, mayhap have we something left we may offer as collateral, and yet play cards again. And the others said, Yea, and Amen, but what else have we?

And they approached Banker right humbly, and gat them down on their knees, and entreated him, saying, O Banker, we have nothing left for collateral, but lo! in the future we will once again have stuff, and between now and then we will have stuff, and we will gladly execute in your favour mortgages, notes, and encumbrances on all our future stuff, but only lend us cards, for the boredom of this place surpasseth all bearing, and our souls are like to expire within us if we cannot play cards, and what availeth us life or liberty without cards?

And Banker smiled a great smile, and welcomed this offer, and did cheerfully and quickly offer for their signature mortgages, notes, and encumbrances on all their future stuff, and they did sign.

And Banker dealt out cards, and again they played. And in the course of time and cards, Banker did own all the future stuff of Everyman and Industry and Government and Finance. Verily, Banker did own it all, all their goods and their lands and their labours, and their children's labours, and their children's labours, world without end. And Banker waxed fat.

And Everyman and Industry and Finance and Government were glad, and did honour to Banker, and rejoiced to serve him, for verily they loved playing cards, and indeed, unless they served him, how else could they get cards?

Here ended the Parable of the Cards.

Sometimes the antidote to too much complexity is a simple story.

Here is the Salvation Island story created by Louis Even in the 1930s:

[link to www.michaeljournal.org]

Cartoon illustrations.

Not familiar with Australian operations, so I did a search for Australian national debt:

[link to duckduckgo.com (secure)]

Here are two hits (they do not agree):
[link to www.debtclock.com.au]
[link to www.australiandebtclock.com.au]

The Channel Islands of Guernsey and Jersey on the other hand do print their own ersatz "pounds" which they spend into circulation and tax back out of circulation. These islands have no collective debt.

To whom is the national debt of Australia owed? Are they selling bonds to non-Australian people and/or institutions?

the book that got me on this whole dirt trail was ''the mystery of banking'' by ludwig,read it for free on scribd,not saying the author is correct but its a good read

well, that's a good question.
i mean, since this is trillions of dollar of "fiat money",
how do they decide which banking institutions get this
"new money"? i mean: this is absolutely "FREE money"
for any of the banks who get it... so, why does one banks
get more of this "free money" than, say, another bank? etc. etc.

I wasn't asking a question. I was asking why people think the money "disappears".
It seemed to me like people talk about the stock market losing money. The stock market doesn't lose money either.
These are two party transactions. And whether you are talking about the FED or the Stock or Bond market, they are all debt instruments.
Yes, I get it. I worked in banks until I was sick of it.

It isn't Free to the secondary banks or should I say Primary lenders. They go to the discount window and
borrow it at the Prime rate from the FED.

Australia is a very big country with not many people. Due to the way "the system" is set up, money is needed to build things.

There isn't enough money in Australia to build everything that is needed even if it would be profitable. Therefore, foreign money is used for some things.

Foreigners invest the money in Australia because it's a stable country with solid exports that a lot of other countries want. In other words, it's a good investment.

The Australian Govt bonds are sold on the open market to whoever wants to buy them (apart from embargos and other such restrictions).

Every central bank operates the same...

And commercial banking is over 600 years old.

So your initial question is "How Do Federal Reserve Notes Go from Printing Press into Circulation?"

First things first. The US Gov wants some money to buy stuff. So instead of just creating their own money via their sovereign powers they instead issue a bond (T-Bill). The Fed "buys" this bond and gives the Treasury a check for $X.XX. The Treasury then buys whatever and sends checks out to pay for those goods and services. The recipients of those checks then deposit them into their bank accounts and then pay their employees or suppliers. Those employees or suppliers deposit their checks into their bank accounts.

Now at some point one of those employee's or suppliers wives takes the husbands debit card and takes out $500 from an ATM. The bank that owns that ATM keeps a certain amount of FRN's on hand for such transactions. When they need more they take a certain sum of bank credits and transfer them to their Federal Reserve account. Once their Fed account has credit in it they can then order more FRN's or Coin from the Fed via their banking services facility.
[link to www.frbservices.org]

The Fed sends the bank currency or coin and deducts the amount from the banks reserve account at the Fed.

When the Fed gets low on coin or currency it orders more from either the US Mint or the BEP. The Fed transfers credit to either the BEP for the cost of production of the notes or to the US Mint for the FACE VALUE of the coin via the Treasury.

Right there you should see the difference. They HATE coin...hate hate HATE it! Cause they actually have to pay for it. Therein lies the weak spot.

oh good stuff I guess it flew over my head.

can you expand on the bonds/stocks? I dont know much about that and I would enjoy to understand. to add a more specific question,

what gives the current value of 14k+ points? all the public companies..? Not trying to get too off topic but if you understand all the intricacies I will take the time to read it

damn this is so good. I cant give karma right now but will come back.

wish I had followup questions too. but thank you this is very concise and well-explained. great addition to the thread!

I am not as well versed in the stock market.

When a company goes public. It sells stock to raise money in an IPO. Initial public offering.
This is ostensibly the most money the company will raise outright.

Then it used to be based on a company's performance anytime the company did well in a quarter the value of the stock goes up. It increases the dividend paid to the stockholders.
Technically the company only gets value depending on how much of it's own stock it still holds from this point on or sells itself, if it's price is going up.
Buys back if going down and wants to maintain an illusion.

Lots to that stuff. The gaming of it all.

The Dow is a composite of 30 stocks. Here's the deal though.
It isn't a continuous market of set stocks therefore in truth it isn't following the progress of anything!!

The stocks that comprise the Dow 30 are not even the same ones that comprised it 10 years ago. So this business of stockmarket rising is at it's heart a deception.
If some stocks are underperforming they are dropped from the list and replaced with a rising star.

As far as I know, the average is the price of one share of each of the Dow 30 components. Preferred and blue chip stock. If that is not correct then someone will let us know.

thank you. i think that answers the question.

Actually, the FED pays less than what it costs the mint to produce currency in paper and ink since it requires a special bond.
The mint or the treasury loses money.

As far as I know, the coins are not bought at face value either. But, they pay more for them proportionally speaking
And the FED loses out on the coin deal, that's true.

Anyone can buy Government bond and T-bills. Other governments used to buy a lot. But, somebody has to buy them and the FED is the buyer of last resort if no one else will. What determines whether others do or don't has to do with the interest the US government is willing to pay to attract buyers. They do not want to pay any higher interest to attract any other buyers at this time and the FED buys them and allows them to keep rates artificially low. To so called stimulate the economy and keep the government borrowing.

One of the biggest proportions in the Governments budgets is interest on the debt. But, they try to tell you it's "entitlements".
However, the entitlements wouldn't be such a problem because people have to pay money for these their entire working lives. If it were well invested and not spent in the general fund it wouldn't be bankrupted.
But, certainly, the payment to people who never paid into the system, illegals and the built in welfare state of people who never worked a day in their lives but game the system.

We run a yearly deficit in the budget of more than a trillion dollars a year.
The debt is the total of all the yearly deficits plus interest added together.

Don't worry man it's the rabbit hole. There are many dimensions to this puzzle. It was put together to confuse the masses and in that endeavor they have been very successful.

They study of "money" should be the first subject for all but unfortunately it is not taught. First thing one should realize is money is not just money. There are many different types of things that are money. The nature of each can be VERY different.

Go to page 17 of this book and see that there are many different types of "money".
[link to archive.org]

Now realize there are really only two types of tangible "money" in circulation today.
Unlimited quantities of Inconvertible Bank Notes AND

Unlimited quantities of Commodity (Zinc/Copper/Nickle) Seignoried coins (The tokens available today, NOT gold or silver).

All other "money" out there (the majority) is intangible bank credit stored in a computer somewhere.

Another Dimension to this money thing is: Who initially generated the money? The Treasury or a Bank (Federal Reserve or other bank)

Current coinage is generated by the Treasury. (DEBT FREE)

Everything else is a form of BANK CREDIT. (DEBT)

A corporate bond is a bond issue by a corporation. It is a bond that a corporation issues to raise money effectively in order to expand its business.[1] The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term "commercial paper" is sometimes used for instruments with a shorter maturity.)

Sometimes, the term "corporate bonds" is used to include all bonds except those issued by governments in their own currencies. Strictly speaking, however, it only applies to those issued by corporations. The bonds of local authorities and supranational organizations do not fit in either category.[clarification needed]

[link to en.wikipedia.org]




From what I understand, right now the Fed is releasing $85B/month into the system in one form or another. That is one reason why the stock market is doing so well!

Yes, exactly.

The present system creates a situation where a child is born into poverty and enslaved to a debt to the banker that was created before birth.

It should be that the child is born into an inheritance with a positive capital account that reflects an ownership position of all the utilities and industry created by the child's forebearers.

The present system is an implementation of the fifth plank of the communist manifesto that says the credit of the people is the property of the government. The government in turn assigns the credit of the people to the banks who in turn loan the people's credit back to the people.

Richard Cook makes the point that the credit of the people should be managed as a public utility on behalf of the public.

Consider the Alaskan oil situation. The oil is presumed to be property of the people. It is sold on the market and rather than tax bills the Alaskans receive an annual oil rebate check. (This was the situation in Libya before that situation was drastically curtailed)

[link to publicbanking.wordpress.com]

If the banking system were managed as a not-for-profit with public ownership, the people would have no public debt and all would be born with a positive capital account.

Suppose that in the Franklin Sanders story Everyman and Industry and Government owned the financial system in some sort of model where Banker was an employee.

The books are open to examination and at the end of the year any excess funds are rebated back to Everyman and Industry and Government.

This is what Richard Cook is saying when he says the public credit should be managed as though it were a public utility.

Personally, I don't trust government to manage the public credit within the context of a centralized model. What I promote is a decentralized model of mutual credit, but frankly I seem to be short in being able to completely imagine how this could be designed.

Thomas Greco has been speaking and writing about how to design a mutual credit monetary system.

I believe Mr 35769388 from Australia that you are failing to grasp the larger picture that the credit of the Australian people does not need to be sold to any outsiders except in one situation.

You need to look at the Abraham Lincoln example with the civil war and railroad rail problem. He could import rails from England and borrow English Pounds to purchase the rails at a high rate of interest... OR he could create credit of the people (Greenbacks) and spend the credit within the nation to build the factories to pour the steel and roll the rails.

The only time Australia needs to borrow anything from the outside world is in a case where you lack people or raw materials to do it yourselves.

Consider the example Dr Ellen Brown uses - the bank of North Dakota. The ND bank makes loans within the state for the benefit of the people and industry of the state. They have no collective debt because the things they do import are easily paid for with oil and grain that is exported from the State of North Dakota. Likewise Australia could easily pay for the imports they must have with their own exports.

5 Fascinating TED Talks for Econ Geeks

[link to www.accountingdegree.com]

Ted Talks home: [link to www.ted.com]

Why you are unemployed:

Part one of two parts - about 15 minutes total for both.

[link to www.youtube.com]

Incorrect; I guessed - admittedly - parts 2, 3, and 4 add up to another 40 minutes (about)

Someone else asks:

Thread: The secrets of the banking . How to create our own money and screw banks . (Page 3)

and receives answers.

James Gibb Stuart trust You Tube channel:
[link to www.youtube.com]
About one year old, but only a few (high quality) videos.

From the UK (Scotland), James Gibb Stuart is also associated with other monetary system reform sites.

Author and business owner: [link to en.wikipedia.org]

UK Money Reform website: [link to www.moneyreformparty.org.uk]

MONOPOLY OF CREDIT, the big issue: [link to prosperityuk.com]

Books from Ossian Publishers (owned by James Gibb Stuart) [link to www.ossianbooks.co.uk]

When you finally figure out that the federal reserve note is a credit instrument drawn on the people's credit and begin looking more deeply - then it might dawn on you that the solution lies in some variation on a socialistic ownership model of the creditory money.

This is something I posted September 2010;
Thread: Why do Moran Hillbillies hate Socialism? (Page 9)



It is in the books, but not even the authors seem to have recognized the salient factual action that set this cooperative apart from every other socialistic structure in the world.

When the charter for the bank was initially obtained from the Spanish government (over fraudulent counterfeiting of signatures by Arizmendi I must add), the founders debated and finally made the decision to subordinate the bank charter to the overall cooperative board.
This placed the bank and bank managers under ownership and control of the largest so-called "borrower" which was the cooperative. No more leveraged buyouts, no third world loans to tin-horn dictators. Bank profits were recycled within the cooperative for the benefit of the laboring class who owned the cooperative.

Update to the present; this structure was subsequently modified to a more "modern" model. The model of socialistic ownership of banking by the Mondragon Cooperative was true for about 30 to 40 years (I lack exact facts here), whereafter the financial fraternity wrestled it free from the subordinate model.

Going back to Tim Huet we read: [quote=Tim Huet]
Over time, the bank's board of directors became the de facto governing body of the Mondragón co-op movement. The cooperative depositors and bank staff serving on its board ensured that the bank acted as both Mondragón's growth engine and linchpin of stability. They directed the bank's business division to help new co-ops form. Sometimes the bank did so by identifying a market opportunity and creating a new co-op from scratch. Other times its staff would help a larger co-op spin off a division to form a new, distinct cooperative in order to maintain its efficiency and democratic vigor. The bank encouraged these smaller co-ops to form groups that shared services in order to maximize economy of scale and marketing potential. In perhaps the most financially successful enterprise of this sort, the bank reorganized an assortment of consumer cooperatives into hybrid worker-consumer co-ops, and created a united retail chain which is now Spain's largest with annual sales amounting to $2.6 billion.

Because of such creative strategies, Mondragón's record of business creation is remarkable. Of the 103 cooperatives founded in the first three decades of the Mondragón Experience, from 1956 to 1986, only three closed. This is particularly impressive when you consider that the Basque region lost well over 100,000 jobs during Spain's deep ten-year recession that started in 1975. During that difficult time Mondragón co-ops actually added workers. In part, they were able to do this by retraining their workers and transferring them from depressed cooperatives to thriving ones. The bank also deserves credit for providing financial and managerial help to troubled co-ops that needed restructuring.

Do your own search, and you can now discover that today Mondragon is in debt to international bankers.
They didn't understand what Arizmendi had done for them, and they threw it away.

I could write a book about this, but need to stop somewhere; Levi Philos