OK, I have made an error.I think you might have been reading some misinformation, the Feds profits definitely go to the government via the e US treasury department.
Last year the Fed handed over $107 Billion to the US treasury. (But yeah if you go down conspiracy theory rabbit holes they will not tell you that)
https://www.federalreserve.gov/newsevents/pressreleases/other20220114a.htm
So the dividends are paid before the treasury gets a slice.c) Exemption From Taxation. Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.
my first mentor , was a member of JBS ( John Birch Society ) and i was given a couple of books to read ( one was title None Dare Call It .......... )Ok, Google “federal reserve Rothschild” and you will get more than enough fake federal reserve stories than you can read in a life time ?
Independent from the US control was my reading and yes you are right about Turkey, i started a thread about the economy there.not many seem interested while India seems to get the popularity support.Turkey CB independent. What are you smoking ?? Eradogan controls the CB and just reduced IR. His personal thesis is that he does not believe increasing IR will reduce inflation. I’ll find the reference for you sometime. I believe he has changed/removed some CB officials recently because he did not agree with their strategies.
Yes, so that is more like interest earned on long term funds they deposit into the federal reserve, not earnings from the operations of the fed.OK, I have made an error.
I should have said that before any money is paid to treasury, a 6% dividend is paid to the member banks who own stock in the Federal reserve, assuming the Fed reserve makes a profit. ( according to Bloombergs it is currently running at an operational loss for the first time in its history ).
From Section 7 of fed reserve act
(a) Dividends And Surplus Funds Of Reserve Banks.
and just to add icing on the cake the very last sentence from the same section
- Stockholder Dividends.
- Dividend Amount. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend on paid-in capital stock of--
- in the case of a stockholder with total consolidated assets of more than $10,000,000,000, the smaller of--
- the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of such dividend; and
- 6 percent; and
- in the case of a stockholder with total consolidated assets of $10,000,000,000 or less, 6 percent.
- Dividend Cumulative. The entitlement to dividends under subparagraph (A) shall be cumulative.
- Inflation Adjustment. The Board of Governors of the Federal Reserve System shall annually adjust the dollar amounts of total consolidated assets specified under subparagraph (A) to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis.
So the dividends are paid before the treasury gets a slice.
Mick
GG, I am more than happy to look after your money for you.This is all very, very, very complicated.
I could work it all out, and good on everyone for posting, but it's a bit like the weather. "The Bureau", or BOM as I call it, is similar witchcraft and if I had enough decades left in my life I'd look in to understanding weather as well as interest rates.
Again, good on all ASF members for posting.
I'll just return to looking out the window on The Fed and "The Bureau" to work out where to park my money, stocks and Gold next month, and also whether to bring an umbrella out when I visit my Australia Post locker for any Cohibas from Cuba.
gg
Really? And where do you think that interest paid comes from, if not its operations?Yes, so that is more like interest earned on long term funds they deposit into the federal reserve, not earnings from the operations of the fed.
What do you mean they cost nearly 6%? Cost for whom?From that 6% interest the earn they have to pay their long term depositors and capital notes, so it’s not all profit for the bank, because those notes cost nearly 6%
Which bank are you referring to when you say its Taxable.Then ofcourse any profit the bank does make is taxable, so generates further income for the government
no matter how many times Turkey exasperates me , i realize the current leader is a Nationalist ( thinks of HIS country first ) and i respect him for thatIndependent from the US control was my reading and yes you are right about Turkey, i started a thread about the economy there.not many seem interested while India seems to get the popularity support.
Turkey is feeding on the silverware of Europe so i expect better medium term outcome
Note there is no lost love for Turkey from me either but the way this country/ leader tricks the West again and again,rolling them in their own incompetency and narrative...no matter how many times Turkey exasperates me , i realize the current leader is a Nationalist ( thinks of HIS country first ) and i respect him for that
Europe needs Turkey as a buffer for immigration from the Middle-East wars that NATO created , so Turkey extracts a fair price for services provided
i am guessing he exasperates Russia and China as well , but i suspect they understand what motivates himNote there is no lost love for Turkey from me either but the way this country/ leader tricks the West again and again,rolling them in their own incompetency and narrative...
Can only admire ....and cry, again and again for the West ...
Really? And where do you think that interest paid comes from, if not its operations?
What do you mean they cost nearly 6%? Cost for whom?
When theymember banks deposit the 6% of capital to be allowed to operate, they only pay half the 6% up front , the other half is at call ( see Richmond Fed membership .
Which bank are you referring to when you say its Taxable.
As I showed in the post of the article 7 reg s, (see Section 7 of fed reserve act ) , it distinctly states these dividends are Tax free.
Mick
I don't know where you get your information from , but once again, I will quite the federal reserve regulations.Ok, so you are still a bit confused about how this all works and who the member banks are and what they do.
The 12 member banks are not actually commercial banks, they themselves basically operate as mini reserve banks for their region of the country, and have many duties to carry out and incur running cost.
The of costs of running these operations are large, they range from operating clearing houses to process cheques, replacing worn out currency, processing inter bank payments, conducting research, supervising banks and credit unions etc etc
So that 6% interest rate isn’t going as profit to anyone it’s largely consumed as running costs or added to the capital reserve or paid to the deposit holders of the commercial banks, credit unions etc that make deposits with the regional member banks.
As I mentioned before, even if some of it does make it back down to the commercial banks, they then pass it on to their depositors or shareholders who are subject to taxation.
You did not provide anything to backup your claims that the 12 regional fed reserves have large expenses.To: Federal Reserve Board
From: Mr. Walter S. Logan, General Counsel
Subject: Payment of dividends of Federal Reserve Banks out of surplus
Date: April 11, 1922
You have requested my opinion upon the question of whether a Federal reserve bank, which has accumulated a surplus fund out of earnings of past years, has authority to use a part of this fund to pay to its stockholding member banks the dividend for a subsequent year during which the current earnings of the federal reserve banks are insufficient to pay such dividend.
I am of the opinion that the question should be answered in the affirmative.
The material portions of Section 7 of the Federal Reserve Act read as follows:
"After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders shall be entitled to receive an annual dividend of six per centum on the paid-in capital stock, which dividend shall be cumulative. After the aforesaid dividend claims have been fully met, the net earnings shall be paid to the United States as a franchise tax except that the whole of such net earnings, including those for the year ending December thirty-first, nineteen hundred and eighteen, shall be paid into a surplus fund until it shall amount to one hundred per centum or the subscribed capital stock of such bank, and that thereafter ten per centum of such net earnings shall be paid into the surplus.
"…Should a Federal reserve bank be dissolved or go into liquidation, any surplus remaining, after the payment of all debts, dividend requirements as hereinbefore provided, as the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied."
The maximum the fed could distribute to the member banks in dividends was nearly twice the amount to be distributed to treasury.The aggregate amount of the surplus funds of the Federal reserve banks may not exceed $6,825,000,000.
) 1 Transfer for fiscal year 2000
(1) In general
The Federal reserve banks shall transfer from the surplus funds of such banks to the Board of Governors of the Federal Reserve System for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury, a total amount of $3,752,000,000 in fiscal year 2000.
MickBut if the 6 percent dividend on capital stock isn’t the Fed’s largest gift, it may be the most brazen—a risk-free entitlement program that has operated in obscurity for 100 years. Most member banks don’t even have to pay corporate taxes on the dividends, unlike most Americans who pay anywhere from 15-20 percent in dividend taxes. An update to the law imposed taxes on dividends from Federal Reserve stock to any shares issued after March 28, 1942. But most Wall Street banks have charters with roots back to the 19th century, and are grandfathered in with the tax exemption.
I think you need to have a look at the actual numbers, for example in the year that the Fed sent $96 Billion to the government, it only paid $1.7 billion in dividends to the member banks. Last year it paid $5.3 Billion in dividends but sent $107 Billion to the government.I don't know where you get your information from , but once again, I will quite the federal reserve regulations.
The Fed Appendix B
You did not provide anything to backup your claims that the 12 regional fed reserves have large expenses.
According to This year 2000 fed report in the year 2000,
The maximum the fed could distribute to the member banks in dividends was nearly twice the amount to be distributed to treasury.
As to the tax question, I refer you to the following from New Republic
Mick
I try to provide the sourse of any figures I put up.I think you need to have a look at the actual numbers, for example in the year that the Fed sent $96 Billion to the government, it only paid $1.7 billion in dividends to the member banks. Last year it paid $5.3 Billion in dividends but sent $107 Billion to the government.
Have you had a look at any of the member bank websites? You will see that their responsibilities are quite large, what makes you think they wouldn’t have large operating costs, they probably do more work than the actual Federal reserve itself.
I am not sure you actually have an idea of how they operate, you seem to be attacking your research side ways.
You can find a chart showing the feds distribution to the government each year here.I try to provide the sourse of any figures I put up.
It would be helpful if you could do the same, lest somebody accuse you of pulling them out of your ear.
As for the large operating costs, once again, you provide no supporting evidence other than the word probably.
I have no idea what their operating costs are, but whatever the operating costs are, they still manage to pay out the dividends.
Mick
You said right there, that members do not receive any profits, and they are passed to the government.The Federal reserve have Members who must subscribe to stock in the fed reserve by depositing 6% of their capital base, but they don’t receive any profits, those are passed along to the government.
When I tried to point out again that the commercial member banks who have 6% of their capital invested in the fed reserve gets paid a dividend, you went off a on tangent saying I was into conspiracy theories.Think of it more like a club that costs money to be in, rather than a profit centre, any money the federal reserve does make gets paid to the government, it the shareholders/members.
It’s true that all the “profits” do get passed along to the government, as I have said the dividends that get paid are just interest on their capital which they are forced to store at the reserve, not true “profits”, the actual profits which are about 20 times larger than the dividends/interest get passed along to the government.Firstly, thanks for supplying some sources for your statements.
This discussion was started when you said in post #240
You said right there, that members do not receive any profits, and they are passed to the government.
I pointed out that the dividend on that money goes back to the commercial member banks who put 6% of their capital into the system.
And this dividend gets paid to the member banks regardless of whether the fed reserve makes a profit or not.
In post #242 you reference that same post by saying saying that the members are not ordinary banks.
You confused the members who paid capital into the fed to participate in the banking system with the 12 "members" of the federal reserve system.
You repeated the same statement in pos #246
Then in post #250 you said
When I tried to point out again that the commercial member banks who have 6% of their capital invested in the fed reserve gets paid a dividend, you went off a on tangent saying I was into conspiracy theories.
I will admit to making a mistake in post #255 when I said any profit goes to the individual banks, which I acknowledged in post #262.
I think I have said enough on this subject, other than to suggest you take the time to follow the original suggestion I made in my very first post, namely it is instructive to the book by Ed griffin.
Mick
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