The Fed seems to pull money out of a hat, like a rabbit.
It's something to consider, when your bags suddenly disapper
I can never understand how market and financial systems work. It’s a mystery to me how money and goods come and go in these things.
I read that a partial audit of the Federal Reserve found the Fed had made $16 trillion worth of secret loans since sometime around 2007 to now, mainly to bail out foreign banks, much at
zero percent interest. Where I get confused by this is that in this period, the total assets of the Fed were somewhere less than $3 trillion, and that supposedly included any outstanding loans. So where’d all that money come from?
It’s like a magic trick. The magician pulls a scarf out of a hat. Then, a rabbit. Then, a dove. Then, 10 scarves. Then, a rabbit and a dove. Then, the annual GDP of the United States of America, plus some loose change. Then, a rabbit. Where can I get a hat like that? I’d pay a guy to take the rabbits and the birds.
Seriously, where did all that money come from? Back in my college days when I was in need of money for bus fare, coffee and maple bars, the trick I learned was to look under vending machines in the community room at the student union building. The vending machines that were on carpet were especially good for this. People would drop coins and not notice because the coins didn’t make a sound hitting the carpet.
The Fed might have got some of the money that way. But I’m guessing there’s never been anywhere near $16 trillion worth of pennies, nickels, dimes, and quarters in existence, in the entire history of coinage, so that can’t be the complete answer.
Then, yesterday, while I was trying to figure all this out, I took a break and attended our weekly Real Change editorial committee meeting, where a bunch of us Real Changers talk about stuff that we think might find its way into this paper, and the issue of confiscation of unattended goods came up, and it rang a bell in my head.
Someone said she had once happened to leave her bags at her bed long enough to go to the bathroom, and came back to find them confiscated by the employees. She feared that if she asked for the bags back, she could be tossed out for being a troublemaker. So she gave up and let them keep the bags, only to find them on sale later, a block away, at a thrift store run by the same shelter service.
Now, again, I’m not suggesting that the Fed is scouring the countryside collecting unattended bags of homeless people and selling them in thrift stores in order to raise its trillions to loan foreign banks. I’m drawing attention to a general technique that might be involved, a technique that might be revealed in this case by way of analogy.
The analogy tells us that there’s a way you can get stuff to sell or give away without having it to begin with. I believe the technical term for it is “stealing.”
As I see it, it works like this. Most of the loans sit on the shelf as window dressing to make the foreign banks look good, so they don’t get foreclosed on. So the loans can just be on the books. If actual money is drawn from any of the loans, the Fed doesn’t give out its own assets, it gives out ours. I haven’t worked out the details of that yet, but, you know, if they just invent electronic funds they could inflate the economy, effectively stealing from all of us all at once.
My hope is that anyone who is inspired to get up in arms about the theft of their unattended economy by the Feds not look the other way when the property of homeless people gets confiscated.
We’re all in this together.
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