Is anyone else worried that The Fed has just purchased $300 billion dollars of Treasuries?

Isn’t a move like this pretty much business as usual for the United States government? And it’s kind of sad too considering over 300 million people who live here depend on them to make sound decisions and then they get let down so much of the time. Maybe I’m just too cynical for my own good but to me, this doesn’t appear to be a sound idea.

@Bluefreedom

well, technically the Fed is a (semi-) private corporation, not a Government entity. That’s the scariest part of it all.

@TaoSan. You’re not kidding. I don’t even like to think about it.

It is a government entity, it’s just quasipublic. Which basically means that it just has a few private components.

@lefteh

it is absolutely not a government entity.

It is a bank/commercial entity whose shares are owned by its “connected” member banks. There is merely a restriction on what a shareholder can do with it’s shares, they are not tradeable and can not be used as collateral against loans, also, the mandatory “reserve” does not earn interest, but the shares receive a 6% dividend.

Thus, if a connected bank that owns shares is sold to say a Chinese or Japanese bank, like Sanwa for example…...guess what.

Very often, people throw together “Federal Reserve Bank” and “Federal Reserve System”.

Whilst the Fed is indeed regulated by the Federal Reserve Act, it is “owned” and not a government entity.

I respectfully disagree.
The system and the banks were put into existence by Congress and have a mandate to serve the government. They function very much as a government institution, albeit a unique and independent one. Not to mention the Board of Governors of the Reserve System are appointed by the President. They are, in essence, owned by you and I.
Good info at http://www.federalreserve.gov as well (note the .gov domain)

see how the CEO of Sanwa Bank feels about that lol

Also, you are pointing to the website of the Federal Reserve System. The twelve branches the Reserve Bank comprises of have .org, and not .gov domains, for the plain reason that they are not eligible for .gov

I know it’s confusing, but believe me, if the Fed were a government entity these domains would be .gov or .fed and not .org

The fact that the Fed is privately owned has long been “under-publicized” in the US. Think of it as a privately held business entity with special government regulations imposed on it. That doesn’t change the fact that the banks that own the shares are the “owners” of the Federal Reserve Bank.

Care to elaborate?

There are some anecdotes floating around about how the CEO of Sanwa, the Japanese bank that bought Union Bank of California, got his way with how they dealt with UboCs FRB shares.

I’d have to dig to make sure I don’t quote anything wrong.

Right, but I guess I’m missing the relevance to the private/public question.

Very simple, the interests of shareholders are not necessarily in the interest of the general public.

Or to elaborate, if the government decides to circulate more cash, in many other countries they go ahead and proverbially, print more money. In the US, the government has the “contractor” FRB circulate more money and pays fees and interest out of tax revenues.

Not all that great if you ask me.

But how does that make the Federal Reserve System entirely private? Though the banks themselves are privately owned, the governance and decisions come from the brass of the System. And those individuals are appointed by the President and confirmed by the Senate. The entire system is under the supervision of the Treasury Department. It operates by and is in existence because of an act of Congress. To me, this sounds like a government entity.

It makes the Federal Reserve Bank privately owned, not the Federal Reserve System. People tend to use these terms interchangeably, when in fact they are not the same things.

The board of governors can mandate and stipulate as much as they want, the timely and efficient implementation/execution is in the hands of private/corporate CEOs that answer to their shareholders.

For example

This isn’t initiated by our government, but by the shareholder-banks that are privately owned in large part by foreign banks.

I agree that the Federal Reserve Banks are privately owned. “The Fed,” however, refers to the Federal Reserve System, which encompasses the banks. Those injections are initiated by our government. By definition, the Federal Reserve System is under control of the government. The bottom line is that the Board of Governors and its Chairman answer to Congress and the President. While the system is quasi-public, and as such has private entities, it is inherently governmental.
We may have to agree to disagree on this.

@lefteh

how boring the world would be, if we all had the same opinions :)

GA for that, my friend.