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To: Wegelhof; reed13k
My understanding by bankrupting the Fed, Treasury is borrowing money and sticking the Fed with the debt. Am I mistaken?

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In short: YES you are mistaken.

The FED is a bank--the biggest. They do not borrow any money, and cannot go bankrupt.

In general, banks do not go bankrupt. Banks create money based upon loaning a multiple of what they have on deposit. If their ratio of credit extended to deposits and stockholder equity gets out of line, or enough of their loans go sour, the bank may be declared insolvent and its loans and deposits sold off to other banks with the aid of FDIC or other agencies. In this insolvency scenario, the only losses are absorbed by the equity shareholders (i.e., owners).

In the recent "Not-a-bailout" Bill, the Fed and the Treasury created a "Side Bank" which to me is very analogous to what would have been called in ENRON days an "Off-Balance-Sheet General Partnership."

The "Side Bank" is capitalized by $500 billion of stockholder equity provided by USA TAXPAYERS. The "Side Bank" does not take deposits, but loans out a multiple of the equity capital, just like any bank would do, grossing the available "Side Bank" funds up to about $4 trillion.

The BIG CHANGE that occurred here is that the Treasury (i.e., USA TAXPAYERS), by virtue of its "Equity" position, gets to call the shots on the part of the FED's Balance Sheet that is involved in the "Side Bank."

Hence, the financial cartel that controls the FED may be losing some control ... to Donald J. Trump (via Mnuchin).

It remains to be seen whether this is the beginning of the end of the global money cartel ... or whether the loans of the "Side Bank" go bad and USA TAXPAYER ends up EATING $500 billion loss.

1,495 posted on 04/11/2020 9:09:38 AM PDT by Disestablishmentarian ("the right of the people peaceably to assemble")
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To: Disestablishmentarian

hmmm


1,566 posted on 04/11/2020 11:40:04 AM PDT by thinden (How many Barr haters across America are being paid by Soros to attack Barr.)
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