But the Fed isn’t an ordinary bank. It’s a fiat money‐issuing central bank acting on the federal government’s behalf; and such a bank can technically function with no capital at all, and even with negative capital. Unlike an ordinary bank’s liabilities, the Fed’s “liabilities” are (in John Exter’s immortal words), “IOU nothings.” The Fed never has to redeem them, except by replacing worn notes with new ones and that sort of thing. If its earnings fall short of its expenses, it can just “print” the difference. It follows that it might remain a going concern even if most of its assets weren’t worth diddley. Nor, as Nathan Tankus points out, is there a “statute, court case or any other binding legal constraint… that requires the Federal Reserve to have a positive net worth.”
In short, and speaking generally, the Fed can “lever‐up” all it likes without a Treasury backstop. The sole caveat is that, if its losses are so great that the present discounted value of its future net earnings is itself negative, it can lose control of inflation. That could happen were the Fed to disburse “helicopter money” on a grand enough scale, or were it forced by the U.S. Treasury to accept a deposit of several trillion‐dollar platinum coins. But it’s unlikely to happen otherwise.
In short, and speaking generally, the Fed can “lever‐up” all it likes without a Treasury backstop. The sole caveat is that, if its losses are so great that the present discounted value of its future net earnings is itself negative, it can lose control of inflation. That could happen were the Fed to disburse “helicopter money” on a grand enough scale, or were it forced by the U.S. Treasury to accept a deposit of several trillion‐dollar platinum coins. But it’s unlikely to happen otherwise.
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Finally, from a consolidated government balance sheet perspective, there is little practical difference between $1 trillion in lending financed entirely by Congress and $1 trillion in lending financed mostly or entirely by the Fed. In one case the Treasury issues more debt to finance the lending; in the other, the Fed’s liabilities, including bank reserves on which it pays interest, increase. The necessary amounts are borrowed either way, with the Treasury ultimately bearing the interest burden. The only real difference is that, when the Treasury’s own liabilities increase, so does the federal debt, whereas when the Fed’s liabilities increase, the federal debt stays the same. In other words, to the extent that it isn’t backstopped, Fed‐funded lending is “off budget.”
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Though no law calls for the Fed to be in the black, or otherwise limits its total lending capacity in any direct fashion, the Fed’s lending, and its Section 13(3) lending in particular, is subject to important legal limits. The most obvious of these are to be fund in Section 13(3) itself, as amended by the Dodd‐Frank Act.
In answering the question, “Is Treasury investment in the Fed’s emergency lending necessary?,” Peter Conti‐Brown observes in a Brookings article that “Nowhere in any part of the Federal Reserve Act does Fed lending require Treasury participation, nor did Congress prevent the Fed from taking losses in its emergency lending. ” The first part of this statement is true, so far as it goes. But the second is at best only a half truth. In defending it Peter notes that, although the law calls for the Fed’s 13(3) lending to be “indorsed or otherwise secured” to the lending Fed bank’s satisfaction, this falls short of dictating that “the Fed avoid taking first losses in an emergency lending facility.” But he overlooks another Section 13(3) clause—13(3)(b)(i)—according to which the Fed must see to it “that the security for emergency loans is sufficient to protect taxpayers from losses.” “It seems to me,” I said in our Twitter exchange, “that this can be taken to mean that the Fed isn’t supposed to lose money.”
Congress, on the other hand, is mostly free to dispose of taxpayers’ money as it sees fit. That includes appropriating funds for the specific purpose of covering losses from insufficiently secured Fed loans. The Fed can, in other words, lose money to the extent that Congress has appropriated money for it to lose, but not otherwise. Treasury backstops sanctioned by Congress are nothing other than such appropriations.
That, I submit, is the real rationale for Treasury backstopping of risky Fed lending. But to defend this view, I must trace that rationale’s roots beyond the Federal Reserve Act, to their underpinnings in the U.S. Constitution.
In answering the question, “Is Treasury investment in the Fed’s emergency lending necessary?,” Peter Conti‐Brown observes in a Brookings article that “Nowhere in any part of the Federal Reserve Act does Fed lending require Treasury participation, nor did Congress prevent the Fed from taking losses in its emergency lending. ” The first part of this statement is true, so far as it goes. But the second is at best only a half truth. In defending it Peter notes that, although the law calls for the Fed’s 13(3) lending to be “indorsed or otherwise secured” to the lending Fed bank’s satisfaction, this falls short of dictating that “the Fed avoid taking first losses in an emergency lending facility.” But he overlooks another Section 13(3) clause—13(3)(b)(i)—according to which the Fed must see to it “that the security for emergency loans is sufficient to protect taxpayers from losses.” “It seems to me,” I said in our Twitter exchange, “that this can be taken to mean that the Fed isn’t supposed to lose money.”
Congress, on the other hand, is mostly free to dispose of taxpayers’ money as it sees fit. That includes appropriating funds for the specific purpose of covering losses from insufficiently secured Fed loans. The Fed can, in other words, lose money to the extent that Congress has appropriated money for it to lose, but not otherwise. Treasury backstops sanctioned by Congress are nothing other than such appropriations.
That, I submit, is the real rationale for Treasury backstopping of risky Fed lending. But to defend this view, I must trace that rationale’s roots beyond the Federal Reserve Act, to their underpinnings in the U.S. Constitution.
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Constitutional Underpinnings
Because those underpinnings are very clearly explained in “Congress’ Power of the Purse,” a 1988 Yale Law Review article by Kate Stith, I need only summarize them here. Stith’s lengthy article is loaded with supporting evidence and arguments.
By stipulating that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law,” the Constitution, Stith observes, “places the power of the purse in Congress.” That assignment of power, she adds, “is at the foundation of our constitutional order,” for it’s by controlling the things on which public monies are spent that Congress “defines the contours of the federal government.”
Congress’ power of the purse has as corollaries two “governing principles.” The first, which Stith calls the “Principle of the Public Fisc,” “assert[s] that all monies received from whatever source by any part of the government are public funds.” The other is a “Principle of Appropriations Control” that “prohibit[s] expenditure of any public money without legislative authorization.” Together these principles imply that “Agencies and officials of the federal government may not spend monies from any source, private or public, without legislative permission to do so.” Congress, on the other hand, has not only the power but the duty to exercise legislative control over federal expenditures. “If Congress permits the Executive access to the public fisc without effective appropriations control [it] abdicates, rather than exercises, its power of the purse.”
Furthermore, Stith claims,
it is not enough for Congress to direct federal agencies to produce a better world. …Congress must affirmatively authorize the funds to do the job. …Even where the President believes that Congress has transgressed the Constitution by failing to [fund some] activity, the President has no constitutional authority to draw funds from the Treasury to finance the activity. Spending in the absence of appropriations is ultra vires.
Finally, and crucially,
Where Congress thus denies appropriations, the denial is not merely a determination that the public fisc cannot afford spending any money on that activity. By such appropriations legislation, Congress decides that, under our constitutional scheme, for the duration of the appropriations denial, the specific activity is no longer within the realm of authorized government actions.
Because those underpinnings are very clearly explained in “Congress’ Power of the Purse,” a 1988 Yale Law Review article by Kate Stith, I need only summarize them here. Stith’s lengthy article is loaded with supporting evidence and arguments.
By stipulating that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law,” the Constitution, Stith observes, “places the power of the purse in Congress.” That assignment of power, she adds, “is at the foundation of our constitutional order,” for it’s by controlling the things on which public monies are spent that Congress “defines the contours of the federal government.”
Congress’ power of the purse has as corollaries two “governing principles.” The first, which Stith calls the “Principle of the Public Fisc,” “assert[s] that all monies received from whatever source by any part of the government are public funds.” The other is a “Principle of Appropriations Control” that “prohibit[s] expenditure of any public money without legislative authorization.” Together these principles imply that “Agencies and officials of the federal government may not spend monies from any source, private or public, without legislative permission to do so.” Congress, on the other hand, has not only the power but the duty to exercise legislative control over federal expenditures. “If Congress permits the Executive access to the public fisc without effective appropriations control [it] abdicates, rather than exercises, its power of the purse.”
Furthermore, Stith claims,
it is not enough for Congress to direct federal agencies to produce a better world. …Congress must affirmatively authorize the funds to do the job. …Even where the President believes that Congress has transgressed the Constitution by failing to [fund some] activity, the President has no constitutional authority to draw funds from the Treasury to finance the activity. Spending in the absence of appropriations is ultra vires.
Finally, and crucially,
Where Congress thus denies appropriations, the denial is not merely a determination that the public fisc cannot afford spending any money on that activity. By such appropriations legislation, Congress decides that, under our constitutional scheme, for the duration of the appropriations denial, the specific activity is no longer within the realm of authorized government actions.
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Before the establishment of the Federal Reserve in 1913, the United States Treasury played a more direct and prominent role in certain aspects of monetary policy and financial management. The absence of a central bank meant that the Treasury Department had to perform functions that are now typically associated with central banks. Here are some key aspects of the U.S. Treasury's role before the Federal Reserve Act of 1913:
Issuance of Money: The U.S. Treasury was responsible for issuing paper currency and coins. It played a central role in determining the amount of money in circulation, although the overall money supply was also influenced by the private banking sector.
Management of Government Finances: The Treasury managed the financial operations of the federal government, including collecting revenues, making payments, and handling the government's accounts. It was directly involved in fiscal policy and had to navigate the challenges associated with funding government expenditures.
Banking Functions: Without a central bank, the Treasury acted as the government's banker. It held the government's deposits and conducted financial transactions on behalf of the government.
Stabilization Efforts: In the absence of a central bank with specific tools for monetary policy, the Treasury attempted to stabilize the financial system and address economic challenges through various means, including the use of gold reserves.
Issuance of Money: The U.S. Treasury was responsible for issuing paper currency and coins. It played a central role in determining the amount of money in circulation, although the overall money supply was also influenced by the private banking sector.
Management of Government Finances: The Treasury managed the financial operations of the federal government, including collecting revenues, making payments, and handling the government's accounts. It was directly involved in fiscal policy and had to navigate the challenges associated with funding government expenditures.
Banking Functions: Without a central bank, the Treasury acted as the government's banker. It held the government's deposits and conducted financial transactions on behalf of the government.
Stabilization Efforts: In the absence of a central bank with specific tools for monetary policy, the Treasury attempted to stabilize the financial system and address economic challenges through various means, including the use of gold reserves.
Silver has played a significant historical role in the development of currency, particularly in the form of silver coins. In the United States, silver has been used as a basis for currency at various points in history, but its role has evolved over time.
Bimetallism: In the 19th century, the United States adhered to a bimetallic standard, where both gold and silver were used as the basis for currency. The Coinage Act of 1792 established the U.S. Mint and defined a bimetallic system with a fixed ratio between the values of gold and silver. This meant that both gold and silver coins were circulating as legal tender.
Silver Coins: The U.S. mint produced various denominations of silver coins, such as the silver dollar, half dollar, quarter, and dime. These coins were widely used in everyday transactions. The value of these silver coins was tied to the silver content they contained.
The Sherman Silver Purchase Act (1890): This legislation aimed to increase the amount of silver in circulation by requiring the U.S. Treasury to purchase large quantities of silver. The goal was to support silver prices and maintain bimetallism. However, the resulting oversupply of silver led to economic challenges, and the Sherman Silver Purchase Act was eventually repealed in 1893.
Transition to Gold Standard: The U.S. underwent a significant shift toward the gold standard in the late 19th century. The Gold Standard Act of 1900 formally established gold as the sole standard for redeeming paper currency. This move marked a departure from the bimetallic system, and silver coins gradually lost their prominence in everyday transactions.
End of Silver Certificates: While silver coins continued to be minted for circulation until 1964, the use of silver in U.S. currency further diminished with the discontinuation of silver certificates in 1968. Silver certificates were a form of paper currency that could be redeemed for a specific amount of silver.
Today, the United States operates on a fiat currency system, where the value of the currency is not directly tied to a physical commodity like gold or silver. Instead, the value is based on the trust and confidence that people have in the government that issues the currency. While silver no longer plays a direct role in the U.S. currency system, it holds historical significance in the evolution of the nation's monetary policies.
Bimetallism: In the 19th century, the United States adhered to a bimetallic standard, where both gold and silver were used as the basis for currency. The Coinage Act of 1792 established the U.S. Mint and defined a bimetallic system with a fixed ratio between the values of gold and silver. This meant that both gold and silver coins were circulating as legal tender.
Silver Coins: The U.S. mint produced various denominations of silver coins, such as the silver dollar, half dollar, quarter, and dime. These coins were widely used in everyday transactions. The value of these silver coins was tied to the silver content they contained.
The Sherman Silver Purchase Act (1890): This legislation aimed to increase the amount of silver in circulation by requiring the U.S. Treasury to purchase large quantities of silver. The goal was to support silver prices and maintain bimetallism. However, the resulting oversupply of silver led to economic challenges, and the Sherman Silver Purchase Act was eventually repealed in 1893.
Transition to Gold Standard: The U.S. underwent a significant shift toward the gold standard in the late 19th century. The Gold Standard Act of 1900 formally established gold as the sole standard for redeeming paper currency. This move marked a departure from the bimetallic system, and silver coins gradually lost their prominence in everyday transactions.
End of Silver Certificates: While silver coins continued to be minted for circulation until 1964, the use of silver in U.S. currency further diminished with the discontinuation of silver certificates in 1968. Silver certificates were a form of paper currency that could be redeemed for a specific amount of silver.
Today, the United States operates on a fiat currency system, where the value of the currency is not directly tied to a physical commodity like gold or silver. Instead, the value is based on the trust and confidence that people have in the government that issues the currency. While silver no longer plays a direct role in the U.S. currency system, it holds historical significance in the evolution of the nation's monetary policies.
The United States Constitution grants Congress the authority to coin money and regulate its value. The relevant clause is found in Article I, Section 8, Clause 5, often referred to as the "Coinage Clause." It states:
"The Congress shall have the Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
This clause gives Congress the explicit power to mint coins, determine their value, and establish the standards for weights and measures, including those related to currency.
The Constitution does not specify the metals to be used in coinage, leaving that decision to the discretion of Congress. This flexibility allowed for changes in the composition of coins over time. In the early years of the United States, both gold and silver coins were in circulation.
The Coinage Act of 1792, which was passed by the first Congress and signed into law by President George Washington, established the U.S. Mint and regulated coinage. This act specified the types of coins to be minted, including gold and silver coins, and set the standards for their weights and metallic content. It effectively implemented the constitutional mandate regarding coinage.
The bimetallic standard, with both gold and silver as the basis for coinage, continued for much of the 19th century. However, as economic and monetary policies evolved, the United States moved towards a gold standard in the late 19th and early 20th centuries. The Gold Standard Act of 1900 formalized this transition, making gold the primary standard for U.S. currency.
While the Constitution provides the authority for Congress to coin money and regulate its value, the specific details of currency composition and standards have been determined through legislation, such as the Coinage Act of 1792 and subsequent acts.
"The Congress shall have the Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
This clause gives Congress the explicit power to mint coins, determine their value, and establish the standards for weights and measures, including those related to currency.
The Constitution does not specify the metals to be used in coinage, leaving that decision to the discretion of Congress. This flexibility allowed for changes in the composition of coins over time. In the early years of the United States, both gold and silver coins were in circulation.
The Coinage Act of 1792, which was passed by the first Congress and signed into law by President George Washington, established the U.S. Mint and regulated coinage. This act specified the types of coins to be minted, including gold and silver coins, and set the standards for their weights and metallic content. It effectively implemented the constitutional mandate regarding coinage.
The bimetallic standard, with both gold and silver as the basis for coinage, continued for much of the 19th century. However, as economic and monetary policies evolved, the United States moved towards a gold standard in the late 19th and early 20th centuries. The Gold Standard Act of 1900 formalized this transition, making gold the primary standard for U.S. currency.
While the Constitution provides the authority for Congress to coin money and regulate its value, the specific details of currency composition and standards have been determined through legislation, such as the Coinage Act of 1792 and subsequent acts.
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The Bible contains numerous references to silver, and it is often mentioned in both the Old and New Testaments. The significance of silver in the Bible varies, and it is used in different contexts to convey various meanings. Here are some notable aspects of what the Bible says about silver:
Symbol of Wealth and Value: In biblical times, silver was considered a precious metal and a symbol of wealth. References to silver often highlight its value and desirability. For example, Proverbs 3:14 (New International Version) states, "for she [wisdom] is more profitable than silver and yields better returns than gold."
Purity and Refinement: The process of refining silver is sometimes used as a metaphor for the purification of individuals. Proverbs 25:4 (New International Version) says, "Remove the dross from the silver, and a silversmith can produce a vessel."
Use in Monetary Transactions: In various biblical narratives, silver is mentioned in the context of monetary transactions. For example, Judas Iscariot betrayed Jesus for thirty pieces of silver (Matthew 26:14-16), and silver is used as currency in other instances.
Offerings and Temple Construction: Silver was also significant in the construction and maintenance of the Tabernacle and later the Temple in Jerusalem. The Israelites contributed silver for various purposes, including constructing sacred vessels and utensils.
Symbolism in Prophecy: In certain prophetic passages, silver is used symbolically. For example, in Zechariah 11:12-13 (New International Version), the prophet speaks of receiving thirty pieces of silver, a reference that is later quoted in the Gospel of Matthew in connection with the betrayal of Jesus.
It's important to interpret these references in their historical and cultural context, considering the symbolic and practical meanings associated with silver in biblical times. The Bible uses various elements, including precious metals like silver, to convey spiritual, moral, and practical lessons to its readers.
Symbol of Wealth and Value: In biblical times, silver was considered a precious metal and a symbol of wealth. References to silver often highlight its value and desirability. For example, Proverbs 3:14 (New International Version) states, "for she [wisdom] is more profitable than silver and yields better returns than gold."
Purity and Refinement: The process of refining silver is sometimes used as a metaphor for the purification of individuals. Proverbs 25:4 (New International Version) says, "Remove the dross from the silver, and a silversmith can produce a vessel."
Use in Monetary Transactions: In various biblical narratives, silver is mentioned in the context of monetary transactions. For example, Judas Iscariot betrayed Jesus for thirty pieces of silver (Matthew 26:14-16), and silver is used as currency in other instances.
Offerings and Temple Construction: Silver was also significant in the construction and maintenance of the Tabernacle and later the Temple in Jerusalem. The Israelites contributed silver for various purposes, including constructing sacred vessels and utensils.
Symbolism in Prophecy: In certain prophetic passages, silver is used symbolically. For example, in Zechariah 11:12-13 (New International Version), the prophet speaks of receiving thirty pieces of silver, a reference that is later quoted in the Gospel of Matthew in connection with the betrayal of Jesus.
It's important to interpret these references in their historical and cultural context, considering the symbolic and practical meanings associated with silver in biblical times. The Bible uses various elements, including precious metals like silver, to convey spiritual, moral, and practical lessons to its readers.
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Forwarded from Tironianae 🍊 🍊 Z. - Ultra Verbum Vincet (SusanW1007🇺🇸 ♥️🇺🇸🦅)
The hedge fund, which was founded by David Einhorn in 1996, increased its investment in the SPDR Gold Trust GLD by 89.22% in the third quarter, as he channeled $34.9 million into the exchange traded fund which tracks the price of gold bullion.
Greenlight first bought shares in the SPDR Gold Trust in the second quarter of 2020, during a gold price rally driven by investors seeking to protect themselves against the economic chaos wrought by COVID-19. Any investments in gold through futures contracts wouldn’t show up in this regulatory filing.
https://www.marketwatch.com/story/david-einhorns-greenlight-capital-snaps-up-gold-as-it-cuts-stake-in-top-two-holdings-02464ab3
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Forwarded from Stacy (Qrash The Matrix)
Forwarded from Stacy (Qrash The Matrix)
BREAKING – Russia: Unknown people opened fire in the center of Moscow
near a bank branch.
https://www.tellerreport.com/news/2023-11-17-prosecutor-s-office-confirms-major-armed-robbery-in-central-moscow.SJE7GESVa.html
near a bank branch.
https://www.tellerreport.com/news/2023-11-17-prosecutor-s-office-confirms-major-armed-robbery-in-central-moscow.SJE7GESVa.html
Forwarded from Tironianae 🍊 🍊 Z. - Ultra Verbum Vincet (SusanW1007🇺🇸 ♥️🇺🇸🦅)
The 68-year-old retired general was found deceased in bed at his home in the village of Adzhievsky in the Stavropol region. Sviridov led Russia’s 6th Army of the Air Force and Air Defense from 2005 to 2009, NY Post reported.
The discovery was made a week after the couple had already passed away, as reported by the popular Russian Telegram channel Baza.
“Gas service workers have already taken measurements and no excess of the permissible concentration of harmful substances has been detected,” the news outlet. “What caused the death of Vladimir and Tatiana Sviridov is still unknown,” the report claimed.
There were no apparent signs of violence at the scene, and Sviridov’s 72-year-old wife, Tatiana, was also found deceased beside him.
https://insiderpaper.com/russian-general-critical-of-putins-third-rate-air-force-found-dead-with-wife-under-unclear-circumstances/
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A sting operation is a law enforcement tactic designed to catch a person committing a crime by means of deception. In a sting operation, undercover agents or officers pose as criminals or interested parties to gather evidence and build a case against a suspect. The goal is to elicit criminal behavior or solicit illegal activity from the target.
Sting operations are commonly used to investigate various types of crimes, such as drug trafficking, prostitution, corruption, fraud, and other illegal activities. The success of a sting operation often relies on the ability of law enforcement officers to convincingly play their roles without arousing suspicion.
These operations may involve surveillance, controlled transactions, and the use of informants, all aimed at obtaining evidence that can be used in court. While sting operations can be effective in apprehending criminals, they also raise ethical concerns, particularly regarding the use of deception and the potential for entrapment. Entrapment occurs when law enforcement induces someone to commit a crime they would not have otherwise committed. As a result, the legality and ethical considerations of sting operations are carefully scrutinized in legal systems.
Sting operations are commonly used to investigate various types of crimes, such as drug trafficking, prostitution, corruption, fraud, and other illegal activities. The success of a sting operation often relies on the ability of law enforcement officers to convincingly play their roles without arousing suspicion.
These operations may involve surveillance, controlled transactions, and the use of informants, all aimed at obtaining evidence that can be used in court. While sting operations can be effective in apprehending criminals, they also raise ethical concerns, particularly regarding the use of deception and the potential for entrapment. Entrapment occurs when law enforcement induces someone to commit a crime they would not have otherwise committed. As a result, the legality and ethical considerations of sting operations are carefully scrutinized in legal systems.
Sealed indictments can be a part of certain sting operations, particularly when law enforcement agencies want to keep details of an investigation confidential until the time is right for arrests to be made. A sealed indictment is an indictment that is kept secret until it is unsealed, typically after the arrest of the suspect.
Sealed indictments serve several purposes:
Maintaining Secrecy: They allow law enforcement to conduct their investigations without alerting the suspects. This secrecy is crucial to prevent suspects from fleeing, destroying evidence, or interfering with the investigation.
Ensuring Safety: Keeping indictments sealed until the arrests are made helps protect the safety of undercover agents and informants involved in the operation.
Preventing Tipping off Suspects: If the existence of an indictment becomes public before the arrests are executed, suspects may become aware of the investigation, making it harder for law enforcement to apprehend them.
Once arrests are made, the indictments are typically unsealed, and the legal process becomes public. The unsealing of indictments allows the accused individuals to be informed of the charges against them, and the case then proceeds through the normal legal proceedings.
Sealed indictments serve several purposes:
Maintaining Secrecy: They allow law enforcement to conduct their investigations without alerting the suspects. This secrecy is crucial to prevent suspects from fleeing, destroying evidence, or interfering with the investigation.
Ensuring Safety: Keeping indictments sealed until the arrests are made helps protect the safety of undercover agents and informants involved in the operation.
Preventing Tipping off Suspects: If the existence of an indictment becomes public before the arrests are executed, suspects may become aware of the investigation, making it harder for law enforcement to apprehend them.
Once arrests are made, the indictments are typically unsealed, and the legal process becomes public. The unsealing of indictments allows the accused individuals to be informed of the charges against them, and the case then proceeds through the normal legal proceedings.