Should the Fed record dollars as equity or as liabilities?

[rpwi]

Currently, they record dollars as liabilities. To me this is a mistake as it is deceptive and allows the Fed to coverup a lot waste and mismanagement.

Here is how it works currently:

Fed starts with x assets = y liabilities + z equity

They go onto the open market and acquire say 1 million in t-bill assets and balance this by adding 1 million in dollar liabilities (either dollar bill liabilities or electronic deposits at the Fed liabilities).

This is a very bad way to do this. Say the Fed creates 1 trillion dollars and spends all of this to get .25 trillion dollars worth of assets. They then sell the assets for .25 trillion. The balance sheet will not reflect that 1 trillion dollars was created...nor would the income statement.

So their accounting looks like this:

To acquire the over-priced securities:

assets (+=1 trillion) = liabilities (+=1 trillion in dollar deposits) + equity

Then once they sell their over-priced securities:

assets (-=1trillion) = liabilities (-=.25 trillion) + equity (-=.75trillion losses)

The proper way would be to record dollars initially as equity (not liabilities) as they are no longer redeemable in gold. For example...if you find a wad of cash on the ground...or buried treasure...or you counterfeit a bunch of money. ...And you are a company practicing standard accounting... You don't list the money as a liability...you list it as equity. A not-for profit company would do the same. The Federal reserve should be nothing but a huge not-for profit company that we control.

Here is how the Fed should account for new money (say a trillion dollars):

assets (+=1 trillion dollars) = liabilities + equity (+= 1 trillion in counterfeited capital)

Now I buy some securities:

assets (-=1 trillion dollars, +=1 trillion securities = liabilities + equity

Now I sell my security at a huge loss (75% down):

assets (-=1 trillion securities,+=.25 trillion dollars) = liabilities + equity (-=.75 in security losses)

What's the difference between the two?

In the first, income would be reported as a loss... 0 equity - .75 trillion in loan losses = .75 in negative income.

In the second, income would be reported as: +1 trillion in dollars - .75 trillion in loan losses = .25 trillion in profit.

Why is this important? The Fed is supposed to give their annual profits after operational expenses and bank dividends to the Congress/Treasury department to be included into the budget. If they under report profits...they don't have to give us the taxpayer as much money. Switching equity to liabilities is not an old trick...tax evaders use it all the time to reduce the amount of taxes they pay...and it appears the Fed is doing the same. This allows the Fed to play financial games mismanaging assets they shouldn't be juggling...and represents a serious time loss to the tax payer. If I as the tax payer have the choice between paying taxes and paying down my debt...and I have to pay taxes...the time value of these lost payments is significant. Yes, the Fed will invest some of the assets in income bearing instruments but that is below the market-rate and the money in the open market would have been much more efferently invested and allocated.

[Paul Or Nothing II]

I believe there's a critical flaw in that argument.
You assume that that .25 trillion would be left as it is when in fact, it doesn't always work like that. Fed creates money to address specific purposes so the 1 trillion (in your example) would be created to buy those bad securities, & when they are eventually sold, even at below their book price, the whole 1 trillion on both sides of the balance sheet will be written off UNLESS they think they need that .25 trillion in the system to put somewhere else, be it to loan it to some institution(s) or buy Treasuries or whatever, but other than that once those bad securities are sold, there would be no purpose in having any part of that 1 trillion on the books.

Remember, there were reports that Fed has loaned trillions & trillions to institutions all over the world, how did it not spark hyperinflation? Well, they weren't lent at the same time but over a period of time, where money was created, lent, repaid & destroyed/written-off & so on over a period

As for the notes & electronic deposits, here's how it works :
http://www.federalreserve.gov/moneta...iabilities.htm

Federal Reserve notes, net of Federal Reserve Bank holdings

Historically, Federal Reserve notes have been the largest liability on the Federal Reserve's balance sheet. A U.S. depository institution, when it needs more currency to meet its customers' needs, asks a Reserve Bank to send it more Federal Reserve notes. The Reserve Bank ships the currency to the institution and debits the institution's Federal Reserve account by the amount shipped. Thus, an increase in Federal Reserve notes outside of the Reserve Banks is matched, in the first instance, by a reduction in the quantity of reserve balances that banks and other depository institutions hold in their Federal Reserve accounts. Similarly, a depository institution that finds that it has more Federal Reserve notes on hand than it needs to meet its customers' needs generally returns the extra currency to a Reserve Bank; the Reserve Bank credits the institution's account so the liability side of the Federal Reserve's balance sheet shows a reduction in Federal Reserve notes outstanding and a matching increase in reserve balances held by depository institutions.

The quantity of Federal Reserve notes held by the public has grown over time. Absent any additional action by the Federal Reserve, the increase in Federal Reserve notes would reduce the quantity of reserve balances held by depository institutions and push the federal funds rate above the target set by the Federal Open Market Committee (FOMC). To prevent that outcome, the Federal Reserve engages in open market operations to offset the reduction in reserve balances.

Anyways, +1 for asking this question, I think it's important that such questions are asked & debated to add to the intellectual depth of this movement; understanding the system in detail will aid us in pointing out its flaws more clearly than us just getting cozy with every conspiracy theory out there just for the sake of re-establishing our dislike for the system

[rpwi]

I believe there's a critical flaw in that argument.
You assume that that .25 trillion would be left as it is when in fact, it doesn't always work like that. Fed creates money to address specific purposes so the 1 trillion (in your example) would be created to buy those bad securities,

Agreed

& when they are eventually sold, even at below their book price, the whole 1 trillion on both sides of the balance sheet will be written off

Both sides yes...but not evenly between assets/liabilities/equity.

The asset side would definitely be lowered by 1 trillion. However, the liabilities can not be lowered by a trillion dollars...because there is still .75 trillion in 'dollar liabilities' floating around in the outside market (remember we only got .25 trillion back in dollars. So with the 'dollar liabilities'...we will definitely decrease this by .25t (thus destroying the monetary base). However, from a double-book keeping perspective...that remaining .75 trillion has to be made up on the finance side of the ledger...so it would come out of equity. This is standard in corporations...bad loans come out of equity and hurt profits.

UNLESS they think they need that .25 trillion in the system to put somewhere else, be it to loan it to some institution(s) or buy Treasuries or whatever, but other than that once those bad securities are sold, there would be no purpose in having any part of that 1 trillion on the books.

Agreed that the .25 trillion get 'destroyed' when it is repaid. However, the loan loss is reflected in equity and therefore profits.

Remember, there were reports that Fed has loaned trillions & trillions to institutions all over the world, how did it not spark hyperinflation? Well, they weren't lent at the same time but over a period of time, where money was created, lent, repaid & destroyed/written-off & so on over a period

Yeah...big problem...because it results in churning. The Fed pulls other tricks of course like asset swaps that allow them to do bailouts in secret.

The gist of my argument is this. In accounting, there are two ways to finance a company. Liabilities and equity. They can both do the trick and both have their pros and cons. The issue is that liabilities are supposed to be external sources of financing whereas equity is not. By the Fed claiming what should be equity as a liability they lower the amount of profits they report and thus enable them to oversee more assets and to send less money to congress.

[Paul Or Nothing II]

They aren't recorded as anything until after the Fed spends them.

Exactly, there's no point in recording it until it's spent!

The asset side would definitely be lowered by 1 trillion. However, the liabilities can not be lowered by a trillion dollars...because there is still .75 trillion in 'dollar liabilities' floating around in the outside market (remember we only got .25 trillion back in dollars.

Once the securities are sold at below the book price - the "loss" - those .75 trillion in your example, will then one way or another form the part of banks' "reserves", which are supposed to be Fed's liabilities anyways

Now, if they want to reduce this increased moneysupply then they'll have to start selling other assets like Treasuries & such & thereby reduce moneysupply

[rpwi]

Exactly, there's no point in recording it until it's spent!

That's not necessarily true. When the Federal Reserve buys t-bills on the open market...while the MB creation and t-bill purchase happens at the same time...this should be considered two accounting transaction and not one. If the Fed were a private company (Counterfeiter Inc.) it would be considered two transactions. The first would be the act in creating money...then the second would be to exchange the dollars for t-bills.

An illustrative example would be how coinage is accounted for at the Fed. The Fed does properly count this as an asset (where as with dollars they are never counted as assets). The accounting for this is also a two stage-process...once to create the coins at the Treasury...then another for the Fed acquire the coins from the Treasury. Now the Fed doesn't count the claim on coinage as equity...but as a liability because the treasury department gets to create form of money...in this case this is call proper accounting. But because the Fed creates dollars (except coins) internally, it the claims should be counted as equity and not liabilities.

Once the securities are sold at below the book price - the "loss" - those .75 trillion in your example, will then one way or another form the part of banks' "reserves", which are supposed to be Fed's liabilities anyways.

I disagree. Certainly the outstanding .75 trillion needs to remain on the balance sheet. However on the 'claim side' of the ledger it belongs to equity and not liabilities. Why is this important? Well in both ways...money and transactions are accounted for. But by conflating equity and liabilities...you distort profits (and therefore remittances to the congress). Think of it this way... If a counterfeiter creates 1 million dollars and then loses .5 million dollars... What was his profit? Was it +.5 million or -.5million? It most certainly was +.5 million because the act of money was itself a profitable venture (which is self-evident). If a company tried to file the latter to the IRS, they would be charged with tax fraud.

Now, if they want to reduce this increased moneysupply then they'll have to start selling other assets like Treasuries & such & thereby reduce moneysupply

They could. But you do not need to sell assets to reduce the money supply. Just as you do not need to buy assets to increase the money supply. For example...say the Fed takes 1 billion they acquired in interest income...on the balance sheet...1 billion in dollar liabilities is wiped out and a 1 billion dollar credit is added to equity.

[Paul Or Nothing II]

If a counterfeiter creates 1 million dollars and then loses .5 million dollars... What was his profit? Was it +.5 million or -.5million? It most certainly was +.5 million because the act of money was itself a profitable venture (which is self-evident).

Ok, let's you're Fed, & now you buy assets from Bank A at 1 trillion, so you add 1 trillion to Bank A's reserves held with you on the Liabilities side & you add 1 trillion on the Assets side as well to balance it out
Ok, now if you sell them at .5 trillion, you will reduce .5 trillion from Bank A on the Liabilities side & reduce .5 trillion from Assets side
What has happened in the whole process, moneysupply has increased by net .5 trillion & it now belongs to Bank A's reserves; is that good, no, because Bank A received a free .5 trillion for being TBTF but they are indoctrinated to think that it "must be done" to sustain the economy, etc etc but the point remains that technically the money no more belongs to the Fed but to Bank A
Now, if you want to further reduce moneysupply then you will have to sell other Assets

They could. But you do not need to sell assets to reduce the money supply. Just as you do not need to buy assets to increase the money supply. For example...say the Fed takes 1 billion they acquired in interest income...on the balance sheet...1 billion in dollar liabilities is wiped out and a 1 billion dollar credit is added to equity.

Receiving interest doesn't create any new money, it just moves the money around on the Liabilities side, that's all

Let's say they receive 1 billion from Bank B as interest on loans, that only means taking 1 billion from Bank B's reserves & showing it as profits which will eventually be handed over to the Treasury
Even when it receives interest from Treasury, for the moment, it will be shown as profits & eventually will be handed back to the Treasury

[Bern]

I'd prefer they record them as ounces. /HR 1098

[Danke]

FRNs shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.

[Revolution9]

FRNs shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.

The problem with it is that the public cannot get to the teller window to get the real US currency in exchange for FRN's. If we could find somebody who could do this they could make a bundle on a 1% surcharge.

Rev9

[heavenlyboy34]

The problem with it is that the public cannot get to the teller window to get the real US currency in exchange for FRN's. If we could find somebody who could do this they could make a bundle on a 1% surcharge.

Rev9

You can always trade your FRNs for PMs. The trouble becomes getting people to accept PMs as payment. I would accept PMs, but most people don't know how to think in such terms anymore. I'm also semi-sure you don't have to pay taxes on exchanges in PMs, as the government considers it "barter".

[Carson]

I prefer they claim them as capital gains.

[Domalais]

They aren't recorded as anything until after the Fed spends them.

[rpwi]

They aren't recorded as anything until after the Fed spends them.

Well yes (aside from coinage which works in reverse on the balance sheet). They shouldn't though. If a corporation find 1 millions dollars in a treasure chest...that is supposed to be recorded right-away as asset/equity entries. If the corporation then buys assets with their new money...that is merely an asset swap. If their assets go bad...that come off of assets and off of equity as a loss...which counteracts the gain from discovered treasure.

The Fed should absolutely use the same measure of accounting. It is not honest to count dollars as liabilities when they should be classified as equity.

[Jive Dadson]

Paper money that is loaned into existence by a bank is always recorded as a liability. Originally it was a genuine liability in the sense that it obligated the bank to redeem the notes in gold or silver on demand. The principles of double entry bookkeeping still require that it be recorded as a liability. The Fed puts the money into accounts that belong to other entities (the Treasury, Goldman Sachs, etc.).

I have not read the messages here. Lazy me. But I see the word "equity." I will point out that equity is itself a liability - a liability to the stockholders. In companies that have no stockholders, it is usually called "bank" rather than "equity," but it is always recorded as a liability, to balance the assets that contribute to the equitable interest of the owners.

[Danke]

Paper money that is loaned into existence by a bank is always recorded as a liability.

A loan is an asset for a bank.

[Jive Dadson]

A loan is an asset for a bank.

The note (IOU) is an asset. The money loaned, when the bank puts it into the borrower's account, is a liability.

Paul Or Nothing II is right. He has admirable patience too.

[Danke]

The note (IOU) is an asset. The money loaned, when the bank puts it into the borrower's account, is a liability.

Paul Or Nothing II is right. He has admirable patience too.

Yes, a deposit is a liability. But a loan is an asset.

[Paul Or Nothing II]

Let's look at a couple of examples.


Illustration 1 :
Fed buys T-bills directly from Treasury, obviously, no involvement of PDs, just Fed creating 0.5 trillion & giving it to Treasury & Treasury gives Fed T-bills in return which go on the Assets side.

Liabilities                                Assets
Currency in circulation - 1 trillion        Treasuries/US debt - 2.5 trillion
All banks' reserves - 1.5 trillion
Treasury A/c - 0 trillion

Fed buys T-bills directly from Treasury at 0.5 trillion

Liabilities                               Assets
Currency in circulation - 1 trillion         Treasuries/US debt - 3 trillion
All banks' reserves - 1.5 trillion
Treasury A/c - 0.5 trillion

Illustration 2:
Now, even in this example, the end-result is exactly the same as in the illustration 1, which is that Treasury essentially ends up with the new money created by the Fed, but the whole thing goes in a more roundabout way.
First, PDs buy from Treasury, so obviously banks' reserves are reduced & added to Treasury A/c.
Then when Fed wants to increase moneysupply, it buys from PDs with new money, so banks' reserves are increased & Fed receives the T-bills, which it adds as Assets.

Liabilities                                    Assets
Currency in circulation - 1 trillion             Treasuries/US debt - 2.5 trillion
All banks' reserves - 1.5 trillion
Treasury A/c - 0 trillion

PDs buy T-bills from Treasury at 0.5 trillion

Liabilities                                   Assets
Currency in circulation - 1 trillion             Treasuries/US debt - 2.5 trillion
All banks' reserves - 1 trillion                          
Treasury A/c - 0.5

Fed buys T-bills from PDs at 0.5 trillion

Liabilities                                    Assets
Currency in circulation - 1 trillion              Treasuries/US debt - 3 trillion
All banks' reserves - 1.5 trillion                          
Treasury A/c - 0.5

[rpwi]

Let's look at a couple of examples.

Illustration 1 :
Fed buys T-bills directly from Treasury, obviously, no involvement of PDs, just Fed creating 0.5 trillion & giving it to Treasury & Treasury gives Fed T-bills in return which go on the Assets side.

While relevant points to how the treasury department could deal directly with the Fed...it is not germane to the matter at hand. The open market does not need to purchase t-bills. In fact they've batted the idea around of purchasing other assets.

If the open market purchased say silver instead and we don't even have t-bills...my critique remains. Creation and trade are erroneously combined. Then creation is not credited to equity (and instead liabilities) which deflates profits and creates a situation in which the Fed hoards assets and they can never really be properly liquidated.

Ron Paul has suggested as a measure to avoid raising the debt ceiling to wipe out part of the debt from the Fed to the US government...out of curiosity how you would account for that?

[Jive Dadson]

Ron Paul has suggested as a measure to avoid raising the debt ceiling to wipe out part of the debt from the Fed to the US government...out of curiosity how you would account for that?

For the record, I do not think inflation-hawk Ron Paul is serious about that, but the way it would work is this: The Fed would write off the US bonds, setting their asset value to zero. Equity [yes, equity!] would be reduced by the amount at which the bonds were previously carried. Now here is where it would get interesting. Since the Fed does the bookkeeping correctly, there surely would not be nearly enough equity to cover that gargantuan write-down. There is a word for that. The Fed would be bankrupt. Supposedly, it would go into receivership just as an ordinary failed bank would do. The current stockholders would lose all (ahem) equity. Sob. Of course that is a pipe dream.

[rpwi]

For the record, I do not think inflation-hawk Ron Paul is serious about that, but the way it would work is this: The Fed would write off the US bonds, setting their asset value to zero. Equity [yes, equity!] would be reduced by the amount at which the bonds were previously carried. Now here is where it would get interesting. Since the Fed does the bookkeeping correctly, there surely would not be nearly enough equity to cover that gargantuan write-down. There is a word for that. The Fed would be bankrupt. Supposedly, it would go into receivership just as an ordinary failed bank would do. The current stockholders would lose all (ahem) equity. Sob. Of course that is a pipe dream.

Ron was serious...and I wish I could remember the link. Ron's idea is terrific, avoids raising the debt ceiling for a while and I wish congress would support him on it.

Doesn't it strike you odd...that money owed from the government to the government can't be written down without causing negative equity? From an accounting perspective, Ron's plan could work. You would just move the liabilities to equity with a little 'recapitalization' first and you have the equity you need to 'properly' execute the write-down.

[Paul Or Nothing II]

While relevant points to how the treasury department could deal directly with the Fed...it is not germane to the matter at hand. The open market does not need to purchase t-bills. In fact they've batted the idea around of purchasing other assets.

That's not the point, you talked about T-bills so I followed up with that & showed that whether Fed buys Treasuries directly from Treasury or whether PDs first buy it from Treasury & then Fed buys from PDs; the bottomline is that Treasury is the indirect beneficiary

If the open market purchased say silver instead and we don't even have t-bills...my critique remains.

Ok, I'll indulge in your proposition & we'll see why it is wrong & it just doesn't work with the accounting

Premise :

Liabilities                                                  Assets
Currency in Circulation - 1 trillion                      Treasuries/US debt - 2 trillion
All banks' reserves - 1 trillion
TOTAL = 2 trillion                                           TOTAL = 2 trillion

As per your proposition, Fed creates 0.5 trillion for no reason at all; 0.5 trillion is added on both sides as "Equity" & "US dollars"

Liabilities                                                  Assets
Currency in Circulation - 1 trillion                     Treasuries/US debt - 2 trillion
All banks' reserves - 1 trillion                           "US dollars" - 0.5 trillion
"Equity" - 0.5 trillion
TOTAL = 2.5 trillion                                       TOTAL = 2.5 trillion

As per your proposition, Fed buys silver with those 0.5 US dollars
Remember, Fed will have to PAY for that silver so it will be paid for by adding to seller's bank account, which resides under "All banks' reserves"

Liabilities                                                   Assets
Currency in Circulation - 1 trillion                      Treasuries/US debt - 2 trillion
All banks' reserves - 1.5 trillion                         Silver - 0.5 trillion
"Equity" - 0.5 trillion
TOTAL = 3 trillion                                         TOTAL = 2.5 trillion

So now there are 3 trillion on liabilities side & 2.5 trillion on the assets side

Why? Because this simply isn't how central-banking works, the money is created IN THE PROCESS OF (NOT before) buying something or paying to someone or loaning to someone

The reason B/S is unbalanced because the way you want to account, the money is essentially created TWICE, once for creating "equity", & once again for buying silver (remember about buying things creating money), sorry but this just isn't the way it works

[rpwi]

...

So far, so good.

As per your proposition, Fed buys silver with those 0.5 US dollars
Remember, Fed will have to PAY for that silver so it will be paid for by adding to seller's bank account, which resides under "All banks' reserves"

Liabilities                                                   Assets
Currency in Circulation - 1 trillion                      Treasuries/US debt - 2 trillion
All banks' reserves - 1.5 trillion                         Silver - 0.5 trillion
"Equity" - 0.5 trillion
TOTAL = 3 trillion                                         TOTAL = 2.5 trillion

So now there are 3 trillion on liabilities side & 2.5 trillion on the assets side

And here is the problem. When the dollars were exchange silver, this was just an asset swap. Silver assets were credited by .5 trillion and dollar assets debited by .5 trillion. You snuck an extra transaction in here by adding to bank reserve liabilities. Bank reserve liabilities wouldn't exist with my system. Why should the Fed record this as a liability? If YOU buy a t-bill, do you consider your dollars spent a liability to the vendor? Certainly, the Fed needs to keep track of the location of electronic dollars (by there very nature being electronic). But in a manner more analogous to an air-traffic controller keeping track of incoming and outgoing planes, not as being on the balance-sheet.

[Paul Or Nothing II]

So far, so good.

And here is the problem. When the dollars were exchange silver, this was just an asset swap. Silver assets were credited by .5 trillion and dollar assets debited by .5 trillion. You snuck an extra transaction in here by adding to bank reserve liabilities. Bank reserve liabilities wouldn't exist with my system. Why should the Fed record this as a liability? If YOU buy a t-bill, do you consider your dollars spent a liability to the vendor? Certainly, the Fed needs to keep track of the location of electronic dollars (by there very nature being electronic). But in a manner more analogous to an air-traffic controller keeping track of incoming and outgoing planes, not as being on the balance-sheet.

All banks' reserves are held with Fed as reserves, for reserve-requirement calculations as well as for check-clearance, interbank transfers & such; it's a liability because it doesn't belong to Fed

And since the seller of silver isn't going to give it for free, he'll need to be paid into his bank account, which will be one of the banks directly or indirectly located under "All banks' reserves"

If I buy a T-bill, I don't need to record it as a liability because firstly, the seller doesn't hold his bank A/c with me but every seller has an direct or indirect bank A/c with Fed; secondly, I will be paying with money that I got by selling my goods & services, of course, Fed doesn't necessarily do that & hence it's considered a "loan" from the people

Why should the Fed record this as a liability? If YOU buy a t-bill, do you consider your dollars spent a liability to the vendor?

I've posted the following a couple of times already, here it is again for the third time, please read it

http://www.currency-news.com/article...-december-2008

In a nutshell, central banks have the statutory right to issue banknotes, that is, in an accounting sense functioning as a debtor for the value of banknotes in circulation. The face value of the notes will be recorded as a liability on the central bank's balance sheet, matched by a corresponding asset; in other words the community provides an interest free loan to the central bank, which in turn invests these funds in income producing assets

The issue seems to be that you base your views on conspiracy theories that Fed is "evil", etc etc & therefore you're unwiling to look at the issue objectively, yes, they are misguided, yes, there are special interests involved as they are wherever government is involved but the system, as it is today, isn't designed or always run to be "evil" even Ron Paul understands that much
SO even the central-bankers understand that whenever they buy something with newly created money, be it T-bills, silver or whatever, they are essentially taking it for free so it is in essence a "loan" from the people & that's why it's recorded as a liability to the "community" (remember, the banks' reserves essentially belong to depositors, that is, to the people as a whole)

[Jive Dadson]

Rpwl, "equity" is defined as the value of an ownership interest in property, e.g. shareholders' equity in a business. Surely you do not mean to suggest that when the Fed lends out a billion dollars, that the Fed's stockholder banks immediately should be credited with a billion dollars of profit. But that is what you are saying.

Double entry bookkeeping is 100's of years old. The Fed does it the way fractional reserve banks have always done it, the way it must be done to make sense.

[rpwi]

Rpwl, "equity" is defined as the value of an ownership interest in property, e.g. shareholders' equity in a business. Surely you do not mean to suggest that when the Fed lends out a billion dollars, that the Fed's stockholder banks immediately should be credited with a billion dollars of profit. But that is what you are saying.

Banks aren't really shareholders of the Fed. The US government is the proper owner of the fed...and therefore deserves credit for the money the Fed creates. Bank dividends are no more/less with the way I would account.

Double entry bookkeeping is 100's of years old. The Fed does it the way fractional reserve banks have always done it, the way it must be done to make sense.

A trip down memory lane is needed... The Fed used to redeem dollars for gold. When this did so, listing dollars bills and dollar deposits as liabilities (while gold as assets made perfect sense). We are no longer on the gold standard. The Fed no longer needs to acquire gold from outside it's walls...instead it can 'create its own gold'. This is holdover is why the Fed's accounting is messed up and in reverse. The fed is acting as if dollars are a loan to to themselves...when in fact dollars are now base money...a distinct entity in and of it self that is nonconvertible.

[kuckfeynes]

...

[Noble Savage]

if I was Washington or Jackson or Lincoln or Franklin I would consider it a liability to be associated with worthlessness.

[Paul Or Nothing II]

Ok, the fundamental issue is that you just don't understand that the very existence of a central-bank is for the purpose of managing moneysupply so not showing moneysupply on the B/S is out of the question, no, it has to be there otherwise there's no point in accounting or making a B/S
A central-bank manages moneysupply by buying & selling things, when it buys, it injects new money into the system, now the asset they buy must go on Assets side & therefore the money paid is accounted as Liabilities because it's been created out of nothing & therefore considered a "loan" from the community for reducing their purchasing-power

I mean it's not even such a complicated issue, it's just basic stuff - 1) central-bank is supposed to manage moneysupply 2) so it's B/S must show moneysupply 3) when it buys assets with new money to increase moneysupply, Assets go on the Assets side & the new money HAS TO go on the Liabilities side; it's just simple to understand if one looks at it objectively but I suppose it gets difficult when one believes in all kinds of conspiracies

Again, there's no question of recording moneysupply separately because the very purpose of central-bank is to manage moneysupply so moneysupply must be shown on the B/S

Comparing a central-bank's B/S with any other corporations is like comparing apples & oranges; they have completely different goals & purposes

Anyways, I don't see this thing going anywhere because the thing is, you have bought into the conspiracy theories too much & therefore you feel troubled by the fact that the new money is recorded as Liability & that's all there is too this whole drama while I choose to look at the issue more objectively so there's a fundamental disconnect between our worldviews, which seems irreconcilable so no point in carrying on with this

P S It's irrelevant what you or Ron Paul or anyone has in mind, if US defaults on ANY debt then that will scare the debt-holders & the markets, as it will be seen as more fiscal instability & heightened risk of more defaults then debt-dumping, inflation & budget-crisis & debt-crisis will only be aggravated; you may disagree that's fine because future is uncertain & markets react in different ways at different times but there's little doubt that the debt-holders aren't going to be very happy about it & a debt-default of any kind could have serious consequences on the US economy

[Travlyr]

Ok, the fundamental issue is that you just don't understand that the very existence of a central-bank is for the purpose of managing moneysupply so not showing moneysupply on the B/S is out of the question, no, it has to be there otherwise there's no point in accounting or making a B/S debase the currency and fund the Empire.

A central-bank manages moneysupply by buying & selling things, when it buys, it injects new money into the system, now the asset they buy must go on Assets side & therefore the money paid is accounted as Liabilities because it's been created out of nothing & therefore considered a "loan" from the community for reducing their purchasing-power printing currency out of nothing and making claims on real goods and services.

I mean it's not even such a complicated issue, it's just basic stuff - 1) central-bank is supposed to manage moneysupply By Counterfeiting. 2) so it's B/S must show moneysupply 3) when it buys assets with new money to increase moneysupply, Assets go on the Assets side & the new money HAS TO go on the Liabilities side; it's just simple to understand if one looks at it objectively but I suppose it gets difficult when one believes in all kinds of conspiracies
Which Paul on Nothing II doesn't believe ever exists. According to Paul or Nothing II nobody ever conspires to cheat. Heck, Paul Warburg and Senator Nelson Aldrich never even existed in Paul or Nothing II's world. It is all a myth.

Again, there's no question of recording moneysupply separately because the very purpose of central-bank is to manage moneysupply so moneysupply must be shown on the B/S steal the wealth of the world.
"Our goal is gradually to absorb the wealth of the world." - Cecil Rhodes, "The secret banking cabal"

Do you know who Cecil Rhodes was Paul or Nothing II? Have you ever heard of a Rhodes Scholar? Why do you think HE would say that? Oh maybe he just bought into conspiracy theory... what do you think?

Comparing a central-bank's B/S with any other corporations is like comparing apples & oranges; they have completely different goals & purposes
Yeah, in Paul or Nothing II's world that kind of stealing is just fine. They are just looking at things differently. Counterfeiting is just profiteering.

Anyways, I don't see this thing going anywhere because the thing is, you have bought into the conspiracy theories too much Which never exist and conspiracy should not even be a word & therefore you feel troubled by the fact that they are stealing from you on a daily basis (inflation) the new money is recorded as Liability & that's all there is too this whole drama while I choose to look at the issue more objectively so there's a fundamental disconnect between our worldviews, which seems irreconcilable so no point in carrying on with this

Because shilling for the bankers is exposing Paul or Nothing II's real agenda

P S It's irrelevant what you or Ron Paul or anyone has in mind, if US defaults on ANY debt then that will scare the debt-holders Oh I'm scared that the dollar will bust & the markets, which aren't really controlled... really they're not as it will be seen as more fiscal instability like Argentina in October 01 & heightened risk of more defaults Like Greece then debt-dumping, Like Iceland inflation & budget-crisis & debt-crisis will only be aggravated; Like Zimbabwe you may disagree that's fine because future is uncertain & markets react in different ways at different times but there's little doubt that the debt-holders aren't going to be very happy about it & a debt-default of any kind could have serious consequences on the US economy

Like the people might go back to work and prosper! Those are serious consequences BTW

Emphasis and Strikes all mine!