What would it look like if the Federal Reserve went bankrupt?

[jxnmsdemguy65]

Many students of the economy, such as investigative journalist Michael Ruppert, thinks that this could very well happen in 2011.

What would be the ramifications?

Would I be able to access the funds in my checking account?

[barbiegeek]

1. Can you site the article?

[Tunkamerica]

11. I believe it's cite; like citation.

[barbiegeek]

14. spelling Nazi--LOL

[Tunkamerica]

15. I tried to be nice about it, but yeah.

[immoderate]

16. You did your best.

--imm

[tama]

2. Fun! n/t

[quaker bill]

3. They "print" the money

How again are they going to go "bankrupt"? They just created 2 trillion dollars from thin air.

[Rosa Luxemburg]

4. they'd ask the printers to print more money

[lurky]

5. How would they go bankrupt? They can print money to pay their debts, IIRC.

I would be interested in seeing a link to one of these articles.

[Statistical]

7. More specifically they have no debts to begin with.

The fed creates money from nothing to purchase assets. They never borrow from anyone for anything.

[taught_me_patience]

26. Yep... awesome post,... this is exactly how it works

People need to understand the jargon:

fed increasing balance sheet = printing money.

[truedelphi]

30. That is it in a nutshell.

And since the Fall of 2008, they have been printing money like crazy.

Except the actual dollar bills are not necessarily printed.

Bernanke explained this to "Sixty Minutes" at one point. He said when there is an entity that needs the Federal Reserve Dollars, he simply opens up an electronic account for that entity and puts whatever number of "digitized" dollars into that account.

He said that it is erroneous for tax payers to think that they are going to be on the hok for these offerings to the larger firms in America.

After all, he said, the money is simply electronic blips. (Remember this is what Bernanke said - please do not blame me if what he said doesn't make sense.)

[Statistical]

6. Never going to happen.

The federal reserve issued record dividend to Treasury in 2008 & 2009. By law they are limited to 8% dividend on assets and any excess goes to Treasury.

The fed isn't going bankrupt.

[FBaggins]

8. They recently made an accounting change that makes this impossible.

It was considered pretty darn close to impossible before, but now it's off the table.

Though the net effect is what other posters have presented. They just get the treasury to print more dollars.

[Statistical]

10. The fed doesn't even need the treasury.

If they need more dollars they simply make more dollars.

[barbiegeek]

19. Huh???

[Lint Head]

9. I would look like the front row seat of a Hank Williams Jr. concert.

I think it's kinda improbable that would happen. Too big to fail.

[Recursion]

20. Not just "too big to fail"; the Fed gets to decide how much money it has

Bankruptcy is literally impossible. Plenty of other things could happen, but it couldn't be literal "bankruptcy".

[Demeter]

12. Bernanke Could File for Unemployment

The Fed has nothing to do with your checking account.

A great injustice would be lifted off the American economy, and Congress would be forced to return to its Constitutional duties.


Upon further thought: pigs would probably take wing.

[MrMickeysMom]

13. I think this is the best kept secret...

An insolvent Fed... Who's ever been successful in their audit?

Fractional Reserve = print mo money, mo money, mo money.... the answer to an austerity program state side. What difference would my money make if it's backed by nothing?

[Recursion]

18. The Fed doesn't use fractional reserve

It has no demand deposits.

[MrMickeysMom]

21. How do you know what you know?

I'm waiting for you to explain the Fed's role to the World Banking System now.

:popcorn:

[Recursion]

22. How do I know the Fed doesn't have demand deposits?

Because I know the definition of "central bank" and "demand deposit".

[MrMickeysMom]

23. Well, good for you!

Me, too! But, that wasn't what I asked.

Now, going back to the point about what difference would my money make if it's backed by nothing... It's a continual watering down process and it's backed by nothing. Due to fractional reserve, that expanding money MEANS NOTHING.

I just followed the recent reports about the biggest assets in 2010 and saw that gold and silver as assets have risen substantially (putting it mildly), but where's the dollar?

Yeah, there it is...hear the flush?

[Recursion]

17. It's literally impossible

A central bank can't go bankrupt. Even if it completely collapsed, "bankruptcy" wouldn't be an accurate way to describe that.

[MrMickeysMom]

24. Then quit with the trite descriptions already

And admit that this country's banking system is an insolvent one. The Fed cannot disclose what backs it up or it would.

[Recursion]

25. Nothing "backs it up"

Nobody ever said something tangible "backs up" fiat currency.

[MrMickeysMom]

27. Good... At least you understand that n/t

[Recursion]

28. What exactly is your point?

That valuation of any currency is ultimately arbitrary? Ummm... ok, sure.

[Statistical]

29. Delete