“Where did half a trillion dollars go?”
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Read below
For a quick explanation of how the Federal Reserve works, read what Richard Russel wrote last year:
Consider the following – – let’s take a situationwhere the U.S. government needs money. The U.S. doesn’t just issueUnited States Notes, which, of course it could. These notes would bedollars backed by the full faith and credit of the United States. No,the U.S. doesn’t issue dollars straight out of the U.S. Treasury.
This is what the U.S. does — it issues Treasury Bonds. The U.S.then sells these bonds to the Fed. The Fed buys the bonds. Wait, howdoes the Fed pay for the bonds? The Fed simply creates money “out ofthin air” (book-keeping entry) with which it buys the bonds. The moneythat the Fed creates from nowhere then goes to the U.S. The Fed holdsthe U.S. bonds, and the unbelievable irony is that the U.S. then paysinterest on the very bonds that the U.S. itself issued. The mindboggles.
Note that the owners of the Federal Reserve profit greatly from collecting all this interest.
Bill Bonner of The Daily Reckoning explained it this way:
When you buy a U.S. Treasury bond, you pay for itwith real money – or, at least as real as dollars get. Money changeshands. No net increase in the money supply. But when the Fed buys aTreasury bond it creates the money to buy it…and thus the money supplyincreases. It’s called “monetizing the debt” – or converting debt intocurrency.
But back to Richard Russell:
The damnable result is that the Fed effectivelycontrols the U.S. money supply. The Fed is …not even a branch of theU.S. government. The Fed is not mentioned in the Constitution of theUnited States. No Constitutional amendment was ever created or voted onto accept the Fed. The Constitutionality of the Federal Reserve hasnever come before the Supreme Court. The Fed is a private bank thatkeeps the U.S. forever in debt – – or I should say in increasing debtalong with ever rising interest payments.
How did the Fed get away with this outrage? A tiny secretivegroup of bankers sneaked through a bill in 1913 at a time when many inCongress were absent. Those who were there and voted for the billdidn’t realize (as so often happens) what they were voting for (shadesof the shameful 2002 vote to hand over to President Bush the power todecide on war with Iraq).”
For an excellent description of exactly how this secretive bankingcartel conspired on a private island to push the Federal Reserve Actthrough Congress, read The Creature From Jekyll Island – A Second Look at the Federal Reserve