3:24 - The gold has been sitting on their balance sheet since 1933 after all of the gold was ordered confiscated to the Treasury. They actually don't possess it but hold the figure on the balance sheet as a record. By federal law, they haven't been able to hold gold as an asset since that legislation.
Brilliant stuff. I was wondering if you could do a video on quantitative easing, and why it won't work when the banks are insolvent, or when they are deemed to be.
i have been really enjoying your videos and learning a lot. thank you and your team so much. it is a bit frustrating to have a resolution rate of maximum 240p... would it be much cooler, if you can make the options of higher resolution possible?
@hwt2009 Sal points that out at the very beginning of the video. He said that this would be the balance sheet before all the craziness happened in 2008.
@hwt2009 Sal points that out at the very beginning of the video. He said that this would be the balance sheet before all the craziness happened in 2008. The date on the Balance sheet itself is dated as Feb 14th 2007. So how is that 'misleading'?
that is one of the best explanations for a balance sheet that i have watched. I am guessing (i will look at the 2008 balance sheet of the fed and compare) that the Fed is claiming to have more "Assets" (worthless treasuries) and even more debt (inflation).
@thekid22585 the federal reserve is connected to international banks so there already is one and theres banks like the federal reserve in every country
Hi Petter, your vedios are really great. I wonder how the federal print money and sell T-bills against it because the t-bills will also be sold and they will get USDollar against. So how that will be offset again? and dont you think with issuing $100 t-bill the Fed. ca print $100 and sell the t-bills for a hundred so they will get a total of $200?
Wouldn't the reverse repo on the liability side be just an obligation to sell back the repo assets to their original owners (holders of "reverse repos" on their asset side)? The explanation "fed has borrowed from someone" seems very strange.
@thekid22585 All I know is the SDRs are interchangeable with almost every currency and isn't the issuance in the same type of control as that of the federal reserve notes?
Hi Sal Thanks So much for your Videos they are awesome. I just wanted to know is the Fed involved in controlling currency exchange rates. If not how the currency exchange rates are determined would me helpful if u could do a video on that plzz
If notes come into existence when the Fed issues them as liabilities and buys treasuries in exchange, how is the government then supposed to find the interest to repay those loans? There won’t be enough notes in existence....
Other than enhancing the transparency of monetary policy, why is the Fed balance sheet important? I don't understand why people consider it to be one of the most 'exciting' stats published by the Fed...
those 12B gold is apprised afaik at $42 per oz, if you calculate it by today price ~$1100 (26 times more), those 12B should become ~315B .... what about that :) it is not such a small amount isnt it ..... and when the gold peak (if it is traded as simple commodity) at $2500 (59 times) ==> 715B..... if gold is ever traded like money again, then i don't want to even calculate it :)
@thekid22585 lol Abraham Lincoln created a Fiat Currency to paper over the Union's bankruptcy during the Civil War, he's no worse than the current presidents we have now. We REALLY need someone like Andrew Jackson!
@dafaucas, I believe in my heart that truth can win, but what matters is doing what is right: Obtain pamphlets on jury nullification and hand them out in front of court houses, especially tax court. Learn precious metals, and buy and sell in silver with anyone who will accept such real money(believe me, folks WILL accept silver). Tell people about Alex Jones. Keep and bear arms. Associate with intelligent, freedom-loving people. Love truth. Come up with your own ideas.
So the FED prints money with which it buys US Treasurys. And the US Government then pays the interest on the treasurys to the FED. But then FED's income goes back to the US Treasury. So the FED is giving the government an inherently useless thing - bills- in exchange for another inherently useless thing -a paper- and then pays interest on those papers (the treasury bills) to itself? Can someone please explain? Where is the value coming from? Edit: So the government is getting the money (currency) for free? Anybody's help would be appreciated.
@thekid22585 The Fed is like a beast with tenacles extending all over the place. They ARE our government even though they technically aren't. They have so much power it's ridiculous.
the godl in fort knox was removed in the 70's or 60's and taken to new enlgand and it is stored over there for safe keeping so nobody can steal it; investigate.
This is a misleading video; the changes occured in 2008 onwards....the Fed Reserve now holds over 1 trillion of mortgage backed securities......what you are seeing is before the TARP and all the bank failures....
Be careful with this video. Although his logic is convincing, the original financial statement is politically correct. Thus, the Fed may have assets upwards of $100 trillion. No matter where the money gets lost in the system or the world, the money always comes back to the Fed.
First of all, how are the outstanding dollars considered liabilities? A liability is something you owe another party - what can the dollar holders come to the fed to claim? Aside from a little gold that it has, the Fed doesn't have assets to give. The majority of its "assets" are treasuries - which are claims to a stream of dollars in the future. And theoretically, the Fed has INFINITY assets since it has a printing press that can create infinity dollars. How can so few people realize how nonsensical this accounting is? The Fed is simply the government's perpetual currency printing press - no more, no less.
David Carr Federal Reserve Notes are collateralized by its assets (and yes, Treasuries are assets) and can be redeemed for lawful money (however, since federal reserve notes ARE lawful money, you won't get very far). The real reasoning is that if the U.S. decided to dissolve the Federal Reserve for some reason, it would get the assets being held and be able to exchange Federal Reserve Notes for whatever they replaced them with. P.S. The Federal Reserve doesn't own any gold. It owns gold certificates (which cannot be redeemed for gold); the Treasury owns gold.
JSavic Treasury securities are created and marketed by the U.S. Treasury, not the Federal Reserve. The Federal Reserve is prohibited from buying them directly from the Treasury, and must instead buy them through open market operations. It does so by crediting the accounts of member banks in exchange for the securities. Deposits are assets to the account holders (the member banks) and liabilities to the banking institution (the Fed). Actual cash is purchased from the Treasury at cost and then "sold" at face value, becoming a claim on Fed assets and thus a liability in the process. Coins are both purchased and "sold" at face value and do not become liabilities for the Fed. The Fed remits earnings to the Treasury after operating expenses and interest payments (including payments on what is effectively preferred stock).
If the FRN were not a liability but an income, then that is a moral hazard problem. The Fed (which is theoretically a bank) could print FRN and earn income. To avoid this conundrum, FRN is correctly treated as a liability. Even if the FRNs were extinguished, it cannot be treated as income, because then the Fed could keep extinguishing its liabilities and not honor up. Again a moral hazard problem. Therefore this accounting method is devised this way. Before 1913, other banks were allowed to print currency and this is how it was done. Today the Fed may have monopoly. But running roughshod with the historical accounting practises is not a good thing. (accountant from India)
Arun Kumar i have news for you - its still a moral hazard. just classifying as liability doesnt change the principle. a handful of unelected people are monetizing debt. they bail out failures with money they just printed. and a liability classification implies it needs to be paid back (or reversed). the fed hasn't decreased their balance sheet in any material way since its creation. it only goes up.
David Carr My friend. You are debating this only because you are seeing the number on the Balance Sheet, cause it's rightly put there. Had it been taken to Income Statement, the words moral hazard itself would be outside of monetary dictionary. I am saying the practice is centuries old. When before the Fed, individual banks carried it against gold backing, FRN was a liability. I know circumstances have changed. But we are not so dis-illusioned that we don't know which side is Up. You are conflating events post 2007, with something which has been around and accepted not only in US but in every other country.
Right. The fed "creates" Federal Reserve Notes which it uses to buy Treasuries. We cover this in the previous 4 or 5 videos on banking and money.
Dec 2021 - watching and trying it figure out if Fed is helping the people, banks, politicians, or themselves.
who goes back to this video after the Fed decides to print "unlimited" billions during the coronavirus pandamic ?
I want my puts to go brrrrrrr
Trillions*
Everyone should understand this. This this their livelyhood!
Yeah, for big corporations.
So they went from less than 1 trillion here to 7 trillion and counting today, yep nothing to worry about they know what they're doing??
Wow, it is amazing to look at the sheet now.. it has multiplied by 10! In 14 years.. what a money printing machine
One word- AWESOME! This is one of the best explanations I ever got.
3:24 - The gold has been sitting on their balance sheet since 1933 after all of the gold was ordered confiscated to the Treasury. They actually don't possess it but hold the figure on the balance sheet as a record. By federal law, they haven't been able to hold gold as an asset since that legislation.
you should do an updated video since the balance sheet is 4.5 trillion now
Brilliant stuff. I was wondering if you could do a video on quantitative easing, and why it won't work when the banks are insolvent, or when they are deemed to be.
You did a great job of explaining things for the common person! Thanx!
i have been really enjoying your videos and learning a lot. thank you and your team so much. it is a bit frustrating to have a resolution rate of maximum 240p... would it be much cooler, if you can make the options of higher resolution possible?
Wenting Liu it’s a ten year old video...
@@Redsoxvsyankees
BOO
@hwt2009
Sal points that out at the very beginning of the video. He said that this would be the balance sheet before all the craziness happened in 2008.
@hwt2009
Sal points that out at the very beginning of the video. He said that this would be the balance sheet before all the craziness happened in 2008.
The date on the Balance sheet itself is dated as Feb 14th 2007.
So how is that 'misleading'?
that is one of the best explanations for a balance sheet that i have watched.
I am guessing (i will look at the 2008 balance sheet of the fed and compare) that the Fed is claiming to have more "Assets" (worthless treasuries) and even more debt (inflation).
sdr's would be how many assets are being held in a savings account at the world bank ... (sdr's are special credits based on a basket of currencies )
@thekid22585 the federal reserve is connected to international banks so there already is one and theres banks like the federal reserve in every country
Would a 1 dollar silver certificate and a one dollar bill be on the same side of a balance sheet?
Hi Petter, your vedios are really great. I wonder how the federal print money and sell T-bills against it because the t-bills will also be sold and they will get USDollar against. So how that will be offset again? and dont you think with issuing $100 t-bill the Fed. ca print $100 and sell the t-bills for a hundred so they will get a total of $200?
Wouldn't the reverse repo on the liability side be just an obligation to sell back the repo assets to their original owners (holders of "reverse repos" on their asset side)? The explanation "fed has borrowed from someone" seems very strange.
@thekid22585 There already is an international fed; the IMF who prints Special Drawing Rights (SDRs). It is privately owned by rothscild =)
Ok
But what is the cap on the Fed’s liabilities? What prevents them from printing ad infinitum?
@thekid22585 All I know is the SDRs are interchangeable with almost every currency and isn't the issuance in the same type of control as that of the federal reserve notes?
The fed does pay interest on its reserves now , right?
Hi Sal Thanks So much for your Videos they are awesome. I just wanted to know is the Fed involved in controlling currency exchange rates. If not how the currency exchange rates are determined would me helpful if u could do a video on that plzz
If notes come into existence when the Fed issues them as liabilities and buys treasuries in exchange, how is the government then supposed to find the interest to repay those loans? There won’t be enough notes in existence....
SDRs are claim on the IMF (Specifically claims denominated in IMF Special Drawing Rights, a basket of world currencies)
Please do a video on FASAB 156
Any excess, minus a 6% dividend, goes back to the U.S. Treasury.
Thanks for showing us. Great video.
How did he get a balance sheet on the Federal Reserve?
Repurchase agreements= Repo market?
good content but I wish you could update the video quality
acually its more about youtube downgrading video quality of old videos, trust me back in 2009 this was actually visible
Other than enhancing the transparency of monetary policy, why is the Fed balance sheet important? I don't understand why people consider it to be one of the most 'exciting' stats published by the Fed...
Simple accounting equation: Assets= Liabilities + Owners Equity
Why do the bank deposit money in the Federal Reserve.
The Fed does not own any real gold, they just own gold certificates and it is valued at $40 something per ounce. Strange?
those 12B gold is apprised afaik at $42 per oz, if you calculate it by today price ~$1100 (26 times more), those 12B should become ~315B .... what about that :) it is not such a small amount isnt it ..... and when the gold peak (if it is traded as simple commodity) at $2500 (59 times) ==> 715B..... if gold is ever traded like money again, then i don't want to even calculate it :)
5:22 So most of what the ..... what the 😂😂😂🤣
Ummm, but since the constitution requires congress "To coin Money, regulate the Value thereof...." isn't all this illegal?
Sal please learn Austrian Business Cycle Theory! You're SO close!
@thekid22585 lol Abraham Lincoln created a Fiat Currency to paper over the Union's bankruptcy during the Civil War, he's no worse than the current presidents we have now. We REALLY need someone like Andrew Jackson!
@dafaucas, I believe in my heart that truth can win, but what matters is doing what is right: Obtain pamphlets on jury nullification and hand them out in front of court houses, especially tax court. Learn precious metals, and buy and sell in silver with anyone who will accept such real money(believe me, folks WILL accept silver). Tell people about Alex Jones. Keep and bear arms. Associate with intelligent, freedom-loving people. Love truth. Come up with your own ideas.
So the FED prints money with which it buys US Treasurys. And the US Government then pays the interest on the treasurys to the FED. But then FED's income goes back to the US Treasury. So the FED is giving the government an inherently useless thing - bills- in exchange for another inherently useless thing -a paper- and then pays interest on those papers (the treasury bills) to itself? Can someone please explain? Where is the value coming from?
Edit: So the government is getting the money (currency) for free? Anybody's help would be appreciated.
Here in 2022
Sal does not know SDR 😄
Muhammad M yeah, im kinda surprised 😲
sensored??? who did it?
Help end the Federal Reserve. Write to your congressman and tell him to support H.R. 833 Federal Reserve Board Abolition Act.
@thekid22585 The Fed is like a beast with tenacles extending all over the place. They ARE our government even though they technically aren't. They have so much power it's ridiculous.
А чё это за программа ?
End the FED already lol
They are forced to that by the law, so money won't multiplicate to much.
@canadakim1
WOW SPREAD UR IDEA AROUND!
the godl in fort knox was removed in the 70's or 60's and taken to new enlgand and it is stored over there for safe keeping so nobody can steal it; investigate.
why is this 240p
FED Balance Sheet in 2020: Yes
crazy that were in the trillions!!!
This is a misleading video; the changes occured in 2008 onwards....the Fed Reserve now holds over 1 trillion of mortgage backed securities......what you are seeing is before the TARP and all the bank failures....
Be careful with this video. Although his logic is convincing, the original financial statement is politically correct. Thus, the Fed may have assets upwards of $100 trillion. No matter where the money gets lost in the system or the world, the money always comes back to the Fed.
this is conspiratorial nonsense
@bhitt99 Well, good luck to you sir. But beware that your brains don't fall out from sheer "open-mindedness".
First of all, how are the outstanding dollars considered liabilities? A liability is something you owe another party - what can the dollar holders come to the fed to claim? Aside from a little gold that it has, the Fed doesn't have assets to give. The majority of its "assets" are treasuries - which are claims to a stream of dollars in the future. And theoretically, the Fed has INFINITY assets since it has a printing press that can create infinity dollars. How can so few people realize how nonsensical this accounting is?
The Fed is simply the government's perpetual currency printing press - no more, no less.
David Carr Federal Reserve Notes are collateralized by its assets (and yes, Treasuries are assets) and can be redeemed for lawful money (however, since federal reserve notes ARE lawful money, you won't get very far). The real reasoning is that if the U.S. decided to dissolve the Federal Reserve for some reason, it would get the assets being held and be able to exchange Federal Reserve Notes for whatever they replaced them with.
P.S. The Federal Reserve doesn't own any gold. It owns gold certificates (which cannot be redeemed for gold); the Treasury owns gold.
JSavic Treasury securities are created and marketed by the U.S. Treasury, not the Federal Reserve. The Federal Reserve is prohibited from buying them directly from the Treasury, and must instead buy them through open market operations. It does so by crediting the accounts of member banks in exchange for the securities. Deposits are assets to the account holders (the member banks) and liabilities to the banking institution (the Fed).
Actual cash is purchased from the Treasury at cost and then "sold" at face value, becoming a claim on Fed assets and thus a liability in the process. Coins are both purchased and "sold" at face value and do not become liabilities for the Fed.
The Fed remits earnings to the Treasury after operating expenses and interest payments (including payments on what is effectively preferred stock).
If the FRN were not a liability but an income, then that is a moral hazard problem. The Fed (which is theoretically a bank) could print FRN and earn income. To avoid this conundrum, FRN is correctly treated as a liability. Even if the FRNs were extinguished, it cannot be treated as income, because then the Fed could keep extinguishing its liabilities and not honor up. Again a moral hazard problem. Therefore this accounting method is devised this way. Before 1913, other banks were allowed to print currency and this is how it was done. Today the Fed may have monopoly. But running roughshod with the historical accounting practises is not a good thing.
(accountant from India)
Arun Kumar i have news for you - its still a moral hazard. just classifying as liability doesnt change the principle. a handful of unelected people are monetizing debt. they bail out failures with money they just printed. and a liability classification implies it needs to be paid back (or reversed). the fed hasn't decreased their balance sheet in any material way since its creation. it only goes up.
David Carr My friend. You are debating this only because you are seeing the number on the Balance Sheet, cause it's rightly put there. Had it been taken to Income Statement, the words moral hazard itself would be outside of monetary dictionary. I am saying the practice is centuries old. When before the Fed, individual banks carried it against gold backing, FRN was a liability. I know circumstances have changed. But we are not so dis-illusioned that we don't know which side is Up. You are conflating events post 2007, with something which has been around and accepted not only in US but in every other country.
cant even read with 240p
Not so helpful. The quality of the video is not good. You barely can see anyting.
Hey from the future. buy bitcoin it will blow up.