Does Fed pay tax on national-debt interest earnings?

[PatColo]

Not sure where to find the answer on this... but it's one of those basic questions which arise when considering that behind the layers of mass-deception & misdirection (like the Fed's quietly adopting a ".gov" domain name a few years ago)- the Fed is just another for-profit government contractor, printing the nation's currency (notes & digital) and loaning it out at compounding interest- an astoundingly profitable enterprise indeed!

We individuals pay tax on whatever meager interest we're paid on our interest-bearing accounts, and corp's pay tax on their profits, but does the Fed/Rothschild Global Usury Empire pay taxes on their interest revenues from the "National Debt"? Or does some sort of "special relationship" exist there, whereby Fed's private shareholders keep all their interest revenues from National Debt? ???

U.S. Govt Stages Fake Coup to Wipe out National Debt (http://www.youtube.com/watch?v=-vTH6dRe9ro)

http://www.youtube.com/watch?v=-vTH6dRe9ro

^alas, we might not need to stage a fake coup (unlike the REAL COUP the Rothschild/Zionist banksters committed against the US on 911 (http://gold-silver.us/forum/showthread.php?23130-The-quot-Israel-did-9-11-quot-Thread)), if the gummit could just grab back all that interest in the form of federal taxes on Fed's interest income! If the gummit exorbitantly taxing the Fed/Rothschilds, made the US an unattractive place to do business for them, then tudaloo Fed!! 8)

As it stands, it seems gummit un-Constitutionally taxes citizens on their earned income, in order to pay the interest on the national debt to the un-Constitutional Fed/Rothschild Usury Empire which "loans us our currency"; but (correct me if I'm wrong..) the gummit don't tax these particular private/for-profit government contractors' obscene profits! :-X

edit: ^ this all gets into the Fed/US-Treasury relationship and "who holds the National Debt?" which is largely the form of T-Notes... held by nations, entities & individuals who buy those T-bills as investments. But most are held by nations, right? And other nations don't file IRS returns.. or whatever! All suddenly so confusing! Maybe we can sort it out some here... better everyone's understanding?

[Glass]

I don't believe they do BUT like the Australian Reserve Bank they probably have to return any surpluses. At least that is what is claimed on the net. I doubt they would have any surpluses though so I can't see that happening.

As to the question of ending the Fed, I have seen the claim many times that there is a clause by which the US government could buy back the Fed charter (or chatever it is) for about $500,000.00. Not sure if thats true but I've seen it said a few times.

[woodman]

They do not.

[madfranks]

They don't pay tax on it because they don't get to keep the interest earnings.


Democrat Wright Patman and California Congressman Jerry Voorhis, in the early 1940s persuaded Congress to pass a bill, which Roosevelt signed, that forbids the Federal Reserve from keeping the interest payments from the government bonds it has counterfeited fiat money to purchase. Today, the FED must return to the Treasury all of this money beyond its operating expenses. For 2011, the FED will pay back $77 billion.

http://lewrockwell.com/north/north1089.html

[Hatha Sunahara]

So, Madfranks, if they don't get to keep the interest earnings on government debt, and they have to return it to the Tresaury, does that mean the government borrows money from the Fed 'interest free'?

That obviously is not true if Interest on the National Debt is one of the biggest line items in the budget. I think the Fed sells the government bonds to commerical banks (who are owners of the Fed), and they try to sell it to the public--including China and Japan and Saudi Arabia and whoever else will buy it.

Hatha

[Ares]

You want to bring down the FED? Stop endorsing it's credit. It really is that easy. You have Remedy in the federal reserve act. Title 12 USC 411 apply it and no longer endorse private credit.

[madfranks]

So, Madfranks, if they don't get to keep the interest earnings on government debt, and they have to return it to the Tresaury, does that mean the government borrows money from the Fed 'interest free'?

That obviously is not true if Interest on the National Debt is one of the biggest line items in the budget. I think the Fed sells the government bonds to commerical banks (who are owners of the Fed), and they try to sell it to the public--including China and Japan and Saudi Arabia and whoever else will buy it.

Hatha

The Federal Reserve doesn't own all of the US Government's debt. All the other holders of that debt need to be paid too. And as far as the Fed's balance sheet, not all of it is made up of US debt, so I suppose the OP question still stands regarding interest paid on commercial bank loans and other collateral.

[madfranks]

does that mean the government borrows money from the Fed 'interest free'?

As far as I understand it, essentially yes. Forgetting every other player and focusing only on the Fed and the US Gov't, if the Fed buys $100 billion in T-bonds, the gov't pays back $110 billion, and the $10b interest on the loan is paid back to the treasury, making the loan to the gov't interest free. That's a real law on the books, and the $77 billion the Fed put into the treasury at the end of 2011 did actually happen.

http://money.cnn.com/2012/01/10/news/economy/federal_reserve_pays_treasury/index.htm

[Hatha Sunahara]

Thank you Madfranks. That closes a loop for me. The Fed generally tries to get other buyers to own Bonds issued by the US Government that it holds. If it fails to do that, the interest the government pays goes back to the government.

This is what makes hyperinflation not only possible, but inevitable. If no private buyers are willing to purchase the US Bonds from the Fed, the Fed will accumulate ownership in US Bonds, which are interest free to the government, and the government will borrow an infinite amount of money from the Fed at zero interest. So, why should any of us be held accountable for this debt through our taxes? What do we get for it but more war and more entitlements that we can't afford anyway, but that the government won't deny us for political reasons. This is why I support Ron Paul--because he has made sense of this and understands how to fix the government.


Hatha

[madfranks]

Thank you Madfranks. That closes a loop for me. The Fed generally tries to get other buyers to own Bonds issued by the US Government that it holds. If it fails to do that, the interest the government pays goes back to the government.

This is what makes hyperinflation not only possible, but inevitable. If no private buyers are willing to purchase the US Bonds from the Fed, the Fed will accumulate ownership in US Bonds, which are interest free to the government, and the government will borrow an infinite amount of money from the Fed at zero interest. So, why should any of us be held accountable for this debt through our taxes? What do we get for it but more war and more entitlements that we can't afford anyway, but that the government won't deny us for political reasons. This is why I support Ron Paul--because he has made sense of this and understands how to fix the government.


Hatha

Some people contend that we can't have a hyperinflationary scenario when we have a central bank loaning money at interest to the gov't, but if/when the fed becomes the only buyer of US debt, the question of interest and how it is paid back goes out the window and the scenario becomes one where the gov't essentially prints all the money it needs without worry of paying interest on borrowed funds.