My idea

[Smoblikat]

So I was doing some thinking (as I frequently do) and I had an idea. Before I say that idea I would like to put a disclaimer on it, I am 18 years old and do not fully understand how the system works at the level i will be talking about, so if something sounds stupid it probably is What if the government gave less money to the federal reserve, a substantial decrease. Then got rid of the federal income tax? If the federal reserve (we will call it FR) realized that it no longer could essentially print its own money it would force it to either be more fiscally responsible or perish (like it should). The money that isnt given to the FR can be used to pay for federal workers, social programs, and all the assorted BS that the federal government likes to use our money for. This will mean that there will be less money going directly into circulation and thus cause all the money out there and all the new money coming in to be worth more. So there will be more money in our pockets due to no federal income tax, that money and all new money coming in will be worth more, the taxpayers will no longer be (as much) on the hook to pay for all the stupid things that the government likes to spend money on, and the FR will either get abolished or will smarten up and stay on the very short leash that it will be on. I would very much like your input on this and why it is either a good idea or makes no sense at all.

 

[IronWing]

The government doesn't give money to the FR. Failure, Mr. Jones, is hardly very original. Sit down.

 

[UberNeuman]

So I was doing some thinking (as I frequently do) and I had an idea.

Before I say that idea I would like to put a disclaimer on it, I am 18 years old and do not fully understand how the system works at the level i will be talking about, so if something sounds stupid it probably is What if the government gave less money to the federal reserve, a substantial decrease. Then got rid of the federal income tax?

If the federal reserve (we will call it FR) realized that it no longer could essentially print its own money it would force it to either be more fiscally responsible or perish (like it should).

The money that isnt given to the FR can be used to pay for federal workers, social programs, and all the assorted BS that the federal government likes to use our money for. This will mean that there will be less money going directly into circulation and thus cause all the money out there and all the new money coming in to be worth more.

So there will be more money in our pockets due to no federal income tax, that money and all new money coming in will be worth more, the taxpayers will no longer be (as much) on the hook to pay for all the stupid things that the government likes to spend money on, and the FR will either get abolished or will smarten up and stay on the very short leash that it will be on.

I would very much like your input on this and why it is either a good idea or makes no sense at all.

\you're welcome.
\\paragraphs, son...

 

[Smoblikat]

The government doesn't give money to the FR. Failure, Mr. Jones, is hardly very original. Sit down.

Then where does the FR get money and where does money go after its printed?

 

[IronWing]

Then where does the FR get money and where does money go after its printed?

The FR prints it and distributes it to member banks.

 

[Smoblikat]

The FR prints it and distributes it to member banks.

Maybe I am wrong, but I think that would be illegal. The FR is privately owned and not part of the government.

 

[IronWing]

Maybe I am wrong, but I think that would be illegal. The FR is privately owned and not part of the government.

Printing money and distributing it to its member banks is one of the FR's reasons for existence. Read your money: Federal Reserve Note. The Treasury mints coins but the paper is all Federal Reserve.

 

[Smoblikat]

Printing money and distributing it to its member banks is one of the FR's reasons for existence. Read your money: Federal Reserve Note. The Treasury mints coins but the paper is all Federal Reserve.

So they then dont "create" money, they make it physical and distribute it. Like a router.

 

[IronWing]

So they then dont "create" money, they make it physical and distribute it. Like a router.

No, the FR creates money out of thin air. They also destroy money as needed. Lately they've been creating a whole bunch of it.