Re: The Federal Reserve should take over checking services from private banks

On May 5, 2:26 pm, smith <s...@xxxxxxxx> wrote:
The Fed should offer checking and debit card services which would solve
two of the biggest financial problems the US (and the world for that
matter) faces and that is fractional banking and credit card fees.

Presently whenever you purchase something online or use your debit card
at a store, the credit card company takes a bite (a tax of sorts) out of
that purchase. This can be 1-3% for bigger purchases and 3-6% for
larger purchases. If you add up all the purchases done by credit/debit
cards this is a huge amount of money! Merchants can even lose money on
small denominated items because the transaction fee is higher then the
cost of the item. Sure you're thinking...why can't the merchant just
raise his fees to offset these costs if the consumer uses a credit card?
They can't legally, because in order to set up merchant accounts with
the credit card companies they have to sign 'merchant agreements' that
ensure that items won't be charged differently based on the payment
method. So even though offering discounts for cash payments saves both
the consumer and the seller, it is illegal if the store offers credit
card payment as an option. Pretty much all stores have to pay these
fees, so they can safely pass almost the entire cost on to the consumer
which is a huge inflationary rippoff.

All of this is unneeded. When you write a check or swipe a credit what
you really doing is just moving information around on the Fed's balance
statement. Person A has a deposit at Bank1 for 10K dollars. He writes
a check to person B who Banks with Bank2 for 10K. What happens is that
Bank1 transfers 10K from their Federal Reserve account to Bank2's
reserve account at the Fed. But there is no need for privates banks to
do this! This only happens because bankers helped write the rules that
setup the Fed and other central banks that ensures that ONLY BANKS can
have hold deposits at the central bank which is grossly unfair. This
monopoly law allows bank to fleece the public by being the unneeded
middlemen between the buyers and sellers which is a huge drain on the
economy.

We've seen this before where congress in the US gave monopoly rights to
tax preparing services like H&R Block to offer Internet tax filing
online for a fee, even though it online filing saves the government a
ton of money and they should offer it free to the public. It's the same
deal, where stupid ignorant politicians grant illegitimate monopolies to
private companies at the expense of the public.

There is no reason why the Fed can't offer the public the right to hold
accounts like private banks do. To get started, the Fed could start out
like many online banks we have today. Checks could be mailed into a
branch office. Wire services could be offered (for free). Checks could
be mailed to people who want to signup so people could write checks just
like they do with a bank. The Fed could also issue a 'Direct Access
Federal Reserve Debit Card' which would allow users to to charge their
accounts directly from the Fed with just a swipe of their card but
without all those awful merchant account fees. As time went on, the Fed
could expand their account services to include the standards like direct
deposit and bill paying. Cash could be obtained by the current time
machines we have now, and banks could be forced to accept cash deposits
on behalf of the Fed in the short term, until the Fed could expand
enough branch offices to facilitate cash services on their own.

The other major problem this would fix would be fractional banking.
Presently when you put your money into a bank, the banks goes wild
speculating your money on investments while the present Fed has this
fake oversight mission of where they make sure banks don't speculate too
much (don't want the banks to create toooo much inflation when they
fabricate all their phony investment deposits), but speculate enough not
to create a liquidity crisis (AKA bankrun because banks are greedy and
issue more deposits then they can meet in reserves). This messed up
system only can happen because bankers are the ones that influence and
control the central banks (politicians pretend to control central banks
but they don't). Now banks would by causing economic crashes left and
right if their parasitic behavior wasn't being constantly bailed out by
Federal Reserve subsidies which are shouldered by the public by the
amount of inflation we endure.

This inflation, the threat of bank runs, and Federal Reserve subsidies
can all be eliminated if the Fed offered direct checking.

Unfortunitly this plan will never happen because the public and their
demagogue politicians they love don't have a clue how our monetary
system works, so they are rely on bankers to regulate bankers which
means any hope of practical reform is probably hopeless.

I was thinking doing just the opposite - It would be a good idea to
privatise the FED's present function of providing a check
clearinghouse operation. The Fed's clearinghouse function is the Fed's
biggest function. (Seventy percent of the Fed's employees work in
their check clearinghouse business). Why not privatise this function
get a huge, huge price for it - and make it private which uses the
efficiency of American enterprise. It also reduces the headaches for
the Fed, allows them to concentrate more on the money supply operatons.

.

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