Today more people are aware of the Federal Reserve's activities than ever before, mostly owing to the Ron Paul movement or H.R. 1207, Rep. Paul’s Federal Reserve Transparency Act, which had 317 cosponsors in the House. The spotlight on the Fed this past year did not prevent it from taking in a record-breaking $45 billion in profits last year, as recorded in public documents and reported by the Washington Post. The Fed's largest previous profit was $34.6 billion, in 2007.

These earnings dwarf those of big banks such as Goldman Sachs, Bank of America, and J.P. Morgan Chase. What the Fed did to achieve them was engage in an aggressive bond-buying program, pushing interest rates down everywhere in an effort to stimulate economic growth. The Fed began these unconventional measures early in the financial crisis, and by the end of 2009, it owned $1.8 trillion in U.S. government debt and mortgage-related securities — up from $497 billion a year ago. A major source of the Fed’s profits was interest income — although such income bears risks. The Fed stands to lose a lot of money if it must sell those securities to reduce the money supply.

According to the report, the Fed also made money on emergency loans to banks and other firms, and on special programs to support lending — as with credit cards, auto loans, and other loans that would enable consumers to spend and businesses to survive. The Fed also increased its balance sheet to the tune of $4.7 billion in interest payments from loans to Bear Stearns and American International Group although those loans declined in value by $3.8 billion. Further gains or losses on these two bailouts are possible in 2010.

By law the Fed must return almost all of its profits to the Treasury. It may deduct operating expenses from its total earnings, such as employee salaries (Fed Chair Ben Bernanke is currently paid a salary of $199,700, with no bonuses) and the fees it charges for clearing checks and electronic payments from banks. Many economists consider this good news: a sign that the Fed’s interventions in the economy last year were successful. They credit the Fed with thwarting disaster by preventing large financial and other institutions such as AIG from going under and putting the economy on the road to recovery, although with unemployment remaining very high, mainstream economists temper their praise by noting that the recovery will be slow and painful as businesses remain reluctant to hire.

Those who would like to see more Fed transparency, however, contend that any recovery evident in government numbers cannot sustain itself unless people are returning to work in large numbers and actually producing things — in an environment of confidence where consumers and investors believe that their hard-earned money will retain its value. This is something that cannot happen in the long run if the Fed and U.S. Treasury Dept. are printing more dollars to sustain an appearance of economic growth, such as what we saw in the middle of the past decade. Fed profits are going into the Treasury in accordance with the realization that since this crisis began, the primary growth “industries” in the country have been government and central banking.

The report quotes Vincent Reinhart, an American Enterprise Institute resident scholar and former Fed official, observing, “This shows that central banking is a great business to be in, especially in a crisis. You buy assets that have a nice yield, and your cost of funds is very low. The difference is profit.”

Photo: AP Images

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zman said:

	Central banking is a scam Central banking is a scam, pure and simple.
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January 12, 2010
Votes: +4

Jeff said:

Fed must be scared to release these phony numbers* Except for the huge fact they don't want any audit... I don't put too much faith in how they came up with that number since they can print money out of thin air. This sounds like a powder puff press release to try and bring the miseducated american public from wanting so badly to look into how much ridiculous power they wield over the world. 13 world banks issue money out of thin air for the American public to borrow & then they spend their working lives paying an income (slavery) tax with blood, sweat & tears to 'pay it back'. How about this.... why doesnt the govt issue interest free money that we don't get charged for? Just like JFK & Abe Lincoln tried.... whoops I guess somebody didnt want that to happen. 13 world banks coming up with numbers they don't want us to even audit. That is worse then Enron by an order of 1000's.

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January 12, 2010
Votes: +6

Harry said:

	... The federal reserve is a banking cartel and has been the direct cause of inflation and the decrease of the purchasing power of the US dollar. Do some research, the fed isnt a federal government but owned by private bankers.
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January 13, 2010
Votes: +4

ConradB said:

... To get a ggod grip on the Fed, here's a good collection of Congressman Louis T. McFadden of Pennsylvania. He was in the act of bringing charges against all involved with the Fed when he turned up deceased. He should have had a good perspective on the Fed as he was the Head of the Banking and Currency Comittee from 1920 to 1931, and these a collection of his speeches on the floor of the House of Representaitves: http://home.hiwaay.net/~becraft/mcfadden.html He even through his speeches informs on how Europe was rebuilt with the American People's swindled gold and this also helps to understand that without America's stolen gold, there would have been no WWII, as the nations of Europe were broke. But like Lincoln, McKinley, Garfield, and Kennedy, he wound up deceased because was outspokenly opposed to the Fed, and the Banksters.

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January 14, 2010
Votes: +3

Paul Friesen said:

	... The function of the Fed is to manipulate the economy so that the real facts are distorted to hide reality. The economy can only grow through productivity. Even if you have zero unemployment without productivity you can have a poor economy. More employment in nonproductive jobs (i.e. government jobs) does nothing for the ecomomy and in reality is a drag on growth.
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January 24, 2010
Votes: +1

Joseph Monte said:

The Federal Reserve is the blame for America's Economic Collapse. The FED is 97 years old The next collapse in American Government will be the greatest upheaval yet! The U.S. Treasury’s collapse brought on by the demise in value of the dollar, will wreak more “havoc” on the economy and deliver more agony and pain to average Americans than the “subprime Mortgage disaster”, “the housing bust”, “the banking crisis”, and the “collapse of GM”, put together! The "Peoples Bank of China" is now calling on the world to replace the U.S. Dollar as the world’s reserve currency, and for the I.M.F. to issue a new single, Super Sovereign Currency. What will the new currency be called, the Amero? “Debt” is the major cause of our country’s demise, and could lead to America’s ultimate extinction, as a nation! U.S. banks now hold obligations that exceed $200,000,000,000,000.00 (trillion), and combined with derivatives, may be as high as $1,100,000,000,000,000.00 (1.1 quadrillion dollars), according to the (U.S.) Office of the Controllers of the Currency! The Australians call the present group of Democrats in American Government, the “watermelon politicians”! They are “green” on the exterior, but “RED” on the interior (communist)! It is “a change”, but it is not traditional Americanism! If most Americans were asked, “Is it ignorance or apathy that Americans are most guilty of”, by allowing TARP to bailout big businesses while all of the costs are placed on American taxpayers backs, most would respond: “I don’t know, and I don’t care”!

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January 29, 2010
Votes: +0