Fed Reserve Bank: Private or gov.-run thing?

[oscar111]

seems to be a group of private banks,

yet the prez appoints the entire Board. Right?

So .. where do its profits go?

Where is real control centered viz decisions?

two factors in deciding if private or gov.... profit path, and control center.

dont know which is more important

comments?

[acmejack]

1. Everything you ever wanted to know about the FED

[snippy]

2. It is a government entity.

It was created by Congress just like any other federal agency, although it does have more independence than any other agency. But Congress can eliminate it or change its structure and responsiblities at any time, unless the president vetoed any such legislation. The profits generated by the Fed go to the US treasury.

[dcfirefighter]

3. "Federal reserve banks are..independent, privately owned..corporations

As per Lewis v. U.S. :http://en.wikipedia.org/wiki/Federal_Reserve#Who_owns_the_Federal_Reserve.3F

[lastknowngood]

4. Purely private. I call the Banksters just change the B to G and you

get a real look at this monster.

[stillcool]

5. via google....

http://www.worldnewsstand.net/book/enemywithin/page01.htm

[oscar111]

6. NO LINKS please! just your own words, not too long but long eno to give

the key evidence.

just short on time, cant go read long articles.

key evidence should be eno for me... maybe two or three screens max. thanks!

[firefox]

7. It is private

This is an important question and I wish you luck if you ever find out the part of the national debt owed to the central bank we know as the Federal Reserve.

I have two previous DU threads bookmarked for Federal Reserve- http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x118560 http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x3327727

Here are two more links - http://69.28.73.17/authorprofiles/victorthorn.html and http://www.888webtoday.com/diamond14.html

This book titled "The Secrets of the Federal Reserve" has an interesting history and some big things to say- http://www.apfn.org/apfn/reserve.htm

The Federal Reserve is a private bank and there is a big secrecy around its ownership, profits, and power. The book above says Kennedy wanted to do away with the private central bank. It should be mentioned in the list of reasons he was killed, but it never gets mentioned in reasons for his assassination.

[oscar111]

8. FIREFOX, pls tell the 99% of us who are harried

by two jobs, no time for links,

in your words, the key evidence in all those links.

thanks a bunch

[firefox]

9. Don't have time either

Asking if the Federal Reserve is a private central bank is like asking if grass is green. It is or it isn't and it is. Nobody ever claims that the government owns the fed, because it does not. It is a big silence to the media just like depleted uranium.

The best one page to read is the opening page of the "Secrets of the Federal Reserve"- http://www.apfn.org/apfn/reserve.htm

This is another thread that you could have found if you had read from the DU links above- http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=3291656

If you are looking to get hit over the head by an alarmist then you should read the paragraphs at http://www.federal-reserve.net/thefederalreserveact.htm A few paragraphs follow.

On the night of November 22, 1910, a small group of surrogates of the most powerful bankers of the World met, under the veil of utmost secrecy, at specific little-used tracks of the railway station in Hoboken, New Jersey. Each of these secret banking agents had his own private railway car with new servants who would not recognize the identity of these men. The men traveled in silence to their secret destination, the elitist resort island off the coast of Georgia named Jekyll Island. Over the next few weeks these men would perpetrate, under the orders of their masters (men such as the Rothschild, Rockefeller and Morgan bankers) perhaps the most colossal and devastating fraud ever inflicted upon the American People.

This ultra-secret fraud is known as the Federal Reserve Act of 1913. The Federal Reserve Act responded to the Public's outcry for an end to concocted monetary crises that had robbed the entire American citizenry of much of their life's earnings. Ironically, their response was like a physician responding to a poisoned patient by injecting massive doses of poison into the patient (of course, no physician would ever commit just such a heinous crime, known as chemotherapy).

The Federal Reserve Act of 1913 concocted legislation, to be foisted upon the People's Congress of the United States, that empowered and commissioned this secret cabal of World-dominant bankers to PRINT UNITED STATES CURRENCY, a usurpation of our Constitution's explicit edict empowering ONLY THE UNITED STATES GOVERNMENT to print and coin currency. This world banking empire used their stolen power to print, out of thin air, paper currency which, in no way represents the gold and silver reserves that authentic currency is supposed to represent. Thus, the Rothschilds, the Morgans and the Rockefellers connived the power to pick the pocket of *EVERY* American, from the small child buying a loaf of bread to bring home, to the father of a household, working his life away to feed, clothe and shelter his family.

This monumental, yet secret fraud had swindled untold billions of REAL dollars from the hands of the American citizenry, from the moment of the birth of the Federal Reserve Act (sneaked through Congress on Christmas Eve, 1913) until the day when one courageous President of the United States, John Fitzgerald Kennedy, determined that he shall return the United States Treasury to its rightful task of printing UNITED STATES SILVER CERTIFICATES, notes that represent REAL money, silver held in reserve by the United States Government -- silver which the U.S. Government promises to pay, upon demand, to the bearer of that certificate.



That one link listed one accounting of the owners of the Fed and the thread was headed with "The owners of the Federal Reserve" http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x3327727 Somewhere in all that leads to a different ownership and it will list Citibank as a large owner.

[notadmblnd]

33. I agree with you on this

Kennedy was killed for a lot of reasons, but moving from a fiat money system is what I believe was reason 1 for his assination. My family still has a couple of the siver certificates that were issued during his admin. Most people don't even remember them.

[German-Lefty]

10. How central banks work.

seems to be a group of private banks,
No but it sets regulations the private banks must obey.

So .. where do its profits go?
Profits? You can think of them as printing money. As an economy grows the money supply must grow in order for prices to remain stable. To avoid deflation they print new money, and buy up US treasury bonds to inject it into the economy. So basically the government spends the new money. It's about 60B$/year in hard cash, which results in about 10 times that amount in new bank account money once it's circulated through. So the other beneficiaries are banks and people that borrow this new money from them.

Where is real control centered viz decisions?
With appointed officials. The power to create money and credit at will, is considered too dangerous to be left directly in the hands of politicians, who would pep up the economy to get reelected at the cost of future inflation, depression, and other chaos.

comments?
You'll get a lot of noise coming from all kinds of crazies that claim to know what they're talking about. They tend to be very emotional and want to go back to a GS or default on our national debt or otherwise. I'm still trying to understand things. There do seem to be some things that worry me about our current system(s).

[oscar111]

11. A GOV THING, seems to me so far. RETORTS, anyone?

so far the re's seem to say it is a gov critter.

big thanks to germanL for his fine reply, in his own words and right in reply to my questions. A plus to you, top of the class.

Appears to me so far, FR is a gov thing with mid and low level workers "contracted out" to private employment, in a manner of speaking. Profits to Treasury.

Disputing comments invited. I seek TRUTH, whereever the chips might fall. TRUTH , just as the French Enlightment sought it. Shibboliths be damned.

[dcfirefighter]

12. The beneficiaries are:

Private banks who may lend more than they hold.

Holders of us treasury notes, which pay interest out of US taxes.

Those with good credit: the US government, existing corporations, and the occasional homebuyer.

Our paper money is backed by US debt: there is no reason for the US government not to issue it's own, debt-free, money. (rather than "Federal Reserve Notes"). In either case, the rate of creation must be controlled to avoid either inflation or deflation. There are plenty of folks out there who point to evidence that the Fed has attempted to manipulate the economy to favor Republican presidential elections.

If the US government created it's own money, it could fund $25 billion worth of government programs without raising taxes. If the US government ended fractional reserve banking (where banks can lend more than they have), United States Notes could fund $250 Billion worth of government programs without levying taxes.

If the Federal Government phased out fractional reserve banking it could pay off (not default, but pay off) it's debt, as it replaced the deposit created (cheque) money with new currency.

[German-Lefty]

13. Hmmm, duno

Our paper money is backed by US debt: there is no reason for the US government not to issue it's own, debt-free, money. (rather than "Federal Reserve Notes").
So what you want the US to start borrowing some other currency? You can't just make one up or maybe you could borrow the Euro or gold? It's the other way around; the US debt is backed with the dollar. We know you can print more of them, we know doing so excessively would screw up your economy.

If the US government created it's own money, it could fund $25 billion worth of government programs without raising taxes.
It got about 60B last year this way. They didn't send 60B to the treasury dirrectly though. They bought 60B in national debt and issued new money for it (crediting it to the banks who sold them bonds).

If the US government ended fractional reserve banking (where banks can lend more than they have), United States Notes could fund $250 Billion worth of government programs without levying taxes.
Well they do get some of that money now, the rest gets loaned out to big industry, mortgages, etc. ~600B$ was created last year in the banks via fractional reserve banking. That money went out into the housing/mortgage bubble but also into useful investment.

If the Federal Government phased out fractional reserve banking it could pay off (not default, but pay off) it's debt, as it replaced the deposit created (cheque) money with new currency.
I guess you could replace the money the government owes the banks, with newly printed cash and up the reserve requirement so that cash couldn't get out and cause inflation. It seems like a zero sum game though.

If you expect them to call back all the loans they made to industry to get up to 100% reserve, you're dreaming. They wouldn't have that money back for years. So for years they wouldn't be able to loan money out to people and the economy would suck. Hmmm, ...unless private investors picked up the slack.

[dcfirefighter]

14. You've got it.

from your perspective, sure, our debt is backed by the dollar. However, the dollar is not backed by gold, the euro, or anything but Treasury Notes/Bills, etc. There is no real need to buy 60B in debt to issue new money. Just issue it, and accept it as payment for taxes. The only other important thing is not to print so many as to be inflationary.

The 600B created last year went to the housing/mortgage bubble as well as useful investment. Those who benefited from this money creation are the banks who make interest, the landowners who benefitted from the real estate bubble due to artificially low interest rates. Because the interest rates aren't set by a 'free market', the business loans they've made will likely result in overproduction, etc., and at some point will need a 'correction'.

The repacement isn't zero-sum, it gains at least by the elimination of $300B in federal debt service each year.

I wouldn't expect them to call back their loans: they'd be issued new currency to back their existing loans, just as you mentioned. New bank deposits would probably not pay interest, as they couldn't be used for loans. New CD's, Mutual Funds, etc. would continue to pay interest, as they represent money risked by the depositor and invested (in loans and mortgages, among other things) by the manager.

Overall, interest rates would decrease, as the US Government would no longer compete for credit to the tune of half a Trillion US$ a year.

[German-Lefty]

15. Still think it's zero sum

The replacement isn't zero-sum, it gains at least by the elimination of $300B in federal debt service each year.
But if the banks are forced (via rules like risk weighting asset rules) to buy 300B$ in debt a year (growing), isn't that about the same thing?

New bank deposits would probably not pay interest, as they couldn't be used for loans.
What's wrong with banks buy US-T bonds, instead of sitting on inflating dollars? The government bond will someday pay back the money, so on one level there is no risk. Doing something like that gives all the money multiplication of the banks to the government. Not sure it's a good thing.

[Iriemon]

16. Congress "printing money" is not a safe option

Our debt is backed by the expectation that the US will maintain sound monetary (and to a lesser extent, fiscal) policy with the result that the dollar will maintain its value.

The "Fed" consists of different entities. It is chiefly run by a Board of Governors, now headed by Greenspan, appointed by the president. The Fed also consists of federal reserve banks -- banks of the United States. Also participating are private banks which in exchange for agreeing to certain rules can borrow money from the fed at discount rates.

The Fed controls monetary policy -- the amount of money in the economy. IMO, one of the wisest things the govt did was separate the monetary policy from those in control of fiscal policy (congress and the president). Giving congress control over the money supply as well as spending authority is a recipe for disaster.

While poor fiscal policy (like borrowing tons of money, spending too much, or too high or low tax rates) can cause serious problems, poor monetary policy can REALLY mess things up and fast. Look at the hyper-inflation examples of Argentina Brazil and Chile for devastating examples of loose monetary policy.

That is why it is good policy not to let congress just print its own money.

The Fed controls monetary policy primarily by short term lending rates to participating banks, and to a lesser extent, setting the reserve requirements for those banks. Hard currency, in the concept of paper and coin, is really not a major monetary policy tool, because the proportion of hard currency to the overal monetary level is very small.

Some people argue it is dangerous to have a currency backed essentially by the expectation that the US will exercise wise monetary policy. There is an argument there. In the late 70s, the fed attempted to influence the employment rate by easing the monetary supply, with the result of double digit inflation in this country. When Volker was appointed in 79, he cracked down on money supply, which put the country in a painful rescession but stopped inflation. Since then, continuing under Greenspan, the Fed has focused first on inflation as its primary concern in setting monetary policy.

They problem with your money supply backed by a commodity (be it gold, silver, or whatever) is that your money supply is at the mercy of that commodity. In times of rescession/deflation, Keyensian economic theory says you should ease credit and get more capital into the system. You can't do that if your money is based on a metal. Simiarly, if the amount of metal produced is increased, it can have inflationary effect that also cannot be controlled. It also leads to speculation as the government tries to maintain its currency based on a metal that is not realistic. For example, just because you have a gold standard doesn't avoid the problem of what happens of the government prints too much money for the amount of gold in reserve.

That was why almost all modern economies no longer are based on a metal standard.

[dcfirefighter]

17. Congress, the Fed, or the Constitution

You pick, they all have their evils: Congress is accountable to the vagaries of popular opinion, The fed isn't accountable, and Constitutionally mandaded maximums are inflexible.

My vote would be for the Constitution; either indexed to a basked of manufactured goods and services, or fixed at a percentage of existing money.

Zero Sum: i'm not asking the banks to buy anything. I'm saying (sorry if my numbers are off) ~$4T of external debt is replaced with $4T of new currency, and the $3T of intragovernmental debt is either replaced with new currency or restructured. With no debt, there's no debt repayment. To keep it sustainable, we'd have to end government borrowing, not a problem as the seignorage off of new currency is approximately equal to recent deficits. I'd favor building reserves of currency / commodities so as not to require a balanced budget.

As such, there'd be no 'zero-risk' investments (one cost of such a change) so therefore bank deposits would be similar to vault deposits (though with the advantage of global electronic transactions). The real, end-user change would be the end of FDIC for interest bearing accounts. To receive interest, a person would have to purchase an investment, rather than deposit it in a 'Bank'; conversely, to have a risk-free storage of value, you'd have to deposit the money in a bank, rather than purchase an investment.

[Iriemon]

18. Not a workable option

Putting $4 trillion of new currency into an $12 trillion US GDP economy would be an absolute disaster. The value of the dollar would evaporate, hyperinflation would be immediate, the credibility of the government would be destroyed, it would result in a worldwide economic catastrophe.

[dcfirefighter]

19. Follow it with me Iriemon

$4T of new currency in, $4T of deposit created bank money out. Money Supply stays the same.

[Iriemon]

20. You need to explain, please

I guess I don't understand exactly what you are suggesting.

The government prints new money. Ok, here is a 4000 billion dollar bills (at the 7-11, I'll have a pack of cigs, and can I get change for a billion? :)) The government uses that to pay off all the folks (and governments that hold US debt.

Please expalin how is that offset by "deposit created money out?" I read your prior posts and don't understand exactly what you are proposing. What deposits? Whose deposits?

[dcfirefighter]

21. Deposit Creation Multiplier

When banks receive demand deposits, say in a checking account, they are liable for those deposits: they can be called by the depositor at any time.

However, that bank will immediately turn around and loan that money to someone else. This loaned money is 'new' money: it spends the same as the first money. Another way to look at it is this: the money is now in two places, the depositor's account, and the loan recepient's pocket. Well, the loan recipient will spend his money and it will eventually wind up in another bank deposit.

Banks are required to hold roughly 10% of their deposits in reserve, as such, banks, in total, create 10 times as much money as they hold.

A better explanations is here: http://en.wikipedia.org/wiki/Money_creation


Eliminating the bank's ability to do this, and issuing them new currency to cover the deposits they've already lent out, exchanges debt for new currency.

[German-Lefty]

22. I think this is what he's trying to say

Right now you've got a few trillion in US bonds sitting in US banks. The banks can't sell these bonds to divest into private industry due to rules set by the FED (see:risk weighted assets). I'm not sure about the numbers but let's say there's a 10% reserve requirement and then a 30% government bond requirement (it's a bit more complicated). Let's say the banks have ~6T dollars in accounts. So they are required to have ~2T in US bonds.

What he's suggesting is to:
1) up the reserve requirement to 10%+30%=40%
2) kill the requirement to buy US bonds.
3) replace (buy back with new cash) the bonds in those banks with cash (or reserve credit)

My not too careful analysis leads me to believe it won't make a difference. In both cases:
1) 40% of new money (demand deposits) will be directed toward the government
2) 60% of new money will be directed toward industries banks trust
3) The money supply (demand deposits) will still be the same.

[Iriemon]

23. I thought he is talking about raising the reserve requirement

and/or eliminating the bank's ability to lend all together. That would take money out of the economy, to offset the otherwise inflationary effect of dumping new money into the economy to pay off debt.

I think banks all of a sudden stopping lending would put a little squeeze on the credit markets. I imagine that not being able to borrow money to, say, buy a home would put a bit of a damper on the housing market. Not being able to buy a car on credit might have some affect on the auto market. Just to mention two of the larger sectors of the economy that would crash and burn.

Personally, I think the better way to handle the situation is for the Govt to stop borrowing so damn much money.

[dcfirefighter]

24. I was talking about raising the reserve requirement

preferably to 100% cash reserves. (incrementally, of course.)

'Banks' could no longer lend money, but other financial institutions could. Banks would simply separate their business functions, but no one could lend deposited money, only invested money. Not that big a deal, since Banks would likely no longer pay interest on deposited money; to receive interest, the money would have to be invested, with some small risk. I would think that interest rates would decrease, as the US government would get out of the borrowing business, and there'd be less competition for credit.

If the government simply exercised fiscal restraint, balanced the budget, and eventually paid off the debt, the results would be deflationary. The debt is what backs the currency. Eliminating the debt eliminates the currency. In http://en.wikipedia.org/wiki/Money_creation note that the first step in money creation is the US Government issuing a debt certificate, a Treasury Bond. To paraphrase Edison, "if a country can issue a bond, it can issue a bill." I don't see why the Treasury doesn't cut out the middle man (the Fed and commercial banks) and issue it's own ">notes.

"It is absurd to say that our country can issue $30,000,000 in bonds and not $30,000,000 in currency. Both are promises to pay; but one promise fattens the usurer, and the other helps the people. If the currency issued by the Government were no good, then the bonds issued would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious values of gold." Thomas Edison, 1921

[sabbat hunter]

25. why would

any one put money in banks if they arent paying interest? banks would go kaput as we know it (some would change to be money lenders/investors but they do that now)

the good thing about banks and putting money into an account is the FDIC insurance that if the bank goes belly up, your money is safe.

unless you are starting a new insurance corporation, if those new financial institutions went belly up, the money would theoretically be gone.

[dcfirefighter]

26. You'd put money in the bank

to have a safe place to keep your money, and have a portable means of payment (debit card). Most people don't earn much of their income from bank deposits; if they have a lot of money saved, they put it in CD's, bonds, stocks, etc.

FDIC only covers deposits, and only up to $100,000. Most people with $100,000 might keep $5,000 in the bank, with the other $95,000 in investments with a greater rate of return.

If the bank merely serves as a vault, there is no possibility of defaulting. FDIC merely insures that if we all took our money out of a bank, we'd get something. Currently the bank only has about 10% of your deposit, having lent 90% of it out. If all of a bank's depositors request their money, the bank doesn't have it.

Yes, if you make an investment in a corporate or government bond, or in a mortgage fund, other mutual fund, or stock, and it goes belly up, you lose. That is the price you'd pay for receiving interest.

[sabbat hunter]

27. if there were no banks

or at least ones that paid interest, i know i wouldnt bother having a bank account, just pay with cash. i never use my debit card anyways.

and why would banks stay in business? as a repository for money? how would they make a profit?

[Iriemon]

28. Which would be disasterous.

Increasing the reserve rates would decrease the amount of money available to lend, the amount available for credit, which would increase interest rates because there would be less money available. On the scale you are talking about, increasing interest rates would be disasterous for the economy.

If banks could not pay interest on deposits and could not lend money, that would kind of affect their business, wouldn't it? Isn't that what banks do, by definition? What other "financial institutions" are you talking about that would perform this function?

How would eliminating the US Govt debt eliminate currency? The debt of the US Govt doesn't affect the money supply. If that were the case, then increasing the debt would be inflationary, which hasn't been the case.

I think you are misreading the article you cite. Money is created by the Fed. Take a bill out of your wallet. On top it says "Federal Reserve Note", not "U.S. Government Debt" or even "US Treasury Note." It is the Federal Reserve banks that print and creates money, not the US Govt.

The fact that the Govt borrows money, in itself, does not create money in the supply. If I buy a T-Bill, I give the government 10k, which gives me a note evidencing the loan. There has been no creation of money. When the govt pays the loan back, it pays me the 10k (+ interest). There has been no decrease in the money supply.

IF step 2 in the Wiki article in the section titled "An example of the creation of money" happens, and the Fed prints a check (or prints money), THEN money is created. It doesn't have to loan money to the Govt to do this. It can loan money to banks. Which it does through short term loans; setting the interest rate on these loans is the primary way it sets the money supply, which is why you hear about the fed rate all the time. The lower the rate, the more banks will borrow, the more money is put into the system. It is the Fed that is creating the money, not the US Govt.

The US Govt could be made to be the institution that issues money. The Fed system could be elimated with the pass of the law. But as I mentioned earlier, giving out otherwise, financially responsible congressment the keys to free money with the money supply would most likely be a disasterous move.

[sabbat hunter]

29. not to mention

that historically most of the money floating around wasnt printed by the goverment but were 'bank notes' put out by various banks around the country, some werent worth the paper they were printed on.

then of course early in US history there was the US bank.

theoretically any bank can put out "bank notes" and it be used as legal tender.

[German-Lefty]

30. Open Market Ops, sorry Edison is wrong

If the government simply exercised fiscal restraint, balanced the budget, and eventually paid off the debt, the results would be deflationary. The debt is what backs the currency. Eliminating the debt eliminates the currency. In http://en.wikipedia.org/wiki/Money_creation note that the first step in money creation is the US Government issuing a debt certificate, a Treasury Bond.
That wikipedia example isn't too great. In step 1 you actually remove all the money you created in the other steps.
0. Guy takes 1M$ dollars out of bank account to buy bonds forcing the bank to call in ~9M$ in investment + 1M from it's reserves.

There are 3 ways the Fed controls the money supply and credit supply: reserve rates, the discount rate, and open market operations. Open market operations are the big hammer. The Fed can buy/sell bonds of different durations to manipulate the yield curve. This is the way new money is made nowdays in the long run.

If there's too much money the Fed can sell bonds, borrowing money up and locking it away for while. If government were to pay those bonds off with tax money, it would be obvious the money is gone, but the money was gone when the fed borrowed it.

On the flip side if the fed wants to create new money it just buys bonds off the market with new money. So if the government sells bonds and the FED buys those bonds with new money, the net effect is the government is printing new money and spending it.

Ultimately there is a connection between debt and the money supply. The more money the Government borrows the higher yields will go, to counter some of this the fed can print some money. So basically if to spend money you have a choice:
1) Taxation - hurting the economy preventing some transations
2) Borrowing money - hurting the economy by shifting investments away
3) Printing money - hurting the economy by causing inflation
Congress decides between 1 and 2. The fed decides between 2 and 3. Most modern countries do all three to some degree.


Sorry I disagree with Edison. There is a difference between debt and cash. If I can't pay you now, I can't pay you now. I have no buisness writing IOUs for cash on demand. I can borrow money. Lender beware. The same holds for a government. If they don't have the money, they shouldn't just print it.

[dcfirefighter]

31. So?

Pls find a better article.

Start with 0 money in circulation. How is dollar #1 created? Fed Prints it? Fed buys US Treasury Debt with dollar? Fed owns US Treasury Debt, US Government spends dollar. $1 in circulation, $1 plus interest in debt.

Your final analogy doesn't hold for governments, money supply shouldn't be fixed, therefore money must be created. Who gets to create it? The King? A private consortium of banks? A democratically elected government?

I'm not advocating giving congress the ability to vote for more money each year; i'm advocating strict Constitutional controls.

[German-Lefty]

32. Here's a link

Pls find a better article.
Sorry, couldn't find it last time. Here you got this one's kind of nice:
http://ingrimayne.saintjoe.edu/econ/Banking/FedMonPol.html
In open-market operations the Federal Reserve buys or sells U.S. government securities, usually T-bills, in the secondary market. When the Federal Reserve buys securities, it creates the funds with which it buys T-bills. It pays with a check drawn on itself, and when a commercial bank submits this check for payment, the bank gets reserves that did not previously exist.

Start with 0 money in circulation. How is dollar #1 created?
It's hard to make that work. To start a new currency you usually have to base it off another trusted one or gold or something. One exceptional example might be here in Germany they just issued everyone 50DM, and hoped they'd stop trading in Cigarettes.

No, the fed multiplies existing money similar to the way banks do in a fractional reserve system. Except the fed can't go bankrupt, she prints money as she needs it.

Fed buys US Treasury Debt with dollar? Fed owns US Treasury Debt, US Government spends dollar. $1 in circulation, $1 plus interest in debt.
Simple run through:
1) Uncle Sam borrows 1$ to give the Pentagon a paint job.
2) So, it sells 1$ in US Treasury Bonds.
3) A bank buys that bond.
4) The FED may (~10% of it) buy the bond back from the bank (or others it thinks are under priced)
5) To do this the fed credits the bank new money.
6) The bank can loan this new money out elsewhere or buy more US bonds.

Your final analogy doesn't hold for governments, money supply shouldn't be fixed, therefore money must be created. Who gets to create it? The King? A private consortium of banks? A democratically elected government?
People that advocate the gold standard, argue the money supply should be fixed leaving us with constant deflation as production improves. I'm really not sure.

The FED gets to create it, they're supposed to be politically independent like the Supreme Court.