Audit the Fed? What would that accomplish?

[thesyntaxera]

A friend is all up in arms about auditing the fed, ron paul...etc What the heck does that even mean, and what if anything would that accomplish?

Just curious. Please help me get my smart on.

[soylent]

[...]what if anything would that accomplish?

Among other things it lets you know what kind of garbage they've been accepting as collateral and at what discount below face value they accepted them so that it is possible to know to what degree they've been involved in back-door bail outs like some claim. Right now the public knows only some of the crap that's in Maiden Lane I, II and III.

[Neally]

It's not going to find trillions being squirreled away into private accounts as the conspiracy/anti-FED people claim. On the other hand, more transparency isn't a bad idea either.

[Bob Blaylock]

I'm reminded of The Grace Commission (http://en.wikipedia.org/wiki/The%20Grace%20Commission)—an audit that Reagan had done during his administration. Unfortunately, nothing of any use was subsequently done with its findings. No point conducting such an audit, if you're not going to do anything about the results.

[TriangleMan]

There is the US Government Accountability Office, it reviews spending:

http://www.gao.gov/

[drkitten]

A friend is all up in arms about auditing the fed, ron paul...etc What the heck does that even mean, and what if anything would that accomplish?

Well,....

Basically, Ron Paul is a lunatic conspiracy theorist. There seems to be some conspiracy theories floating around about how the Fed is run by the usual s3krit cabal of Communist Jewish Reptoid bankers from the planet Zog to enrich themselves at the expense of real humans so that they can fill their swimming pools with twenty dollar bills and dive into them Scrooge McDuck fashion.

And the idea is that by auditing the Fed, we'll see the money leak and will be able to get the money back from the Reptoids. While no sensible person believes this, there are any number of 'tards on the forum that will passionately defend this conspiracy theory. You'll see them when they show up.

At a marginally more rational level, Paul has made it his mission to destroy the Fed. Quite literally -- he even has a book published entitled "End the Fed," which is required 'tard reading despite the fact that few of them have actually made it to chapter 2. (Not enough pictures, I guess.)

Since sensible people recognize that the Fed is actually quite a good thing, he doesn't have the political support to do that, so he's going for the next best thing, which is to destroy its ability to operate independently of whatever political/populist whims are going through Congress and the Fox News echo chamber. When the Fed was set up, it was deliberately set up to be outside of Congress' direct supervision (and of the President's, for that matter) so that we wouldn't see things like a deliberate easing of monetary policy to produce a temporary stock market boost just before the election,.... which of course would cause inflation after the election. This is the type of stupid currency trick usually carried out by banana republics, and it's one reason that banana republics tend to have economies as messed up as they have. (Look at Argentina under Peron for an example of what happens when you let the elected dictator run the money supply.)

But this means that the Fed has to be able to take unpopular decisions, such as tightening currency supplies to prevent inflation when the economy is starting to get out of line. One of the former Fed chairs (Martin) famously said that the job of the Fed was "to take the punch bowl away just as the party was starting to heat up" or something like that (I forget the exact quote). Paul Volcker deliberately caused a recession in the early 1980s by tightening the money market, but he also managed as a result to get inflation under control and laid the groundwork for the boom economy of the 1980s and 1990s by doing so. Low inflation, high growth rate, low unemployment,.... can all be tied to his deeply unpopular actions at the time.

The rather silly call for "transparency" is really just a call to put Congress back in control of the money supply with an overall goal of destroying the Fed. Paul is even fairly explicit about this, but for some reason, there are an awful lot of populists out there that want the United States to be a banana republic.....

[Travis]

The rather silly call for "transparency" is really just a call to put Congress back in control of the money supply with an overall goal of destroying the Fed. Paul is even fairly explicit about this, but for some reason, there are an awful lot of populists out there that want the United States to be a banana republic.....

That's because a lot of people have a complete inability to think of things long term. They want theirs NOW! They could care less about what happens a few years from now so long as they get that new TV and backyard swimming pool NOW!

There's also the type of people who railed against the bank bailouts because there were apparently cool with letting the entire economy implode if it allowed them some immediate emotional satisfaction to see millionaires ruined. Then there are the Paultards who want the economy to implode because they have fantasies of ruling the wasteland aftermath like a king with their hoarded treasure of precious, shiny GOLD!

[The Central Scrutinizer]

A friend is all up in arms about auditing the fed, ron paul...etc What the heck does that even mean, and what if anything would that accomplish?

Just curious. Please help me get my smart on.

He wants to find the loot the joohs are hiding.

The funny thing is, the tards who are always railing against the FRB, don't even know how the FRB works.

[Dunstan]

And the idea is that by auditing the Fed, we'll see the money leak and will be able to get the money back from the Reptoids. While no sensible person believes this, there are any number of 'tards on the forum that will passionately defend this conspiracy theory. You'll see them when they show up.


And of course, if the bill passes, and no wrongdoing is found, these folks will admit they were wrong.







(Wrong because they underestimated the fiendish devious nature of the Reptoids, who cleverly covered up their tracks!)

[se7ensnakes]

Now this is laughable. Dr Kitten, who apparently has not done any reading on the subject, fails to mention that the central bank scheme has been trying to get a foothold since the beginning of this country. That the founding fathers and most presidents commented on the problems with central banking; that Nicholas Biddle publicly threatened to collapse the economy, that the Federal Reserve act was written in secrecy by Aldrich, Warburg et al. Perhaps, just perhaps it has not dawn on her that 1+1=2 or should I say P+M=C (where p = people, M = money, and C= corruption). I suppose Dr Kitten believes that every criminal out there is going to post their intentions in the New York Times, as an argument that conspiracies are non-existent.

[drkitten]

Edited for rule 11 and rule 12.

[lomiller]

And of course, if the bill passes, and no wrongdoing is found, these folks will admit they were wrong.

At the very least any audit will find that the Fed spent/leant money it didn’t have, and they will yell “SEE I TOLD YOU!!!” despite the fact this is exactly what the Fed is supposed to be doing. The Fed increases money supply by buying federal securities, of in emergencies lending it directly to banks, and they do this with money that didn’t previously exist.

[Francesca R]

I recommend both US legislative houses should agree and pass a bill and get the POTUS to sign it before the Fed conducts overnight system repos, in the interests of accountability. Actually a referendum might be even better. Have to be daily at about lunchtime and there'd need to be a quick turnaround before the primary dealers shut up shop, but at least the public could be secure in the knowledge that the FOMC wasn't sneakily attempting to manufacture a housing bubble.

[The Central Scrutinizer]

Now this is laughable. Dr Kitten, who apparently has not done any reading on the subject, fails to mention that the central bank scheme has been trying to get a foothold since the beginning of this country. That the founding fathers and most presidents commented on the problems with central banking; that Nicholas Biddle publicly threatened to collapse the economy, that the Federal Reserve act was written in secrecy by Aldrich, Warburg et al. Perhaps, just perhaps it has not dawn on her that 1+1=2 or should I say P+M=C (where p = people, M = money, and C= corruption). I suppose Dr Kitten believes that every criminal out there is going to post their intentions in the New York Times, as an argument that conspiracies are non-existent.

Why are joohs always doing everything in sekrit? They sure are a crafty bunch!

[Praktik]

The rather silly call for "transparency" is really just a call to put Congress back in control of the money supply with an overall goal of destroying the Fed. Paul is even fairly explicit about this, but for some reason, there are an awful lot of populists out there that want the United States to be a banana republic.....

Simon Johnson thinks (http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040202573.html) that America is already on it's way there:

In a normal advanced economy, creating hundreds of billions of dollars in new money would not foster runaway inflation. As long as the economy is underperforming -- for example, with high unemployment -- stimulating the economy will only cause that "slack" to be taken up, the theory goes. Only when unemployment is low again can workers demand higher wages, forcing companies to raise prices.

But is the United States really a normal advanced economy anymore? We seem to have taken on some features of so-called emerging markets, including a bloated (and contracting) financial sector, overly indebted consumers, and firms that are trying hard to save cash by investing less. In emerging markets there is no meaningful idea of "slack;" there can be high inflation even when the economy is contracting or when growth is considerably lower than in the recent past.

If the United States is indeed behaving more like an emerging market, inflation is far easier to manufacture. People quickly become dubious of the value of money and shift into goods and foreign currencies more readily. Large budget deficits also directly raise inflation expectations. This would help Bernanke avoid deflation, but there is a great danger that unstable inflation expectations will become self-fulfilling. We do not want to become more like Argentina in 2001-2002 or Russia in 1998, when currencies collapsed and inflation soared.

[TraneWreck]

I think a lot of the controversy stems from the Feds duty as "lender of last resort."

Remember that the Fed was created in the wake of destructive bank runs. That power to lend to struggling financial institutions was meant to stop the panic, thus the Fed doesn't have to reveal information about those loans.

It makes sense: if the Fed had to publicly report that an institution needed an emergency loan, that would contribute to panic instead of mitigating it.

But this is the source for a lot of the conspiracy theories, "OH MY GOD, WHO IS GETTING THAT MONEY? WE DON'T EVEN KNOW!!!!" And compared to the very public bailouts (Of which the government got most of its money back), it's a pittance.

[Dunstan]

Why are joohs always doing everything in sekrit? They sure are a crafty bunch!

I'm still trying to figure out how you draft a piece of legislation other than "in secret." What's the alternative? Invite the press into your Congressional Office to stand over your shoulder while you type?

I bet Ron Paul's book was drafted in secret, too!

[timhau]

I'm still trying to figure out how you draft a piece of legislation other than "in secret." What's the alternative? Invite the press into your Congressional Office to stand over your shoulder while you type?

You do it live on teh interweb.

[The Central Scrutinizer]

It makes sense: if the Fed had to publicly report that an institution needed an emergency loan, that would contribute to panic instead of mitigating it.

I used to work for the Fed. I can confirm that this information is strictly confidential.

[ServiceSoon]

Are there any reasonable objections why there shouldn't be more transparency for the currency that affects the majority of people on the planet? Besides those mentioned by DrKitten.

It makes sense: if the Fed had to publicly report that an institution needed an emergency loan, that would contribute to panic instead of mitigating it.How long does it take to mitigate a failing bank? Perhaps the fed could release this information every quarter or biannually.

[TraneWreck]

Are there any reasonable objections why there shouldn't be more transparency for the currency that affects the majority of people on the planet?

How long does it take to mitigate a failing bank? Perhaps the fed could release this information every quarter or biannually.

Sure, I'm on board with more transparency, and waiting a certain amount of time might be appropriate. Although even when the bank has been stabilized, learning that it almost failed is a good way to convince people to start shifting around funds.

There are a lot of reforms that would make the Fed a much better institution. I'm simply arguing (and I think most here are of a similar mind) that those reforms shouldn't be motivated by nutty conspiracy nonsense.

[The Central Scrutinizer]

Although even when the bank has been stabilized, learning that it almost failed is a good way to convince people to start shifting around funds.

I would argue that learning that your bank "almost" failed is a good way to insure that it does.

[drkitten]

How long does it take to mitigate a failing bank? Perhaps the fed could release this information every quarter or biannually.

In terms of public opinon? Practically forever.

The Fed was set up in part to prevent exactly what Trane suggests would happen. People who learn that their bank "almost" failed would withdraw their money, which is another term for a bank run.

[TraneWreck]

I would argue that learning that your bank "almost" failed is a good way to insure that it does.

Agreed. You said it much better than I did.

[Malerin]

I would argue that learning that your bank "almost" failed is a good way to insure that it does.

Is that a bad thing? Businesses fail all the time. If my bank is teetering on the edge, and needs support from the Fed, maybe the much sounder bank next door should get my business.

[Travis]

Are there any reasonable objections why there shouldn't be more transparency for the currency that affects the majority of people on the planet? Besides those mentioned by DrKitten.

Why do we need more reasons? Those presented by DrKitten are pretty good ones for why you don't want your currency supply subject to populism.

[ServiceSoon]

Why do we need more reasons? Those presented by DrKitten are pretty good ones for why you don't want your currency supply subject to populism.
You're only looking at one aspect of an enormous issue. IMHO more input is needed to make a decision. Drkitten said that the President or Congress could manipulate the currency during an election year (I've heard people say just this about gasoline prices). There are mechanisms in place that prevent this very thing from occurring. Based on what I know Congress has the power to intervene in any manner they see fit, and both Congress and the President must approve of the chairperson every so often. Yet this manipulation Drkitten was concerned with doesn't occur very often. It appears that this concern is valid, but hasn't been the case in the good ol' US yet. Drkitten's concerns seem more macro. I'd like to get down to the nuts and bolts.

Does anybody know what information an audit would make available to the public which isn't currently available? And would the availability of this information make Drkitten's concern more likely or easier to happen?

[thesyntaxera]

Well,....

...snip...

The rather silly call for "transparency" is really just a call to put Congress back in control of the money supply with an overall goal of destroying the Fed. Paul is even fairly explicit about this, but for some reason, there are an awful lot of populists out there that want the United States to be a banana republic.....

It's either that or some Randian dystopia where the stupid greedy masses who only "take take take" will be ruled by the intelligent, wealthy, hyperindividualist freedom nazis...or something.

I mean, who doesn't want to carry around gold to buy groceries?

[Stacko]

I mean, who doesn't want to carry around gold to buy groceries?

Sounds like a creative solution to America's obesity epidemic.

[The Central Scrutinizer]

Does anybody know what information an audit would make available to the public which isn't currently available? And would the availability of this information make Drkitten's concern more likely or easier to happen?

The nuts keep yelling for an audit, but haven't made it clear what exactly they are looking for. Why? Because they literally are looking for evidence that the joohs are funneling money to the Illuminatti, but they know they will look like fools if that's the reason they give.

[Tippit]

I think a lot of the controversy stems from the Feds duty as "lender of last resort."

Remember that the Fed was created in the wake of destructive bank runs. That power to lend to struggling financial institutions was meant to stop the panic, thus the Fed doesn't have to reveal information about those loans.

It makes sense: if the Fed had to publicly report that an institution needed an emergency loan, that would contribute to panic instead of mitigating it.

But this is the source for a lot of the conspiracy theories, "OH MY GOD, WHO IS GETTING THAT MONEY? WE DON'T EVEN KNOW!!!!" And compared to the very public bailouts (Of which the government got most of its money back), it's a pittance.

The Fed was created as the result of a conspiracy to foist a central bank on the United States on Jekyll Island, GA, just a few miles from where I live. I've been in the room where bankers representing 1/4 of the world's weath met in secret to discuss the plans. It is at the Jekyll Island Resort Club.

The ignorance surrounding this issue is astounding. The Fed was created presumably in response to the 1907 panic, which itself was the result of a combination of NY bankers calling in loans all at once, a failed takeover attempt on United Copper, and the inherently unstable fractional reserve system.

As far as the Fed/inflation sponsored bailouts being a "pittance", you couldn't be more wrong (http://www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html). The Fed is quite simply an institution that is able to create vast sums of money out-of-nothing (counterfeiting), and distribute them in secret to its friends. How in your right mind does this not represent a huge problem, and how is this even remotely democratic, or equitable?

[Travis]

Does anyone bother to point out that since the establishment of a central bank the economy has been a lot less volatile? Doesn't that seem to indicate it is doing it's job?

[Dunstan]

Does anyone bother to point out that since the establishment of a central bank the economy has been a lot less volatile? Doesn't that seem to indicate it is doing it's job?

To be fair, it's difficult to separate that from the effects of modern technology, especially communications technology. (Capital and labor are more mobile, prices and wages more flexible, making it easier for the economy to adjust to shocks.)

[The Central Scrutinizer]

The Fed was created as the result of a conspiracy to foist a central bank on the United States on Jekyll Island, GA, just a few miles from where I live. I've been in the room where bankers representing 1/4 of the world's weath met in secret to discuss the plans. It is at the Jekyll Island Resort Club.

I bet they were all joohs too!

The ignorance surrounding this issue is astounding.

:id:

The Fed was created presumably in response to the 1907 panic, which itself was the result of a combination of NY bankers calling in loans all at once, a failed takeover attempt on United Copper, and the inherently unstable fractional reserve system.

I bet those bankers were all joohs too.

The Fed is quite simply an institution that is able to create vast sums of money out-of-nothing (counterfeiting),

Which you are all too happy to accept for payment and spend for goods.

...and distribute them in secret to its friends.

More joohs.

How in your right mind does this not represent a huge problem, and how is this even remotely democratic, or equitable?

I'm a jooh. So it seems quite fair to me.

[TraneWreck]

The Fed was created as the result of a conspiracy to foist a central bank on the United States on Jekyll Island, GA, just a few miles from where I live. I've been in the room where bankers representing 1/4 of the world's weath met in secret to discuss the plans. It is at the Jekyll Island Resort Club.

The ignorance surrounding this issue is astounding. The Fed was created presumably in response to the 1907 panic, which itself was the result of a combination of NY bankers calling in loans all at once, a failed takeover attempt on United Copper, and the inherently unstable fractional reserve system.

As far as the Fed/inflation sponsored bailouts being a "pittance", you couldn't be more wrong (http://www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html). The Fed is quite simply an institution that is able to create vast sums of money out-of-nothing (counterfeiting), and distribute them in secret to its friends. How in your right mind does this not represent a huge problem, and how is this even remotely democratic, or equitable?

The "Pittance" I referred to was the lending of last resort. I think the information you linked actually strengthens my argument. Here's what I wrote:

And compared to the very public bailouts (Of which the government got most of its money back), it's a pittance.

The information on that page has $1.4 trillion, $528 billion of which has been spent, for "Government Lending." How much of that total stems from the confidential last resort lending?

Even if you assume every penny comes from that Fed duty, it would account for about 1/5th of the expense, and only a little over 1/10th of the projected cost.

But again, that page says nothing specific about the program I was referring to.

[Tippit]

Does anyone bother to point out that since the establishment of a central bank the economy has been a lot less volatile? Doesn't that seem to indicate it is doing it's job?

Except, it hasn't. The Fed caused and presided over the biggest depression in US history, and numerous recessions since. The only job it has done, is debase the dollar by some 97% since its inception. This of course amounts to a massive tax, which few people seem to understand. The tax also happens to be regressive, which means it burdens the poor more than the rich.

[The Central Scrutinizer]

Except, it hasn't.

Except it has. At least in the US, on planet Earth.

The Fed caused and presided over the biggest depression in US history, and numerous recessions since.

Really? When did this happen?

The only job it has done, is debase the dollar by some 97% since its inception. This of course amounts to a massive tax, which few people seem to understand. The tax also happens to be regressive, which means it burdens the poor more than the rich.

Yes, the old "counterfeit" currency. We get it. We're still laughing, but we do get it.

[TriskettheKid]

The Fed was created as the result of a conspiracy to foist a central bank on the United States on Jekyll Island, GA, just a few miles from where I live. I've been in the room where bankers representing 1/4 of the world's weath met in secret to discuss the plans. It is at the Jekyll Island Resort Club.

That is 100% WRONG.

The plan that the bankers dreamt up on Jekyll Island WAS NOT THE FED. What they came up with, and wanted passed, was something called the Aldrich Plan. This is a plan that would have put the national currency in the hand of bankers, not the government. In essence, the Aldrich Plan would have given bankers exactly the power that the "audit the Fed" crowd are currently claiming they have.

This never got far, as the Republicans lost a ton of seats in Congress in the 1912 elections, resulting in a Democratic majority. The Democrats were not very happy with the plan, and it was subsequently dropped for what would become the Glass-Owens Act. Yes, some parts from the Aldrich Plan came in (such as a decentralized national bank), but what did pass was not what was proposed by Aldrich.

Quit it with the conspiracy theory ****.

[The Central Scrutinizer]

Quit it with the conspiracy theory ****.

Do we really want him to quit? What would we do for comedy?

[TriskettheKid]

Do we really want him to quit? What would we do for comedy?

www.foxnews.com

[Tippit]

That is 100% WRONG.

The plan that the bankers dreamt up on Jekyll Island WAS NOT THE FED. What they came up with, and wanted passed, was something called the Aldrich Plan. This is a plan that would have put the national currency in the hand of bankers, not the government. In essence, the Aldrich Plan would have given bankers exactly the power that the "audit the Fed" crowd are currently claiming they have.



That's funny. The Aldrich plan doesn't differ from what became the Federal Reserve Act in any material way. Namely, the Fed gets to create money out of thin-air in secret. That's all that matters. The fact that the Aldrich plan was worse was used to sell an ignorant public the "good alternative".



This never got far, as the Republicans lost a ton of seats in Congress in the 1912 elections, resulting in a Democratic majority. The Democrats were not very happy with the plan, and it was subsequently dropped for what would become the Glass-Owens Act. Yes, some parts from the Aldrich Plan came in (such as a decentralized national bank), but what did pass was not what was proposed by Aldrich.



Again, what passed is the essence of every other corrupt central bank, the ability to create vast sums of money out of nothing in secrecy, and manipulate the supply, all while maintaining some pretense of beneficial independence. This only fools the stupid among us, apparently.



Quit it with the conspiracy theory ****.

Fact, not theory.

[The Central Scrutinizer]

That's funny. The Aldrich plan doesn't differ from what became the Federal Reserve Act in any material way. Namely, the Fed gets to create money out of thin-air in secret. That's all that matters. The fact that the Aldrich plan was worse was used to sell an ignorant public the "good alternative".

And yet, oddly, the Feds actions are all over the news. Perhaps you should turn off Faux News or whatever "news" source conspiritards use, and try reading a real newspaper.

Again, what passed is the essence of every other corrupt central bank, the ability to create vast sums of money out of nothing in secrecy, and manipulate the supply, all while maintaining some pretense of beneficial independence. This only fools the stupid among us, apparently.

Fact, not theory.

:crazy:

[TriskettheKid]

That's funny. The Aldrich plan doesn't differ from what became the Federal Reserve Act in any material way.

Yes, it does.

Unless you think that the populist Democrats that came into the majority after the 1912 elections were somehow secretly in cahoots with the Republicans who were there previously, only changing the name from the Aldrich Plan to the Glass-Owen Act.

Namely, the Fed gets to create money out of thin-air in secret.

Yeah, and it's not like the actions of the Fed are in anyway predictable. In all my life, I've never heard of analysts expecting the Fed to do something like drop or raise interest rates, or anything like that. Nope. Not once.

[The Central Scrutinizer]

Unless you think that the populist Democrats that came into the majority after the 1912 elections were somehow secretly in cahoots with the Republicans who were there previously, only changing the name from the Aldrich Plan to the Glass-Owen Act.

They're all Jews. Of course they're in cahoots. :)

[WildCat]

You're only looking at one aspect of an enormous issue. IMHO more input is needed to make a decision. Drkitten said that the President or Congress could manipulate the currency during an election year (I've heard people say just this about gasoline prices). There are mechanisms in place that prevent this very thing from occurring
Yep, and Ron Paul wants to eliminate those mechanisms.

[WildCat]

The only job it has done, is debase the dollar by some 97% since its inception. This of course amounts to a massive tax, which few people seem to understand.
Maybe because this only affects a few people, those who keep all their money stashed under their mattress to keep it out of the filthy greedy hands of the joos who run the banks.

[Tippit]

The "Pittance" I referred to was the lending of last resort.



The context for your "pittance" claim was apparently that the amount of money the Fed creates as a "lender of last resort" pales in comparison to "public bailouts". By "public bailouts" I can only imagine you were referring to TARP, since we don't know exactly how much money the Fed has counterfeited to pay its Wall Street cronies with TALF, and all its other dealings. This indicates that you don't really have a grasp of the situation. First of all the NY Times can't know how many bad assets the Fed bought, because the Fed isn't transparent. It can only estimate. Second of all, almost everything on that page that *isn't* TARP is funded by monetary inflation at the Federal Reserve. The stuff that is actually funded by Treasury, including TARP, is also funded by inflation at the Federal Reserve to the extent that it represents monetized US Government debt, which is a not-insignificant amount.



The information on that page has $1.4 trillion, $528 billion of which has been spent, for "Government Lending." How much of that total stems from the confidential last resort lending?



All of it. Every dollar the Fed lends at the discount window, and every dollar that it creates out of thin-air to purchase the garbage that Wall Street wants the public to subsidize represents monetary inflation - a regressive tax. This includes every dollar that is created by the Fed to monetize US Treasury bonds, which are then used to purchase more garbage (TARP). So the $1.4B figure is hardly all-inclusive of the Fed's dealings. In fact, compared to what the Fed has done, the Treasury bailout via TARP is small potatoes.



Even if you assume every penny comes from that Fed duty, it would account for about 1/5th of the expense, and only a little over 1/10th of the projected cost.

But again, that page says nothing specific about the program I was referring to.

I can't know what program you're referring to unless you are specific. When most people refer to the bailout, they're referring to TARP. This represents the amount of money that was actually allocated by Congress for the purposes of bailing out Wall Street.

Then there's what the Fed does (http://www.salon.com/news/bank_reform/index.html?story=/opinion/feature/2010/04/01/secret_fed_bailout_open2010).

[WildCat]

the inherently unstable fractional reserve system.
Elminating the fractional reserve system is a great idea... if a nation of subsistence farmers living hand-to-mouth is your goal.

[Tippit]

Maybe because this only affects a few people, those who keep all their money stashed under their mattress to keep it out of the filthy greedy hands of the joos who run the banks.

At what point does constant bigot-baiting in-lieu of argument become as vile as bigotry itself? Probably when it's used to drown out legitimate criticism of corrupt institutions. But don't let that stop you.

[TriskettheKid]

Elminating the fractional reserve system is a great idea... if a nation of subsistence farmers living hand-to-mouth is your goal.

Well, we could go back to the way things were prior to the Fed, but after the Second National Bank.

After all, the dollar wasn't devalued by the mysterious, secret, and evil entity that is the Fed. And we wouldn't have much to worry about with the dollar no longer being debased so horridly.

You know, just minor things to worry about. Like.....

The Panic of 1837 and resulting 5yr depression
The Panic of 1857
The Panic of 1873, and the joyous time known as the Long Depression
The Panic of 1884 (more minor than the others)
The Panic of 1893, which had the interesting effect of being made worse due to a run on the gold supply
The Panic of 1907

But it's all worth it. Why have a stable economy?

[WildCat]

At what point does constant bigot-baiting in-lieu of argument become as vile as bigotry itself? Probably when it's used to drown out legitimate criticism of corrupt institutions. But don't let that stop you.
Oh please. All the anti-fed conspiracy theories have their roots in anti-semitism.

Just look at Henry Ford's favorite book "The International Jew" for the roots of the current anti-fed sentiment.

eta: Chapter 57. Jewish Idea in American Monetary Affairs
Chapter 58. Jewish Idea Molded Federal Reserve Plan
Chapter 59. Jewish Idea of Central Bank for America
Chapter 60. How Jewish International Finance Functions
Chapter 61. Jewish Power and America's Money Famine

All Ron Paul does is disguise the anti-semitism by substituting "banker" for "Jews".

[The Central Scrutinizer]

At what point does constant bigot-baiting in-lieu of argument become as vile as bigotry itself? Probably when it's used to drown out legitimate criticism of corrupt institutions. But don't let that stop you.

You refer to our currency as "counterfeit" and you want to be taken seriously? Oh that's rich!

:dl:

[Tippit]

Yes, it does.

Unless you think that the populist Democrats that came into the majority after the 1912 elections were somehow secretly in cahoots with the Republicans who were there previously, only changing the name from the Aldrich Plan to the Glass-Owen Act.



It's apparent that there are no material differences between the Aldrich Bill, and what became the Federal Reserve Act. The best way to pass some controversial legislation, is to propose the most egregious conditions and then concede all of the irrelevant points. Frank Vanderlip (http://en.wikipedia.org/wiki/Frank_Vanderlip), a banker who attended the 1910 Jekyll Island meeting wrote in his 1935 autobiography From Farmboy to Financier :


I was as secretive, indeed I was as furtive as any conspirator. Discovery, we knew, simply must not happen, or else all our time and effort would have been wasted. If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress…I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System.”


Evidently Vanderlip, co-author of what became the Aldrich Plan, wasn't too disappointed with the Federal Reserve Act.



Yeah, and it's not like the actions of the Fed are in anyway predictable. In all my life, I've never heard of analysts expecting the Fed to do something like drop or raise interest rates, or anything like that. Nope. Not once.

This is relevant how? It's predictable that if I go to a certain area of town waving $100 bills that I will get robbed. That changes the actuality of being robbed how?

[Tippit]

Well, we could go back to the way things were prior to the Fed, but after the Second National Bank.

After all, the dollar wasn't devalued by the mysterious, secret, and evil entity that is the Fed. And we wouldn't have much to worry about with the dollar no longer being debased so horridly.

You know, just minor things to worry about. Like.....

The Panic of 1837 and resulting 5yr depression
The Panic of 1857
The Panic of 1873, and the joyous time known as the Long Depression
The Panic of 1884 (more minor than the others)
The Panic of 1893, which had the interesting effect of being made worse due to a run on the gold supply
The Panic of 1907

But it's all worth it. Why have a stable economy?

The fact that there were recessions and depressions before the ones that came after the Fed's inception isn't a valid argument for the Fed. The ability to manipulate the money supply or various aspects of a market existed before the Fed. The Fed merely institutionalized the manipulation and broadened the scope.

[TriskettheKid]

It's apparent that there are no material differences between the Aldrich Bill, and what became the Federal Reserve Act.

That's funny, because it's wrong.

The Aldrich Plan called for what was essentially a single central bank controlled by bankers, completely independent from the government.

I mean, where the hell do you read this alternate history ****?

[TraneWreck]

The context for your "pittance" claim was apparently that the amount of money the Fed creates as a "lender of last resort" pales in comparison to "public bailouts". By "public bailouts" I can only imagine you were referring to TARP, since we don't know exactly how much money the Fed has counterfeited to pay its Wall Street cronies with TALF, and all its other dealings.

[...]

Then there's what the Fed does (http://www.salon.com/news/bank_reform/index.html?story=/opinion/feature/2010/04/01/secret_fed_bailout_open2010).

Almost nothing contained in that response was accurate. That link detailed where the money went, people can read it for themselves.

By the way, what is inflation at right now? And what has it been since the crisis started?

[TriskettheKid]

The fact that there were recessions and depressions before the ones that came after the Fed's inception isn't a valid argument for the Fed. The ability to manipulate the money supply or various aspects of a market existed before the Fed. The Fed merely institutionalized the manipulation and broadened the scope.

What are you on about?

If I was making a point about recessions and depressions, I would have said so.

What I was pointing out, and rightly so, were the number of banking panics that took place in the interim. There was almost a banking panic every decade from the end of the Second National Bank to the start of the Fed.

[Tippit]

Oh please. All the anti-fed conspiracy theories have their roots in anti-semitism.

Just look at Henry Ford's favorite book "The International Jew" for the roots of the current anti-fed sentiment.

eta: Chapter 57. Jewish Idea in American Monetary Affairs
Chapter 58. Jewish Idea Molded Federal Reserve Plan
Chapter 59. Jewish Idea of Central Bank for America
Chapter 60. How Jewish International Finance Functions
Chapter 61. Jewish Power and America's Money Famine

All Ron Paul does is disguise the anti-semitism by substituting "banker" for "Jews".

The only person who's said anything in this thread about jews, up until now, was you, and another troll. It's a pathetic attempt at ad hominem, but it's even worse, because I don't even resemble a bigot. So you're attempting to discredit the arguer based on a presumption that isn't even true. The "jew is code word for banker" argument is ridiculous, because that would prohibit any legitimate criticism of "bankers". It's doubly ridiculous because it presumes that the Fed is "run by jews".

The fact that Henry Ford was an anti-semite and decided to use hateful rhetoric in his condemnation of the Fed doesn't have anything to do with the argument against the Fed, it just provides useful idiots the ability to distract from the substance of the issue, which is the fact that the Fed is a corrupt institution.

[Tippit]

Almost nothing contained in that response was accurate. That link detailed where the money went, people can read it for themselves.



Really? What was accurate, then? My response was about where the money came from, and the answer is "thin-air", and it's not a pittance.



By the way, what is inflation at right now? And what has it been since the crisis started?

That depends. How do you define inflation, by an increase in consumer prices? What index of consumer prices do you want to use? The government CPI is cooked. If you define it by the money supply, the Fed decided to stop publishing M3 (http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html), so we have to estimate it.

But, as I've pointed out before, focusing on consumer prices to measure inflation is exceedingly myopic. That would ignore all of the Fed-induced asset bubbles throughout history. The already vastly-wealthy wall streeters who received the bailouts aren't really going to ramp up their consumption of food and energy, were these actually accounted for in CPI. They might add another Bentley to their car collection. What they're sure to do, however, is buy assets like stocks and bonds, to increase their relative share of the production pie. This will undoubtedly allow them to consume more than their fair-share in the future.

Of course it's worth pointing out, again, that monetary inflation is a tax, and even if the CPI weren't understated and indicated a price change of 0, you would still be paying a tax in the form of an opportunity cost. You see, in a robust and technologically advanced society such as ours, prices for goods and services will be in a constant state of decline - things get cheaper as we produce more. It's only the persistent debasement of our money that keeps prices stable, or going up.

It's not my fault that most people don't understand this, it's akin to how people perceive taxes withheld much differently than taxes paid.

[The Central Scrutinizer]

I mean, where the hell do you read this alternate history ****?

Conspiracy sites, especially those involving Jewish conspiracies.

What's funny is that Tippit keeps posting this nonsense, and gets nothing but ridicule in return. I think he doesn't realize this is a skeptics site and he has not, and will not, convince anyone that our money is counterfeit. You'd think eventually he'd figure it out.

[se7ensnakes]

trisketthekid You have been duped: While the aldrich plan did not make it through the glass-owens bill did which was pretty much, according to testimony by an expert witness, the same as the aldrich plan. To argue that the Jekyll Island meeting did not occur is an excise is education because there is much evidence that it did occur including admittance by one of the conspirators.

[se7ensnakes]

We don't need the fed, america had two central banks prior and they both collapse. Gone. voted out. American went on to become a first world economy. The idea of a central bank is antiquated. We should have representatives, with access to supercomputers, programs that run money expansion and contraction assimulations, and economic counsels. This idea that the FOMC can actually make altruistic decisions is really truly against human nature. There are simply no angels with halos and wings watching out for us in the FOMC. Sorry but this is a sad fact.

[TriskettheKid]

trisketthekid You have been duped: While the aldrich plan did not make it through the glass-owens bill did which was pretty much, according to testimony by an expert witness, the same as the aldrich plan. To argue that the Jekyll Island meeting did not occur is an excise is education because there is much evidence that it did occur including admittance by one of the conspirators.

Oh, how I love it. Isn't it always "according to testimony by an expert witness?"

Anyway, the Jekyll Island meeting took place, the Aldrich Plan is what came of it, the Glass-Owen Act came about after the populist Democrats came into office after the 1912 elections, the Chicago Manifesto from the American Banking Association in August 1913 argued for the Aldrich Plan, and the Glass-Owen Act passed in December.

Long story short, the Aldrich Plan and the Glass-Owen Act were not the same. Anyone who says differently is trying to sell you something.

[se7ensnakes]

Everyday I get up and wonder how much i am going to pay for milk today. I see the shoppers down the isle and watch them curse at the supermarket manager for being so greedy and raising prices. As people are intellectually frail, it will take some constant explaining ...But better turn on American Idol...Yeah baby American Idol is on. Dr Kitten American Idol is on!

[se7ensnakes]

well I should not need to explain to you who this expert witness is and what he said ...since you could know with just a little reading about what main arguments transpire during the sessions. Yes the Glass-Owen Act and the Aldrich Plan accomplish the same things. No one is trying to sell you anything, you have already bought it...

[The Central Scrutinizer]

Looks like we have an escapee from the CT forum!

[se7ensnakes]

The main problem with the federal Reserve system is that, through fractional reserve banking 10 dollars of base money created by the federal reserve, becomes 90 dollars in the economy. Because of the multiplier effect this 10 dollars bounces around from loans to deposits from loan to deposits as money gravitates to the banking system, expanding and contracting the money supply. Question: If you were a creative individual how can you figure out to get ungodly rich by planned money contraction and expansion? come on think...dont let the bankers do all the thinking for you!

[se7ensnakes]

The central Scruinizer
I have three friends and we are planning to shoplift in walmart. There, i proved it to you...conspiracies do exist. Any questions? Oh wait, is your argument that conspiracies are only for little people? Oops i posted my intentions as a result it could no longer be a conspiracy. Okay my three friends and I are going to do something but i am not going to tell you what it is. Its going to be a C-O-N-S-P-I-R-A-C-Y..... Aaaaaaaaaaaaaaaaaaaahhhhhhhh................

[The Central Scrutinizer]

The central Scruinizer
I have three friends and we are planning to shoplift in walmart. There, i proved it to you...conspiracies do exist. Any questions? Oh wait, is your argument that conspiracies are only for little people? Oops i posted my intentions as a result it could no longer be a conspiracy. Okay my three friends and I are going to do something but i am not going to tell you what it is. Its going to be a C-O-N-S-P-I-R-A-C-Y..... Aaaaaaaaaaaaaaaaaaaahhhhhhhh................

Damn, you got me there. I have no response. :rolleyes:

[Skeptic]

You refer to our currency as "counterfeit" and you want to be taken seriously? Oh that's rich!

These folks (LaRouche fans) used to stand in front of the university where I studied and pass around pamphlets telling us FRNs (Federal Reserve Notes, as they insist calling them, to distinguish them from REAL money, you see) are worthless.

Then they would ask for a donation and I would refused, or I would dip my hand into their "donation" bill and help myself to a $20. When they'd protest, I'd say: "But you just told me this stuff is totally worthless! So what do you care?"

I never actually took their $20, but the expression on their face was priceless.

[Skeptic]

The central Scruinizer
I have three friends and we are planning to shoplift in walmart. There, i proved it to you...conspiracies do exist. Any questions?

Yes.

Try to actually perform that conspiracy without getting caught, and see if you succeed.

Or try to organize with your three friends a surprise birthday party for a fourth friend without anybody tipping him off by mistake and keeping in a secret more than a week.

You'll find out it's harder than you think.

Now, imagine how likely it is that your conspiracy -- involving hundreds of thousands of people over a century and more -- actually would be kept secret for so long. Not a single deathbed confession, for example, or signed will admitting part of it. Not one involved ever blurting out the truth to his wife when drunk. Nada. Zilch.

And remember: this super-secret conspiracy is by the same incredibly efficient and perfectly-working government that brought us the DMV, $400 toilet seats, and the Watergate scandal.

[The Central Scrutinizer]

These folks (LaRouche fans) used to stand in front of the university where I studied and pass around pamphlets telling us FRNs (Federal Reserve Notes, as they insist calling them, to distinguish them from REAL money, you see) are worthless.

Then they would ask for a donation and I would refused, or I would dip my hand into their "donation" bill and help myself to a $20. When they'd protest, I'd say: "But you just told me this stuff is totally worthless! So what do you care?"

I never actually took their $20, but the expression on their face was priceless.

We used to get the same nuts at the Fed every April 15th, protesting taxes. We had to try to explain to them that the Fed had nothing to do with taxes, the IRS was 6 blocks west. It was like talking to a cement wall. Looks like some of them learned how to use a computer and joined the JREF forums.

[se7ensnakes]

Mr Skeptic,
Conspiracies dont have to be secret, just unbelievable to the uneducated. It is a numbers game, it has to function just below the radar of most people. You and mr central scrutinizer miss the class on stratum in the ding-a-ling school of economics you attended did you not? You see these crime banking families have meetings that hire people that hire people that hire people. Now you turn on the television most of the reports are ocassionally on monetary theory or policy. Just enough not to wake the masses from watching american idol and playing video games. You think that all of the 500 channels of television are independent and reporting everything. Consequently, there are only two things that people know about money 1)you need to work to make money 2)you can buy things with it. Now i dont know about you but I tend to think that if you give some stranger your paycheck for management, and he hires lawyers (using your own money) to inhibit my ability to see ALL of what you are doing, maybe, just maybe there might be some hanky panky going on. But thats just me. I for one will like to see the mechanics of the half a trillion foreign credit swap, and specifically how is that going to help these united states. Hell i would want to discuss in detail this half a trillion dollar foreign credit swap publicly. I will like someone managing my paycheck to be approachable and without counsel. I dont know about you central scrutinizer or skeptics but this is how i work. I guess i am unique in that manner.

[The Central Scrutinizer]

Mr Skeptic,
Conspiracies dont have to be secret, just unbelievable to the uneducated. It is a numbers game, it has to function just below the radar of most people. You and mr central scrutinizer miss the class on stratum in the ding-a-ling school of economics you attended did you not? You see these crime banking families have meetings that hire people that hire people that hire people. Now you turn on the television most of the reports are ocassionally on monetary theory or policy. Just enough not to wake the masses from watching american idol and playing video games. You think that all of the 500 channels of television are independent and reporting everything. Consequently, there are only two things that people know about money 1)you need to work to make money 2)you can buy things with it. Now i dont know about you but I tend to think that if you give some stranger your paycheck for management, and he hires lawyers (using your own money) to inhibit my ability to see ALL of what you are doing, maybe, just maybe there might be some hanky panky going on. But thats just me. I for one will like to see the mechanics of the half a trillion foreign credit swap, and specifically how is that going to help these united states. Hell i would want to discuss in detail this half a trillion dollar foreign credit swap publicly. I will like someone managing my paycheck to be approachable and without counsel. I dont know about you central scrutinizer or skeptics but this is how i work. I guess i am unique in that manner.

Is there any history of mental illness in your family?

[WildCat]

Mr Skeptic,
Conspiracies dont have to be secret, just unbelievable to the uneducated.
There's a difference between a conspiracy and a conspiracy theory. You are firmly in conspracy theory land.

[WildCat]

The only person who's said anything in this thread about jews, up until now, was you, and another troll. It's a pathetic attempt at ad hominem, but it's even worse, because I don't even resemble a bigot. So you're attempting to discredit the arguer based on a presumption that isn't even true. The "jew is code word for banker" argument is ridiculous, because that would prohibit any legitimate criticism of "bankers". It's doubly ridiculous because it presumes that the Fed is "run by jews".

The fact that Henry Ford was an anti-semite and decided to use hateful rhetoric in his condemnation of the Fed doesn't have anything to do with the argument against the Fed, it just provides useful idiots the ability to distract from the substance of the issue, which is the fact that the Fed is a corrupt institution.
Just because you substitute "bankers" for Jews" while keeping the conspiracy intact otherwise doesn't excuse you. You are still spouting the same old conspiracy theory, thinly veiled to hide the anti-semitism that created it.

[se7ensnakes]

No wildcat and how would you know a conspiracy fact from a theory? You claim that: There was never a Nicholas Biddle who threatened to collapse the economy to get his way; that the jekyll island meeting never took place; that the Federal Reserve did not contract the money supply during the great depression is simply a monumental show of ignorance. Your idea that the politicians and the financial district is working to better america from the kindness of their heart is worst than idiotic...

[WildCat]

No wildcat and how would you know a conspiracy fact from a theory? You claim that: There was never a Nicholas Biddle who threatened to collapse the economy to get his way; that the jekyll island meeting never took place; that the Federal Reserve did not contract the money supply during the great depression is simply a monumental show of ignorance. Your idea that the politicians and the financial district is working to better america from the kindness of their heart is worst than idiotic...
What does any of that have to do with auditing the Fed to expose the evil global cabal of NWO types who are out to destroy America and enslave the people?

[stilicho]

Really? What was accurate, then? My response was about where the money came from, and the answer is "thin-air", and it's not a pittance.

That depends. How do you define inflation, by an increase in consumer prices? What index of consumer prices do you want to use? The government CPI is cooked. If you define it by the money supply, the Fed decided to stop publishing M3 (http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html), so we have to estimate it.

But, as I've pointed out before, focusing on consumer prices to measure inflation is exceedingly myopic. That would ignore all of the Fed-induced asset bubbles throughout history. The already vastly-wealthy wall streeters who received the bailouts aren't really going to ramp up their consumption of food and energy, were these actually accounted for in CPI. They might add another Bentley to their car collection. What they're sure to do, however, is buy assets like stocks and bonds, to increase their relative share of the production pie. This will undoubtedly allow them to consume more than their fair-share in the future.

Of course it's worth pointing out, again, that monetary inflation is a tax, and even if the CPI weren't understated and indicated a price change of 0, you would still be paying a tax in the form of an opportunity cost. You see, in a robust and technologically advanced society such as ours, prices for goods and services will be in a constant state of decline - things get cheaper as we produce more. It's only the persistent debasement of our money that keeps prices stable, or going up.

It's not my fault that most people don't understand this, it's akin to how people perceive taxes withheld much differently than taxes paid.

How did I know before I opened this thread that it was going to turn into a Tippit thread?

Any word on that independent wealth you've claimed to have acquired? Which companies were those again? And how did you accomplish that without 'thin-air' currency and regulated bank financing? Were you born rich? Lying?

Hmmm?

[KoihimeNakamura]

No wildcat and how would you know a conspiracy fact from a theory? You claim that: There was never a Nicholas Biddle who threatened to collapse the economy to get his way; that the jekyll island meeting never took place; that the Federal Reserve did not contract the money supply during the great depression is simply a monumental show of ignorance. Your idea that the politicians and the financial district is working to better america from the kindness of their heart is worst than idiotic...

Because if America prospers /so do they/

[Verde]

Mr Skeptic,
Conspiracies dont have to be secret, just unbelievable to the uneducated. It is a numbers game, it has to function just below the radar of most people. You and mr central scrutinizer miss the class on stratum in the ding-a-ling school of economics you attended did you not? You see these crime banking families have meetings that hire people that hire people that hire people. Now you turn on the television most of the reports are ocassionally on monetary theory or policy. Just enough not to wake the masses from watching american idol and playing video games. You think that all of the 500 channels of television are independent and reporting everything. Consequently, there are only two things that people know about money 1)you need to work to make money 2)you can buy things with it. Now i dont know about you but I tend to think that if you give some stranger your paycheck for management, and he hires lawyers (using your own money) to inhibit my ability to see ALL of what you are doing, maybe, just maybe there might be some hanky panky going on. But thats just me. I for one will like to see the mechanics of the half a trillion foreign credit swap, and specifically how is that going to help these united states. Hell i would want to discuss in detail this half a trillion dollar foreign credit swap publicly. I will like someone managing my paycheck to be approachable and without counsel. I dont know about you central scrutinizer or skeptics but this is how i work. I guess i am unique in that manner.

Thanks to Google, I translated that to Hungarian.

Összeesküvések dont volna, hogy titkos, csak hihetetlen, hogy az iskolázatlan. Ez a számok játéka, azt a funkciót csak alul a radar a legtöbb ember. Ön és a mr központi scrutinizer hiányzik az osztály a réteg a ding-a-ling School of Economics Ön részt ugye? Látod, ezek a bűncselekmények banki családok találkoznak, hogy a bérleti embereknek, hogy az emberek, hogy a bérleti bérleti emberek. Most kapcsolja be a televíziót a jelentések nagy részét esetenként a monetáris elmélet és politika. Csak annyi, hogy ne ébressze fel a tömegek néz American Idol és a videojátékok. Azt hiszed, hogy az 500 csatornás televízió független és jelentési mindent. Következésképpen, csak két dolog, hogy az emberek tudják a pénzről 1) meg kell dolgozni, hogy a pénz 2) meg lehet vásárolni a dolgokat vele. Most én dont tud rólad, de én inkább hiszem, hogy ha ad egy idegen a csekk az irányítás, és ő azt bérlő ügyvédek (értelemszerűen a saját pénz), hogy gátolja a képességemet, hogy minden, amit csinálsz, talán, csak talán nem lehet némi hókusz panky folyik. De amit csak én. Én az egyik lesz, mint látni, hogy a mechanika a fél billió külföldi hitel-swap, és különösen hogy megy, hogy segítsen ezeknek az Egyesült Államokba. Hell szeretnék megvitatni részletesen a fél billió dolláros külföldi hitel-swap nyilvánosan. Én mint aki irányítása én csekk, hogy megközelíthető és nem tanácsot. Nem tudom rólad központi scrutinizer vagy szkeptikusok, de ez hogyan működik. Azt hiszem, én vagyok egyedülálló, hogy legyen.


Yes, makes a lot more sense now.

V.

[Travis]

Except, it hasn't. The Fed caused and presided over the biggest depression in US history, and numerous recessions since. The only job it has done, is debase the dollar by some 97% since its inception. This of course amounts to a massive tax, which few people seem to understand. The tax also happens to be regressive, which means it burdens the poor more than the rich.

We were still on the Gold Standard during the Great Depression which made efforts to get out of it almost useless. Countries that dropped the Gold Standard recovered much quicker.

[Tippit]

We were still on the Gold Standard during the Great Depression which made efforts to get out of it almost useless. Countries that dropped the Gold Standard recovered much quicker.

If it weren't for the Fed contracting the money supply by 33%, (after inflating it during the roaring twenties and causing stock market speculation) we wouldn't have had the Great Depression to begin with. Just ask Ben Bernanke. You don't "get out" of recessions and depressions by simply inflating prices. First, monetary inflation represents a transfer of wealth, so there is a basic inequity in this "solution". Second recessions are about the liquidation of bad investments. When the Fed goes on a free money binge, it typically results in bad or risky loans that otherwise wouldn't have occured, which results in malinvestment. This must be liquidated before any true economic recovery can commence. Healthy economies are not defined by artificially inflated prices, they're defined by productivity and growth.

History has shown that a gold standard alone fails to produce economic stability, but that's due to the real source of instability, which is fractional reserve banking.

[WildCat]

the real source of instability, which is fractional reserve banking.
Once again, do you see anything but a nation of subsistence farmers (after a few hundred million drop dead from starvation) after you succeed in banning fractional reserve banking?

How would anything get financed?

[timhau]

Maybe we should set aside some land for a new nation, United States of Goldbugia, where only real, gold-based money can buy things, and full-reserve banks guarantee that your deposits are always in the vault in your bank.

The land had better be fertile, because export industry is going to be real scarce in USG.

[drkitten]

You don't "get out" of recessions and depressions by simply inflating prices.

Actually, you can. Check out the famous Capitol Hill Babysitting Co-op for a well-documented example.

Once again, Tippit shows that there is no set of facts too simple and obvious for him to get wrong.

[TraneWreck]

Actually, you can. Check out the famous Capitol Hill Babysitting Co-op for a well-documented example.

Once again, Tippit shows that there is no set of facts too simple and obvious for him to get wrong.

What makes Tippit's stance doubly hilarious is that there's a major economic crisis happening in Greece that persists in part because they can't inflate their currency.

[Travis]

I never understand the obsession with the Gold Standard.

GDP of the United States in 2009: $14.266 trillion
Estimated value (http://pubs.usgs.gov/of/2002/of02-303/OFR_02-303.pdf) of all the Gold ever mined: $4.5 trillion

[drkitten]

I never understand the obsession with the Gold Standard.

Oh, it's easy.

If you're too dumb to know how to invest your money to stay ahead of inflation, then inflation robs you of purchasing power.

If you're too paranoid to trust anyone with your money in order to invest it for you to stay ahead of inflation, then inflation robs you of purchasing power.

[Skeptic]

Mr Skeptic,
Conspiracies dont have to be secret, just unbelievable to the uneducated.

Doesn't seem so to me. It's usually the uneducated who believe every conspiracy theory that comes down the pike. Those with economics degree tend to laugh at the economics conspiracy theories, just like engineers and scientists laugh at the "we never went to the moon" conspiracy theories, and biologists and geologists at "evolution is wrong, the earth is 6000 years old" conspiracy theories.

You see these crime banking families have meetings that hire people that hire people that hire people.

They do?

When was the last meeting? Where? Was it last year? This year? In Zurich? Venice? New York? Details, please.

Now you turn on the television most of the reports are ocassionally on monetary theory or policy. Just enough not to wake the masses from watching american idol and playing video games.

You mean television has BOTH serious AND entertainment programs???

Looks suspicious to me. Must be a conspiracy!

You think that all of the 500 channels of television are independent and reporting everything.

I would not at all expect television, especially independent television, to report "everything" -- only what sells.

There's demand for sports and (unsurprisingly) not much demand for a channel broadcasting hare-brained conspiracy theories, so such a channel will lose money for lack of viewers, so it doesn't exist any more than, say, the "Early Assyrian Archeology" channel does.

I mean, what did you expect?

Consequently, there are only two things that people know about money 1)you need to work to make money 2)you can buy things with it. Now i dont know about you but I tend to think that if you give some stranger your paycheck for management, and he hires lawyers (using your own money) to inhibit my ability to see ALL of what you are doing, maybe, just maybe there might be some hanky panky going on.

Hanky panky that's been going on for 100 years and nobody spilled the beans?

I will like someone managing my paycheck to be approachable and without counsel.

They usually are, only not to rude conspiracy theory nuts.

[drkitten]

What makes Tippit's stance doubly hilarious is that there's a major economic crisis happening in Greece that persists in part because they can't inflate their currency.

When you're wrong in theory, you can always argue that the theory is incomplete and that actual practice bears you out.

When you're wrong in practice, you can always argue that someone has tampered with the system, keeping it from operating as theory says that it should.

But when you're wrong in both theory and in practice,.... you might a Gold Bug.

[Tippit]

What makes Tippit's stance doubly hilarious is that there's a major economic crisis happening in Greece that persists in part because they can't inflate their currency.

Or, their crisis has to do with the fact that the government's budget deficit alone is 12.7% of the country's GDP, and their debt/GDP is 113%. The crisis is due to the malinvestment which has been the result of persistent euro-inflation for the past decade, combined with the fact that they can't service their enormous debt.

[Tippit]

Maybe we should set aside some land for a new nation, United States of Goldbugia, where only real, gold-based money can buy things, and full-reserve banks guarantee that your deposits are always in the vault in your bank.

The land had better be fertile, because export industry is going to be real scarce in USG.

You mean, US workers will actually make things again? And they will make them for consumption in the US? And the government won't be able to spend practically unlimited amounts of money on preemptive foreign wars, and corrupt domestic programs? I'd like to sign up.

[The Central Scrutinizer]

You mean, US workers will actually make things again? And they will make them for consumption in the US? And the government won't be able to spend practically unlimited amounts of money on preemptive foreign wars, and corrupt domestic programs? I'd like to sign up.

Congratulations. Welcome back to 1807!

[WildCat]

Congratulations. Welcome back to 1807!
When 95% of the country were subsistence farmers.

[Travis]

Congratulations. Welcome back to 1807!

Actually even in 1807 the US imported goods. I don't think there is any period in US history analogous to the "zero international trade" dystopia that Tippit seems to desire.

[Malerin]

Actually even in 1807 the US imported goods. I don't think there is any period in US history analogous to the "zero international trade" dystopia that Tippit seems to desire.

It wasn't too long ago we were running trade surpluses (http://www.calculatedriskblog.com/2009/01/us-trade-deficit-graphs.html).

[Travis]

A trade surplus is different from disallowing imported goods altogether. Of course it wouldn't matter since no one would have money to buy any imports if we went to the Gold Standard.

[drkitten]

Or, their crisis has to do with the fact that the government's budget deficit alone is 12.7% of the country's GDP, and their debt/GDP is 113%. The crisis is due to the malinvestment which has been the result of persistent euro-inflation for the past decade, combined with the fact that they can't service their enormous debt.

Er,.... Euro-inflation?

Sorry, Tippit, but even you should be able to see the contradiction here. If there's inflation going on, then the value of the debt is contracting and Greece's position is getting better, not worse. (That's why inflation is good for borrowers and bad for lenders.)

[drkitten]

You mean, US workers will actually make things again?

That's right. They'll make,.... food.

And nothing else.

And they will make them for consumption in the US?

Or for sale abroad as cash crops, because that's the only way they will be able to get anything that doesn't grow on a farm.

tI'd like to sign up.

I'm sure you would. After all, the idea of reducing the United States to a nation of subsistence farmers is a position only an idiot could love.

[se7ensnakes]

Dr Kittens Idea to remedy the inflation problem is to invest money. That sounds simple except Dr Kitten apparently dont know what tulipmania means.

[se7ensnakes]

Skeptic you are taking extremes. We are not talking about every conspiracy...we are talking specifically about the banking families. Just because you dont read, does not mean they dont exist.

Psst psst the meetings are secret...you are not invited.

The Media avoids explaining how fractional reserve banking works, it also avoids any consistent mention of the mechanics of the t-bond - fed note interchange and the effect of its deposit in private banks

[timhau]

Dr Kittens Idea to remedy the inflation problem is to invest money. That sounds simple except Dr Kitten apparently dont know what tulipmania means.

... and all investing is like tulip mania. :rolleyes:

[drkitten]

... and all investing is like tulip mania. :rolleyes:

It is to the Gold Bugs. That's why people like 7 and Tippit are so terrified of inflation,... because they can't tell the difference between Warren Buffett and Charles Ponzi, or between buying shares in a profitable company or useless objects that they hope to sell to a still greater fool.

See post #89. ("If you're too dumb to know how to invest your money to stay ahead of inflation, then inflation robs you of purchasing power.")

In fact, their inability to distinguish between equity investments and commodities like gold (that don't pay dividends) is one of the reasons they like gold so much.

[Michael Redman]

Problem:
What makes Tippit's stance doubly hilarious is that there's a major economic crisis happening in Greece that persists in part because they can't inflate their currency.

Hypothesis:
When you're wrong in theory, you can always argue that the theory is incomplete and that actual practice bears you out.

When you're wrong in practice, you can always argue that someone has tampered with the system, keeping it from operating as theory says that it should.

But when you're wrong in both theory and in practice,.... you might a Gold Bug.

Observation:
Or, their crisis has to do with the fact that the government's budget deficit alone is 12.7% of the country's GDP, and their debt/GDP is 113%. The crisis is due to the malinvestment which has been the result of persistent euro-inflation for the past decade, combined with the fact that they can't service their enormous debt.

That was a little too slick. I smell a conspiracy . . . :D

[GreyArea]

When the Fed was set up, it was deliberately set up to be outside of Congress' direct supervision (and of the President's, for that matter) so that we wouldn't see things like a deliberate easing of monetary policy to produce a temporary stock market boost just before the election,.... which of course would cause inflation after the election.

I'm trying to figure out why the pre-Fed system would have such a populist base. A short-term stock market boost itself wouldn't mean much to the little guys who support Ron Paul and Lyndon Larouche. Is there some other economic/financial benefit these supporters perceive?


If there's inflation going on, then the value of the debt is contracting and Greece's position is getting better, not worse. (That's why inflation is good for borrowers and bad for lenders.)

In the late 19th century, indebted farmers would like inflation, right? I remember reading about the people who wanted an increase in the monetary supply through silver, but I don't remember the details. Today, would indebted suburbanites like inflation (or think they would)? Maybe that is part of the reason for anti-Fed attitudes.

I'll also echo the point that a lot of these attitudes about banks are laundered anti-Semitic conspiracy theories. That could explain a cultural reason for favoring anti-Fed ideas irrespective of their economic sense or consequences. Some people are willing to forgo material improvement for everyone (including themselves) if they can still stick it to their cultural enemies.

[69dodge]

That's why people like 7 and Tippit are so terrified of inflation,... because they can't tell the difference between Warren Buffett and Charles Ponzi, or between buying shares in a profitable company or useless objects that they hope to sell to a still greater fool.

Not all companies pay dividends. Buffet's Berkshire Hathaway doesn't. If I own a share, all I can do with it is sell it to someone else, at a price that I hope is higher than what I bought it at. I guess you'd say that neither I nor the buyer are fools in that case. But why not?

[Travis]

Dr Kittens Goldbugs Idea to remedy the inflation problem is to invest (in) money gold. That sounds simple except Dr Kitten Goldbugs apparently dont [sic] know what tulipmania means.

[drkitten]

Not all companies pay dividends. Buffet's Berkshire Hathaway doesn't. If I own a share, all I can do with it is sell it to someone else, at a price that I hope is higher than what I bought it at. I guess you'd say that neither I nor the buyer are fools in that case. But why not?

Because gold doesn't generate wealth the way an ongoing commercial concern does.

[drkitten]

I'm trying to figure out why the pre-Fed system would have such a populist base. A short-term stock market boost itself wouldn't mean much to the little guys who support Ron Paul and Lyndon Larouche. Is there some other economic/financial benefit these supporters perceive?

I think it's simple populist vengeance.


In the late 19th century, indebted farmers would like inflation, right? I remember reading about the people who wanted an increase in the monetary supply through silver, but I don't remember the details.

Yup, the 'free silver' movement.

Today, would indebted suburbanites like inflation (or think they would)?

That's,.... complicated.

Contrary to the gibberish that Tippit spouts, regular and predictable inflation is not a problem. (Getting this wrong is one of the major reasons that he qualifies as a lunatic.) It's not a problem for either the lender or the borrower, because the lender simply sets interest rates at the level of expected interest plus a reasonable risk premium. What becomes a problem is a sudden and unexpected change in interest rates.

E.g. if I have money to lend, and I expect inflation to be at 2%, I can charge 4% interest and earn a 2% real return. If inflation jumps to 10%, then I'm earning a net negative 6% return,... but similarly, if inflation disappears altogether, then I'm earning 4% real return.

On the other hand, since wages track inflation, if I'm paying a debt, and inflation jumps to 10%, I will probably see a 10% raise, but still be paying the same dollar amount on my debts. So high inflation is good for the borrower but bad for the lender.

The situation is a little different now, because most people are carrying debt with an adjustable rate, either through an ARM or credit card (neither of which existed in the late 19th century). Now an increase in inflation will simply mean that my bank raises the rates. So the suburbanite who is carrying a traditional fixed-rate mortgage, a fixed-rate car loan, and no credit card debt would benefit --- but how many people does that describe?

The other problem is that sometimes -- relatively rarely, but sometimes -- wages don't track inflation. A good example of this is the 'stagflation' of the 1970s. If you're a person caught in stagflation, then you're likely to see your earning power actually decrease.

But of course, 1975 was thirty-five years ago. I know there's a saying about generals always being ready to re-fight the last war, but if you're that concerned about 70's-style stagflation, that's like a modern general trying to re-fight the Battle of Hastings.....


I'll also echo the point that a lot of these attitudes about banks are laundered anti-Semitic conspiracy theories. That could explain a cultural reason for favoring anti-Fed ideas irrespective of their economic sense or consequences.

Yup. I think this is the best answer to your first paragraph above.

[The Central Scrutinizer]

I'm trying to figure out why the pre-Fed system would have such a populist base. A short-term stock market boost itself wouldn't mean much to the little guys who support Ron Paul and Lyndon Larouche. Is there some other economic/financial benefit these supporters perceive?

For some people, life didn't turn out exactly the way they had hoped. As they sit in their trailers, drinking can after can of beer, they just know that someone (not them) is to blame. They watch their Glen Beck program on TV, and see those rich bankers (aka Jews), in their fancy $1000 suits, getting bailed out by a black president, and figure it's all their fault.

[69dodge]

Because gold doesn't generate wealth the way an ongoing commercial concern does.

I don't understand why that matters.

What wealth are you talking about? The products of the company? I'm not interested in buying them; I'm interested in making money by investing in the company. The profits of the company? They don't help me, because the company doesn't give them to me as dividends.

All that remains for me to do is to sell my share in the company to someone else, the same as I can sell my gold to someone else. So, the relevant question is, will anyone else want to buy the share or the gold for a higher price than what I bought it for? I don't see why potential buyers would prefer one to the other; all they can do with either is to sell it in turn to yet someone else for a price that is yet higher.

It all seems quite circular.

[The Central Scrutinizer]

I don't understand why that matters.

What wealth are you talking about? The products of the company? I'm not interested in buying them; I'm interested in making money by investing in the company. The profits of the company? They don't help me, because the company doesn't give them to me as dividends.

All that remains for me to do is to sell my share in the company to someone else, the same as I can sell my gold to someone else. So, the relevant question is, will anyone else want to buy the share or the gold for a higher price than what I bought it for? I don't see why potential buyers would prefer one to the other; all they can do with either is to sell it in turn to yet someone else for a price that is yet higher.

It all seems quite circular.

If you buy 10% of XYZ Inc today, and over the next 20 years, XYZ grows to be 3 times as big, you own 10% of something which is 3 times bigger than it was when you bought it (and somewhere along the way, they may decide to start paying dividends).

If you buy an ounce of gold today, in 20 years you will still have an ounce of gold (you are guaranteed no dividends along the way).

Yes, in both cases your goal is to sell it to someone else for more than you paid for it.

[drkitten]

I don't understand why that matters.

What wealth are you talking about? The products of the company? The profits of the company?

All of the above.


All that remains for me to do is to sell my share in the company to someone else, the same as I can sell my gold to someone else. So, the relevant question is, will anyone else want to buy the share or the gold for a higher price than what I bought it for?

Because the company is larger. The money that they're not putting into dividends, they're investing into corporate growth (almost by definition, unless management is really bad), which in turn means future profits.

Even if you're simply valuing the corporation for its liquidation value, a bigger company will liquidate for more.

[thesyntaxera]

For some people, life didn't turn out exactly the way they had hoped. As they sit in their trailers, drinking can after can of beer, they just know that someone (not them) is to blame. They watch their Glen Beck program on TV, and see those rich bankers (aka Jews), in their fancy $1000 suits, getting bailed out by a black president, and figure it's all their fault.

To be fair...aren't most of organized tax/fed protestors wealthy white folks? Didn't the NYTimes have some demographic poll published recently?
http://www.nytimes.com/2010/04/15/us/politics/15poll.html

Though, there are plenty of rednecks who have no idea how to take responsibility for themselves...

[Travis]

To be fair...aren't most of organized tax/fed protestors wealthy white folks? Didn't the NYTimes have some demographic poll published recently?
http://www.nytimes.com/2010/04/15/us/politics/15poll.html

Though, there are plenty of rednecks who have no idea how to take responsibility for themselves...

Yes, those are known as "Greedy Douchebags." They are annoying. They represent everything wrong with America. But they are not the ones that buy into these conspiracy theories....though they may help perpetuate them to serve their own narrow interests.

[thesyntaxera]

Yes, those are known as "Greedy Douchebags." They are annoying. They represent everything wrong with America. But they are not the ones that buy into these conspiracy theories....though they may help perpetuate them to serve their own narrow interests.

I don't know that I would go that far, but they do seem misguided. They are the old guard in it's dying gasp. Time to kick and scream and write poorly executed protest signs I guess. I get the frustration, but how do you explain to a huge demographic that they are just the programming by-product of faulty societal memes that have spiraled out of control and floated to the surface of all the post-relevance-angst on a suicide mission to not make any sense?

[Travis]

I don't know that I would go that far, but they do seem misguided. They are the old guard in it's dying gasp. Time to kick and scream and write poorly executed protest signs I guess. I get the frustration, but how do you explain to a huge demographic that they are just the programming by-product of faulty societal memes that have spiraled out of control and floated to the surface of all the post-relevance-angst on a suicide mission to not make any sense?

By writing a big sign that says: "you are just a huge demographic that is just the programming by-product of faulty societal memes that have spiraled out of control and floated to the surface of all the post-relevance-angst on a suicide mission to 'not make any sense' wackjob protest movements!"

It might hurt their feelings but I couldn't care less.

[se7ensnakes]

Why it is very important for the fed to end:
Fed System:
1) Fractional Reserve banking which allows private corporations to expand and contract the money in circulation, and therefore have the ability to forecast economic conditions and invest accordingly.
2) Liquidity is managed by private corporations for profit, regardless of such concerns as bankruptcies, high unemployment, and foreclosures.
3) Only a select few have inside information as to coming economic conditions. Congress is prohibited from knowing everything in an FOMC meeting.
4) Billion of dollars paid in interest on money that is created by the fractional reserve system (another words, money that was created by a bookkeeping entry).
5) Debt based money system - Every dollar that was entered into circulation by the t-bond - federal reserve note interchange represents debt.
6) Money, otherwise entered into the system, causes inflation, which is promptly removed by a “bust”. (i.e. high unemployment, bankruptcies , and foreclosures.
7) Imbalance in the monetary system causes high inflation, which essentially translate to working for less money, which is no different than an additional tax.
8) Private corporations have t he ability to control politics by the effect of calculated financial panics.
Post-Fed System:
1) 100% reserve banking assures that banks are able to take care of their own business without resulting to insurance, fed bail-outs, or affecting other industries.
2) Monetary Balance attained by a well publicized practice in the house.
3) If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.
4) Improve education so that when you ask most people “what is the subject of the income tax” they will know and they will also know its significant. Teach high school students the mechanics and effects of fractional reserve banking, and of the national debt.

Without doubt if there chance of success, the bankers (as they have done so many times before) will attempt to collapse the economy. If you set up a congressional committee to investigate economic terrorism, most in the committee might get controlled by pay-offs, blackmail, etc…

[drkitten]

Why it is very important for the fed to end:
Fed System:
1) Fractional Reserve banking which allows private corporations to expand and contract the money in circulation, and therefore have the ability to forecast economic conditions and invest accordingly.
2) Liquidity is managed by private corporations for profit, regardless of such concerns as bankruptcies, high unemployment, and foreclosures.

Yeah, the only problem with this "theory" is that these EEVIL private korperations that make up the Fed can't actually make any profit from their activities. It gets turned over to the Treasury.

More epic fail in a badly chosen font. Why don't you go for the trifecta of crazy-stupid and write in angry fruit salad colors as well?

[The Central Scrutinizer]

Why it is very important for the fed to end:
Fed System:
1) Fractional Reserve banking which allows private corporations to expand and contract the money in circulation, and therefore have the ability to forecast economic conditions and invest accordingly.
2) Liquidity is managed by private corporations for profit, regardless of such concerns as bankruptcies, high unemployment, and foreclosures.
3) Only a select few have inside information as to coming economic conditions. Congress is prohibited from knowing everything in an FOMC meeting.
4) Billion of dollars paid in interest on money that is created by the fractional reserve system (another words, money that was created by a bookkeeping entry).
5) Debt based money system - Every dollar that was entered into circulation by the t-bond - federal reserve note interchange represents debt.
6) Money, otherwise entered into the system, causes inflation, which is promptly removed by a “bust”. (i.e. high unemployment, bankruptcies , and foreclosures.
7) Imbalance in the monetary system causes high inflation, which essentially translate to working for less money, which is no different than an additional tax.
8) Private corporations have t he ability to control politics by the effect of calculated financial panics.
Post-Fed System:
1) 100% reserve banking assures that banks are able to take care of their own business without resulting to insurance, fed bail-outs, or affecting other industries.
2) Monetary Balance attained by a well publicized practice in the house.
3) If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.
4) Improve education so that when you ask most people “what is the subject of the income tax” they will know and they will also know its significant. Teach high school students the mechanics and effects of fractional reserve banking, and of the national debt.

Without doubt if there chance of success, the bankers (as they have done so many times before) will attempt to collapse the economy. If you set up a congressional committee to investigate economic terrorism, most in the committee might get controlled by pay-offs, blackmail, etc…

Wow. Really?

[Dunstan]

Fed System:
...
5) Debt based money system - Every dollar that was entered into circulation by the t-bond - federal reserve note interchange represents debt.


Ah, so you think fiat money is bad because it represents "debt." Ok, got it. Printing money = bad.

Post-Fed System:
...
If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.

But you want the government to "retire the debt" by printing money, because printing money = lower taxes = good.

Could you at least be internally consistent?

[se7ensnakes]

No it is not the printing of the money that is bad…it is the fact that private corporations can expand and contract the money supply by limiting or extending credit. Where there are boom followed by bust, it is evidently calculated and therefore give advance knowledge when to invest and when to pull out.
Yes the government should print its own money, and fiscal balance should be public, not secret in some board meeting. No one should be privy to information regarding the expansion or contraction of the money supply. The money supply should be balance publicly, and the rise and fall of politicians should rest on this performance.
“The Treasury bond – federal reserve note interchange is clearly a scam. If your government can print a treasury bond it can just as readily print a United States Dollar, good for all debts. When the Federal Reserve creates money out of thin air expressly to purchase bonds in the open market, the book keeping entry (which is money) expands by a factor of ten in private corporations called bank. This money expansion affords privilege information…information that is used to invest accordingly. That way wealth flows from the masses to those with that special knowledge.

[drkitten]

No it is not the printing of the money that is bad…it is the fact that private corporations can expand and contract the money supply by limiting or extending credit.

You'd prefer that a government agency had that authority?

We've done that experiment; it tends to lead to political manipulations with the currency supply and a banana-republic type of economy. So that's out, too.

Of course, if it's not a government agency, then by definition it would have to be a private company (those are the only choices). But perhaps what we could do is use a private company (so it's independent of political control), but one that returns all of its profits directly to the Treasury, so there's little incentive or opportunity to profit from currency manipulations, and to keep the deliberations absolutely secret so there are no opportunities for insider trading.

Congratulations! You've just re-invented the modern Fed.

[lomiller]

So much woo so little time.


If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.


This has proven to be a recipe for economic collapse for countries that have attempted it.


100% reserve banking assures that banks are able to take care of their own business without resulting to insurance, fed bail-outs, or affecting other industries.


With 100% reserve requirement there would be no such thing as a bank.

Improve education so that when you ask most people “what is the subject of the income tax” they will know and they will also know its significant. Teach high school students the mechanics and effects of fractional reserve banking, and of the national debt.


That would indeed be a good idea, though not for the reasons you believe.



[QUOTE=se7ensnakes;5880886]it is the fact that private corporations can expand and contract the money supply by limiting or extending credit.



The only way a bank could do this would be to stop doing business sit on their cash. This is not a viable way of making money and outside of a deflationary economy it’s the very last thing they would ever want to do. Even if they tried, they would be betting against the Fed, who can create as much money as they want to bet with.

Yes the government should print its own money,


Economies where the government directly controls money supply are inevitably poor and third world. Every large rich nation uses an arms length agency to control it’s money supply. The lesson here should be obvious.

When the Federal Reserve creates money out of thin air expressly to purchase bonds in the open market, the book keeping entry (which is money) expands by a factor of ten in private corporations called bank.

If your government can print a treasury bond it can just as readily print a United States Dollar, good for all debts.


The treasury does print all US dollars. It then sells them to the Fed which in turn sells them to banks.

Correct.

This money expansion affords privilege information…information that is used to invest accordingly. That way wealth flows from the masses to those with that special knowledge.


No. Money used to purchases federal securities offer no inside knowledge or advantage. Even target inflation rates are well know. The Fed targets 2% inflation. The only reason they would ever put the breaks on the US money supply when inflation is below that would be the danger of overshooting.

[The Central Scrutinizer]

No it is not the printing of the money that is bad…it is the fact that private corporations can expand and contract the money supply by limiting or extending credit. Where there are boom followed by bust, it is evidently calculated and therefore give advance knowledge when to invest and when to pull out.
Yes the government should print its own money, and fiscal balance should be public, not secret in some board meeting. No one should be privy to information regarding the expansion or contraction of the money supply. The money supply should be balance publicly, and the rise and fall of politicians should rest on this performance.
“The Treasury bond – federal reserve note interchange is clearly a scam. If your government can print a treasury bond it can just as readily print a United States Dollar, good for all debts. When the Federal Reserve creates money out of thin air expressly to purchase bonds in the open market, the book keeping entry (which is money) expands by a factor of ten in private corporations called bank. This money expansion affords privilege information…information that is used to invest accordingly. That way wealth flows from the masses to those with that special knowledge.

:crazy:

[dudalb]

se7ensnakes appears to have flunked economics 1A very,very,badly.

[Michael Redman]

se7ensnakes appears to have flunked economics 1A very,very,badly.

Effective communication, as well. That font seems designed to make the reader give up halfway through.

[AaronMHatch]

Effective communication, as well. That font seems designed to make the reader give up halfway through.

One might argue that his goal was accomplished.

[timhau]

With 100% reserve requirement there would be no such thing as a bank.

Yes there would. The problem is that it would be like Scrooge McDuck's Money Bin.

[Rockingham, AH Deist]

Question: If the Fed was engaged in corruption, would we know?



You'd prefer that a government agency had that authority?

We've done that experiment; it tends to lead to political manipulations with the currency supply and a banana-republic type of economy. So that's out, too.

Of course, if it's not a government agency, then by definition it would have to be a private company (those are the only choices).

This maybe an entirely stupid idea, but why not set it up as a public entity but based upon tightly controlled formula(ie. printing/withdrawing money at a rate equivalent to price inflation+population growth, though I'm no economist so I'm not pinning my reputation on that idea;)) so that political manipulations are avoided?

The treasury does print all US dollars. It then sells them to the Fed which in turn sells them to banks.

Or another idea... perhaps the last part of that process(private banks) could be cut out? It's not unprecedented, such as system exists in North Dakota and it seems to be working well(damn, I'm not allowed to post URL's. Just search "Bank of North Dakota" into google).

Though the Retardlicans would probably bitch about it being socialism:rolleyes:

[drkitten]

This maybe an entirely stupid idea, but why not set it up as a public entity but based upon tightly controlled formula(ie. printing/withdrawing money at a rate equivalent to price inflation+population growth, though I'm no economist so I'm not pinning my reputation on that idea;)) so that political manipulations are avoided?

That would create a runaway feedback cycle as you set it up. If you allow the government to print MORE money in times of inflation (and force it to print LESS in times of deflation), the first time you get inflationary pressure, you'll automatically print even more money, which will produce even more inflation, which will cause even more money to be printed, and we'll end up with hyperinflation.

You might be able to set something up with printing money proportional to population growth minus inflation or something. But the other problem is that the Fed has to be able to respond to predicted inflation, not just inflation that's actually there -- and it needs to be able to respond to more issues than just inflation.

Basically, you're trying to take the human out of the loop entirely, but we still need human judgement in the loop at some point. The easiest way to isolate it from political pressure (but still let it be effective) is to make the judge non-political. Like the Fed.


Or another idea... perhaps the last part of that process(private banks) could be cut out?

Again, that just makes the bankers beholden to the politicians. The point is that the President -- or the Governor of North Dakota -- shouldn't be able to issue orders to the person who runs the currency supply.

[drkitten]

Yes there would. The problem is that it would be like Scrooge McDuck's Money Bin.

And how would Scrooge stay in business?

Remember, he's paying 2% interest on every dollar in his Money Bin. But since it's just sitting there in the bin, it's earning zero him nothing. Every year, he loses 2% of his money (and no longer has 100% reserves, unless he pours money in from his own pocket).

[lomiller]

This maybe an entirely stupid idea, but why not set it up as a public entity but based upon tightly controlled formula(ie. printing/withdrawing money at a rate equivalent to price inflation+population growth, though I'm no economist so I'm not pinning my reputation on that idea;)) so that political manipulations are avoided?

The Federal reserve board is a an arms length public entity (as opposed to the Federal reserve banks which are hybrid public/private entities) charged with managing the US money supply and ensuring the stability of the US financial system. “arms length” means that although the Fed chairman is appointed by the President and must make regular reports to Congress they can’t dictate his/her day to day actions.

In it’s role as managing the US money supply it generally tries to keep enough money in circulation to archive maximum economic growth without exceeding a target inflation rate which is generally in the ~2% range. If inflation drops below this, it increases the money supply to encourage economic growth, if inflation seems likely to rise above 2% it will begin to restrict the money supply in order to prevent inflation.

The primary mechanism for managing the money supply is though buying/selling federal government securities. Buying them increases the money supply, selling them decreases it. In extraordinary circumstances it can also loan money directly to banks. This is primarily part of it’s role as lender of last resort that allow it to hold off bank runs, but it can also be used to increase/decrease the money supply. It also has the power to inject money directly into the economy but this is an absolute last resort.

Is this the type of entity you had in mind?

[timhau]

And how would Scrooge stay in business?

Remember, he's paying 2% interest on every dollar in his Money Bin.

That's where you went wrong. Scrooge isn't paying a penny to anybody. Remember, the idea here is to create a society where sitting on money is an investment strategy.

[The Central Scrutinizer]

That's where you went wrong. Scrooge isn't paying a penny to anybody. Remember, the idea here is to create a society where sitting on money is an investment strategy.

I'm assuming the 2% is inflation.

[timhau]

I'm assuming the 2% is inflation.

*cough*gold standard*cough*

The 2% is WHAT?

[The Central Scrutinizer]

*cough*gold standard*cough*

The 2% is WHAT?

Inflation.

[drkitten]

Inflation.

In a properly designed unrealistic gold-bug-topia, you don't get inflation, because the money supply can't keep up with the magical increases in production.

Of course, the idea that the magical increases in production are generally produced by investment, which vanishes almost completely during times of sustained deflation, is foreign to these unrealistic gold-bug-topiae. Isn't it nice to be able to handwave away basic facts about the universe?

Now I think I'm going to go fly around the city and fight crime, because I can handwave away things like the laws of physics.

[Tippit]

Again, that just makes the bankers beholden to the politicians. The point is that the President -- or the Governor of North Dakota -- shouldn't be able to issue orders to the person who runs the currency supply.

And why not? Control of the nation's currency is more important than virtually anything. Amschel Rothschild said, "Let me issue and control a nation's currency, and I care not who writes its laws." Institutional counterfeiting (or, what the Federal Reserve does) is not even close to a neutral transaction, it's a highly regressive tax with clearly defined winners and perhaps no-so-well-defined losers (anyone who holds US dollars, worldwide). If the creation of money can be done for immense private gain, which it has in the case of the Wall Street banker bailouts, why *shouldn't* it be politicized? At least voting for politicians gives us the illusion of accountability, as opposed to the total lack of accountability and transparency we have at the Federal Reserve.

[Tippit]

And how would Scrooge stay in business?

Remember, he's paying 2% interest on every dollar in his Money Bin. But since it's just sitting there in the bin, it's earning zero him nothing. Every year, he loses 2% of his money (and no longer has 100% reserves, unless he pours money in from his own pocket).

Under a one-hundred percent reserve system, banks could only loan their own paid-in-capital, and they would have to charge people fees to store their money, much like a warehouse similar to public storage does. They could also issue certificates of deposit whereby it is clear to the customer that their principal is gone momentarily, and at-risk. A demand-deposit system should not be dependent on a logical impossibility, that is, paying every depositor should they all wish to have their money at the same time. Fractional Reserve banking is inflationary, and inherently unstable and should be abolished. We would be far better off paying to have our money stored than to have bankers making bad or corrupt loans which lead to malinvestment and economic depression.

[Tippit]

That's where you went wrong. Scrooge isn't paying a penny to anybody. Remember, the idea here is to create a society where sitting on money is an investment strategy.

No, the idea is to create an equitable society where money represents a store of value, not something to be debased to fund wild investment schemes and real estate or stock market speculation that lead to economic crises. People will invest sound money for the same reason that people invest unsound money above the "risk-free rate", because business returns are typically greater than the productivity norm.

[Tippit]

In a properly designed unrealistic gold-bug-topia, you don't get inflation, because the money supply can't keep up with the magical increases in production.



It doesn't have to keep up, the money is revalued against the more goods and services it can purchase. Everyone benefits from lower prices, and as long as wages are allowed to fall along with other prices there are no adverse effects.



Of course, the idea that the magical increases in production are generally produced by investment, which vanishes almost completely during times of sustained deflation, is foreign to these unrealistic gold-bug-topiae. Isn't it nice to be able to handwave away basic facts about the universe?



That's ridiculous. If that were true, then in the current system people would only invest in the risk-free rate for nominal returns. But they don't, they invest in equities, corporate debt, real estate, and other risky investments. Sound money just makes capital naturally scarce, as opposed to available for whatever pie-in-the-sky investments bankers and politicians want to cook up for us next.

[drkitten]

It doesn't have to keep up, the money is revalued against the more goods and services it can purchase.

Yes. That's called "deflation."

\ Everyone benefits from lower prices, and as long as wages are allowed to fall along with other prices there are no adverse effects.

Aside from the crippling adverse effects of the deflation itself, you mean?


Sound money just makes capital naturally scarce, as opposed to available for whatever pie-in-the-sky investments bankers and politicians want to cook up for us next.

Do you even read what you write? Because the rest of the forum certainly does.

"Sound money just makes capital [and therefore capital investment] naturally scarce.... as opposed to available for ... investments."

That's basically what I said earlier. Deflation destroys investment, which is necessary for productivity growth. So your gold-bug-topia will be a stagnant economy at best. In fact, it will be worse than a stagnant economy, because people won't even "invest" in replacement capital (to offset depreciation and wear-and-tear).

But aside from the fact that you're handwaving away "basic facts about the universe,"....

[The Central Scrutinizer]

No, the idea is to create an equitable society where money represents a store of value, not something to be debased to fund wild investment schemes and real estate or stock market speculation that lead to economic crises. People will invest sound money for the same reason that people invest unsound money above the "risk-free rate", because business returns are typically greater than the productivity norm.

I agree. Life was much better in 1681.

[drkitten]

I agree. Life was much better in 1681.


"But if I finish my chores, and you finish thine, then tonight we're going to party like it's 1699."

[Tippit]

Yes. That's called "deflation."



Aside from the crippling adverse effects of the deflation itself, you mean?



Deflation which mirrors the productivity norm isn't crippling at all. The historic periods of unprecedented economic growth coupled with price deflation prove this. The only time deflation is crippling, is after the deflationary shock caused by the collapse of an economy which was inflated to begin with. But that's like blaming the effect for the cause.



Do you even read what you write? Because the rest of the forum certainly does.

"Sound money just makes capital [and therefore capital investment] naturally scarce.... as opposed to available for ... investments."



Capital investment requires capital. You have to save to invest. Our economic problems today stem from the misallocation of capital, not the scarcity of capital. The system as it is today loots the purchasing power of the depositor, and the currency holder so as to fund the consumption of the financial elite and the beneficiaries of the system. This hardly represents "capital investment".

The status quo that you shill for isn't about more "capital investment", it's about the transfer of wealth. Forcing demand depositors and currency holders to pay for bad and risky "investments" is the cause of the problem, not the solution. If you want to invest, first you must save (or, in your case, steal).



That's basically what I said earlier. Deflation destroys investment, which is necessary for productivity growth. So your gold-bug-topia will be a stagnant economy at best. In fact, it will be worse than a stagnant economy, because people won't even "invest" in replacement capital (to offset depreciation and wear-and-tear).

But aside from the fact that you're handwaving away "basic facts about the universe,"....

Not only doesn't deflation "destroy investment", but the presumption that we don't have enough investment already is faulty. The problem is too much malinvestment, useless speculation, and risky/bad investments due to monetary inflation and fraud. The people who should be making investments are the people who have already proven they can produce what people want in the marketplace, ie: savers.

[Dunstan]

Deflation which mirrors the productivity norm isn't crippling at all.

What does it mean to "mirror the productivity norm?"

The problem (or one of them, anyway) with deflation is that it puts a floor on real interest rates.

r = i - e

where r is the real rate of interest (the true rate of return on investment), i is the nominal interest rate (the percentage in dollar terms), and e is expected inflation.

The nominal rate of interest can't go below zero, since people can just earn a zero nominal return by sticking their cash (or gold, precious gold!!!!) under their mattresses.

In a deflationary environment, e is negative. That means that with, say 5% deflation, the real rate of interest cannot go below 5%. It may be impossible to reach what would otherwise be the market-clearing price of capital. In the real world, that means that other profitable investment projects go unfunded, because would-be lenders can make a better return in their mattresses than by lending to someone who can "only" pay them a 4% return.

[drkitten]

What does it mean to "mirror the productivity norm?"

The same thing that any other phrase Tippit uses means. It means that Tippit knows less about economics than your average goldfish cracker.



The problem (or one of them, anyway) with deflation is that it puts a floor on real interest rates.

r = i - e

where r is the real rate of interest (the true rate of return on investment), i is the nominal interest rate (the percentage in dollar terms), and e is expected inflation.

The nominal rate of interest can't go below zero, since people can just earn a zero nominal return by sticking their cash (or gold, precious gold!!!!) under their mattresses.

In a deflationary environment, e is negative. That means that with, say 5% deflation, the real rate of interest cannot go below 5%. It may be impossible to reach what would otherwise be the market-clearing price of capital. In the real world, that means that other profitable investment projects go unfunded, because would-be lenders can make a better return in their mattresses than by lending to someone who can "only" pay them a 4% return.

And, further, that risk premia across the board must increase. If you can make 5% putting your money in a cookie jar, what kind of phenomenal ROI would you expect for an investment with a 10% chance of total loss?

No one will make non-risky investments because they typically don't pay enough to cover the real rate of interest. No one will make risky investments because they don't pay enough to pay a reasonable risk premium over the real rate of interest.

Unsurprisingly, Tippit got something else wrong....

[Michael Redman]

The interesting thing to me, with little knowledge of economics, is that Tippit's arguments seem to lead to the conclusion that our society should be completely destitute, rather than the most awash in wealth that humanity has ever seen, even during the recent economic troubles.

So, Tippit, why is it that there is so much wealth in our society despite the system that should be destroying it all, and what would the world look like instead today if we had been doing things all along as you suggest they should have been?

[The Central Scrutinizer]

The interesting thing to me, with little knowledge of economics, is that Tippit's arguments seem to lead to the conclusion that our society should be completely destitute, rather than the most awash in wealth that humanity has ever seen, even during the recent economic troubles.

It's jealousy and class envy. The "Anti-Fed" crowd are people whose life just didn't turn out the way they thought it should have. Gosh darn it, they worked hard, but the trailer roof keeps leaking and their 10 year Chevy just got repossessed. They turn on the TV, and they see those counterfeit-money-printing Jews in their $2000 Armani suits and their $100,000 BMW's and it makes their blood boil. And to think the gubmit, the same gubmit who wants to take their guns, is bailing these Jew bastards out!

So, Tippit, why is it that there is so much wealth in our society despite the system that should be destroying it all, and what would the world look like instead today if we had been doing things all along as you suggest they should have been?

[Emperor_Gestahl]

They turn on the TV, and they see those counterfeit-money-printing Jews in their $2000 Armani suits and their $100,000 BMW's and it makes their blood boil. And to think the gubmit, the same gubmit who wants to take their guns, is bailing these Jew bastards out!

Not only does this strike me as a broad-spectrum ad-hom, from what I can tell the assertion that people in $2000 suits driving BMWs are "Jews" originates from you personally.

I don't agree with Tippit overall, I think our serious modern problems arose more recently than the Federal Reserve Act (The blowing of the housing/equity bubble and the ongoing refusal to allow fair value for associated assets/derivatives). More likely than conspiracy is that the Fed has simply failed its mission to avoid outside influence. The government encouraged the private sector to lend to deadbeats, then subsequently hand off the hot-potato as any businessman would, dragging us into an enormous bubble. The apathy of the Fed mid-til-peak bubble amounts to passive collaboration with the political and private entitites that created it.. In my opinion.

That said, I'm disappointed at the level of race-baiting going on from people I believe to be otherwise intelligent. If Tippit's assertions aren't worth addressing for you then don't address them at all. If someone can link a post where Tippit is spouting racism please do so, otherwise your argument tactics seem more like a scientologist's than a skeptic's..

There's probably no theory in all of modern philosophy that hasn't at some point been advocated by a racist.. or sexist.. or homophobe.. That shouldn't automatically link said idea to said philosophy. Noone should have to remind adults of that, but like I said I'm disappointed.

[Dunstan]

Your concern is noted.

[The_Animus]

I only finished through page 2, and I'll read the rest but I felt the need to comment on the dynamics of the discussion.

@Tippit: I commend you for your continued patience and attemps to have a legitimate discussion.

@The Central Scrutinizer, WildCat, and a couple others: Do you ever post anything that is remotely relevant or in any way furthers legitimate discussion? I'm appalled that you consider yourself skeptics. You don't address points that are made, you don't make any points, provide any information, or evidence. You make utterly pointless remarks, use hyperbole, sarcasm, ad hominem, and pretty much anything that isn't legitimate and mature discussion. You make repeated comments that anyone who is anti-FED is a jew hater. It's disgusting, it's ridiculous, and it's downright retarded and I see you making posts like this all the time.

You even make comments such as What's funny is that Tippit keeps posting this nonsense, and gets nothing but ridicule in return. I think he doesn't realize this is a skeptics site and he has not, and will not, convince anyone that our money is counterfeit. You'd think eventually he'd figure it out. Ridicule is not a tool of a skeptic. It does not help determine what is right and wrong. It is not a promoter of good or legitimate discussion.

I wish this forum was moderated more strictly.

As to the topic of this thread I found the link Tippit provided at http://www.salon.com/news/bank_reform/index.html?story=/opinion/feature/2010/04/01/secret_fed_bailout_open2010 to be informative. The article claims that the FED created and spent tens of billions of dollars without the concent or knowledge of congress and that it only revealed what it did 2 years later because it was finally required to release documents/information about it. Currency becomes worth less the more there is. As a result printing and spending massive amounts of money without anyone knowing about it sounds a lot like counterfitting. In both cases it is not government sanctioned printing of money, and in both cases this printing of money devalues everyone elses money (which is why counterfitting is illegal in the first place). While I won't claim to know exactly how the FED works it seems that there are genuine concerns surrounding it.

[Tippit]

What does it mean to "mirror the productivity norm?"



Productivity Norm (http://lmgtfy.com/?q=productivity+norm)



The problem (or one of them, anyway) with deflation is that it puts a floor on real interest rates.

r = i - e

where r is the real rate of interest (the true rate of return on investment), i is the nominal interest rate (the percentage in dollar terms), and e is expected inflation.

The nominal rate of interest can't go below zero, since people can just earn a zero nominal return by sticking their cash (or gold, precious gold!!!!) under their mattresses.

In a deflationary environment, e is negative. That means that with, say 5% deflation, the real rate of interest cannot go below 5%. It may be impossible to reach what would otherwise be the market-clearing price of capital. In the real world, that means that other profitable investment projects go unfunded, because would-be lenders can make a better return in their mattresses than by lending to someone who can "only" pay them a 4% return.

This isn't problematic at all, it's a feature. Remember, the problem isn't a lack of capital. The problem is an abundance of fiat capital which has been poorly invested and taken real resources away from otherwise vastly more productive endeavours. Bad investments don't exist in a vaccum, they consume time, money and scarce natural resources to the exclusion of good investments. There may be a virtually endless supply of money, but there is a limited amount of productive people with the resources necessary to produce. Scarce capital as opposed to artificially cheap capital forces creditors to distinguish between bad and good investments. Those who make good investments are rewarded with profits, and those who don't should not receive even more capital to misallocate upon their failure, which is exactly what has happened, and is happening.

We need to make capital naturally scarce, as opposed to having a central bank subsidize artificially low interest rates. More importantly, we need to better invest existing capital, and who is more qualified than the saver, who has already demonstrated the ability to allocate capital profitably?

Using your own example, you can have nominally profitable investments that don't beat the rate of inflation, and these are no better than investments under a sound money scheme which do not even beat the productivity norm. These types of investments should simply not be funded at all, and it was these investments that caused the economic crisis. At the root of it all is the Federal Reserve, without which the monetary inflation simply wouldn't have existed to make them.

[stilicho]

The problem is an abundance of fiat capital which has been poorly invested and taken real resources away from otherwise vastly more productive endeavours. Bad investments don't exist in a vaccum, they consume time, money and scarce natural resources to the exclusion of good investments.

Like digging for gold:

http://forums.randi.org/showpost.php?p=5322495&postcount=28

"[The] cost associated with digging [gold] out of the ground is a feature..."

[CriticalFunker]

I only finished through page 2, and I'll read the rest but I felt the need to comment on the dynamics of the discussion.

@Tippit: I commend you for your continued patience and attemps to have a legitimate discussion.

@The Central Scrutinizer, WildCat, and a couple others: Do you ever post anything that is remotely relevant or in any way furthers legitimate discussion? I'm appalled that you consider yourself skeptics. You don't address points that are made, you don't make any points, provide any information, or evidence. You make utterly pointless remarks, use hyperbole, sarcasm, ad hominem, and pretty much anything that isn't legitimate and mature discussion. You make repeated comments that anyone who is anti-FED is a jew hater. It's disgusting, it's ridiculous, and it's downright retarded and I see you making posts like this all the time.

You even make comments such as Ridicule is not a tool of a skeptic. It does not help determine what is right and wrong. It is not a promoter of good or legitimate discussion.

I wish this forum was moderated more strictly.

As to the topic of this thread I found the link Tippit provided at http://www.salon.com/news/bank_reform/index.html?story=/opinion/feature/2010/04/01/secret_fed_bailout_open2010 to be informative. The article claims that the FED created and spent tens of billions of dollars without the concent or knowledge of congress and that it only revealed what it did 2 years later because it was finally required to release documents/information about it. Currency becomes worth less the more there is. As a result printing and spending massive amounts of money without anyone knowing about it sounds a lot like counterfitting. In both cases it is not government sanctioned printing of money, and in both cases this printing of money devalues everyone elses money (which is why counterfitting is illegal in the first place). While I won't claim to know exactly how the FED works it seems that there are genuine concerns surrounding it.

I have to cosign on this. This juvenile taunting over disagreeing viewpoints is pretty pathetic. It's kind of revealing how certain posters act like children on this forum. You've believed your own hype and surrounded yourself with a proper echo clique chamber who engages in the same immature tactics that are used to deflect any serious discussion into this topic. Who cares how many degrees you have if you are a raging condescending *******? It has to be a serious hinderance in the world if you can't have a rational discussion without namecalling someone or insulting their intelligence. That to me seems pretty insecure about yourself as a person and quite a damaging character flaw.

In turn most of the forum is afraid to challenge alot of the uncalled for responses. This is unacceptable because it doesn't follow the forum rules. I've seen many people banned for less. I even see Moderators engaging in this behaviour as well. No wonder most people refrain from commenting. We have alot of bitter insecure members who can't communicate with a opposing view, without insults or derogatory comments. We shouldn't have cheerleaders either cheering this on.

The abuse I've seen just on this topic alone is astounding. Some people need to enroll in etiquette lessons in forum discussion 101. I think insulting someone because you disagree with them doesn't make you win the argument. You just end up look like a blowhard *******. This really does need to be addressed and I thank the people who have commented on this.


How pathetic to gang up on someone with a opposing view. Doesn't sound like skepticism to me.

[The Central Scrutinizer]

@The Central Scrutinizer...Do you ever post anything that is remotely relevant or in any way furthers legitimate discussion?

No

I'm appalled that you consider yourself skeptics. You don't address points that are made, you don't make any points, provide any information, or evidence.

Of course I do. When someone seriously considers US currency to be counterfeit, I laugh at them. What other reaction could possibly be more appropriate?

You make utterly pointless remarks, use hyperbole, sarcasm, ad hominem, and pretty much anything that isn't legitimate and mature discussion. You make repeated comments that anyone who is anti-FED is a jew hater.

I consider this a compliment.

It's disgusting, it's ridiculous, and it's downright retarded and I see you making posts like this all the time.

Isn't the use of the word "retarded" supposed to be not politically correct?

Ridicule is not a tool of a skeptic.

Of course it is. Perhaps you are not a skeptic?

It does not help determine what is right and wrong. It is not a promoter of good or legitimate discussion.

Again, when one seriously considers US currency to be counterfeit, they are not interested in "legitimate discussion".

I wish this forum was moderated more strictly.

I don't.

The article claims that the FED created and spent tens of billions of dollars without the concent or knowledge of congress and that it only revealed what it did 2 years later because it was finally required to release documents/information about it.

I'm sure you already know this, but the Fed doesn't need the "concent (sic) or knowledge of congress" in going about its daily business.

Currency becomes worth less the more there is. As a result printing and spending massive amounts of money without anyone knowing about it sounds a lot like counterfitting. In both cases it is not government sanctioned printing of money, and in both cases this printing of money devalues everyone elses money (which is why counterfitting is illegal in the first place).

You realize that the Fed doesn't print money, right? So it's hard to imagine that the Treasury printed all this money without sanctioning it.

Oh, and FYI: "counterfitting" is something a carpenter does when he remodels a kitchen.

While I won't claim to know exactly how the FED works it seems that there are genuine concerns surrounding it.

Great! What are those concerns?

[Emperor_Gestahl]

Could the Fed's absolute failure to prevent, slow down, or warn about a huge speculative housing bubble until after it blew sky-high be considered a genuine concern? If the organization is failing at such a core duty, before we investigate do we really need to first establish if this is due to incompetence, simple corruption, or jews/aliens/whatever?

*GASP*, I'm on topic! Even Tippit hasn't pulled that off so far! If only accusations of racism were accompanied by evidence of racism this thread would still be 1 page long.

So.. I put forth that the Fed should be at least audited, to determine why, after dropping the ball, it stood there and watched it slowly roll out of bounds before taking action of any kind.

The "no one could have forseen this" excuse is pretty thin, the banks clearly knew how crappy(fraudulent) all those mortgages were since they made quite a business out of offloading them. If the FRB, all insiders of said banks, didn't inform Mr. Bernanke of the widespread fraud in residential mortgages then perhaps the organization is due for some serious restructuring. If they did inform him but he chose the "see no evil speak no evil" approach anyway.. Political influence seems likely, and again we should rethink the role and structure of the Fed.

[The Central Scrutinizer]

Could the Fed's absolute failure to prevent, slow down, or warn about a huge speculative housing bubble until after it blew sky-high be considered a genuine concern?

Is that their job? Even assuming it is (it's not), how do you imagine they could have prevented it?

If the organization is failing at such a core duty, before we investigate do we really need to first establish if this is due to incompetence, simple corruption, or jews/aliens/whatever?

First we have to establish that it is/was a "core duty".

So.. I put forth that the Fed should be at least audited...

By whom? Also, are you suggesting that they aren't audited now?

...to determine why, after dropping the ball, it stood there and watched it slowly roll out of bounds before taking action of any kind.

I stood and did nothing too. Should I be audited?

The "no one could have forseen this" excuse is pretty thin, the banks clearly knew how crappy(fraudulent) all those mortgages were since they made quite a business out of offloading them. If the FRB, all insiders of said banks, didn't inform Mr. Bernanke of the widespread fraud in residential mortgages then perhaps the organization is due for some serious restructuring. If they did inform him but he chose the "see no evil speak no evil" approach anyway.. Political influence seems likely, and again we should rethink the role and structure of the Fed.

Are you sure no one foresaw this? I'd suggest quite a few people did. They were largely ignored.

[The_Animus]

I'm sure you already know this, but the Fed doesn't need the "concent (sic) or knowledge of congress" in going about its daily business.

You realize that the Fed doesn't print money, right? So it's hard to imagine that the Treasury printed all this money without sanctioning it.


My apologies concerning the printing of money.

Now then from the article...

First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself.

The losses from those deals still total tens of billions, and taxpayers are ultimately on the hook. But the public never knew. There was no congressional oversight. It was all done behind closed doors. And the New York Fed -- then run by Tim Geithner -- was very much in the center of the action.

So are you maintaining the position this is not a concern?

[The Central Scrutinizer]

So are you maintaining the position this is not a concern?

I will sleep quite soundly tonight.

[stilicho]

Political influence seems likely, and again we should rethink the role and structure of the Fed.

Most of your entry is copy and paste from various kook sites but this caught my eye. You have it backwards. It is politically-motivated interests that are behind any efforts to rethink the role and structure of the Fed.

Please supply an alternate "role and structure" for a central banking system. Indicate which functions it will retain, modify, replace, or abandon. Any historical comparisons would be helpful.

[Emperor_Gestahl]

First we have to establish that it is/was a "core duty".


Combating the boom/bust cycle is kinda the point of a central bank, is it not? Anyway, here's a Bernanke quote:

Along with price stability, maximum employment is one of the Congress's two mandated objectives for the Federal Reserve.
http://federalreserve.gov/newsevents/speech/bernanke20100508a.htm

They admit freely that one of their core mandates is "price stability", which I'm going to go out on a limb and say includes the price of real-estate not doubling in under a decade..

[Emperor_Gestahl]

Most of your entry is copy and paste from various kook sites but this caught my eye. You have it backwards. It is politically-motivated interests that are behind any efforts to rethink the role and structure of the Fed.

So "home loans for everyone" wasn't a political move by the govt? And the Fed's decision to forsake its duty and let the govt/banks get away with sparking asset price dislocation for 10+ years? It's either politics, incompetence, or Tippit-esque malevolence. Take your pick, without suggesting the Fed's job isn't really its job. To be fair, the FDIC has performed miserably as well.

I have to assume the "kook sites" you're referring to belong to economists who don't see a flowery economic recovery forthcoming? In that case it may take a few years to determine where the "kook" label should be pinned. After all Bernanke's assertions were all kookish in hindsight prior to Q4 2008.

[The Central Scrutinizer]

They admit freely that one of their core mandates is "price stability", which I'm going to go out on a limb and say includes the price of real-estate not doubling in under a decade..

Interesting. So lets say my home is worth $100,000 in 2000. By 2010, it is worth $200,000. What do you propose the Fed do? Fine me? Force me to sell it and give them half the money? Force me to take on a roommate, so that my "half" is now back to being worth only $100,000? What? Let's have some answers.

[drkitten]

They admit freely that one of their core mandates is "price stability", which I'm going to go out on a limb and say includes the price of real-estate not doubling in under a decade..

Well, you're welcome to go out on that particular limb, but it's very rickety and won't support the weight you want it to. "Price stability" in this context simply means low-and-predictable inflation (the usual expressed target is 2% per year). The Fed has no more reason to worry about a sudden spike specificaly in real-estate prices than it does to worry about a sudden doubling of Pringles' prices, except as it affects the overall economy.

(Which I admit real estate is more likely to do than some random snack food.)

But one of the effects, and take-away lessons, of the tech boom in the late 1990s is that growth in one sector of the economy doesn't necessarily mean a bubble or an impending disaster. Greenspan had it right when he let the party run in 1995-97 instead of pulling the interest rate trigger; the rise of the Internet and e-commerce really has made fundamental changes in the global consumer economy, and we're still working out some of the implications. Even factoring in the effects of the tech bust, the US (and world) economy is awesomely more productive now than it was in 1990, in part because anyone can now sell anything to anyone, which is changing equilibrium prices all over the place. (Video tapes and CDs are now mostly valueless, for example, but data mining algorithms are priceless, precisely because there is more data to mine. Traditional stockbrokers are losing their shirts; on-line trading portals are making mints. Et cetera.)

A more prosaic example is how average cell phone prices shot up when smartphones (and particularly the iPhone) were introduced. The smart phone was so clearly a better product that so clearly met some people's needs that they were willing to pay high-end PDA prices for a phone. This isn't a sign of price instability, but of a changing market (and a new product on the market that changes the game).

I don't think we've yet figured out where the new equilibrium price is on real estate; I suspect it will end up substantially higher than it was in 1995, precisely because the process of home selling has changed so much. It used to be that if you bought a house, you went to an agent, who showed you a dozen or so houses, and you picked the one you liked best. But he didn't often show you more houses than that, because showing houses was time consuming and expensive.

Now you do most of your own legwork; you can take virtual tours or virtual "open houses" of a hundred houses in a single evening, and then mail the agent for the particulars of your favorite in a much larger set. Each house is being viewed by many more buyers, which means there's a much better chance for a good fit and that you're more likely to find a house that you really want instead of one you will settle for, which in turn means you will be willing to pay more for the house. And because the houses are being viewed by more buyers, the sellers are having to put more work (and cost) into the houses they want to sell. "Curb appeal" is becoming less important than "page appeal" because the web page is where you make your first impression -- and if the house doesn't display well in IE, no one will even bother to do the drive-by and see if they like it.

So, basically, just because house prices are going up in an otherwise relatively stable economic environment doesn't mean that "prices" are unstable.

[stilicho]

So "home loans for everyone" wasn't a political move by the govt? And the Fed's decision to forsake its duty and let the govt/banks get away with sparking asset price dislocation for 10+ years? It's either politics, incompetence, or Tippit-esque malevolence. Take your pick, without suggesting the Fed's job isn't really its job. To be fair, the FDIC has performed miserably as well.

I have to assume the "kook sites" you're referring to belong to economists who don't see a flowery economic recovery forthcoming? In that case it may take a few years to determine where the "kook" label should be pinned. After all Bernanke's assertions were all kookish in hindsight prior to Q4 2008.

You forgot to include this part of my post:

Please supply an alternate "role and structure" for a central banking system. Indicate which functions it will retain, modify, replace, or abandon. Any historical comparisons would be helpful.

What policy would you have the Federal Reserve employ, including the mechanisms by which it would do so, when it is determined that an economic and/or financial decision by government or private enterprise is wrong-headed? And who is to make this determination?

Take a look at the US economy right now and explain what decisions are presently wrong-headed and how you would have the Federal Reserve respond, intervene, withdraw, etc. Include the "role and structure" you claimed required rethinking. You have the podium.

[stilicho]

Interesting. So lets say my home is worth $100,000 in 2000. By 2010, it is worth $200,000. What do you propose the Fed do? Fine me? Force me to sell it and give them half the money? Force me to take on a roommate, so that my "half" is now back to being worth only $100,000? What? Let's have some answers.

Why stop at the big ticket items? Why not something as simple as bread and grain prices?

http://www40.statcan.ca/l01/cst01/econ155a-eng.htm

Look at all that price instability! (Canadian statistics but you get the idea).

[Emperor_Gestahl]

Please supply an alternate "role and structure" for a central banking system. Indicate which functions it will retain, modify, replace, or abandon. Any historical comparisons would be helpful.

What policy would you have the Federal Reserve employ, including the mechanisms by which it would do so, when it is determined that an economic and/or financial decision by government or private enterprise is wrong-headed? And who is to make this determination?

Take a look at the US economy right now and explain what decisions are presently wrong-headed and how you would have the Federal Reserve respond, intervene, withdraw, etc. Include the "role and structure" you claimed required rethinking. You have the podium.

For your last paragraph, I'd have to first imagine some decisions/policies if I wanted to analyze or critique them, since the point behind calling for an audit is that said decisions/policies are opaque.

As for the "role" of the Fed I'd suggest maybe that they at least mention when speculative/criminal forces are driving unsustainable asset inflation? The market tends to pay attention when the Fed speaks, a few frank words in 2005 or 2006 could have gone a long way toward mitigating the size and damage of the housing bubble.

If the Fed doesn't already have a mandate to require that the organizations under its purview conduct business in an honest and sustainable way, I suggest that it should. FRB members must have known that their own companies were writing loans without even basic proof of income, the Fed allowing this behavior is problematic in my view.

So suggestion 1 = "say things that are true, even if they are not pleasant, preferably into a microphone", suggestion 2 = "require non-destructive business practices from member banks". Glass-Steagal could have been a big help in affecting the latter, but that's more a legislative/lobbying issue.

The Fed clearly has the authority to enact my first suggestion, why they chose not to during the bubble is the main thing I'd like investigated. A mandate to warn publicly against wildly speculative or price-dislocating market conditions might be a nice thing to have added.


And to drkitten, I get your point about technological progress leading to sustainable jumps in various prices but I don't see how it relates to an asset bubble caused largely by widespread and sanctioned mortgage fraud. I don't consider fraud to be much of an innovation.. Sure the housing market may have been boosted by a better selection for buyers, but it doesn't explain the FDIC taking a 50+% haircut on most of the assets it eventually has to swallow. That's from inability of the borrower to pay, and that reality was clear to the banks involved before, during, and after the writing of the "liar loans". If the banks knew this (they did) then the Fed (being composed of those banks) should have known as well. Either they were oblivious as they seem to claim (problem), they knew but "saw no evil" worth mentioning (problem), or they both failed to speak up and lacked the will or authority or mandate to interdict (problem).

Also I'll add that households spend ~30% of income on housing, a massive run-up in the housing market is not an irrelevant contribution to overall "prices" regardless of how CPI is calculated.

[The Central Scrutinizer]

Interesting. So lets say my home is worth $100,000 in 2000. By 2010, it is worth $200,000. What do you propose the Fed do? Fine me? Force me to sell it and give them half the money? Force me to take on a roommate, so that my "half" is now back to being worth only $100,000? What? Let's have some answers.

Not surprisingly, this remains unanswered.

[stilicho]

As for the "role" of the Fed I'd suggest maybe that they at least mention when speculative/criminal forces are driving unsustainable asset inflation? The market tends to pay attention when the Fed speaks, a few frank words in 2005 or 2006 could have gone a long way toward mitigating the size and damage of the housing bubble.

If the Fed doesn't already have a mandate to require that the organizations under its purview conduct business in an honest and sustainable way, I suggest that it should. FRB members must have known that their own companies were writing loans without even basic proof of income, the Fed allowing this behavior is problematic in my view.

I doubt that is the mandate of the Federal Reserve nor should it be.

The issue is the lack of regulation of the banking industry. It appears you want to adopt the Canadian system. There are many fewer chartered banks here, the cost of borrowing is higher than it is in the US, and economic downturns don't cause banks to fail. It's a risk-averse system and there are a few reasons to think it would not be acceptable to Americans.

@The Central Scrutinizer: One option would be to require more collateral for any asset investment that has appreciated by N% over M months. I think that's what the emperor is trying to say but that wouldn't be the responsibility of the central bank to enforce.

[The Central Scrutinizer]

@The Central Scrutinizer: One option would be to require more collateral for any asset investment that has appreciated by N% over M months. I think that's what the emperor is trying to say but that wouldn't be the responsibility of the central bank to enforce.

Ha! The chances of something like that passing are lower than the chances of me flying to Mars in the next 10 minutes.

[stilicho]

Ha! The chances of something like that passing are lower than the chances of me flying to Mars in the next 10 minutes.

I'm just flying kites too but I think my alternatives are at least concrete. It dismays me to see people ready to blame or ditch an institution (central banking) whenever the economy turns sour. It's dressed up differently but you can see all the same features in the "audit the Fed" programme as you do in Nesta Webster or Eustace Mullins.

[Free Thinkr]

So, basically, just because house prices are going up in an otherwise relatively stable economic environment doesn't mean that "prices" are unstable.
Yes it does, when you can simply look and see that there was no similar run-up in rental prices. It was pretty damn obvious that there was a run-up in driven by the positive-feedback of easy money.

[Free Thinkr]

Not surprisingly, this remains unanswered.
That's because it's nonsensical. No one is suggesting that there should be any action limiting an increase in the price of a given piece of real estate per se. The point is that when a particular policy is causing all or most real estate to rapidly increase in price, that policy needs to be checked.

[The Central Scrutinizer]

Yes it does, when you can simply look and see that there was no similar run-up in rental prices. It was pretty damn obvious that there was a run-up in driven by the positive-feedback of easy money.

Can counterfeit money buy real properties? Interesting question. :confused:

[The Central Scrutinizer]

That's because it's nonsensical. No one is suggesting that there should be any action limiting an increase in the price of a given piece of real estate per se. The point is that when a particular policy is causing all or most real estate to rapidly increase in price, that policy needs to be checked.

Checked by who?

If there is a policy which causes a rapid increase in the price of chewing gum, should that be checked too?

[Free Thinkr]

Checked by who?
Those setting the policy, obviously.

If there is a policy which causes a rapid increase in the price of chewing gum, should that be checked too?
Presumably, yes. Why wouldn't you check a policy you knew was distorting market pricing (unless of course, you had some specific reason for doing so, like, say, mitigating an externality).

[The Central Scrutinizer]

Those setting the policy, obviously.

So the Fed should audit the Fed. Interesting.

(I'm pretty sure*** they do this already)



(***By "pretty sure" I mean 100% certain)

[Free Thinkr]

So the Fed should audit the Fed. Interesting.

(I'm pretty sure*** they do this already)



(***By "pretty sure" I mean 100% certain)
?? I was responding to this:
Interesting. So lets say my home is worth $100,000 in 2000. By 2010, it is worth $200,000. What do you propose the Fed do? Fine me? Force me to sell it and give them half the money? Force me to take on a roommate, so that my "half" is now back to being worth only $100,000? What? Let's have some answers.
You asked what the Fed should do. The Fed should take action to prevent further expansion of the bubble. It simply chose not to.

[stilicho]

You asked what the Fed should do. The Fed should take action to prevent further expansion of the bubble. It simply chose not to.

How? Do you approve of my law that would require substantially higher collateral for financing any asset purchase of N% increase over M months?

Let's not have any more of these blithe pronouncements. What should X do when Y happens? Define your terms or at least provide an example.

By the way, none of these solutions have much to do with the central bank. They are legislative in nature.

[The Central Scrutinizer]

The point is that when a particular policy is causing all or most real estate to rapidly increase in price, that policy needs to be checked.

Checked by who?

Those setting the policy, obviously.

So the Fed should audit the Fed. Interesting.

(I'm pretty sure*** they do this already)



(***By "pretty sure" I mean 100% certain)

?? I was responding to this:

You asked what the Fed should do. The Fed should take action to prevent further expansion of the bubble. It simply chose not to.

So you withdraw your comment that the Fed should audit the Fed?

[stilicho]

So you withdraw your comment that the Fed should audit the Fed?

I wonder why all the crickets all of a sudden. The thread seemed pretty lively for a while.

Anyhow, I was awaiting a story like this:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajaBDIE.1DPU&pos=5

Quick. Head for the hills! Asset bubble approaching!! Audit the Fed!!! Elect Ron Paul!!!!

[The Central Scrutinizer]

I wonder why all the crickets all of a sudden. The thread seemed pretty lively for a while.

Anyhow, I was awaiting a story like this:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajaBDIE.1DPU&pos=5

Quick. Head for the hills! Asset bubble approaching!! Audit the Fed!!! Elect Ron Paul!!!!

I hope the Fed acts quickly to stop this.

[lomiller]

I hope the Fed acts quickly to stop this.
ZOMG! Housing prices in Michigan have doubled, the Fed needs to put a stop to this now!!!

[Emperor_Gestahl]

Well here comes an audit of the $2T thrown around during (the start of) the crisis, let's see where that goes.

http://www.nytimes.com/2010/05/12/business/12regulate.html?hp

[stilicho]

Well here comes an audit of the $2T thrown around during (the start of) the crisis, let's see where that goes.

http://www.nytimes.com/2010/05/12/business/12regulate.html?hp

I agree with Ron Paul (cited in the article); it's not really an audit. Try again next year?

[The Central Scrutinizer]

Well here comes an audit of the $2T thrown around during (the start of) the crisis, let's see where that goes.

http://www.nytimes.com/2010/05/12/business/12regulate.html?hp

I think the Jews got most of it.

[Travis]

Presumably, yes. Why wouldn't you check a policy you knew was distorting market pricing (unless of course, you had some specific reason for doing so, like, say, mitigating an externality).

First you need to know there is such a policy in place, something the Fed wouldn't know about since it isn't an investigative agency able to subpoena documents and such.

Secondly you would need to prove the policy is distorting market pricing which is a lot harder than it sounds. Remember bubbles are easy to identify only after the fact.

Lastly you need to prove that the distortion of market prices is something that needs to be addressed. Loads of things distort market prices everyday.

[se7ensnakes]

[quote]:
So much woo so little time.
I don't know what this “woo” is or what relevance this has to this discussion.
[quote]:
This has proven to be a recipe for economic collapse for countries that have attempted it.
What exactly do you call it when the the nation has 25% unemployment, and people loose all of their gold assets, their homes , their farms, their savings, and businesses? Thats not an economic collapse?Here is a list of some of the disastrous events after the passage of the Fed act of 1913, during these economic upheaval people lost jobs, homes, businesses, farms, gold assets. In the 1930s under the guise of straightening the economy, gold was confiscated from the people and sent in train loads to Fort Knox and eventually sold off to Europeans at a discounted rate. The remaining gold is being held by the Federal Reserve Bank as partial collateral for the national debt.
The Federal Reserve came into play in 1914
1921 crash
1929 – 1939 The great depression, 25% unemployment, Americans lost most of their gold assets.
1953 – recession
1957 – 1960 recession
1969 recession
1973 – 1975 Recession
1981 – 1982 recession
1987 Black Monday Crash
1990 recession
2001 recession
2001 – 20?? - recession and bailouts

Those with foreknowledge of the impending economic collapse pull out, buy gold, short the market. During bad economic times money does not simply disappear, but exchanges hand between those with privilege information and everyone else. Just as the newspapers reminded everyone after the passage of the Federal Reserve Act that “now depressions can be scientifically prevented” similarly depressions can be scientifically caused.
Also you are proposing a debt system for government that is completely artificial simply to control inflation? Another words pay interest to whom ever holds the securities simply because government has not the capacity to curb inflation? What more there is every evidence that this is not working as the 1913 dollar is now worth a few cents. We not only have inflation we have a debt. This is a debt that is taking a toll on public projects, taxes, and workers. I use to buy this small pies from Walmart for 58 cents within a weeks time the price of these pies has rising to 75 cents each. Inflation has not only devalued my paycheck, I now has to give more taxes to the various agencies because of this debt system.
[quote]:
With 100% reserve requirement there would be no such thing as a bank.
“When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.”
Frederick Bastiat, The Law
Exactly! Now you are getting smart. Without a parasitic entity certain things will logically follow in our society. Each day when I go to the supermarket the milk price will be the same as months ago, my paycheck is going to buy the same thing as it did when I first started working. A raise will really mean a raise. All the modern machinery and advances will actually reduce the price of goods. The systematic economic mayhem will end. Private banks will no longer be empowered to create money while everybody else has to work for it. There will no longer be calculated ups and downs in the economy. There will be the end of credit booms that end up in terrible bust. The centuries of endless “Tulip-manias” where people loose their jobs, their homes, their businesses and the savings will finally stop. No longer will an unstable and parasitic business affect other businesses that actually produce something and give to society. With a stable economy industries that actually produce goods and services will be able to grow and finance their own growths. With more jobs there will be less crimes. With the end of mortgage television we will actually hear news that are significant to our lives instead of constant bombardment of who is cheating in Hollywood. Perhaps, then public will be more aware of their representatives in Washington and lobbying will be minimize. For the first time in a hundred year we will actually have something close to a republic.

“Bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough money to buy it back again...
Take this greater power away from them and great fortunes like mine will disappear, They out to disappear for then this would be a better world.”
Sir Joseph Stamp – Director Bank of England 1928 – 1941 (Reputed to be the 2nd richest man in England at the time)


[quote]:
That would indeed be a good idea, though not for the reasons you believe.


“If the American people ever figure out how international bankers work, there will be a revolution by tomorrow morning.”
Henry Ford

The one and only reason that this present economic system works is because of the public's lack education. No one in their right mind will want to see the value of their paycheck dwindle every week. Similarly, no one will want their representatives getting bought-off by private banking interest.
I suspect that the people fully aware of what is going will want real monetary reform. They would want full transparency and accountability of the nations money supply.

[quote]:
The only way a bank could do this would be to stop doing business sit on their cash. This is not a viable way of making money and outside of a deflationary economy it’s the very last thing they would ever want to do.

“Nothing but to widespread suffering will produce any effect on Congress... Our only safety is in pursuing a steady course of firm restriction – and I have no doubt that such a course will ultimately lead to restoration of the currency and the re-charter of the bank.”
Nicholas Biddle commenting on limiting credit to collapse the economy and affect politics
It is not the very last thing that they want to do...it is what they do, historically speaking. And yes banks make far more by being very selective with loan applications or freeing up credit. The large banks that knew of the impending economic downturn pull out of certain markets or they short stocks. In this way they gain control of key corporations. In a depress economy certain competitive small banks either go bankrupt or are bought-out by large commercial banks. With fewer small banks there is a monopolization of reserves.
Here is a list of some of the disastrous events after the passage of the Fed act of 1913, during these economic upheaval people lost jobs, homes, businesses, farms, gold assets. In the 1930s under the guise of straightening the economy, gold was confiscated from the people and sent in train loads to Fort Knox and eventually sold off to Europeans at a discounted rate. The remaining gold is being held by the Federal Reserve Bank as partial collateral for the national debt.
Federal Reserve 1914
1921 crash
1929 – 1939 The great depression – Americans lost most of their gold assets.
1953 – recession
1957 – 1960 recession
1969 recession
1973 – 1975 Recession
1981 – 1982 recession
1987 Black Monday Crash
1990 recession
2001 recession
2001 – 20?? - recession and bailouts
During bad economic times money does not simply disappear, but exchanges hand between those with privilege information and everyone else. Just as the newspapers reminded everyone after the passage of the Federal Reserve Act that “now depressions can be scientifically prevented” similarly depressions can be scientifically caused.
[quote]:
Even if they tried, they would be betting against the Fed, who can create as much money as they want to bet with.
“Before the passage of this act the New York Bankers could only dominate the reserves of New York, now we are able to dominate the bank reserves of the entire country.” Senator Aldrich, one of the architects of the fed
The Fed work for the interest of the banks. Do you think that those bankers that huddle to jekyll island to design the Federal Reserve Act did so because they wanted to help the public? The reality is that they wante to maximize profits for the banks at the expense of the general public. All you have to do is to study the great depression. The Fed helped expand and then contract the money supply causing economic chaos in these united states. During the great depression the people subsequently lost their gold, homes, farms, businesses.

[quote]:
Economies where the government directly controls money supply are inevitably poor and third world.

“The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots... I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America, and use it systematically to corrupt modern civilization. They will not hesitate to plunge the whole of Christendom into wars and chaos in order that the earth should become their inheritance.”
Otto Von Bismark

Large rich nations become large rich nations because of their industrial prowess not because private banks control the money supply. It is the Colt, the Ford, the Wrights, the Edison, the Steve Jobs that elevated the United States to a first world economy. Corporations whose profits finance their own expansion are financially more stable and could best overcome the constant recessions and depressions thrown their way by the private control of the money supply.
Additionally the money management model that “rich” countries use is the result of banker's efforts. Three centuries the money trust crime families have manipulated politicians to implement the central bank scheme – fractional reserve system. This did not come in as a matter of public debate but as a result of paid politicians carrying the Bankers' agenda. These nations you speak of are mere democracies / republics only on paper. In practicality they are just oligarchies.

[quote]:
Every large rich nation uses an arms length agency to control it’s money supply. The lesson here should be obvious.

“Mr Speaker my message to the American people : Don't let congress seal this wall street deal! These criminals have so much political power they can shut down the normal legislative process of the highest law making body in this land. All the committees that should be scanning every word of what is being negotiated are benched and that means that the American people are benched too. We are constitutionally sworn to defend and protect the republic against all enemies foreign and domestic.”
Representative Marcia Kaptur after what appears to be a calculated market collapse.

Finally: you are inflicted with the cute little-angel-with-halo-and-wings syndrome. Money is the lifeblood of any nation. Any nation who uses an arms length agency to control it's money supply, particularly those nations where most of the public have no clue about the mechanics of money creation, have lost effective political control of their money. These nations are at the whim of the large commercial banks that control them politically and financially. Laws are passed which give these banks greater and greater power at the expense of the working public. At this point the republic is lost.
You believe that there are actually some little angels with halos and cute little wings watching out for the public good. I tend to be more realistic that people are concern about profits, about the welfare of their immediate family, and ultimately when they have enough money about power. They become intoxicated with power. When the members of the house financial committee receives a total of 300 million dollars in campaign contributions from lobbyist the working people have effectively lost control of their political representatives.
The only way that money could be managed is full accountability, full transparency, and all actions to balance the money supply should be done publicly and under the glittering lights of a free media. The feasibility of having metals of intrinsic value as money is debatable because the IMF could corner the gold market. But certainly combining fiat currency, with private management of the money supply is clearly the worst, particularly when we have super computers that can aid congress in balancing the currency.

[quote]:
The treasury does print all US dollars. It then sells them to the Fed which in turn sells them to banks.
Correct.
The reality of the matter is that 97% of the money exist digitally. The physical money that the fed receives is paid by a bookkeeping entry in the Fed's balance sheet.

[quote]:
No. Money used to purchases federal securities offer no inside knowledge or advantage. Even target inflation rates are well known.

“To cause high prices, all the Federal Reserve Board will do will be to lower the re-discount rate..., producing an expansion of credit and rising stock market; then when ...business men are adjusted to these conditions, it can check … prosperity in mid-career by arbitrarily raising the rate of interest. It can cause the pendulum of a rising and falling market to swing gentle back and forth by slight changes in the discount rate, or cause violent fluctuations by a greater rate variation, and in either case it will possess inside information as to the financial conditions and advance knowledge of the coming change, either up or down.
This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any government that ever existed.”
Rep. Charles Lindbergh (R-MN)

Exactly how do you know this? Are you an FOMC meeting attendee? Are you able to read minds? You certainly do not know if there are any self-serving decisions taken? Nor can you assure the public that there are no creative maneuvers that can scam the public of money. Also, there appears to be politically driven low interest rates? If there are such decisions taken who is there to watch over the FOMC? Moreover the effect of feds loan of half a trillion dollar to foreign central banks (the so-called central bank liquidity swaps) is not known to congress much less to you. Finally, why is the Federal Reserve so hysterical about being audited?

The Fed targets 2% inflation.
Hmm... I am looking at the fed's own website and I see the Adjusted Monetary Base and on 2008 I see about 341% per annum base money inflation...but...
The Fed's 2% is irrelevant. Fractional Reserve Banking creates most of the money in circulation. You are debating me on a subject which evidently know little about. This remark proves it. This is basic knowledge about money expansion writing in most 101 economic books. So long as the banks keep extending credit there is going to be an expansion in the money supply. Since the 10% reserve requirement is only for money from checkbook deposits, loans based on long term deposits have no reserve requirements.

[The Central Scrutinizer]

Could you reformat your response into a legible format? I'm sure it's the usual nonsense, but I can't even tell.

[stilicho]

Could you reformat your response into a legible format? I'm sure it's the usual nonsense, but I can't even tell.

More evidence of another bubble:

Orders for factory goods, sales of new and existing homes and consumer spending probably climbed in April, indicating the U.S. recovery was strengthening before the European debt crisis rattled global financial markets, economists said reports this week may show.

(Source: http://www.bloomberg.com/apps/news?pid=20601068&sid=aAEgKSfj5dUg )

And this part is obviously evidence of some sort of nefarious scheme:

Government stimulus funding for energy efficiency and infrastructure projects is also spurring orders.

Is there such a thing as an infrastructure project bubble?

[stilicho]

"This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any government that ever existed.”
Rep. Charles Lindbergh (R-MN)

This caught my eye. Quoting cranky old progressives who've been dead for almost a century doesn't strengthen your case. Who's next? Eustace Mullins?

[stilicho]

“The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots... I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America, and use it systematically to corrupt modern civilization. They will not hesitate to plunge the whole of Christendom into wars and chaos in order that the earth should become their inheritance.”
Otto Von Bismark

Also...if you're going to invent attributable quotations you should spell the alleged writer's name correctly: Bismarck with a "ck" at the end.

Bismarck was not really concerned with the US and was busy with enough war and chaos of his own to worry about what Lincoln meant for Christendom--an obsolete term even by his time.

[drkitten]

Also...if you're going to invent attributable quotations you should spell the alleged writer's name correctly: Bismarck with a "ck" at the end.

No, no, you don't understand. This isn't Bismarck, the Iron Chancellor. This is Otto von Bismark, the inventor of the self-licking paper clip. He made a fortune selling office supplies to the Confederate War Department during the Civil War, but then lost it all when the South realized that no one living south of Virginia could read or write -- a tradition that continues to this day.

Unfortunately, Bismark had tied up all of his fortune in a foreign bank that left all his money in the back of a Mississippi paddle-wheeler, and so was left penniless and financially dependent upon the most successful auto manufacturer of his time -- the inventor of the Lincoln, who supported him until his death at the hands of John "Phone" Booth.

[Mister Agenda]

Can counterfeit money buy real properties? Interesting question. :confused:

Counterfeit money spends just like real money as long as the buyer doesn't detect it or is confident of being able to spend it. For a government the problem with counterfeit money is that it makes each individual unit of the money supply less valuable.

Of course the money supply generated by the banking system and the mint by definition is not counterfeit. However, like counterfeit money, overproduction of currency also makes each individual unit of the money supply less valuable. Were the rate of inflation to rise significantly, many more people would likely start making comparisons between the money they're being paid in and counterfeit money.

I'm fairly convinced that inflation at a low rate is a good idea for the economic health of the country. But yes, both counterfeit and debased currency can buy real properties.

[stilicho]

I'm fairly convinced that inflation at a low rate is a good idea for the economic health of the country. But yes, both counterfeit and debased currency can buy real properties.

Not to mention that debasement of currency and coin clipping was common before what we'd call modern times.

It's been really exciting, lately, to see that a centralised currency among disparate political entities is causing predictably severe problems in Europe right now. I don't often wager but I don't think the euro can survive five more of these tremors. We have Greece now, followed by Spain, and shortly Portugal and Ireland. If France followed those four, I'd have to wonder how much influence Brussels could have on this monetary marvel.

[Hold on!]

No your wrong , the FED has been charging one percent of all monies printed since 1913 and their payments have been in gold, since they themselves realize the true value of the dollar. A trusted source from capitol hill confirmed this a couple of months ago, so in three years it will be 100% , you figure it out from there.

[drkitten]

No your wrong , the FED has been charging one percent of all monies printed since 1913.

No, it hasn't.

[The Central Scrutinizer]

No your wrong , the FED has been charging one percent of all monies printed since 1913 and their payments have been in gold, since they themselves realize the true value of the dollar. A trusted source from capitol hill confirmed this a couple of months ago, so in three years it will be 100% , you figure it out from there.

Your "trusted source" should seek out a non-Jewish mental health professional.

[timhau]

No your wrong , the FED has been charging one percent of all monies printed since 1913 and their payments have been in gold, since they themselves realize the true value of the dollar. A trusted source from capitol hill confirmed this a couple of months ago, so in three years it will be 100% , you figure it out from there.

Since 1913 they've been charging one percent per year, and in three years they've been at it for 100 years so they have charged 100% in total, and then they control the world because they have all the world's money, and nobody else has any.

:eek:

[se7ensnakes]

How to beat a conspiratard in an internet forum debate:
Warning: Do not use this in real life or you will be laugh at by everyone.
If you, by occasion, find some conspiratard who is making sense and you have no logical rebuttal, use this techinique. It works everytime!
1 If the Ct (short for conspiratard) quote someone really important, go to wikipedia and study the quoted individual. Find out some negative things about him and if you cannot, then, just make up your own.
2 Pretend you have studied the individual profusely. You have to get the upper hand by pretending you know the individual that is being quoted.
3 You dont need to get into the specifics of the quote, just work on the individual. Is he fat? Is he skinny. Does he live at home with his mother? What political party does he adhere to?
4 For example, if the Conspiratard quotes Rosie O'donell, just say, “oh that woman is gay. Or if he quotes Charlie Sheen, for example, just say that Charlie Sheen wears panties. Remember it does not have to be true. That should stop the conspirard on his track.
5 Above all don't make it sound like an opinion, you need to make what you are saying sound like it is a fact. This is very important!
6 Scan any mispelled words. You get a plus if you find a mispelled pronoun (a pronoun is the proper name of a city, a person, etc.).
7 Finally, if that does not work bring out the big guns. Simply call your adversary a Conspiratard. Thats right. Call him a Conspirard. If need be you can call him a conspirard twice. Once you do you should automatically win the debate. No human being can stand up to being called a conspiratard.

Good Luck and may Frodo be with you....

[The Central Scrutinizer]

How to beat a conspiratard in an internet forum debate:
Warning: Do not use this in real life or you will be laugh at by everyone.
If you, by occasion, find some conspiratard who is making sense and you have no logical rebuttal, use this techinique. It works everytime!
1 If the Ct (short for conspiratard) quote someone really important, go to wikipedia and study the quoted individual. Find out some negative things about him and if you cannot, then, just make up your own.
2 Pretend you have studied the individual profusely. You have to get the upper hand by pretending you know the individual that is being quoted.
3 You dont need to get into the specifics of the quote, just work on the individual. Is he fat? Is he skinny. Does he live at home with his mother? What political party does he adhere to?
4 For example, if the Conspiratard quotes Rosie O'donell, just say, “oh that woman is gay. Or if he quotes Charlie Sheen, for example, just say that Charlie Sheen wears panties. Remember it does not have to be true. That should stop the conspirard on his track.
5 Above all don't make it sound like an opinion, you need to make what you are saying sound like it is a fact. This is very important!
6 Scan any mispelled words. You get a plus if you find a mispelled pronoun (a pronoun is the proper name of a city, a person, etc.).
7 Finally, if that does not work bring out the big guns. Simply call your adversary a Conspiratard. Thats right. Call him a Conspirard. If need be you can call him a conspirard twice. Once you do you should automatically win the debate. No human being can stand up to being called a conspiratard.

Good Luck and may Frodo be with you....

How to beat a conspiratard on the Internet (or on real life):

1) State facts.

My list is so much more efficient.

[The_Animus]

Interesting. So lets say my home is worth $100,000 in 2000. By 2010, it is worth $200,000. What do you propose the Fed do? Fine me? Force me to sell it and give them half the money? Force me to take on a roommate, so that my "half" is now back to being worth only $100,000? What? Let's have some answers.

Not surprisingly, this remains unanswered.

Probably because the scenario is nonsensical. It makes absolutely no sense that a product should double in price after being used for 10 years. That house is in worse shape than when it was new, yet somehow it is declared to now be worth the equivalent of 2 of those brand new houses. There has been no real value added to the product. Can you name other products whereby no value is added to the product but it nonetheless increases in price by 100%?

At best the land on which the home resides may increase in price because the location has gained value.

[Dunstan]

6 Scan any mispelled words. You get a plus if you find a mispelled pronoun (a pronoun is the proper name of a city, a person, etc.).


6.5 Point out any misused words or incorrect definitions.

[The Central Scrutinizer]

Probably because the scenario is nonsensical. It makes absolutely no sense that a product should double in price after being used for 10 years. That house is in worse shape than when it was new, yet somehow it is declared to now be worth the equivalent of 2 of those brand new houses. There has been no real value added to the product. Can you name other products whereby no value is added to the product but it nonetheless increases in price by 100%?

At best the land on which the home resides may increase in price because the location has gained value.

Wow. Seriously? Did you miss the whole real estate bubble? It just popped a few years ago. I'm pretty sure it was in all the papers.

ETA: The question remains unanswered.

[The_Animus]

Wow. Seriously? Did you miss the whole real estate bubble? It just popped a few years ago. I'm pretty sure it was in all the papers.

ETA: The question remains unanswered.

I'm well aware that the scenario you suggested happened. The point was that the increased value estimates are complete BS. What logically follows from this understanding is that if an institution takes your $100,000 house and declares a fabricated value of $200,000 the obvious answer would be to have the FED force the institution pulling $100,000 of value out of it's ass to stop that practice.

[The Central Scrutinizer]

I'm well aware that the scenario you suggested happened. The point was that the increased value estimates are complete BS. What logically follows from this understanding is that if an institution takes your $100,000 house and declares a fabricated value of $200,000 the obvious answer would be to have the FED force the institution pulling $100,000 of value out of it's ass to stop that practice.

What on earth are you talking about?

The question remains unanswered.

[The_Animus]

No. It was answered. You asked what the Fed should do and I told you. They should force correct and accurate valuation of the home. It is not worth $200,000 it is worth $100,000 and once that is accurately reflected there is no longer a problem.

[The Central Scrutinizer]

No. It was answered. You asked what the Fed should do and I told you. They should force correct and accurate valuation of the home. It is not worth $200,000 it is worth $100,000 and once that is accurately reflected there is no longer a problem.

How do you know it's not worth $200,000? Or $300,000? Or $9,000?

[The_Animus]

How do you know it's not worth $200,000? Or $300,000? Or $9,000?

I already answered this. I also posed a question to you. Not surprisingly, this remains unanswered.
Can you name other products whereby after years of use no value is added to the product but it nonetheless increases in price by 100%?

Now before you go and take that out of context and say something like a autographed baseball card or gold, those are not the same for reasons I would hope are obvious to you.

If not then let me phrase the question another way. What reason is there that the house should now be worth $200,000? What is it exactly that gives the house, not the land, this added $100,000 of worth?

[The Central Scrutinizer]

If not then let me phrase the question another way. What reason is there that the house should now be worth $200,000? What is it exactly that gives the house, not the land, this added $100,000 of worth?

Would you say Monticello is not worth more than when Thomas Jefferson built it? Seriously?

[The_Animus]

Would you say Monticello is not worth more than when Thomas Jefferson built it? Seriously?

That is different for the same reason as the signed baseball card.

Your statement was regarding a normal $100,000 house that after 10 years is now priced at $200,000. Do not change the situation.

I'll ask again. What reason is there that the house should now be worth $200,000? What is it exactly that gives the house, not the land, this added $100,000 of worth?

[Travis]

How to beat a conspiratard in an internet forum debate:
Warning: Do not use this in real life or you will be laugh at by everyone.
If you, by occasion, find some conspiratard who is making sense and you have no logical rebuttal, use this techinique. It works everytime!
1 If the Ct (short for conspiratard) quote someone really important, go to wikipedia and study the quoted individual. Find out some negative things about him and if you cannot, then, just make up your own.
2 Pretend you have studied the individual profusely. You have to get the upper hand by pretending you know the individual that is being quoted.
3 You dont need to get into the specifics of the quote, just work on the individual. Is he fat? Is he skinny. Does he live at home with his mother? What political party does he adhere to?
4 For example, if the Conspiratard quotes Rosie O'donell, just say, “oh that woman is gay. Or if he quotes Charlie Sheen, for example, just say that Charlie Sheen wears panties. Remember it does not have to be true. That should stop the conspirard on his track.
5 Above all don't make it sound like an opinion, you need to make what you are saying sound like it is a fact. This is very important!
6 Scan any mispelled words. You get a plus if you find a mispelled pronoun (a pronoun is the proper name of a city, a person, etc.).
7 Finally, if that does not work bring out the big guns. Simply call your adversary a Conspiratard. Thats right. Call him a Conspirard. If need be you can call him a conspirard twice. Once you do you should automatically win the debate. No human being can stand up to being called a conspiratard.

Good Luck and may Frodo be with you....

Translation: this person once tried to use Charlie Sheen as an expert source for something not related to drugs or hookers and got burned for it. Also they probably misspelled a common pronoun.

[jhunter1163]

A house (or anything else, for that matter) is worth whatever someone will pay for it. The bank is not making the judgment that Scrut's house is worth $200,000; the person buying it is. The bank didn't create the extra $100,000 in value for Scrut; the buyer did.

Now, the bank certainly will send an appraiser out to look at Scrut's house to judge whether, in the event of a default, there's a snowball's chance in hell the bank can sell the house to someone else for $200,000. But banks exist to lend money; I've never heard of a bank having a loan prevention department. So, as long as the house is in reasonably good shape the appraiser will likely say "OK", the buyer will get his loan, Scrut gets his $200K, and everyone's happy.

[Mashuna]

How to beat a conspiratard in an internet forum debate:
Warning: Do not use this in real life or you will be laugh at by everyone.
If you, by occasion, find some conspiratard who is making sense and you have no logical rebuttal, use this techinique. It works everytime!
1 If the Ct (short for conspiratard) quote someone really important, go to wikipedia and study the quoted individual. Find out some negative things about him and if you cannot, then, just make up your own.
2 Pretend you have studied the individual profusely. You have to get the upper hand by pretending you know the individual that is being quoted.
3 You dont need to get into the specifics of the quote, just work on the individual. Is he fat? Is he skinny. Does he live at home with his mother? What political party does he adhere to?
4 For example, if the Conspiratard quotes Rosie O'donell, just say, “oh that woman is gay. Or if he quotes Charlie Sheen, for example, just say that Charlie Sheen wears panties. Remember it does not have to be true. That should stop the conspirard on his track.
5 Above all don't make it sound like an opinion, you need to make what you are saying sound like it is a fact. This is very important!
6 Scan any mispelled words. You get a plus if you find a mispelled pronoun (a pronoun is the proper name of a city, a person, etc.).
7 Finally, if that does not work bring out the big guns. Simply call your adversary a Conspiratard. Thats right. Call him a Conspirard. If need be you can call him a conspirard twice. Once you do you should automatically win the debate. No human being can stand up to being called a conspiratard.

Good Luck and may Frodo be with you....

Thanks for the thoughtful suggestions. However, it's all moot really, as I've never had occasion to get beyond the highlighted portion above.

[lomiller]

I'll ask again. What reason is there that the house should now be worth $200,000? What is it exactly that gives the house, not the land, this added $100,000 of worth?

The fact that someone is willing to pay another $100K for it gives it $100K worth. Are you suggesting we abandon the free market and have the government dictate what the house can sell for?

[The Central Scrutinizer]

That is different for the same reason as the signed baseball card.

Your statement was regarding a normal $100,000 house that after 10 years is now priced at $200,000. Do not change the situation.

Ah, I see. I'm supposed to name all the things that can go up in value without improvements, except for those things that don't fit the point you're trying to make.

I'll ask again. What reason is there that the house should now be worth $200,000? What is it exactly that gives the house, not the land, this added $100,000 of worth?

You would have to ask the person willing to pay the $200,000 for the house. I'm not the one buying it.

[The_Animus]

The fact that someone is willing to pay another $100K for it gives it $100K worth. Are you suggesting we abandon the free market and have the government dictate what the house can sell for?

In a free market a company does not profit for years upon years on end. If there was profit and no barriers to entry then competition would join the market until profit reached zero or nearly zero. Free market tends to work the way communism does, practice seems to always deviate from theory. But I'm not really interested in debating the 'free market'.

If I take a small normal rock and convince someone to buy it from me for $1000 because I tell them it's a rare meteorite, it is not worth $1000. The person was only willing to buy it based upon lies of inflated worth. This is generally constituted as fraud. This is the same with housing prices. There is no increased value to them ten years after they were made but all across the country home worth was inflated based upon nothing. As a result what is considered fair market value is artificially raised and that is why people are willing to pay it.

I asked what makes the home worth $100,000 more after ten years. You said because someone is willing to pay it. But as the rock example shows above, someone willing to pay it doesn't make it actually worth that.

If you'd like I can rephrase the question again. What value has been added to the home such that a person is willing to pay $100.000 more for it?

[The_Animus]

Ah, I see. I'm supposed to name all the things that can go up in value without improvements, except for those things that don't fit the point you're trying to make.

You backpedaled and provided a different scenario. Unless you are telling me you cannot understand the difference between a standard house of which millions like it are available, and a rare historical house built by a former president of the united states.

[The Central Scrutinizer]

If I take a small normal rock and convince someone to buy it from me for $1000 because I tell them it's a rare meteorite, it is not worth $1000. The person was only willing to buy it based upon lies of inflated worth. This is generally constituted as fraud. This is the same with housing prices. There is no increased value to them ten years after they were made but all across the country home worth was inflated based upon nothing. As a result what is considered fair market value is artificially raised and that is why people are willing to pay it.

100% incorrect. Where was the fraud in housing? Was the seller of every house sold telling the buyer that George Washington once owned it?

I asked what makes the home worth $100,000 more after ten years. You said because someone is willing to pay it. But as the rock example shows above, someone willing to pay it doesn't make it actually worth that.

Then what is it worth?

If you'd like I can rephrase the question again. What value has been added to the home such that a person is willing to pay $100.000 more for it?

Again, you would have to ask the buyer.

[The Central Scrutinizer]

You backpedaled and provided a different scenario. Unless you are telling me you cannot understand the difference between a standard house of which millions like it are available, and a rare historical house built by a former president of the united states.

This makes no sense.

[Dunstan]

In a free market a company does not profit for years upon years on end. If there was profit and no barriers to entry then competition would join the market until profit reached zero or nearly zero. Free market tends to work the way communism does, practice seems to always deviate from theory. But I'm not really interested in debating the 'free market'.

You're equivocating in your use of "profit." When economists say that long-run profits in a competitive market are zero, they're referring to economic profit, not accounting profit. Economic profit factors in a return on capital, adjusted for risk. So if it takes a million dollars in capital to operate a particular business, that business may very well be showing annual profits on its income statement of, say, 50-100K, and it won't faze an economist one bit.

If I take a small normal rock and convince someone to buy it from me for $1000 because I tell them it's a rare meteorite, it is not worth $1000. The person was only willing to buy it based upon lies of inflated worth. This is generally constituted as fraud.

Yes, because you're misrepresenting the factual properties of the rock. This is a poor analogy to housing.

This is the same with housing prices. There is no increased value to them ten years after they were made but all across the country home worth was inflated based upon nothing. As a result what is considered fair market value is artificially raised and that is why people are willing to pay it.

I asked what makes the home worth $100,000 more after ten years. You said because someone is willing to pay it. But as the rock example shows above, someone willing to pay it doesn't make it actually worth that.

So who decides what something is worth? You? How? And what are you going to do about it? Ban anyone from paying more than what you think the house is worth?

If you'd like I can rephrase the question again. What value has been added to the home such that a person is willing to pay $100.000 more for it?

If you're insisting that "value" can only mean the intrinsic properties of the home, as opposed to how other people value it and what they're willing and able to pay for it, then none. But so what? Market price is not based solely on the intrinsic properties of a good. It's affected by tastes, the income and wealth of interested purchasers, the prices of substitute and complementary goods, and many other things.

[Tippit]

I'm well aware that the scenario you suggested happened. The point was that the increased value estimates are complete BS. What logically follows from this understanding is that if an institution takes your $100,000 house and declares a fabricated value of $200,000 the obvious answer would be to have the FED force the institution pulling $100,000 of value out of it's ass to stop that practice.

The Fed isn't in the business of setting real estate prices, it's in the business of perpetually debasing our currency via the inflation tax. Sometimes this results in asset inflation, like in real estate, sometimes this results in higher consumer prices. Sometimes the inflation gets exported. Most of the time they debase the currency just enough to offset economic growth plus a couple of points, so that the average sheeple can't figure out how he's being scammed.

The market value of a property is the intersection of the bid and ask. The price a seller is willing to accept depends upon a lot of things, in your example it is mostly the debasement of the currency that the property is quoted in.

So the correct and obvious answer to TCS's moronic question, is that the Fed should simply stop debasing our money to prevent the asset bubbles from happening in the first place.

[Tippit]

You're equivocating in your use of "profit." When economists say that long-run profits in a competitive market are zero, they're referring to economic profit, not accounting profit. Economic profit factors in a return on capital, adjusted for risk. So if it takes a million dollars in capital to operate a particular business, that business may very well be showing annual profits on its income statement of, say, 50-100K, and it won't faze an economist one bit.



This is why the market values companies with similar earnings at different multiples. It's why a semiconductor manufacturer is valued much less than a software firm, the former is highly capital intensive. It's all about the free cash flow, not earnings.



Yes, because you're misrepresenting the factual properties of the rock. This is a poor analogy to housing.



It's a poor analogy because of the absolute loss of value in the currency used to bid upon the property. While the rock is being misrepresented, the property isn't. It's the buyer who has lost real purchasing power over time, thanks to the Fed. Hopefully the buyer has other assets for which the nominal value has been similarly inflated, to offset this. Those who don't have lots of assets, namely the proportionately cash oriented poor, get screwed. If they want to purchase such assets to participate in the shell game, they must take on even more debt, with more onerous terms.



So who decides what something is worth? You? How? And what are you going to do about it? Ban anyone from paying more than what you think the house is worth?



Clearly, he's confused. The legitimate course of action, is to understand who is manipulating the value of our money and take action.



If you're insisting that "value" can only mean the intrinsic properties of the home, as opposed to how other people value it and what they're willing and able to pay for it, then none. But so what? Market price is not based solely on the intrinsic properties of a good. It's affected by tastes, the income and wealth of interested purchasers, the prices of substitute and complementary goods, and many other things.

Yes, but during the housing bubble the high market prices were the direct result of the vastly increased supply of the monetary unit that composed the numerators of the prices in question. This, courtesy of the Fed.

[The Central Scrutinizer]

The Fed isn't in the business of setting real estate prices, it's in the business of perpetually debasing our currency via the inflation tax.

This is correct. :crazy:

Most of the time they debase the currency just enough to offset economic growth plus a couple of points, so that the average sheeple can't figure out how he's being scammed.

I really wish I was as smart as you. One question though - how come I'm so much more successful than you?

[MikeMangum]

This is correct. :crazy:



I really wish I was as smart as you. One question though - how come I'm so much more successful than you?

To be fair, success doesn't necessarily correlate with intelligence. I submit exhibit A (http://blogcritics.org/culture/article/sean-penns-katrina-pr-stunt-springs/)

;)

[The_Animus]

Again, you would have to ask the buyer.

I don't see how you could since this is a hypothetical situation and you can't buy a hypothetical house. So how about you give a hypothetical answer and quit avoiding the question?

[The Central Scrutinizer]

I don't see how you could since this is a hypothetical situation and you can't buy a hypothetical house. So how about you give a hypothetical answer and quit avoiding the question?

So you're asking me what makes a hypothetical house worth $200K? Ummmm.....oooo....kay.

[CORed]

Translation: this person once tried to use Charlie Sheen as an expert source for something not related to drugs or hookers and got burned for it. Also they probably misspelled a common pronoun.

Or maybe it was a noun, since they obviously don't know the difference between a pronoun and a noun.

[MikeMangum]

So you're asking me what makes a hypothetical house worth $200K? Ummmm.....oooo....kay.

Actually, that's simple. A good or service, whether real or hypothetical, is worth whatever someone is willing to pay for it. If someone is hypothetically willing to pay $200k for a hypothetical house, that's what it is worth...hypothetically. ;)

[drkitten]

Actually, that's simple. A good or service, whether real or hypothetical, is worth whatever someone is willing to pay for it. If someone is hypothetically willing to pay $200k for a hypothetical house, that's what it is worth...hypothetically. ;)

Yes, but The_Animus evidently knows better. He "knows" that the house that someone is willing to pay $200,000 for is "really" only worth $100,000.


Your statement was regarding a normal $100,000 house that after 10 years is now priced at $200,000. Do not change the situation.

I'll ask again. What reason is there that the house should now be worth $200,000? What is it exactly that gives the house, not the land, this added $100,000 of worth?

Evidently, he doesn't accept that "someone is willing to pay an extra $100,000" gives it an added $100,000 of worth.

[Rikeln]

A friend is all up in arms about auditing the fed, ron paul...etc What the heck does that even mean, and what if anything would that accomplish?

Just curious. Please help me get my smart on.

From listening to Alan Grayson and Ron Paul it would force some more transparency on the Fed's part in telling us who gets money from us for bailouts and stuff like that.

The bill that recently passed though was stripped down to a one-time audit to find out who got the bailout money I think. The Fed won't tell us as it stands now.

[stilicho]

So the correct and obvious answer to TCS's moronic question, is that the Fed should simply stop debasing our money to prevent the asset bubbles from happening in the first place.

Why not just outlaw the banking industry? That would do it a lot quicker. I guarantee you that substituting our modern technological and industrial society with, say, feudalism and a barter economy would accomplish your goals more directly. And you could add a death penalty for merchants found clipping coins.

[The Central Scrutinizer]

Why not just outlaw the banking industry? That would do it a lot quicker. I guarantee you that substituting our modern technological and industrial society with, say, feudalism and a barter economy would accomplish your goals more directly. And you could add a death penalty for merchants found clipping coins.

Good point. And he could have Jews burned at the stake.

[drkitten]

From listening to Alan Grayson and Ron Paul it would force some more transparency on the Fed's part in telling us who gets money from us for bailouts and stuff like that.

Well, right there is a very bad thing.

The easiest way to make sure that a bank fails is to let everyone know that it's worried about failing. If you know that First Federal Bank and Trust needed a bailout, but First National Savings and Loan didn't, where are you going to going to bank? Telling everyone that FFB&T needed a bailout will force a run on that particular bank.


The Fed won't tell us as it stands now.

Good. Right there you can tell that the Fed is smarter and more correct than Grayson and Paul.

[The Central Scrutinizer]

Well, right there is a very bad thing.

The easiest way to make sure that a bank fails is to let everyone know that it's worried about failing. If you know that First Federal Bank and Trust needed a bailout, but First National Savings and Loan didn't, where are you going to going to bank? Telling everyone that FFB&T needed a bailout will force a run on that particular bank.




Good. Right there you can tell that the Fed is smarter and more correct than Grayson and Paul.

I used to work for the Federal Reserve. This information was tightly controlled, for the reasons you state.

[drkitten]

I used to work for the Federal Reserve. This information was tightly controlled, for the reasons you state.

Gosh. That must mean that I'm almost as smart as the guys at the Fed.

... which still puts me one up on Paul and Grayson.

[dudalb]

Why not just outlaw the banking industry? That would do it a lot quicker. I guarantee you that substituting our modern technological and industrial society with, say, feudalism and a barter economy would accomplish your goals more directly. And you could add a death penalty for merchants found clipping coins.

That is what amuses me about so many of these right wing conspiracy wackjobs. They claim to love the Free Market system, but have no freaking idea of how it operates.

[drkitten]

That is what amuses me about so many of these right wing conspiracy wackjobs. They claim to love the Free Market system, but have no freaking idea of how it operates.

Well, many of them also claim to love the Bible and have never read it.

Basically, conspiracy theory, like many religions, is all about what's wrong with the world. It's often easier to identify the things that you don't like and attribute it to someone or something that you don't like (or have been trained not to like) than it is to come up with an actual workable solution.

There was an interesting survey I saw a while ago. Some large percentage of fundamentalists surveyed (40%?) thought that "from each according to his abilities, to each according to his needs" was from the Bible. (Here's a modern spotting of that mistake.) (http://forum.quoteland.com/eve/forums/a/tpc/f/99191541/m/7371924106)

What does that say about their familiarity with both Communism and the Bible? If they disagree with it, it must be "communist" -- but if they agree with it and it sounds pithy, it must be a biblical quotation....

[The Central Scrutinizer]

Basically, conspiracy theory, like many religions, is all about what's wrong with the world. It's often easier to identify the things that you don't like and attribute it to someone or something that you don't like (or have been trained not to like) than it is to come up with an actual workable solution.

There's also the blame angle. Some guy sits at home, he's the smartest guy in the trailer park, and some damn Mexican just took his job. He sees the Jew banker in the $1000 suit on CNN, and dammit, it must somehow be his fault, because it certainly isn't mine.

[Sceptic-PK]

"I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it." - Fed Chairman Ben Bernanke.

I’ve been long wanting to draw attention to this quote from Tippit’s sig.

Tippit, is there any particular reason (other than you being a moonbat armchair economist) you cherry-pick this particular quote from Bernanke’s excellent speech, when there are whole paragraphs dedicated to showing how the gold standard perpetuated and increased the severity of the Great Depression? I know you’re a big fan of gold, so I am curious whether you’ve actually read the speech in its entirety, and if you have, what your thoughts are about mainstream economists’ conclusions regarding gold’s role in the GD?

[The Central Scrutinizer]

I’ve been long wanting to draw attention to this quote from Tippit’s sig.

Tippit, is there any particular reason (other than you being a moonbat armchair economist) you cherry-pick this particular quote from Bernanke’s excellent speech, when there are whole paragraphs dedicated to showing how the gold standard perpetuated and increased the severity of the Great Depression? I know you’re a big fan of gold, so I am curious whether you’ve actually read the speech in its entirety, and if you have, what your thoughts are about mainstream economists’ conclusions regarding gold’s role in the GD?

I see you're new here. Don't expect a rational answer.

[Sceptic-PK]

I see you're new here. Don't expect a rational answer.

Haha, don’t you worry about that. Been lurking for 3-4 years and I know all about our friend Tippit. But I have wanted to ask him ever since he added that quote to his sig.

[WildCat]

Sweet, sweet gold... my precious...

[stilicho]

I’ve been long wanting to draw attention to this quote from Tippit’s sig.

Tippit, is there any particular reason (other than you being a moonbat armchair economist) you cherry-pick this particular quote from Bernanke’s excellent speech, when there are whole paragraphs dedicated to showing how the gold standard perpetuated and increased the severity of the Great Depression? I know you’re a big fan of gold, so I am curious whether you’ve actually read the speech in its entirety, and if you have, what your thoughts are about mainstream economists’ conclusions regarding gold’s role in the GD?

It's been drawn to his attention, particularly by me as long as a year ago. He stated that to call that quip light-hearted or anecdotal was equal to mocking Milton Friedman at his own birthday party.

[MikeMangum]

Well, right there is a very bad thing.

The easiest way to make sure that a bank fails is to let everyone know that it's worried about failing. If you know that First Federal Bank and Trust needed a bailout, but First National Savings and Loan didn't, where are you going to going to bank? Telling everyone that FFB&T needed a bailout will force a run on that particular bank.


It would force a run on that bank, but only if the customers of that bank are stupid.

I can't believe I need to post it, but here is the wiki link for the FDIC.

BTW, I've actually had my bank taken into recievership by the FDIC. It was a horrible experience. About 6 months afterwards, I had to log into a different website to do my online banking (www.chase.com as opposed to www.wamu.com). The horror!

It is completely painless to a customer of a bank that fails, at least it was in my case. In fact, my debit card still says Washington Mutual.

[MikeMangum]

I’ve been long wanting to draw attention to this quote from Tippit’s sig.

Tippit, is there any particular reason (other than you being a moonbat armchair economist) you cherry-pick this particular quote from Bernanke’s excellent speech, when there are whole paragraphs dedicated to showing how the gold standard perpetuated and increased the severity of the Great Depression? I know you’re a big fan of gold, so I am curious whether you’ve actually read the speech in its entirety, and if you have, what your thoughts are about mainstream economists’ conclusions regarding gold’s role in the GD?

The gold standard did not perpetuate or increase the severity of the depression, and that is not the argument that Bernanke makes in his speech. His argument is that tight monetary policy essentially caused the depression.

The role of the gold standard was that, as implemented at the time, it fixed exchange rates for various currencies, causing the depression (caused by the Fed) to go global. From Bernanke's speech:
Facilitating the cross-sectional natural experiment was the fact that the international gold standard, which had been suspended during World War I, was laboriously rebuilt during the 1920s (in a somewhat modified form called the gold-exchange standard). Countries that adhered to the international gold standard were essentially required to maintain a fixed exchange rate with other gold-standard countries. Moreover, because the United States was the dominant economy on the gold standard during this period (with some competition from France), countries adhering to the gold standard were forced to match the contractionary monetary policies and price deflation being experienced in the United States.

...

Friedman and Schwartz's insight was that, if monetary contraction was in fact the source of economic depression, then countries tightly constrained by the gold standard to follow the United States into deflation should have suffered relatively more severe economic downturns. Although not conducting a formal statistical analysis, Friedman and Schwartz gave a number of salient examples to show that the more tightly constrained a country was by the gold standard (and, by default, the more closely bound to follow U.S. monetary policies), the more severe were both its monetary contraction and its declines in prices and output. One can read their discussion as dividing countries into four categories.

The speech makes an argument that the tight monetary policy of the Fed caused the depression and prolonged it. It also makes the argument that because of the gold-exchange standard (different than simply "the gold standard") prevented exchange rates from floating freely and essentially forced other nations into deflationary monetary policy as well, which meant that monetary policy set by the Fed impacted much of the rest of the world as well.

The quote in Tippit's signature is not counter to the thrust of the speech by Bernanke. In fact, that is essentially the gist of the speech: the Fed caused the great depression with tight monetary policy and fixed exchange rates caused the Fed's mistake to harm the economies of many other countries.

ETA:
From the speech...
The first category consisted of countries that did not adhere to the gold standard at all or perhaps adhered only very briefly. The example cited by Friedman and Schwartz was China. As they wrote (p. 361), "China was on a silver rather than a gold standard. As a result, it had the equivalent of a floating exchange rate with respect to gold-standard countries. A decline in the gold price of silver had the same effect as a depreciation in the foreign exchange value of the Chinese yuan. The effect was to insulate Chinese internal economic conditions from the worldwide depression. . . . And that is what happened. From 1929 to 1931, China was hardly affected internally by the holocaust that was sweeping the gold-standard world, just as in 1920-21, Germany had been insulated by her hyperinflation and associated floating exchange rate."

...

The second category consisted of countries that had restored the gold standard in the 1920s but abandoned it early in the Depression, typically in the fall of 1931. As Friedman and Schwartz observed (p. 362), the first major country to leave the gold standard was Great Britain, which was forced off gold in September 1931. Several trading partners, among them the Scandinavian countries, followed Britain's lead almost immediately. The effect of leaving gold was to free domestic monetary policy and to stop the monetary contraction. What was the consequence of this relaxed pressure on the money stock? Friedman and Schwartz noted (p. 362) that "[t]he trough of the depression in Britain and the other countries that accompanied Britain in leaving gold was reached in the third quarter of 1932. [In contrast, i]n the countries that remained on the gold standard or, like Canada, that went only part way with Britain, the Depression dragged on."

It wasn't the gold standard, it was the fixed exchange rates combined with monetary contraction. If someone actually read that speech and came to the conclusion that Bernanke is arguing that pegging a currency to a specific amount of gold (without also fixing currency exchange rates) caused the great depression, they need to re-read the speech.

[The Central Scrutinizer]

It would force a run on that bank, but only if the customers of that bank are stupid.

I can't believe I need to post it, but here is the wiki link for the FDIC.

BTW, I've actually had my bank taken into recievership by the FDIC. It was a horrible experience. About 6 months afterwards, I had to log into a different website to do my online banking (www.chase.com as opposed to www.wamu.com). The horror!

It is completely painless to a customer of a bank that fails, at least it was in my case. In fact, my debit card still says Washington Mutual.

Well, a lot of people are stupid. That doesn't make it any less painful for the bank.