America's Impending Master Class Dictatorship

[Woods]

The Fed was created with the "official" purpose on fighting inflation and managing the business cycle. However, since its inception it has proven totally incompetent of doing either of them. The Fed is the main source of inflation, and its actions result in a more violent business cycle because it denies the market a real recovery.

I'd dare to say that we've managed to avoid something truly catastrophic thus far... such as mass homelessness and starvation.

Who's to say what would've happened without it?

I've heard differing theories for both sides... some saying the Fed tends to retard recovery... while others contend that the Fed makes the downtimes less awful, so the extended recovery is worth it.

I think something is necessary to control the money supply... something central anyway... don't want states and individual banks to be issuing their own notes backed up by who knows what... like the value of land or the price of cotton.

 

[CloudStrife]

I'd dare to say that we've managed to avoid something truly catastrophic thus far... such as mass homelessness and starvation.

Who's to say what would've happened without it?

I've heard differing theories for both sides... some saying the Fed tends to retard recovery... while others contend that the Fed makes the downtimes less awful, so the extended recovery is worth it.

I think something is necessary to control the money supply... something central anyway... don't want states and individual banks to be issuing their own notes backed up by who knows what... like the value of land or the price of cotton.

The Fed isn't "central". It's independent of our gov't.

Fractional banking basically allows banks to issue their own notes. RIght now in the US they can do it at a 1:10 ratio of real dollars they have in possession. They can loan out $9 for every $1 they have.

We haven't avoided homelessness and starvation, just delayed it. Imagine a house that needs a repair every now and then. You could go through the trouble of having it fixed right, or you can do a cheap fix. We've been doing cheap fix after cheap fix. Eventually the house is going to collapse.

 

[Woods]

Last time I checked the State did not have a monopoly on the supply of gold in an economy. The only way the supply of gold can rise is by the mining of new gold, which is an expensive job. The Fed, if they wanted to raise the money supply, can do it immediately with the push of one button.

Which one is easier?

You don't think that the government would/could get a monopoly on the supply of gold in the economy? Really?

Even if we used gold coins, they'd have to be struck... and I assure you the govt would want to be doing all of that so there is some standard... as opposed to Jim-Bob passing of gold-veneered lead out of his basement.

 

[CloudStrife]

You don't think that the government would/could get a monopoly on the supply of gold in the economy? Really?

Even if we used gold coins, they'd have to be struck... and I assure you the govt would want to be doing all of that so there is some standard... as opposed to Jim-Bob passing of gold-veneered lead out of his basement.

There were gold coins struck by the US gov't, and many did and still do prefer them because it verifies the quality. However, an assay can be privately done to also verify the quality. http://www.apmex.com/Product/19042/2_1_2_gm_999_Gold_Bar___Pamp_Suisse_With_Assay_Card.aspx

 

[Woods]

The Fed isn't "central". It's independent of our gov't.

Fractional banking basically allows banks to issue their own notes. RIght now in the US they can do it at a 1:10 ratio of real dollars they have in possession. They can loan out $9 for every $1 they have.

We haven't avoided homelessness and starvation, just delayed it. Imagine a house that needs a repair every now and then. You could go through the trouble of having it fixed right, or you can do a cheap fix. We've been doing cheap fix after cheap fix. Eventually the house is going to collapse.

Every bank note printed is printed by the Fed... no bank prints its own money.

And yes... banks are legally allowed to lend out 90% of their controlled assets... and they pay interest on deposited money so they can put it to work. The Fed didn't invent this, I assure you... and capitalism is not possible without this concept.

To use your house analogy... think of it as house that needs rennovation that you can't move out of... so you can't very well tear the whole thing down and start over.

 

[Woods]

There were gold coins struck by the US gov't, and many did and still do prefer them because it verifies the quality. However, an assay can be privately done to also verify the quality. http://www.apmex.com/Product/19042/2_1_2_gm_999_Gold_Bar___Pamp_Suisse_With_Assay_Card.aspx

I would hardly call that money.

 

[thatwhichisnt]

I'd dare to say that we've managed to avoid something truly catastrophic thus far... such as mass homelessness and starvation.

Who's to say what would've happened without it?

I've heard differing theories for both sides... some saying the Fed tends to retard recovery... while others contend that the Fed makes the downtimes less awful, so the extended recovery is worth it.

I think something is necessary to control the money supply... something central anyway... don't want states and individual banks to be issuing their own notes backed up by who knows what... like the value of land or the price of cotton.

The reason why crashes are becoming more frequent and worse is because we have denied a real recovery for so long. We have no allowed bad money and credit to be washed out, bad businesses to fail, and bad monetary policy to correct itself. The root is the cheap money the fed provides.

 

[thatwhichisnt]

You don't think that the government would/could get a monopoly on the supply of gold in the economy? Really?

Even if we used gold coins, they'd have to be struck... and I assure you the govt would want to be doing all of that so there is some standard... as opposed to Jim-Bob passing of gold-veneered lead out of his basement.

If you read the entire thread you would of read my defense of the seperation of government and money.

 

[Woods]

The reason why crashes are becoming more frequent and worse is because we have denied a real recovery for so long. We have no allowed bad money and credit to be washed out, bad businesses to fail, and bad monetary policy to correct itself. The root is the cheap money the fed provides.

Can't really comment on that... as I don't have data in either direction.

What I would theorize is that nobody in Washington has the balls to either cut spending or raise taxes enough to cover costs... which is more about people failing the system, rather than the system failing.

 

[Woods]

If you read the entire thread you would of read my defense of the seperation of government and money.

You can make whatever case you want; everyone here knows that the government is going to have control of the money.

I was addressing the statement that the government cannot manipulate gold... so your defense of seperation of governemt and money has nothing to do with this.

 

[CloudStrife]

Every bank note printed is printed by the Fed... no bank prints its own money.

And yes... banks are legally allowed to lend out 90% of their controlled assets... and they pay interest on deposited money so they can put it to work. The Fed didn't invent this, I assure you... and capitalism is not possible without this concept.

To use your house analogy... think of it as house that needs rennovation that you can't move out of... so you can't very well tear the whole thing down and start over.

A band doesn't len dout 90% of its money. It lends out $9 for every $1 it possess or takes in. Ex. If a bank has $5 (real dollars) in its vault, it can lend out $45 (imaginary). It cuts a check which is required by law to be recognized as money. Another bank accepts it, and repeats the process with the imaginary money by lending out $40.50. And so on and so forth. This is why there is such a contraction when people default on loans.

Capitalism is simply economic freedom. There is no requirement for a certain banking system.

If you're whole house needs renovation, you can either do a little here and there to make it temporarily livable (our gov't is actually actively making it worse), or you can be pretty uncomfortable in it while you do the necessary work. And, yes, at some point the house may be beyond fixing and need to be torn down. At that point you can either stay in it while it falls or get out while you can.

 

[thatwhichisnt]

Can't really comment on that... as I don't have data in either direction.

What I would theorize is that nobody in Washington has the balls to either cut spending or raise taxes enough to cover costs... which is more about people failing the system, rather than the system failing.

How does debt fall into our conversation about the Feds counterproductive and borderline criminal monetary policy?

 

[thatwhichisnt]

A band doesn't len dout 90% of its money. It lends out $9 for every $1 it possess or takes in. Ex. If a bank has $5 (real dollars) in its vault, it can lend out $45 (imaginary). It cuts a check which is required by law to be recognized as money. Another bank accepts it, and repeats the process with the imaginary money by lending out $40.50. And so on and so forth. This is why there is such a contraction when people default on loans.

Capitalism is simply economic freedom. There is no requirement for a certain banking system.

If you're whole house needs renovation, you can either do a little here and there to make it temporarily livable, or you can be pretty uncomfortable in it while you do the necessary work. And, yes, at some point the house may be beyond fixing and need to be torn down. At that point you can either stay in it while it falls or get out while you can.

What you are talking about is the money multiplier.

Person A lends 100 to the banks. If the reserve ratio, set by the fed, is 10 percent then the bank must keep 10 dollars as their demand deposit. The other 90 is lent out. The person who received that loan deposits the 90, and this time the bank only holds 9 dollars, and then lends the other 81 out. And so on down the line.

Before the Fed that low of a reserve requirement was unimaginable because a bank didnt have the Fed to fall back on. If they lent all their depositors money out, and at the same time the depositors wanted their money, it would be a disaster. The bank didnt have enough assets to cover liabilities, and the bank went bankrupt.

The Fed created this immoral banking system. Without it, none of these banks would be able to remain solvent if they take great risks.

 

[CloudStrife]

What you are talking about is the money multiplier.

Person A lends 100 to the banks. If the reserve ratio, set by the fed, is 10 percent then the bank must keep 10 dollars as their demand deposit. The other 90 is lent out. The person who received that loan deposits the 90, and this time the bank only holds 9 dollars, and then lends the other 81 out. And so on down the line.

Before the Fed that low of a reserve requirement was unimaginable because a bank didnt have the Fed to fall back on. If they lent all their depositors money out, and at the same time the depositors wanted their money, it would be a disaster. The bank didnt have enough assets to cover liabilities, and the bank went bankrupt.

The Fed created this immoral banking system. Without it, none of these banks would be able to remain solvent if they take great risks.

I think the first bank can actually multiply their holdings, since its real, by 9. Any bank that gets the check can only lend out 90% of that amount.

 

[CloudStrife]

http://www.lewrockwell.com/rothbard/frb.html

 

[Woods]

How does debt fall into our conversation about the Feds counterproductive and borderline criminal monetary policy?

I wasn't talk about the fed's counterproductive or borderline criminal monetary policy... nor did I have any idea that's what you were talking about.

I was talking about how the fed is not why the economy stinks... while I thought you were talking about the fed is why the economy stinks.

I was merely offering an alternative theory as to why the economy could be not recovering completely; not becaus the fed is evil, but because the fools in Washington don't want to be fiscally responsible.

 

[CloudStrife]

I wasn't talk about the fed's counterproductive or borderline criminal monetary policy... nor did I have any idea that's what you were talking about.

I was talking about how the fed is not why the economy stinks... while I thought you were talking about the fed is why the economy stinks.

I was merely offering an alternative theory as to why the economy could be not recovering completely; not becaus the fed is evil, but because the fools in Washington don't want to be fiscally responsible.

Which is what brought the fed into existence.

The fed is part of the reason the economy stinks. The other part is direct gov't meddling.

 

[Woods]

I can't keep this all straight... one minute the Fed isn't part of the government... the next minute it is... one minute the Fed is JP Morgan's personal wealth generating device... the next minute it's an insturment of politicians in Washington to keep themselves in power.

Near as I can tell, the only thing that's been consistent is the message that the governemnt is bad and gold is good.

Yea... I'm done.

 

[CloudStrife]

I can't keep this all straight... one minute the Fed isn't part of the government... the next minute it is... one minute the Fed is JP Morgan's personal wealth generating device... the next minute it's an insturment of politicians in Washington to keep themselves in power.

Near as I can tell, the only thing that's been consistent is the message that the governemnt is bad and gold is good.

Yea... I'm done.

The fed is independent of our gov't, but it was created by it. I think it was under Woodrow Wilson. Our reps have no control over the fed. They can't even audit the damn thing.

 

[thatwhichisnt]

I think the first bank can actually multiply their holdings, since its real, by 9. Any bank that gets the check can only lend out 90% of that amount.

Well, how much they keep is up to the Fed. Usually its between 2 and 7 percent, however much lower when they want to "expand" the economy.
IIRC, to get the money multiplier you take the deposit and divide it by 1-RR. If you are talking about depositing a loan you do the same thing, but -1, to take in account that a portion of the loan has already been taken out once.