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Ron Paul Says 1.3 Trillion Dollar Debt Owed To Federal Reserve Is Not Real! Amazing Plan To Save A T
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reply to post by JR MacBeth
There were 2 central banks before the FED was created, if I remember my history correctly. Andrew Jackson was president during the 2nd's charter, even though he was against it, and Alexander Hamilton advocated for the creation of the first. I didn't get my timeline wrong.
Your post is definitely well thought out, but its difficult to argue against an accusation against the FED like they are the Mafia. That's a conspiracy and there is no evidence for or against, at least not definitively. So, I will not address those points you make.
Your Ben Franklin example is a very narrow, and definitely exception not the rule type of presentation, that was proven as a bad system with time. Plus, you oversimplify the problem. Ben Franklin was only a baby when the first colonies started issuing their own, early American Currencies. TheScrip was a form of credit not tied to any currency and in many instances is used when there is no currency available to be used. If you are referring to the war debt that we acquired, well that's another argument, but it was issued with the full faith and credit of the colonies, and that which was not retired through taxation following the war, was forgiven with the writing of the new constitution. Holland was the big loser with that debacle. Well, France also went bankrupt, but it had a revolution of its own so our debt was forgiven(or at least severely reduced) to them anyway.
Companies, like mining firms, used to use them on a regular basis. We know from history that they essentially enslaved their workers through debt and making mining towns that were the only places the workers could spend their scrip. Yeah, thats a great idea, you really wish to return to that system?!? You want to get paid a Wal-Mart Scrip when you work at Wal-Mart and not be able to trade with any other company? What if Target refuses to accept the Wal-Mart Scrip, or vice versa? This is a very bad system, it's inefficient, and there are so many problems that there are many books written on why its bad.
Your argument about the FED taking risks doesn't make sense. The only thing they do is regulate banks and issue currency through various methods such as buying bonds, changing reserve requirements, changing interest rates, or ordering the printing of money. Since they do profit, the benefit the US Treasury, in fact, they are the only agency in the ENTIRE US GOVERNMENT that operates with a HUGE SURPLUS that gets donated to the treasury. The FED doesn't have the power to take risks, unless you count it as a risk to invest in a government currency somewhere in the world but mostly the US, and if they did then the US treasury would benefit from their wins as well as losing from their losses. But, then again, the FED operates with a surplus. Private agencies can take risks, but not the FED.
You compare Congress to the corrupt Chicago Police department of the early 20th century and elude to us not choosing our own leaders since the "Banksters" choose them for us. It seems like you are stating that my votes don't count and that its all an illusion. That is a conspiracy and there is no proof for or against that accusation, at least not definitively, therefore, I will not argue that point. Its absurd to bring that into an argument about facts.
Finally, you ask why its so smart to let the ones who are in control of the FED stay in control, and then answer the question by stating "Protection". Well, that's not my answer, it may be your misguided answer, but not mine. I say let the FED stay the FED because we don't have hyperinflation. The fiscal policy of the federal government is causing other problems, like high unemployment, but this is not the fault of the FED. The problem with the US government does not lie with the FED, it lies with the Congress and President who think its a good idea to get new credit cards to make the payments on our old maxed out ones! On top of that they have adopted historically proven, bad employment protectionist policies that increase the rate of unemployment and make it difficult to create new jobs.
I wasn't trolling with my statement, I like the FED and I know its a good creation. I haven't tried to find, but I can't think of any off the top of my head, any governments with central banks similar to the FED that have had to deal with large amounts of inflation. I named several examples in a previous post in this thread though, that showed that a central government can, and usually does, cause rampant inflation when left in charge of its own monetary system.
If we had had the FED during the Civil War then Lincoln wouldn't have had to worry about the interest rate. The profit from the FED is paid directly back to the US Treasury, so our government borrows for free from the FED anyway.
As for inflationary periods having to do with national crisis, well, yeah that does happen. But, then again, there are very few decades when there isn't some sort of national crisis. The US has had a war every decade, except the 1930's, since WW1. If you count the Indian Wars, you could say we have had a war every decade since the US's creation. So, we are in perpetual crisis.
There were 2 central banks before the FED was created, if I remember my history correctly. Andrew Jackson was president during the 2nd's charter, even though he was against it, and Alexander Hamilton advocated for the creation of the first. I didn't get my timeline wrong.
Your post is definitely well thought out, but its difficult to argue against an accusation against the FED like they are the Mafia. That's a conspiracy and there is no evidence for or against, at least not definitively. So, I will not address those points you make.
Your Ben Franklin example is a very narrow, and definitely exception not the rule type of presentation, that was proven as a bad system with time. Plus, you oversimplify the problem. Ben Franklin was only a baby when the first colonies started issuing their own, early American Currencies. TheScrip was a form of credit not tied to any currency and in many instances is used when there is no currency available to be used. If you are referring to the war debt that we acquired, well that's another argument, but it was issued with the full faith and credit of the colonies, and that which was not retired through taxation following the war, was forgiven with the writing of the new constitution. Holland was the big loser with that debacle. Well, France also went bankrupt, but it had a revolution of its own so our debt was forgiven(or at least severely reduced) to them anyway.
Companies, like mining firms, used to use them on a regular basis. We know from history that they essentially enslaved their workers through debt and making mining towns that were the only places the workers could spend their scrip. Yeah, thats a great idea, you really wish to return to that system?!? You want to get paid a Wal-Mart Scrip when you work at Wal-Mart and not be able to trade with any other company? What if Target refuses to accept the Wal-Mart Scrip, or vice versa? This is a very bad system, it's inefficient, and there are so many problems that there are many books written on why its bad.
Your argument about the FED taking risks doesn't make sense. The only thing they do is regulate banks and issue currency through various methods such as buying bonds, changing reserve requirements, changing interest rates, or ordering the printing of money. Since they do profit, the benefit the US Treasury, in fact, they are the only agency in the ENTIRE US GOVERNMENT that operates with a HUGE SURPLUS that gets donated to the treasury. The FED doesn't have the power to take risks, unless you count it as a risk to invest in a government currency somewhere in the world but mostly the US, and if they did then the US treasury would benefit from their wins as well as losing from their losses. But, then again, the FED operates with a surplus. Private agencies can take risks, but not the FED.
You compare Congress to the corrupt Chicago Police department of the early 20th century and elude to us not choosing our own leaders since the "Banksters" choose them for us. It seems like you are stating that my votes don't count and that its all an illusion. That is a conspiracy and there is no proof for or against that accusation, at least not definitively, therefore, I will not argue that point. Its absurd to bring that into an argument about facts.
Finally, you ask why its so smart to let the ones who are in control of the FED stay in control, and then answer the question by stating "Protection". Well, that's not my answer, it may be your misguided answer, but not mine. I say let the FED stay the FED because we don't have hyperinflation. The fiscal policy of the federal government is causing other problems, like high unemployment, but this is not the fault of the FED. The problem with the US government does not lie with the FED, it lies with the Congress and President who think its a good idea to get new credit cards to make the payments on our old maxed out ones! On top of that they have adopted historically proven, bad employment protectionist policies that increase the rate of unemployment and make it difficult to create new jobs.
I wasn't trolling with my statement, I like the FED and I know its a good creation. I haven't tried to find, but I can't think of any off the top of my head, any governments with central banks similar to the FED that have had to deal with large amounts of inflation. I named several examples in a previous post in this thread though, that showed that a central government can, and usually does, cause rampant inflation when left in charge of its own monetary system.
If we had had the FED during the Civil War then Lincoln wouldn't have had to worry about the interest rate. The profit from the FED is paid directly back to the US Treasury, so our government borrows for free from the FED anyway.
As for inflationary periods having to do with national crisis, well, yeah that does happen. But, then again, there are very few decades when there isn't some sort of national crisis. The US has had a war every decade, except the 1930's, since WW1. If you count the Indian Wars, you could say we have had a war every decade since the US's creation. So, we are in perpetual crisis.
Whoa, wait a minute? Profits from the federal reserve are "donated" right back to the U.S. treasury? First time I've heard this. I admit that's
what common sense would dictate but I've honestly never heard or read that it's what actually happens in practice. I thought that the profits went
into the federal reserve board of directors' pockets as they are privately owned. That was the only viable explanation for why the American debt
rivals it's GDP, and why it has steadily risen, no matter what the economy does, and why it will never be paid off. Or so I thought.
reply to post by memarf1
You entire post is complete nonsense.
Are you trolling? I really don't want to waste my time responding to you if you're just playing games.
First off, I do not advocate for the govt to take control of the monetary system. 2nd, there are numerous reasons why central banking is bad, one of the most obvious is our current economic crisis.
In fact every economic crisis the U.S has ever had has been directly caused by the govt -- from the Panic of 1819 to the The Panic of 1907 to the Great Depression to our current crisis. It doesn't matter if the govt tries to do it or a quasi-private institution does it, all forms of central banking [monetary control] have been proven to be detrimental.
You simply don't understand how monetary competition works. You should read: Choice in Currency.
Just give me one example of something good the Fed has done since it has been created.
You should take your own advice.
You entire post is complete nonsense.
Are you trolling? I really don't want to waste my time responding to you if you're just playing games.
There is nothing wrong with a central bank, in fact all logic dictates that it is far better than a direct government control over the monetary system.
First off, I do not advocate for the govt to take control of the monetary system. 2nd, there are numerous reasons why central banking is bad, one of the most obvious is our current economic crisis.
In fact every economic crisis the U.S has ever had has been directly caused by the govt -- from the Panic of 1819 to the The Panic of 1907 to the Great Depression to our current crisis. It doesn't matter if the govt tries to do it or a quasi-private institution does it, all forms of central banking [monetary control] have been proven to be detrimental.
The only monopoly they have is the creation of money, which we don't want competition for. If I can create more money than you, and then you decide to beat me, and so on, then we end up with worthless currency and a bad economy
You simply don't understand how monetary competition works. You should read: Choice in Currency.
The FED is a good organization and it does not make sense to attack them in this manner, nor accuse me of being communist.
Just give me one example of something good the Fed has done since it has been created.
Please go read a first year Macro-Economics book! You say you read "The Creature from Jekyll Island" but clearly you don't understand the FED, its operations, or its mandate.
You should take your own advice.
reply to post by mbkennel
Give me the years, some articles, books or something please.
Without them I don't know what crisis you're talking about.
Give me the years, some articles, books or something please.
Without them I don't know what crisis you're talking about.
edit on 13-7-2011 by Rockdisjoint because: (no reason given)
reply to post by Rockdisjoint
One could easily argue that 40 years of economic difficulty on the Atlantic and within the foreign affairs of those countries lead to the panic of 1819. Sure, the 2nd bank issued notes causing widespread inflation, but that was a direct response to the crisis that was already underway following the war of 1812.
The panic of 1907 was caused by a fall of about 50% on the stock market, leading to a run on the banks. This is very similar to what happened in 1929 and worse in 1931 leading to the great depression. These events are precisely why regulation is important and precisely why the FDIC was created by the Glass-Steagall act of 1933. It is also important for you to report that JP Morgan placed much of its own money and convinced many of the other large banks to inject their money, a bailout of sorts, into the economy since there was no central bank to do it at the time. Yes, the free market worked to fix the problem that time, but there is no guarantee that banks would do that today. Not once has a central bank, to my recollection, proven to be detrimental. I challenge you to find an example.
You ask for one example of something good that the FED has done. Well, we have the worlds reserve currency and every currency is linked to the dollar. This is because of a sound and stable monetary policy, which is as you know completely established by the FED with absolutely no political influence. With the exception of threatening to assassinate the board of governors, there can be no political pressure that is actually applied. You or I or any of our government officials can call and annoy the board of governors, but we can do nothing legally other than discuss or attempt to persuade them.
Its funny you would say I need to read an economics book, I teach college economics. I have read and reread much on this subject, including the Hayek paper you present to prove your point. That paper is an excellent example of my point. The FED is not subject to political pressure, since by its design it is immune even to a 2 term president. Hayek points out the weakness of a bank that is subject to the pressures of the government. Since the FED isn't subject to these types of pressures, it is ideal as a central bank. You state that no central bank is necessary at all, but without such a bank how do you propose we control the monetary system? Mercantilism? Between sinking ships, the simple lack of gold, and the number of people in the world, it simply won't work. A stable monetary system with a conservative currency, like the Dollar, can be just as effective. The biggest part of the FED's mandate is the control of inflation and a stable monetary policy, which is exactly what Hayek is advocating in this paper. Additionally, the FED has established a very good record of stability.
Furthermore, there is nothing restricting your use of foreign currency within the confines of your country, except convenience. Everyone else chooses the dollar, and thus you must. You are not compelled to do so by anything other than necessity. The states are prohibited from creating currency, but you can still use Euro's or Yuans or any other foreign currency you desire, but you don't because it is inconvenient. In fact, the dollar has done exactly what Hayek writes about. In many countries the currencies were simply not stable, and thus they adopted the dollar. In fact, most of the central American countries use the dollar as their official currency because of its stability. Evidence of the desire for the dollar can be further observed by our trade imbalance. They want dollars so they sell us stuff and we give them dollars.
One could easily argue that 40 years of economic difficulty on the Atlantic and within the foreign affairs of those countries lead to the panic of 1819. Sure, the 2nd bank issued notes causing widespread inflation, but that was a direct response to the crisis that was already underway following the war of 1812.
The panic of 1907 was caused by a fall of about 50% on the stock market, leading to a run on the banks. This is very similar to what happened in 1929 and worse in 1931 leading to the great depression. These events are precisely why regulation is important and precisely why the FDIC was created by the Glass-Steagall act of 1933. It is also important for you to report that JP Morgan placed much of its own money and convinced many of the other large banks to inject their money, a bailout of sorts, into the economy since there was no central bank to do it at the time. Yes, the free market worked to fix the problem that time, but there is no guarantee that banks would do that today. Not once has a central bank, to my recollection, proven to be detrimental. I challenge you to find an example.
You ask for one example of something good that the FED has done. Well, we have the worlds reserve currency and every currency is linked to the dollar. This is because of a sound and stable monetary policy, which is as you know completely established by the FED with absolutely no political influence. With the exception of threatening to assassinate the board of governors, there can be no political pressure that is actually applied. You or I or any of our government officials can call and annoy the board of governors, but we can do nothing legally other than discuss or attempt to persuade them.
Its funny you would say I need to read an economics book, I teach college economics. I have read and reread much on this subject, including the Hayek paper you present to prove your point. That paper is an excellent example of my point. The FED is not subject to political pressure, since by its design it is immune even to a 2 term president. Hayek points out the weakness of a bank that is subject to the pressures of the government. Since the FED isn't subject to these types of pressures, it is ideal as a central bank. You state that no central bank is necessary at all, but without such a bank how do you propose we control the monetary system? Mercantilism? Between sinking ships, the simple lack of gold, and the number of people in the world, it simply won't work. A stable monetary system with a conservative currency, like the Dollar, can be just as effective. The biggest part of the FED's mandate is the control of inflation and a stable monetary policy, which is exactly what Hayek is advocating in this paper. Additionally, the FED has established a very good record of stability.
Furthermore, there is nothing restricting your use of foreign currency within the confines of your country, except convenience. Everyone else chooses the dollar, and thus you must. You are not compelled to do so by anything other than necessity. The states are prohibited from creating currency, but you can still use Euro's or Yuans or any other foreign currency you desire, but you don't because it is inconvenient. In fact, the dollar has done exactly what Hayek writes about. In many countries the currencies were simply not stable, and thus they adopted the dollar. In fact, most of the central American countries use the dollar as their official currency because of its stability. Evidence of the desire for the dollar can be further observed by our trade imbalance. They want dollars so they sell us stuff and we give them dollars.
Originally posted by crimvelvet
Straight from the horses mouth. Bankers print pretty pieces of paper and swap that paper for your property, assets and labor.... CAN YOU SAY SLAVERY WITHOUT THE HASSLE OF UPKEEP???
Glad that you understood what Central Banking is all about.
But how exactly do you go from creating money from thin air (which is what any Central Bank is supposed to do) to "slavery without the hassle of upkeep"?
Before paper currency came into existence metals were used as money and metals were mined from the earth. Did that make everybody the slaves of mine owners?
Originally posted by mbkennel
Originally posted by Cassius666
Well what does it mean its not real? You owe it to the federal reserve. If you repay money at an interest to the federal reserve, who gets the profits? America? Somebody else?
The profits enjoyed by the Federal Reserve, which are the result of interest on bonds that it holds minus its operational costs, are donated to the U.S. Treasury for the purpose of reducing debt. In practice, thus the interest paid from the US Treasury to the Federal Reserve on the Feds holdings is recycled back to the Treasury.
See Federal reserve act, section 7, in particular (b)
www.federalreserve.gov...
The statutory 6% dividends to member banks are very small in size.
The Federal reserve is not a scam. You may dislike its policies and actions (I think Bernanke is actually pretty good but Greenspan was a disaster), but it is not a Vast Evil Conspiracy.edit on 13-7-2011 by mbkennel because: (no reason given)
After 8 pages of reading the thread finally find what I was wishing someone had pointed.
Essentially when the US government "borrows" from the US Federal Reserve it does so at no cost, since all the interest paid is recycled back to the treasury. This is also the reason why Ron Paul's suggestion would work. But for the same reason it is exactly the same as doubling the debt ceiling and allowing the government to "borrow" an additional 1.3 trillion. If the FED forgives/writes off the existing debt (which is what Ron Paul's suggestion is), the government gets to "borrow" the same amount without raising the limit. But the limit itself makes no sense anyway. The government cannot borrow without legislative approval and the same legislature can the raise the limit to any arbitrary level it pleases. Other than the legislature having to pass two resolutions for the same purpose, can't see what its usefulness is.
Originally posted by crimvelvet
The reason for a 'run on the bank' and collapse, is because of FRACTIONAL RESERVE BANKING. A Fancy name for banker FRAUD. When people realized the bank was lending out money that did not exist and/or lending "recklessly" to bad risks, you ended up with a run on the bank. If I place money in a saving account or CD I expect it to be lent out. If I place the money in a checking Acct. AND I pay fees for the privilege, then the money had better be there - a CONTRACT.
Therefore all of this can be handle by insisting that banks honor contract law just like the rest of us have to. Today bankers do not have to play by the same rule the rest of us do and that is the problem, we now have a "privileged class" - the bankers.
I doubt the banks of the day violated any contracts. I fear they may never have promised to protect the deposits (current or savings) under all circumstances. Otherwise they would practically be the equivalent to loans and not deposits.
Under your terms, if all the accounts were current accounts, banks cannot lend even a penny, since if the borrowers default or go under the banks reserves would be a fraction of their committments. Historically that is how banks operated for centuries, as safe-keepers of people's savings for a fee. When they went into lending, it should have been obvious to anyone that the money being lent by the banks was the depositors' and if the bank made bad loans, the depositors stand to lose. Even if people didn't realise it immediately, they would have realised it as soons as a couple of banks went down after a bank run. Even so the popularity of fractional reserve banking itself did not come down. People knew there was a risk, but the risk was offset by the regular returns they earned on their deposits.
Paper currency and fractional reserve banking became popular under market forces because they served a dire need, a money supply that can keep up with industrial production without leading to monetary deflation.
Did the bankers enjoy their new found power to create money out of nothing? Quite likely. Did they conspire with governments to give themselves that power? Quite unlikely.
Ludwig von Mises is not as consistent as his admirers project him to be. What is consistent about free market and mandating that banks back their paper currency with metals? The government could require that the taxes be paid in either metal or as notes of a bank whose currency is backed 100% with metal. They could even require for the purpose of taxation all business transaction be recorded for their value in terms of such currency regardless of what currency they are conducted in. Other than that, I don't see how a government in a free market can mandate how a bank should conduct its business and provide its services.
reply to post by Observor
It makes us "slaves" - actually serfs because we are obligated to work and give up the wealth we create in return for NOTHING.
What is a serf/slave??? Someone who must work for another human being and who gets nothing in return for that work while the "owner" sits on his duff and enjoys the fruits of the first persons labor.
What about the other half of what we earn??? The Average credit card debt per household is $14,687 this does not include education loans, car loans and house mortgages. 97% of the US money supply is in the form of banks loans.- Interesting that the US dollar has lost 96% of its value since the Federal Reserve Act.
So what do we get in return for our obligation to pay all those loans with money we earn through our labor???
As I said we get NOTHING!
Humans originally used "barter" or the direct exchange of goods. This was cumbersome so a certain type of trade good became the generally agreed upon medium of exchange. This could be metals such as Gold, Silver and Copper as well as many other things such as cowry shells or obsidian points (Arrows). All these things used as "money" had elements in common.
The KEY is
* durable
* intrinsic worth
* profit
* divisible
I am going to add two more characteristics to the list.
* relative scarcity - a part of intrinsic worth
* easily transported
Metals have all of these characteristics but does paper money??? When the paper money was a SILVER (or gold) certificate, that is a contract obliging the bank/government to exchange it for metal upon demand, then yes paper money had intrinsic worth. Fiat currency which is NOT backed by metal has NO intrinsic worth. It has no more worth than toilet paper as has been proved in countries such as Germany and Zimbabwe. Note that while US citizens were not allowed to own gold when in 1933 President Franklin D. Roosevelt outlawed private gold ownership, the BANKS could demand US dollars be exchanged for gold. (Bankers are not dumb THEY wanted GOLD not pieces of paper and still do to this day) This had Congressman, McFadden, Chair of the House of Representatives Committee on Banking and Currency, hopping MAD. Finally in 1971, President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". Even About.com Economics "glossary defines [FIAT MONEY] as "money that is intrinsically useless; is used only as a medium of exchange".
And there is the key: GOLD has intrinsic worth while fiat money is intrinsically useless. If you had converted to gold, then as the US dollar was devalued your savings would remain relatively constant. In 1972 about $2,000 US dollars (57 oz of gold) bought a nice new car. Today it is $30,000 (19 oz of gold) and up. The $1000 I saved in 1972 now has a buying power of less than a hundred dollars. I should have splurged and bought gold jewelry!
So why are we stuck with a fiat currency and why hasn't the USA hit hyper inflation given the Fed is printing money like mad??? I finally found a reasonable explanation.
The article states tax compliance is high in the U.S yet the Grace Commission Report to the President (1984) states"...one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy-a vicious cycle that must be broken...." Now we have a 20% unemployment rate and the retiring of the baby boomers as well as a federal debt increase from fiscal 1983 deficit of $195 billion to over $14 TRILLION (Interestingly the report projected $13 trillion by the year 2000)
Second when the price of fuel rises there is a corresponding rise in the price of everything else.
Third the Russians, China and others are calling for a different world reserve currency than the dollar.
If the US dollar ever losses reserve currency status we are going to be in a world of hurt because hyperinflation is going to hit. Reserve currency status is the only thing that has kept us from following in the foot steps of Germany and others.
Glad that you understood what Central Banking is all about.
But how exactly do you go from creating money from thin air (which is what any Central Bank is supposed to do) to "slavery without the hassle of upkeep"?
Before paper currency came into existence metals were used as money and metals were mined from the earth. Did that make everybody the slaves of mine owners?
SLAVES
It makes us "slaves" - actually serfs because we are obligated to work and give up the wealth we create in return for NOTHING.
What is a serf/slave??? Someone who must work for another human being and who gets nothing in return for that work while the "owner" sits on his duff and enjoys the fruits of the first persons labor.
2009– Year of the Slave
....So, what is a slave? How do we define a slave? What test do we use to tell if someone is a slave. What makes them different from free people?
Free people can say “no”. Free people can refuse demands for their money, time, and children. Slaves cannot. There is no freedom without the freedom to say “no”.....
Freedom is the freedom to say "no."
When you are forced to surrender half your life’s work to the government in ever-increasing taxes, then you are a slave. Throughout history, slaves were expected to perform the work needed for their own upkeep, then perform additional work for the rulers. For Roman slaves, the ratio of work-for-self versus work-for-rulers was about 50-50. The same ratio applied to Medieval Serfs, and even to the slaves of the American south. And, when you add up all the overt taxes, covert fees, tariffs, excises, plus the increased price you pay for products to pay the taxes of the companies that make those products, you will find that Americans are at that same “half-for-self” versus “half-for-rulers” ratio! Can you say “no” to the confiscation of half of your life? Can you even get the masters to maybe reduce the burden by a significant amount? No? Congratulations. You are a slave.....
What about the other half of what we earn??? The Average credit card debt per household is $14,687 this does not include education loans, car loans and house mortgages. 97% of the US money supply is in the form of banks loans.- Interesting that the US dollar has lost 96% of its value since the Federal Reserve Act.
So what do we get in return for our obligation to pay all those loans with money we earn through our labor???
First National Bank of Montgomery vs. Daly (1969)
Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
www.webofdebt.com...
As I said we get NOTHING!
GOLD vs FIAT
Humans originally used "barter" or the direct exchange of goods. This was cumbersome so a certain type of trade good became the generally agreed upon medium of exchange. This could be metals such as Gold, Silver and Copper as well as many other things such as cowry shells or obsidian points (Arrows). All these things used as "money" had elements in common.
... money exists to facilitate trade when basic barter isn’t practical....
Perhaps I am in one group with a surplus of dried meat and you are in the other with a surplus of tubers. It would stand to reason that we would agree to trade some quantity of one for the other. But what if I don’t want your tubers? ...
Eventually you show me some flint knife blades and I don’t need them because I have plenty of my own knife blades but I realize the following…
* They never go bad, rot, etc.(durable)
* I can trade them later for something I do want (intrinsic worth)
* It took me less energy to get my meat then to make a blade (profit)
* I can trade multiple blades with multiple individuals (divisible)
www.trtam.com...
The KEY is
* durable
* intrinsic worth
* profit
* divisible
I am going to add two more characteristics to the list.
* relative scarcity - a part of intrinsic worth
* easily transported
Metals have all of these characteristics but does paper money??? When the paper money was a SILVER (or gold) certificate, that is a contract obliging the bank/government to exchange it for metal upon demand, then yes paper money had intrinsic worth. Fiat currency which is NOT backed by metal has NO intrinsic worth. It has no more worth than toilet paper as has been proved in countries such as Germany and Zimbabwe. Note that while US citizens were not allowed to own gold when in 1933 President Franklin D. Roosevelt outlawed private gold ownership, the BANKS could demand US dollars be exchanged for gold. (Bankers are not dumb THEY wanted GOLD not pieces of paper and still do to this day) This had Congressman, McFadden, Chair of the House of Representatives Committee on Banking and Currency, hopping MAD. Finally in 1971, President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". Even About.com Economics "glossary defines [FIAT MONEY] as "money that is intrinsically useless; is used only as a medium of exchange".
And there is the key: GOLD has intrinsic worth while fiat money is intrinsically useless. If you had converted to gold, then as the US dollar was devalued your savings would remain relatively constant. In 1972 about $2,000 US dollars (57 oz of gold) bought a nice new car. Today it is $30,000 (19 oz of gold) and up. The $1000 I saved in 1972 now has a buying power of less than a hundred dollars. I should have splurged and bought gold jewelry!
So why are we stuck with a fiat currency and why hasn't the USA hit hyper inflation given the Fed is printing money like mad??? I finally found a reasonable explanation.
...Given the previous hyperinflation, clearly there was ample reason for currency revulsion. So you can consider this argument a necessary but not sufficient precondition. What makes the universal acceptance stick is that government accepts its own money to expunge liabilities to it. In plain English, fiat money has value because it is the only money you can use to pay taxes. ....The fact that this money is also the medium of exchange only entrenches its use. So the tax liability is a necessary pre-condition for fiat currency to work, something I will return to....
[No wonder Amendment 16 - Status of Income Tax Clarified was Ratified 2/3/1913, a couple months after the Federal Reserve Act. cv]
Weimar Germany 1919-1923
The key to Weimar's hyperinflation was two-fold.
1. The German government had a large foreign currency debt obligation.
2. The German economy lost huge amounts of productive capacity causing prices to soar as demand outstripped supply....
Zimbabwe
While the facts in Zimbabwe are different, the underlying causes for hyperinflation were the same: foreign currency obligations and a loss of productive capacity.
Zimbabwe had established Independence from Britain in 1980. Yet, by the late 1990s 70% of productive arable land was still held by the small minority 1% of white farmers in the country. After years of talk about redistribution, in 2000, the President Robert Mugabe began to redistribute this land.
The redistribution process was a disaster, .... With agricultural production having plummeted, Zimbabwe was forced to pay to import food in hard currency.
Meanwhile, the government turned to the printing presses to fulfil its domestic obligations. as in Germany, the foreign currency obligations, the loss of productive capacity and the money printing was a toxic brew which ended in hyperinflation.
Hyperinflation in the USA, May 2010
As you can see from the two most severe cases of hyperinflation, the problem in each case was a loss of productive capacity, foreign currency liabilities, and a loss of the ability to tax....
In the German example, the Germans had a huge foreign currency liability that it had to pay, meaning it could not make good on the liability by printing money. It was a currency user as far as these liabilities went. Meanwhile, with productive capacity limited, the government was then unable to ease price pressure through the tax lever. The shortage of goods drove up prices inexorably and the government was forced to turn to the printing press in order to meet its domestic obligations.
In the Zimbabwe example, taxes were again central. Unable to recoup enough tax revenue and with large foreign currency obligations and a loss of productive capacity, the government resorted to printing money in an environment where prices were rising.
So, hyperinflation has very specific preconditions that are not apparent in the U.S..
1. No foreign currency liability: The U.S. dollar is the world's reserve currency so the U.S. can pay for trade goods in U.S. dollars.. The U.S. does not have a peg to gold or some other currency which acts as a de facto foreign currency liability. And the U.S. government has substantially no foreign currency liabilities. All of the debt is issued in domestic currency.
2. Price pressures are still anchored: While commodity prices are rising, they are rising in all currencies, not just in USD. Moreover, their rise will create demand destruction before any hyperinflation could occur. Why? Unemployment is high and capacity utilization is low, meaning there are no inflationary pressures on that front to help push inflation higher before demand destruction sets in.
3. Currency revulsion has not set in: Tax compliance is high in the U.S. We are not talking about Russia, Greece or Argentina where government has had a difficult time in raising tax. Moreover, as the USD is still the world's reserve currency, there has been no freefall sell off of dollars, nor do I anticipate any in the near-to-medium term.
In short, there will be no hyperinflation in the U.S. any time soon.... www.creditwritedowns.com...
The article states tax compliance is high in the U.S yet the Grace Commission Report to the President (1984) states"...one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy-a vicious cycle that must be broken...." Now we have a 20% unemployment rate and the retiring of the baby boomers as well as a federal debt increase from fiscal 1983 deficit of $195 billion to over $14 TRILLION (Interestingly the report projected $13 trillion by the year 2000)
Second when the price of fuel rises there is a corresponding rise in the price of everything else.
Third the Russians, China and others are calling for a different world reserve currency than the dollar.
If the US dollar ever losses reserve currency status we are going to be in a world of hurt because hyperinflation is going to hit. Reserve currency status is the only thing that has kept us from following in the foot steps of Germany and others.
reply to post by Observor
If the FED forgives/writes off the existing debt (which is what Ron Paul's suggestion is), the government gets to "borrow" the same amount without raising the limit. But the limit itself makes no sense anyway.
Not exactly. The FED can still say no and is likely to say no if the federal government defaults on its obligation to the FED. Remember, the FED's most important mandate is to keep the dollar as a stable currency with stable or low inflation. If they start printing money in this fashion on a regular basis then we will see loads of inflation. Hayek warned about this in the paper that the other poster posted a page or 2 ago. We have to hope the FED has more scruples than that and refuses to loan more if the treasury doesn't pay back what it already borrowed.
reply to post by memarf1
I would say something like, "Abandon all hope!", with you being such an advocate of the Fed, and people starring your posts, but at least you have an excuse.
You admitted to teaching economics in college! Which makes you rather indoctrinated, in my book.
And your so-called "argument" is that you really can't argue about it, because if we assume there are elements of "conspiracy", then no one can prove anything anyway. Nice!
But that's fine. Not sure I should address any of your points either, but they're pretty weak.
Let me see if I'm understanding you correctly. You "know" the Fed is a "good creation"??
Your main stated reason is apparently that they're wonderful, because we don't have "hyperinflation". You don't mention the phony CPI, but why would you do that?
Oh yes, and huge unemployment, the Fed has nothing to do with that!
EXCEPT that it is one of their dual mandates, as you well know. Price stability, and maximum employment.
Are politics and protectionism problems, as you point out? Of course, but they are not the MAIN problems.
The problem with most of us (not just economists), is that we fail to even ask the right questions to begin with.
I noticed you didn't even want to touch the Bear Stearns incident I specifically mentioned. Didn't the Fed illegally hand Bear to JP Morgan (one of the owners of the Fed by the way)? How is it that JP Morgan gets $30 billion from the Fed, without precedent, or approval? And you likely recall the closed doors over that weekend. Where is the transparency? Oh yeah. It's the Fed. They don't have to be transparent, and by all appearances, they will never be audited. DANGER Will Robinson!!
A lot more to it of course. How about Goldman Sachs and the Fed? No conflicts of interest? All is well, mine commissar!
There is a bigger picture here, even beyond the intentional bubbles created over and over again, that continually gets swept aside. The Fed, in the center of dollar hegemony, the engine of the emerging Global Empire (at the expense largely of FOREIGN holders of constantly devaluing dollars), a massive military-industrial machine that enjoys virtually unlimited funding...
I mentioned asking the right questions. When do we ask ourselves where all this is heading?
It doesn't take a genius to figure it out. The Euro is a good indication that an elite desire more than just a big powerful central bank in the US. The IMF should be that other clue.
They won't be happy until they have a GLOBAL central bank.
At that point, they will be far beyond the reach of guys like Ron Paul, and they will laugh at us all, but probably they'll laugh the hardest at the various economists along the way, that thought it was all such a great idea.
SO, you KNOW the Fed is a "good idea". You aren't kidding about teaching economics, seems pretty obvious to me.
JR
I say let the FED stay the FED because we don't have hyperinflation. The fiscal policy of the federal government is causing other problems, like high unemployment, but this is not the fault of the FED. The problem with the US government does not lie with the FED, it lies with the Congress and President who think its a good idea to get new credit cards to make the payments on our old maxed out ones! On top of that they have adopted historically proven, bad employment protectionist policies that increase the rate of unemployment and make it difficult to create new jobs.
I wasn't trolling with my statement, I like the FED and I know its a good creation.
I would say something like, "Abandon all hope!", with you being such an advocate of the Fed, and people starring your posts, but at least you have an excuse.
You admitted to teaching economics in college! Which makes you rather indoctrinated, in my book.
And your so-called "argument" is that you really can't argue about it, because if we assume there are elements of "conspiracy", then no one can prove anything anyway. Nice!
But that's fine. Not sure I should address any of your points either, but they're pretty weak.
Let me see if I'm understanding you correctly. You "know" the Fed is a "good creation"??
Your main stated reason is apparently that they're wonderful, because we don't have "hyperinflation". You don't mention the phony CPI, but why would you do that?
Oh yes, and huge unemployment, the Fed has nothing to do with that!
EXCEPT that it is one of their dual mandates, as you well know. Price stability, and maximum employment.
Are politics and protectionism problems, as you point out? Of course, but they are not the MAIN problems.
The problem with most of us (not just economists), is that we fail to even ask the right questions to begin with.
I noticed you didn't even want to touch the Bear Stearns incident I specifically mentioned. Didn't the Fed illegally hand Bear to JP Morgan (one of the owners of the Fed by the way)? How is it that JP Morgan gets $30 billion from the Fed, without precedent, or approval? And you likely recall the closed doors over that weekend. Where is the transparency? Oh yeah. It's the Fed. They don't have to be transparent, and by all appearances, they will never be audited. DANGER Will Robinson!!
A lot more to it of course. How about Goldman Sachs and the Fed? No conflicts of interest? All is well, mine commissar!
There is a bigger picture here, even beyond the intentional bubbles created over and over again, that continually gets swept aside. The Fed, in the center of dollar hegemony, the engine of the emerging Global Empire (at the expense largely of FOREIGN holders of constantly devaluing dollars), a massive military-industrial machine that enjoys virtually unlimited funding...
I mentioned asking the right questions. When do we ask ourselves where all this is heading?
It doesn't take a genius to figure it out. The Euro is a good indication that an elite desire more than just a big powerful central bank in the US. The IMF should be that other clue.
They won't be happy until they have a GLOBAL central bank.
At that point, they will be far beyond the reach of guys like Ron Paul, and they will laugh at us all, but probably they'll laugh the hardest at the various economists along the way, that thought it was all such a great idea.
SO, you KNOW the Fed is a "good idea". You aren't kidding about teaching economics, seems pretty obvious to me.
JR
reply to post by JR MacBeth
Not indoctrinated, informed and learned. If half the people who don't understand the creation of the FED would just go read some books about it they would agree with me.
I don't supply you an opinion about my knowledge, I provided several historical examples. If you choose to ignore those points then live in denial.
I truly don't understand this attack on the FED, yes things happen behind closed doors and you mention several examples that I agree are DEFINITE conflicts of interest. But, you tell me where the FED has hurt anyone clearly? Their mandates are stable currency/prices, and to attack unemployment. Unemployment is high but not b/c of the FED, the QE1-2 were both meant to ease unemployment. The problem isn't the FED, TPTB have successfully moved your attention to what you think is the problem and you have ignored the real issues. Fiscal policy is the real problem here. Visit this blog and read Unemployment and the Next Two Years, it is explained nicely there.
More historical examples show that the federal governments policies of safety nets and entry barriers are what is keeping unemployment high, not the FED policies. Inflation and unemployment are directly related. When we have long periods of no inflation we have long periods of high unemployment. So, the FED undertook QE1-2 to ease that problem. The reason, among others, that it didn't work is that our president pushed for bailouts, safety nets, and other social programs that told Americans it is okay to be lazy and not work. There are unemployment signs everywhere I go, just about everyone I know works more hours than they were hired for b/c the companies cannot get the help they need, and yet we still have unemployment of 9.2%? Its not the FED, its the federal government and the citizens who have this entitlement expectation.
My main point about my main point about hyperinflation has been historically proven. They have succeeded in their mandates for the most part over the past century. Early in their creation there were some speed bumps, just as there are, although less, now. Funny how that works. A large number of variables in any equation can never account for the larger number of interconnected variables in the real world.
You mention the Euro and the IMF, but fail to realize that all of that is just convenience! As long as we have some choice over currency and banks and there is never truly one single world bank that would obviously have too much power to influence geopolitics, then things should always get better. Having the IMF for the Euro Zone, the FED for the America's, the banks of China and Russia, should provide sufficient cover from manipulation of geopolitics. The "elite" want a central currency because its better for trade which is in turn better for employment. There is already an exchange rate out there, but that takes time in a world where time shouldn't even be a consideration.
You tell me, would you rather drive to an embassy or international airport to exchange your dollars for Euros or just be able to spend your money as you see fit? Do you use credit or check cards? If you do then you are already using international currency with exchange rates and you don't have the choice. You are just buying stuff with your dollars and something happens behind the scenes to make sure you get your change back in dollars and they get their payment in Yuan, or Euro's, or whatever currency they use.
You mention the "Global Empire" as devaluing dollars, but shortly before that you talk about how the FED isn't helping to create jobs as it is mandated to do. Well, here is a short lesson on currency. Strong Dollar means more imports since its cheaper to buy stuff from elsewhere. This drives manufacturing and other jobs away from the country. A Weak Dollar means more exports. This drives manufacturing to domestic locations and creates jobs.
The reason the "elite" want an global currency is that they believe monetary policy would be completely under control and that prices, jobs, and trade would stabilize globally. It would be very similar to a gold standard since the amount of money in the entire world could be completely controlled.
You mention auditing the FED. I hear this a lot. The only thing that is secret at the FED is it's international dealings in foreign currencies. Otherwise, its all public record and online. If you want the FED to be audited, GO DO IT! Here is the website: www.federalreserve.gov...
For the record I discussed, in short, the CPI in a different post and included a link.
I really wish we could discuss this in person, its very complex and we could write books on this blog.
I'm not addressing the JP Morgan or Bear Sterns things you mention above b/c that has been talked about to no end and the accusations continue. I simply don't wish to discuss it any further.
Not indoctrinated, informed and learned. If half the people who don't understand the creation of the FED would just go read some books about it they would agree with me.
I don't supply you an opinion about my knowledge, I provided several historical examples. If you choose to ignore those points then live in denial.
I truly don't understand this attack on the FED, yes things happen behind closed doors and you mention several examples that I agree are DEFINITE conflicts of interest. But, you tell me where the FED has hurt anyone clearly? Their mandates are stable currency/prices, and to attack unemployment. Unemployment is high but not b/c of the FED, the QE1-2 were both meant to ease unemployment. The problem isn't the FED, TPTB have successfully moved your attention to what you think is the problem and you have ignored the real issues. Fiscal policy is the real problem here. Visit this blog and read Unemployment and the Next Two Years, it is explained nicely there.
More historical examples show that the federal governments policies of safety nets and entry barriers are what is keeping unemployment high, not the FED policies. Inflation and unemployment are directly related. When we have long periods of no inflation we have long periods of high unemployment. So, the FED undertook QE1-2 to ease that problem. The reason, among others, that it didn't work is that our president pushed for bailouts, safety nets, and other social programs that told Americans it is okay to be lazy and not work. There are unemployment signs everywhere I go, just about everyone I know works more hours than they were hired for b/c the companies cannot get the help they need, and yet we still have unemployment of 9.2%? Its not the FED, its the federal government and the citizens who have this entitlement expectation.
My main point about my main point about hyperinflation has been historically proven. They have succeeded in their mandates for the most part over the past century. Early in their creation there were some speed bumps, just as there are, although less, now. Funny how that works. A large number of variables in any equation can never account for the larger number of interconnected variables in the real world.
You mention the Euro and the IMF, but fail to realize that all of that is just convenience! As long as we have some choice over currency and banks and there is never truly one single world bank that would obviously have too much power to influence geopolitics, then things should always get better. Having the IMF for the Euro Zone, the FED for the America's, the banks of China and Russia, should provide sufficient cover from manipulation of geopolitics. The "elite" want a central currency because its better for trade which is in turn better for employment. There is already an exchange rate out there, but that takes time in a world where time shouldn't even be a consideration.
You tell me, would you rather drive to an embassy or international airport to exchange your dollars for Euros or just be able to spend your money as you see fit? Do you use credit or check cards? If you do then you are already using international currency with exchange rates and you don't have the choice. You are just buying stuff with your dollars and something happens behind the scenes to make sure you get your change back in dollars and they get their payment in Yuan, or Euro's, or whatever currency they use.
You mention the "Global Empire" as devaluing dollars, but shortly before that you talk about how the FED isn't helping to create jobs as it is mandated to do. Well, here is a short lesson on currency. Strong Dollar means more imports since its cheaper to buy stuff from elsewhere. This drives manufacturing and other jobs away from the country. A Weak Dollar means more exports. This drives manufacturing to domestic locations and creates jobs.
The reason the "elite" want an global currency is that they believe monetary policy would be completely under control and that prices, jobs, and trade would stabilize globally. It would be very similar to a gold standard since the amount of money in the entire world could be completely controlled.
You mention auditing the FED. I hear this a lot. The only thing that is secret at the FED is it's international dealings in foreign currencies. Otherwise, its all public record and online. If you want the FED to be audited, GO DO IT! Here is the website: www.federalreserve.gov...
For the record I discussed, in short, the CPI in a different post and included a link.
I really wish we could discuss this in person, its very complex and we could write books on this blog.
I'm not addressing the JP Morgan or Bear Sterns things you mention above b/c that has been talked about to no end and the accusations continue. I simply don't wish to discuss it any further.
edit on 14-7-2011 by memarf1 because: typo
Originally posted by memarf1
reply to post by Observor
If the FED forgives/writes off the existing debt (which is what Ron Paul's suggestion is), the government gets to "borrow" the same amount without raising the limit. But the limit itself makes no sense anyway.
Not exactly. The FED can still say no and is likely to say no if the federal government defaults on its obligation to the FED. Remember, the FED's most important mandate is to keep the dollar as a stable currency with stable or low inflation. If they start printing money in this fashion on a regular basis then we will see loads of inflation. Hayek warned about this in the paper that the other poster posted a page or 2 ago. We have to hope the FED has more scruples than that and refuses to loan more if the treasury doesn't pay back what it already borrowed.
The limits are for how much the Congress can request. Since Congress is the same body that sets the limits, not sure what sense it makes to set the limits in the first place.
The Fed's ability to reject the request is independent of what the limit is. Of course, if they forgive the debt as Ron Paul suggests, under sound banking principles, the Fed should reject any further requests from the Congress for a loan of even $1. I am not aware of any bank that writes off a debt and then gives a fresh loan to the same entity. Since the interest on the loan is anyway coming back to the treasury, the government should have no problem servicing the debt regardless the size. So a question of default doesn't arise.
Ron Paul's suggestion doesn't make sense since he is asking the Fed to violate its own principles to save the Congress from having to do something it could easily do, raise the debt ceiling.
reply to post by memarf1
You type a lot, but I'm beginning to doubt that you're an actual person. Repetitive and irrational walls of text are something sock puppets are known for.
I gave you many examples of central banks or govt initiating boom bust cycles. Even Tulip Mania was caused by govt intervention.
The USD didn't become the WRC because the Fed is good at printing money, we became the WRC because our currency use to be redeemable in gold -- countries trusted us, but now we are losing our WRC position.
Try again.
The U.S has a sound and stable monetary polices?
More nonsense. The president picks the board of governors and they all must be approved by the senate and every 4 years the Fed chairman must be ``re-approved`` by the president. To claim that no one has any political influence over any of them is absurd.
At what college?
You're lying. You didn't read the paper, because if you did you would understand what monetary competition is. You're arguing for what Hayek brilliantly argued against -- a monopoly on the creation of legal tender.
I have already explained this. The monetary system doesn't need any control. The Fed by design is nothing more than a way for national banks to socialize losses, loans and inflation.
Who do you think causes the inflation? Monetary competition is the only way to achieve a stable monetary system. In fact you're denying reality, the USD, Euro, ect can all collapse at any given moment. Monetary competition would provide alternative mediums of exchange that could minimize the effects of a collapse of the USD. Allowing competing currencies would provide safety, security and efficiency and freedom to our commerce and lifestyles.
I do not want to trade one worthless piece of paper for another worthless piece of paper, many stores in my area already accept Euros and they prefer them over the USD so to say that everyone wants U.S dollars is a lie. You even admitted that every other nations currency is pegged to the dollar, so repeatedly telling me that I can trade one nations currency for another really doesn't help your case.
No, no one in their right mind wants to continue using dollars, but they are forced to at gun point. With monetary competition you can still use your dollars if you want to, but no one would be forced to use or accept them.
You type a lot, but I'm beginning to doubt that you're an actual person. Repetitive and irrational walls of text are something sock puppets are known for.
Not once has a central bank, to my recollection, proven to be detrimental. I challenge you to find an example.
I gave you many examples of central banks or govt initiating boom bust cycles. Even Tulip Mania was caused by govt intervention.
You ask for one example of something good that the FED has done. Well, we have the worlds reserve currency and every currency is linked to the dollar.
The USD didn't become the WRC because the Fed is good at printing money, we became the WRC because our currency use to be redeemable in gold -- countries trusted us, but now we are losing our WRC position.
Try again.
This is because of a sound and stable monetary policy
The U.S has a sound and stable monetary polices?
which is as you know completely established by the FED with absolutely no political influence. With the exception of threatening to assassinate the board of governors, there can be no political pressure that is actually applied.
You or I or any of our government officials can call and annoy the board of governors, but we can do nothing legally other than discuss or attempt to persuade them.
More nonsense. The president picks the board of governors and they all must be approved by the senate and every 4 years the Fed chairman must be ``re-approved`` by the president. To claim that no one has any political influence over any of them is absurd.
Its funny you would say I need to read an economics book, I teach college economics.
At what college?
I have read and reread much on this subject, including the Hayek paper you present to prove your point. That paper is an excellent example of my point.
You're lying. You didn't read the paper, because if you did you would understand what monetary competition is. You're arguing for what Hayek brilliantly argued against -- a monopoly on the creation of legal tender.
You state that no central bank is necessary at all, but without such a bank how do you propose we control the monetary system? Mercantilism?
I have already explained this. The monetary system doesn't need any control. The Fed by design is nothing more than a way for national banks to socialize losses, loans and inflation.
Between sinking ships, the simple lack of gold, and the number of people in the world, it simply won't work.
The biggest part of the FED's mandate is the control of inflation and a stable monetary policy, which is exactly what Hayek is advocating in this paper. Additionally, the FED has established a very good record of stability.
Who do you think causes the inflation? Monetary competition is the only way to achieve a stable monetary system. In fact you're denying reality, the USD, Euro, ect can all collapse at any given moment. Monetary competition would provide alternative mediums of exchange that could minimize the effects of a collapse of the USD. Allowing competing currencies would provide safety, security and efficiency and freedom to our commerce and lifestyles.
Furthermore, there is nothing restricting your use of foreign currency within the confines of your country, except convenience
I do not want to trade one worthless piece of paper for another worthless piece of paper, many stores in my area already accept Euros and they prefer them over the USD so to say that everyone wants U.S dollars is a lie. You even admitted that every other nations currency is pegged to the dollar, so repeatedly telling me that I can trade one nations currency for another really doesn't help your case.
Everyone else chooses the dollar, and thus you must.
No, no one in their right mind wants to continue using dollars, but they are forced to at gun point. With monetary competition you can still use your dollars if you want to, but no one would be forced to use or accept them.
edit on 14-7-2011 by Rockdisjoint because: (no reason
given)
reply to post by Observor
" Did they conspire with governments to give themselves that power? Quite unlikely. " I suggest you read a well researched article on a different subject before making that type of statement. That Article made a permanent change in my view of how this country is actually run.
"....Paper currency and fractional reserve banking became popular under market forces because they served a dire need, a money supply that can keep up with industrial production without leading to monetary deflation....."
This is the basic premise (excuse) used to justify the printing of money aka expansionary monetary policies. Below I have the three accepted economic models Classical, Keynesians, and Monetarists. None seem to think much of expansionary monetary policies.
HMMMmmm, I wonder what the "velocity of money" idea does to your theory that we NEED to expand the money supply.
It seems like Mises (Austrian School of Economics) is not the only one who is not real enthusiastic about expansionary monetary policies. Now even the head of the bank of England is backing off. more on the ongoing debate UK Proposal for Banking Reform: Fractional-Reserve Banking versus Deposits and Loans
Seems Fractional Reserve got the boot in the UK over a hundred years ago. Too bad the sheeple keep falling for the same con job.
I guess I am not the only one who hates the banksters
Here is a history of Fractional Reserve banking but the source is very questionable: abundanthope.net...
Paper currency and fractional reserve banking became popular under market forces because they served a dire need, a money supply that can keep up with industrial production without leading to monetary deflation.
Did the bankers enjoy their new found power to create money out of nothing? Quite likely. Did they conspire with governments to give themselves that power? Quite unlikely.
" Did they conspire with governments to give themselves that power? Quite unlikely. " I suggest you read a well researched article on a different subject before making that type of statement. That Article made a permanent change in my view of how this country is actually run.
... Over the last quarter-century, historians have by and large ceased writing about the role of ruling elites in the country's evolution. Or if they have taken up the subject, they have done so to argue against its salience for grasping the essentials of American political history. Yet there is something peculiar about this recent intellectual aversion, even if we accept as true the beliefs that democracy, social mobility, and economic dynamism have long inhibited the congealing of a ruling stratum. This aversion has coincided, after all, with one of the largest and fastest-growing disparities in the division of income and wealth in American history....Neglecting the powerful had not been characteristic of historical work before World War II. hnn.us...
"....Paper currency and fractional reserve banking became popular under market forces because they served a dire need, a money supply that can keep up with industrial production without leading to monetary deflation....."
This is the basic premise (excuse) used to justify the printing of money aka expansionary monetary policies. Below I have the three accepted economic models Classical, Keynesians, and Monetarists. None seem to think much of expansionary monetary policies.
CLASSICAL
Classical economists believe in Say's Law, which states that people supply things to the economy so they have income to demand things of the value they've supplied. [Basic Barter System. cv] Classical economists also argue that all money is always in the economy, because even when people put their income away in the form of savings in banks, stocks, etc. that money still flows back into the economy in the form of investment....
The quantity theory of money is the theory dealing with money and prices. It states that the price level in an economy depends on how much money is in the economy.
In classical economics, the quantity theory of money centers around the equation
"(Quantity of money) x (velocity of money) = (price level) x (quantity of goods sold)."
Velocity of money just means how often money is spent. The price level times the quantity of goods sold obviously equals the GDP, total production. Velocity, then, times the amount of money would equal that. A coin, for example, is passed around from person to person throughout time and each time it is spent, it generates income worth its value. The number of times that coin was passed on throughout the year is its velocity....
..Classical economics also stresses that the amount of goods and services produced is not affected by the money supply. This doctrine is the veil of money assumption. This assumption separated the world of finance (of purely monetary studies) and the rest of the economy (the production of goods and services). The veil of money theory basically says that when the money supply changes, the real economy does not because when money supply changes by a certain amount, everything else does as well. If it doubles, then prices double, and people's pay doubles too to compensate for this, so nothing really changes. Classical economics states that money supply is the force that changes the price level.... library.thinkquest.org...
HMMMmmm, I wonder what the "velocity of money" idea does to your theory that we NEED to expand the money supply.
KEYNESIANS
Keynesians do not believe in the direct link between the supply of money and the price level that emerges from the classical quantity theory of money. They reject the notion that the economy is always at or near the natural level of real GDP ....They also reject the proposition that the velocity of circulation of money is constant and can cite evidence to support their case.
Keynesians do believe in an indirect link between the money supply and real GDP. They believe that expansionary monetary policy increases the supply of loanable funds available through the banking system, causing interest rates to fall. With lower interest rates, aggregate expenditures on investment and interest-sensitive consumption goods usually increase, causing real GDP to rise. Hence, monetary policy can affect real GDP indirectly.
Keynesians, however, remain skeptical about the effectiveness of monetary policy. .... Keynesians tend to place less emphasis on the effectiveness of monetary policy and more emphasis on the effectiveness of fiscal policy, which they regard as having a more direct effect on real GDP.
MONETARISTS
...Since the 1950s, a new view of monetary policy, called monetarism, has emerged that disputes the Keynesian view that monetary policy is relatively ineffective. Adherents of monetarism, called monetarists, argue that the demand for money is stable and is not very sensitive to changes in the rate of interest. Hence, expansionary monetary policies only serve to create a surplus of money that households will quickly spend, thereby increasing aggregate demand. Unlike classical economists, monetarists acknowledge that the economy may not always be operating at the full employment level of real GDP. Thus, in the short-run, monetarists argue that expansionary monetary policies may increase the level of real GDP by increasing aggregate demand. However, in the long-run, when the economy is operating at the full employment level, monetarists argue that the classical quantity theory remains a good approximation of the link between the supply of money, the price level, and the real GDP—that is, in the long-run, expansionary monetary policies only lead to inflation and do not affect the level of real GDP.
Monetarists are particularly concerned with the potential for abuse of monetary policy and destabilization of the price level. They often cite the contractionary monetary policies of the Fed during the Great Depression, policies that they blame for the tremendous deflation of that period. Monetarists believe that persistent inflations (or deflations) are purely monetary phenomena brought about by persistent expansionary (or contractionary) monetary policies. As a means of combating persistent periods of inflation or deflation, monetarists argue in favor of a fixed money supply rule. They believe that the Fed should conduct monetary policy so as to keep the growth rate of the money supply fixed at a rate that is equal to the real growth rate of the economy over time. Thus, monetarists believe that monetary policy should serve to accommodate increases in real GDP without causing either inflation or deflation. www.cliffsnotes.com...
It seems like Mises (Austrian School of Economics) is not the only one who is not real enthusiastic about expansionary monetary policies. Now even the head of the bank of England is backing off. more on the ongoing debate UK Proposal for Banking Reform: Fractional-Reserve Banking versus Deposits and Loans
Bank of England Head Mervyn King Proposes Eliminating Fractional Reserve Banking
... Mervyn King, the governor of the Bank of England, has tonight made a big intervention into the debate on banking reform. In a speech at Buttonwood, New York, he [listed] much more radical proposals....
4. Stunningly, Mervyn King imagines the "abolition of fractional reserve banking":
"Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not co-exist with risky assets."
King does not advocate any of these radical plans - but the fact that he goes out of his way to list them, and to place them on the agenda of the UK's Independent Commission on Banking, means that we are not yet at the end of the debate about long-term reform of the banks.
***
Beyond the technicalities, the fact that a central banker in a G7 country is prepared to imagine such outcomes is itself significant.
Moreover, King wrote to Ben Dyson and stated:
You suggest that banks should be forced to conform to the underlying purpose of the 1844 Bank Reform Act. You might be aware that I have said publicly that I think ideas in this spirit - such as those advocated by John Kay - certainly merit serious consideration in the debate as to how we reform our financial system. I remain sympathetic to these views. But as I said in my previous letter, I do not want to prejudice the outcome of the Banking commission's deliberations. Now the Commission has been set up, I think we all should wait to see its conclusions."
As Dyson explains:
The 1844 Bank Charter Act ('Reform' is a typo) was a piece of legislation that prohibited commercial banks from printing paper notes (£1, £5, £10 and so on). Before this law was passed, banks were permitted to print as many paper notes as they wanted, up to the point where they printed too many and went bankrupt (as everyone cashed in their paper notes at once).
The 1844 Bank Charter Act ('Reform' is a typo) was a piece of legislation that prohibited commercial banks from printing paper notes (£1, £5, £10 and so on). Before this law was passed, banks were permitted to print as many paper notes as they wanted, up to the point where they printed too many and went bankrupt (as everyone cashed in their paper notes at once).
That situation should sound very similar to the situation that we have today - we currently allow commercial banks to 'print' money in the form of digital bank deposits (the numbers in your bank account). In the years up to 2007, the banks 'printed' far too much of this digital money, to the extent that they - and the economy - started to collapse.
The 'underlying purpose' of the 1844 Bank Charter Act was to prevent the commercial banks creating money and to restore that privilege to the state. It had become obvious to the government of the day that if banks were allowed to create money, they would keep creating money up until the point where it destabilized the economy, so they could not be trusted with this responsibility.
So, in plain English, Mervyn King appears to be saying:
"I agree that banks should probably be stopped from creating money,....
www.zerohedge.com...
Seems Fractional Reserve got the boot in the UK over a hundred years ago. Too bad the sheeple keep falling for the same con job.
Top bankers destroy value, study claims
Bankers should count themselves lucky they are being hit by a mere 50 per cent additional tax on bonuses, a new report argues today, because their benefit to society is negative.....
the NEF has built on the summer comment from Adair Turner, chairman of the Financial Services Authority, that some activity in the City [London Bankers] is "socially useless" to come up with an estimate of the social value of elite bankers.
The authors assume the financial crisis and recession would not have happened without City bankers engaging in risky, opaque and complex transactions. Applying a guess about the cost of the recession on the rest of society, they estimate top City bankers des-troy £7 of value for every £1 they are paid privately.
If the figures are accurate, a rational government should shut the City. Naturally, the City disagrees and so does the Treasury, which sees benefits in properly regulated activity in the Square Mile....
I guess I am not the only one who hates the banksters
Here is a history of Fractional Reserve banking but the source is very questionable: abundanthope.net...
reply to post by Observor
Loans and deposits are not the same and were not treated as the same even back in Roman and Greek times. As I said this is a matter of CONTRACT LAW, and the bankers are committing what is in actuality a breech of contract. Only the fact it has become such a common practice has kept Judges from hang bankers out to dry. LINK
Despite what you seem to think the idea of a "business contract" has been with us for centuries and that includes "Banking Contracts"
I doubt the banks of the day violated any contracts. I fear they may never have promised to protect the deposits (current or savings) under all circumstances. Otherwise they would practically be the equivalent to loans and not deposits.
Under your terms, if all the accounts were current accounts, banks cannot lend even a penny, since if the borrowers default or go under the banks reserves would be a fraction of their committments. Historically that is how banks operated for centuries....
Loans and deposits are not the same and were not treated as the same even back in Roman and Greek times. As I said this is a matter of CONTRACT LAW, and the bankers are committing what is in actuality a breech of contract. Only the fact it has become such a common practice has kept Judges from hang bankers out to dry. LINK
Despite what you seem to think the idea of a "business contract" has been with us for centuries and that includes "Banking Contracts"
...As de Soto explains, in the history of banking stretching back to old Greece, there has always been a clear difference between the irregular deposit contract and the loan (or mutuum) contract. The difference between these two types of contracts is perfectly logical and has been upheld legally throughout the history of Greek and later Roman banking practice (which doesn't mean that bankers did not quite often yield to the temptation of misappropriating the funds entrusted to them – but the legal situation was at all times perfectly clear).
Let us first explain what these contracts are and why they are different. A deposit of a good is done for the purpose of safe-keeping or warehousing. Such a deposit is termed 'irregular' when it is comprised of a fungible good, which allows a great many deposits to be intermingled, and confers upon the depository institution only the duty to pay to the depositor the so-called tantundem on demand, this is to say an amount of the good similar to the amount deposited, but not necessarily the completely identical units of the good deposited.
Note here that this type of deposit could refer to e.g. grain deposited in a grain silo, or oil deposited in an oil storage facility, or any other fungible good, including of course money. To the depositor it obviously doesn't matter upon withdrawal whether the gold ounce he receives is the very same one he deposited originally.
What matters is that it is a gold ounce indistinguishable in weight and appearance from the originally deposited one. The reasons for depositing money in a bank are
1. the safekeeping function the bank provides (the risk of theft or loss of the money is reduced) and
2. certain services such as payment services the bank can render on behalf of the depositor. It is clear though that the deposit is expected to be available on demand, which is to say, anytime.
This is true of every deposit a bank receives, and thus to actually fulfill this essential feature of the deposit contract, the tandundem equal to all deposits must be kept at hand at all times. In other words, if the bank takes some percentage of the deposits entrusted to it and uses it for its own business ventures, it misappropriates funds.
De Soto then contrasts the irregular deposit contract with the loan contract, in which an exchange of present goods for future goods takes place. This is a fundamentally different transaction, in that the saver who lends money to the bank for a specified term at interest relinquishes his use of the money for the term, in exchange of receiving back his money plus interest in the future.
The bank then has full use of the money for the duration of the contract, and can e.g. use it to lend it out at a higher interest rate to an entrepreneur in need of funds. Here the bank plays a legitimate role as a financial intermediary, as an institution that furthers economic coordination by bringing lenders and borrowers together, and making a legitimate profit for rendering this service.
By contrast, in the case of the bank lending out funds it is supposed to safeguard, i.e. money held in demand deposits, a situation is created that flies in the face of common sense. The depositor has not relinquished use of the money deposited after all, so when the bank lends some this deposited money out – a process that creates an additional deposit in favor of the borrower – then two parties have a concurrent claim on the same money.
The reason why bankers had the idea to misappropriate deposits in this manner is of course that they noticed than in 'normal times', it would rarely happen that a majority of depositors would want to withdraw their deposits all at once. So by keeping only a fractional reserve, they could make large profits for themselves by making use of the money that had been entrusted to them for mere safekeeping (employing the aforementioned 'imaginative powers' of bankers that Horwitz finds so laudable).
However, it was always held by jurists throughout antiquity that this misappropriation of deposits was clearly illegal.
In Roman law, bankers who could not pay out deposits on demand due to such misappropriation were fully liable and forced to pay a fine for late payment. As de Soto explains, this led to some legal confusion later on, as canonical laws against usury were circumvented in medieval times via the so-called 'depositum confessatum'.
This was in fact a loan contract that was disguised as a demand deposit, which allowed an interest payment to be attached to it by disguising it as a fine for late payment. This led legal scholars subsequently astray, as the idea of the deposit being the same as a loan contract began to take root.... www.acting-man.com...
reply to post by memarf1
You have got to be kidding.
Ever hear of the GREAT DEPRESSION????
People suiciding by jumping out of windows???
Or doesn't that count as "hurting people.
The Fed caused the Great Deppression as "The brilliance of Friedman and Schwartz's work on the Great Depression" shows. Even Bernanke plainly states that in his Remarks At the Conference to Honor Milton Friedman, November 8, 2002.
Ending statement by The Bernanke:
This from the idiot who just more than DOUBLED the US money supply
The ONLY reason the FED (and Congress) has not brought the USA to total bankruptcy and Hyperinflation is because the US dollar is the World Reserve Currency. However the rest of the world is getting pretty fed up with the situation. Part of the reason we are at war in the middle east is because of a move away from the dollar.
Stewart Dougherty, a specialist in inferential analysis, agrees. It is now "statistically impossible for the United States to pay its obligations". www.silverbearcafe.com...
And if you have any doubts at all about the CRIMINAL INTENT of those who conspired on Jekyll Island to bring about the Federal Reserve Act of 1913. Here are the words of the organizer:
I truly don't understand this attack on the FED, yes things happen behind closed doors and you mention several examples that I agree are DEFINITE conflicts of interest. But, you tell me where the FED has hurt anyone clearly?
you tell me where the FED has hurt anyone clearly?
You have got to be kidding.
Ever hear of the GREAT DEPRESSION????
People suiciding by jumping out of windows???
Or doesn't that count as "hurting people.
The Fed caused the Great Deppression as "The brilliance of Friedman and Schwartz's work on the Great Depression" shows. Even Bernanke plainly states that in his Remarks At the Conference to Honor Milton Friedman, November 8, 2002.
Ending statement by The Bernanke:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.
This from the idiot who just more than DOUBLED the US money supply
The ONLY reason the FED (and Congress) has not brought the USA to total bankruptcy and Hyperinflation is because the US dollar is the World Reserve Currency. However the rest of the world is getting pretty fed up with the situation. Part of the reason we are at war in the middle east is because of a move away from the dollar.
The Real But Unspoken Reasons For The Iraq War
Summary
Although completely suppressed in the U.S. media, the answer to the Iraq enigma is simple yet shocking - it an an oil CURRENCY war. The Real Reason for this upcoming war is this administration's goal of preventing further OPEC momentum towards the euro as an oil transaction currency standard....
....I am amazed that the US government, in the midst of the worst financial crises ever, is content for short-selling to drive down the asset prices that the government is trying to support....The bald fact is that the combination of ignorance, negligence, and ideology that permitted the crisis to happen still prevails and is blocking any remedy. Either the people in power in Washington and the financial community are total dimwits or they are manipulating an opportunity to redistribute wealth from taxpayers, equity owners and pension funds to the financial sector. ~ Paul Craig Roberts was Assistant Secretary of the Treasury www.countercurrents.org...
Stewart Dougherty, a specialist in inferential analysis, agrees. It is now "statistically impossible for the United States to pay its obligations". www.silverbearcafe.com...
And if you have any doubts at all about the CRIMINAL INTENT of those who conspired on Jekyll Island to bring about the Federal Reserve Act of 1913. Here are the words of the organizer:
Of all the contrivances for cheating the laboring classes of mankind, none is so effectual as that which deludes them with paper money. It is the most perfect expedient ever invented for fertilizing the rich man’s fields by the sweat of the poor man’s brow. Ordinary tyranny, oppression, excessive taxation, these bear lightly on the happiness of the community compared with fraudulent currencies and the robberies committed by depreciated paper. Our own history has recorded enough, and more than enough, of the demoralizing tendency, the injustice and intolerable oppression on the virtuous and well disposed, of a degraded paper currency, authorized by law, or in any way countenanced by Government. ~Nelson W. Aldrich, United States Senator, at a New York City dinner speech on October 15, 1913 IV Proceedings of the Academy of Political Science #1, at 38 (Columbia University, New York (1914)). [He was quoting Andrew Jackson. cv] www.linuxtoday.com...
reply to post by crimvelvet
Always good to see your posts crimvelvet. No quarter!
I sometimes get a bit frustrated in these debates, but usually because so many are misinformed.
But what happens when you encounter someone who "should" know better, and keeps making statements that make your mouth drop open?
The Fed not hurting anyone?
Sheesh. That one takes the prize today.
Keep up the good work!
JR
Always good to see your posts crimvelvet. No quarter!
I sometimes get a bit frustrated in these debates, but usually because so many are misinformed.
But what happens when you encounter someone who "should" know better, and keeps making statements that make your mouth drop open?
The Fed not hurting anyone?
Sheesh. That one takes the prize today.
Keep up the good work!
JR
reply to post by memarf1
I may not agree with you about the FED but I certainly do agree about "supply side economics." One guy, I am not sure who, said If you want to do something for the economy get out there and produce something! Grow food, start a business, MAKE something... The USA has become a country of burger flippers and store clerks, we no longer MAKE stuff, we import it now instead, especially since NAFTA and WTO.
One statistic I found very interesting was in this article:
Much of the economic woes are due to the barriers to starting and running a small business. Red Tape coupled with the Government/Corporate revolving door means the large corporations in control of the US bureaucracies are in a very good position to wipe-out the smaller competition.
Sancho's comment:
Another example:
SHIELDING THE GIANTS is a MUST READ detailing the history of the cover-up of food borne diseases caused by the big corporations: www.whistleblower.org...
One E. coli O157:H7 Outbreak I Think I could have Prevented, is an article by a law firm specialising in Food Borne ill cases. They were contacted by Munsell just before the fecal material hit the fan.
John Munsell & A Trip To The Woodshed With The USDA, is a humorous story detailing the corruption in the government.
This is collaborating information:
Senate Hearings
www.access.gpo.gov... - Testimony by Mr. Stan Painter, Chairman, National Joint Council of Food Inspection Locals:
www.fsis.usda.gov... - Hearing where Stan Painter is called a LIAR by the government. (In a round about way of course)
And more recently the USDA big-footing small business: Family Facing $4 Million in Fines for Selling Bunnies (netting $200 a year)
Compare that to this: Report Rips FDA Oversight Of Produce
Everyone is EQUAL under the LAW????
Yeah, right, and if you believe that I have a bridge I want to sell....
.....Let me correct something I stated earlier, that virtually all startup businesses fail. In reality only about 17% fail after 5 years, Link. My point still stands however, and is addressed at the end of my response to you.
I am not even going to address the rest of your posts until you go read some stuff about supply side economics. It is the study and claim that reducing barriers to the supply side will stimulate the supply side to grow. SO, if we lower taxes on corporations, if we reduce barriers to entry(which does work), and so on, or if we take on an infant industry position(paying for upstarts or protecting young industry as we did with steel), or if we place stimulus money at the top and hope it trickles down.....
I may not agree with you about the FED but I certainly do agree about "supply side economics." One guy, I am not sure who, said If you want to do something for the economy get out there and produce something! Grow food, start a business, MAKE something... The USA has become a country of burger flippers and store clerks, we no longer MAKE stuff, we import it now instead, especially since NAFTA and WTO.
One statistic I found very interesting was in this article:
Research on Small Businesses by Moya K. Mason
....4. A study done by Inc. magazine and the National Business Incubator Association (NBIA) revealed that 80 percent of new businesses fail within the first five years.
....7. According to Dun & Bradstreet reports, "Businesses with fewer than 20 employees have only a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10 years." Restaurants only have a 20% chance of surviving 2 years. Of these failed business, only 10% of them close involuntarily due to bankruptcy and the remaining 90% close because the business was not successful, did not provide the level of income desired or was too much work for their efforts. The old adage, "People don't plan to fail, they fail to plan" certainly holds true when it comes to small business success. The failure rate for new businesses seems to be around 70% to 80% in the first year and only about half of those who survive the first year will remain in business the next five years.
Much of the economic woes are due to the barriers to starting and running a small business. Red Tape coupled with the Government/Corporate revolving door means the large corporations in control of the US bureaucracies are in a very good position to wipe-out the smaller competition.
Sancho's comment:
...I'm glad to see People posting about their own experiences with waking up. I know at times it can be difficult; especially wading through all the crud out there.
I remember for years my brother chose not to see the light of day, and it was his very employer who showed him. He worked for the EPA in oil field site inspections. Consistently he was tasked with fining, and shutting down mom, and pop outfits, but consistently was ordered to leave the big boys like Exxon Mobil alone.
This made a profound impact on the way he looked at the World,.... www.abovetopsecret.com...
Another example:
SHIELDING THE GIANTS is a MUST READ detailing the history of the cover-up of food borne diseases caused by the big corporations: www.whistleblower.org...
One E. coli O157:H7 Outbreak I Think I could have Prevented, is an article by a law firm specialising in Food Borne ill cases. They were contacted by Munsell just before the fecal material hit the fan.
John Munsell & A Trip To The Woodshed With The USDA, is a humorous story detailing the corruption in the government.
This is collaborating information:
Senate Hearings
www.access.gpo.gov... - Testimony by Mr. Stan Painter, Chairman, National Joint Council of Food Inspection Locals:
www.fsis.usda.gov... - Hearing where Stan Painter is called a LIAR by the government. (In a round about way of course)
And more recently the USDA big-footing small business: Family Facing $4 Million in Fines for Selling Bunnies (netting $200 a year)
Compare that to this: Report Rips FDA Oversight Of Produce
... FDA relies on the industry to correct them without oversight or follow-up. Between 2000 and 2007, FDA detected food safety problems at more than 40% of the 2,002 plants inspected, yet half of those plants were inspected only once. The plants with food safety problems received only warning letters from FDA, and even those ended in 2005...
Salmonella Source Found
The Salmonella strain associated with the lastest foodborne illness outbreak has been found, in irrigation water as well as in a sample from some serrano peppers at a Mexican farm. The farm is located in Nuevo Leon, Mexico. “The agency seized no fresh produce, sought no injunctions and prosecuted no firms” www.americanvegetablegrower.com...
Everyone is EQUAL under the LAW????
Yeah, right, and if you believe that I have a bridge I want to sell....
reply to post by Rockdisjoint
I'm keeping this one as a point by point, although I didn't waste space by quoting you. You are clearly an intelligent individual, but you have ideas of how things work, but no actual facts. You need to go study this before making these types of arguments.
I'm not a sock puppet, its a complex issue that requires lots of explaining for closed minded conspiracy theorists who won't believe the truth if it slapped them in the face. They see problems everywhere and for some reason find a conspiracy everywhere they look.
You didn't give any specific examples, you only spouted off about several problems the US has had since its inception, but never once did you provide me a direct example of an economy that failed b/c of a poor monetary policy connected to a central bank that was loosely tied to a central government, i.e. an entity like the FED.
The Dollar became the worlds currency because it was a reliable source. Just like the British Pound was the world currency before that, the Dollar grew in popularity because of stability. Its also important to note that it wasn't the world currency until the close of WW2 and the Marshall plan was enacted while the British were low on gold reserves and the US agreed to a direct valuation of $35 per ounce of gold. Additionally, we don't have a government sponsored gold standard, but last time I checked you could still buy gold with your dollars. So, go buy some gold if you don't like using paper money. Then again, that would be inconvenient to make purchases, so I doubt you do that either.
Do you seriously believe that the US has poor monetary policy from the FED? We definitely have FISCAL issues, but not MONETARY ones. Last time I checked it didn't take a suitcase full of money to buy a loaf of bread. In fact, I can't think of a time since the FED's creation that that has been the case, not even the Great Depression.
Go read up on the board of governors buddy. The president appoints members for 14 year terms, and even then only 1 comes up every 2 years. So, it would take a president both terms to appoint a majority to the board, and even then he would only have 4 of 7. The design was specifically to reduce and virtually eliminate the possibility of political influence over the board. By the time the President has a majority he is leaving office anyway. What you elude to is the term 2 of them serve as chairmen and vice-chairmen while on the board. They are still subject to their original 14 year term and thus outside the political influence you so desire so you can hate the FED some more.
Florida State for a short time, then Tallahassee Community College until I moved back to my home town of Joplin(where I believed pre-tornado that my family would be better suited) where I have acquired a position at Crowder College.
I don't lie... Ever. I did read the paper and you are the one that misunderstands Hayeks intention. In fact, let me glance back through the paper real fast for the most important single paragraph in it... Page 14, first paragraph. Hayek agrees with me. Furthermore, you don't have a lack of currency to choose from. You can barter, trade, use Euros if you like, Gold is abundant and available, oh and it has a dollar price(interesting right?). You have other options if you don't like paper currency. You choose not to exploit your other options b/c paper money is efficient and simple. Plus, since we have such a great central bank, it has a relatively stable value, losing 1-3% per year, as is expected by the tiny expansionary policy that is normal for the FED(that is until the QE of course).
You really want to go back to barter or the stone age? Why not eliminate money entirely? You wish for a gold, but don't even realize that gold is just as arbitrary as paper! I watched your video and the guy fails to mention that as you dilute the gold or silver into the coinage, and use fractional amounts, the banks have just as much power as they do right now. PLUS, he argues for a single world currency which is precisely what you and Hayek argued against! SO PICK A SIDE ALREADY!
You fail to realize that competing currencies will have exchange rates too. Competing currencies simply makes trade more difficult, which is one big reason the American Confederacy(post revolution, not Civil War) was failing so quickly. One currency is important for trade, stability, and security.
Now I'm very confused. Do you want a currency competition or not? One or many? All are worthless, so what exactly are you advocating? I think you don't even know.
Nobody is forcing you at gunpoint to use dollars. Many businesses issue money that can only be used at their locations. We typically call them coupons, but they are essentially money. If you want to only use coupons, go ahead. If you want to buy things with gold, nobody is stopping you. If you want to print your own money, as long as its not counterfeit US Dollars, do it. I think you will find it is very difficult to trade that way though. That is exactly why I believe you won't do it.
reply to post by crimvelvet
The FED was young and inexperienced at the time of the Great Depression and undertook a disastrous restrictive monetary policy. They learned from that and have since had a very conservative expansionary policy(until recently), hence why we have not had any new Great Depressions directly related to the FED. If you wish to count the recent major recession, okay, but that too was because of a dumb decision to deregulate the banks, not sinister plans to take control of the world. In fact, Ben Bernanke did his thesis for his Ph.D. on the Great Depression and did exactly the opposite policy of what was undertaken at the time of that famous example. He undertook an expansionary monetary policy. Now, I don't believe it worked, I believe it was a bad decision, but I don't believe we are in a depression either.
People committing suicide out of windows certainly DOES NOT COUNT as the FED hurting people. Those people chose to kill themselves and then did so. The Chairmen of the FED didn't push them out, he didn't order their demise, and he certainly did not tell them to hurt themselves. I am broke, but you don't see me killing myself. If someone thinks their money is worth more than their lives and decide to kill themselves, I don't blame the FED, I blame the idiot who has misplaced valuation.
I recently had 2 uncles die 2 weeks apart. One fought with cancer for 2 years and the other committed suicide because he had some familial issues. The one that died first was the one who committed suicide. The one remaining told my father that my other uncle was a coward and it was sad that he had been fighting to stay alive when the suicidal one just gave up the gift of life that the cancerous uncle so desired. I couldn't agree more. I don't blame the suicidal ones family for making his life hell, I blame him for giving up. I don't blame the FED for idiots jumping from buildings b/c they went bankrupt, I blame the idiots for not realizing the ground hurts more than an empty bank account.
reply to post by crimvelvet
I had to add this to compliment your last post. Very informative and enlightening. There is certainly corruption inside our government. The question is, how do we weed it out?
I'm keeping this one as a point by point, although I didn't waste space by quoting you. You are clearly an intelligent individual, but you have ideas of how things work, but no actual facts. You need to go study this before making these types of arguments.
I'm not a sock puppet, its a complex issue that requires lots of explaining for closed minded conspiracy theorists who won't believe the truth if it slapped them in the face. They see problems everywhere and for some reason find a conspiracy everywhere they look.
You didn't give any specific examples, you only spouted off about several problems the US has had since its inception, but never once did you provide me a direct example of an economy that failed b/c of a poor monetary policy connected to a central bank that was loosely tied to a central government, i.e. an entity like the FED.
The Dollar became the worlds currency because it was a reliable source. Just like the British Pound was the world currency before that, the Dollar grew in popularity because of stability. Its also important to note that it wasn't the world currency until the close of WW2 and the Marshall plan was enacted while the British were low on gold reserves and the US agreed to a direct valuation of $35 per ounce of gold. Additionally, we don't have a government sponsored gold standard, but last time I checked you could still buy gold with your dollars. So, go buy some gold if you don't like using paper money. Then again, that would be inconvenient to make purchases, so I doubt you do that either.
Do you seriously believe that the US has poor monetary policy from the FED? We definitely have FISCAL issues, but not MONETARY ones. Last time I checked it didn't take a suitcase full of money to buy a loaf of bread. In fact, I can't think of a time since the FED's creation that that has been the case, not even the Great Depression.
Go read up on the board of governors buddy. The president appoints members for 14 year terms, and even then only 1 comes up every 2 years. So, it would take a president both terms to appoint a majority to the board, and even then he would only have 4 of 7. The design was specifically to reduce and virtually eliminate the possibility of political influence over the board. By the time the President has a majority he is leaving office anyway. What you elude to is the term 2 of them serve as chairmen and vice-chairmen while on the board. They are still subject to their original 14 year term and thus outside the political influence you so desire so you can hate the FED some more.
Florida State for a short time, then Tallahassee Community College until I moved back to my home town of Joplin(where I believed pre-tornado that my family would be better suited) where I have acquired a position at Crowder College.
I don't lie... Ever. I did read the paper and you are the one that misunderstands Hayeks intention. In fact, let me glance back through the paper real fast for the most important single paragraph in it... Page 14, first paragraph. Hayek agrees with me. Furthermore, you don't have a lack of currency to choose from. You can barter, trade, use Euros if you like, Gold is abundant and available, oh and it has a dollar price(interesting right?). You have other options if you don't like paper currency. You choose not to exploit your other options b/c paper money is efficient and simple. Plus, since we have such a great central bank, it has a relatively stable value, losing 1-3% per year, as is expected by the tiny expansionary policy that is normal for the FED(that is until the QE of course).
You really want to go back to barter or the stone age? Why not eliminate money entirely? You wish for a gold, but don't even realize that gold is just as arbitrary as paper! I watched your video and the guy fails to mention that as you dilute the gold or silver into the coinage, and use fractional amounts, the banks have just as much power as they do right now. PLUS, he argues for a single world currency which is precisely what you and Hayek argued against! SO PICK A SIDE ALREADY!
You fail to realize that competing currencies will have exchange rates too. Competing currencies simply makes trade more difficult, which is one big reason the American Confederacy(post revolution, not Civil War) was failing so quickly. One currency is important for trade, stability, and security.
Now I'm very confused. Do you want a currency competition or not? One or many? All are worthless, so what exactly are you advocating? I think you don't even know.
Nobody is forcing you at gunpoint to use dollars. Many businesses issue money that can only be used at their locations. We typically call them coupons, but they are essentially money. If you want to only use coupons, go ahead. If you want to buy things with gold, nobody is stopping you. If you want to print your own money, as long as its not counterfeit US Dollars, do it. I think you will find it is very difficult to trade that way though. That is exactly why I believe you won't do it.
reply to post by crimvelvet
The FED was young and inexperienced at the time of the Great Depression and undertook a disastrous restrictive monetary policy. They learned from that and have since had a very conservative expansionary policy(until recently), hence why we have not had any new Great Depressions directly related to the FED. If you wish to count the recent major recession, okay, but that too was because of a dumb decision to deregulate the banks, not sinister plans to take control of the world. In fact, Ben Bernanke did his thesis for his Ph.D. on the Great Depression and did exactly the opposite policy of what was undertaken at the time of that famous example. He undertook an expansionary monetary policy. Now, I don't believe it worked, I believe it was a bad decision, but I don't believe we are in a depression either.
People committing suicide out of windows certainly DOES NOT COUNT as the FED hurting people. Those people chose to kill themselves and then did so. The Chairmen of the FED didn't push them out, he didn't order their demise, and he certainly did not tell them to hurt themselves. I am broke, but you don't see me killing myself. If someone thinks their money is worth more than their lives and decide to kill themselves, I don't blame the FED, I blame the idiot who has misplaced valuation.
I recently had 2 uncles die 2 weeks apart. One fought with cancer for 2 years and the other committed suicide because he had some familial issues. The one that died first was the one who committed suicide. The one remaining told my father that my other uncle was a coward and it was sad that he had been fighting to stay alive when the suicidal one just gave up the gift of life that the cancerous uncle so desired. I couldn't agree more. I don't blame the suicidal ones family for making his life hell, I blame him for giving up. I don't blame the FED for idiots jumping from buildings b/c they went bankrupt, I blame the idiots for not realizing the ground hurts more than an empty bank account.
reply to post by crimvelvet
I had to add this to compliment your last post. Very informative and enlightening. There is certainly corruption inside our government. The question is, how do we weed it out?
edit on 14-7-2011 by memarf1 because: Adding one more response
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