Question about US Politics and School

Now before anyone goes on a rant about how the school system is nothing but institutionalized brainwashing, well I don't want to hear it. (I guess you can share it if you want. I can't stop you, just I would rather not hear it. Nothing you can do about it anyways )If you think that then great but I have a serious question that just dawned on me that I think might be interesting for ATS to discuss.

So in my Economics class we're currently on a unit about banking and more specifically the history of banking. Anyways it seems to strongly favor (and my teacher as well) that without a central bank there would be chaos. Yet people in our government are discussing ending the fed. Now I've actually supported that so I'm curious as to how true what the book is saying is.

If without a central bank there would be chaos, why do we want to get rid of our central bank?

reply to post by drew1749


If you eat poisonous food you die. However, without food you die and its not really a strong poison. So you keep eating the poisonous food, but at some point you realize that the risk of dying from the poison out-weighs the risk of dying of starvation. That is when you abandon the poisonous food and search out healthy food.

reply to post by drew1749

If without a central bank there would be chaos, why do we want to get rid of our central bank?

What do you mean chaos?

Why would there be chaos?

reply to post by Rockdisjoint


I'm not the best at economics. Just repeating what my teacher said. Obviously a central bank brings stability to our currency right?

reply to post by drew1749

If without a central bank there would be chaos, why do we want to get rid of our central bank?

The US was without a central bank for roughly half its history. The time periods we DID have a central bank, by my count of the list on Wikipedia, we had an equal number (with equal severity) of recessions.

As far as I can tell, the economy is simply too complex and organic a thing for people to actively manage as such. Additionally, a central bank adds in additional issues by manipulating interest rates (thus sending false signals to banks/businesses and prompting unwise lending and investment), acting as an effectively-bottomless lender of last resort (thus providing an air of safety to highly risky behaviours, which then become taxpayer responsibility), and quite simply - robs the people (WHY exactly does the US need to borrow its own money from bankers - at interest? Figure in the tinkering with interest rates here as well, and what that does to savings and money supply).

In short, central banks don't appear to have done anything useful for us, just compared to the times we didn't have them (beyond artificially inflating the economy itself to an unsustainable degree, as we've seen recently with the "evaporation" of who knows how much "wealth" in the US alone). They also enable these additionally risky businesses, and don't do anything that we honestly couldn't do ourselves anyway if we just had the Treasury issue our own interest-free currency.

Pointless, beyond making a LOT of money for certain bankers & businessmen at the expense of others, IMHO.

I'm with Praetorius.

Don't ever take anything one person says for granted, even if they are your teacher. Study the pros and cons on both sides before you make a decision.

Since this can be a complicated issue that could possibly take more space than available here, I highly recommend doing a Google search for "Central Banks Fail" and do some serious reading.

Good luck!

reply to post by drew1749


I assume you're in college? When I was in college all of my economics proffs were adamant Keynesian's, and they support as much Government intervention in the economy as possible.

So here is my educated explanation of the Federal Reserve:

The Federal Reserve has existed for most of our history, in some form or another. The first Centralized Banks failed because they were directly controlled by Congress.. and their power was not as "involved" with the actual economy. The problems arising was that higher ranking politicians could use the bank as a tool for their own purposes .. they could jack with interest rates to fit their own means.

The Federal Reserve as it is today was the brainchild of the bankers who thought that if Economist controlled the economy, and not politicians, then the power of the Federal Bank couldn't be used for political purposes. This is true.

The "Chaos" that your Proff is talking about is called the "business cycle"

In Classical Economics, that is to say, economics without Centralized Banking and Government regulation the economy goes through a natural cycle where the economy sees huge growth then declines rather sharply. The economy prior to our modern central banking system was more "erratic" but it was also "real"

The method of control to neutralize the Economy under our modern system is the extension of Credit.. and the control mechanisms for Credit being Interest rates, Leverage Ratios and Inflation control. Because the Central Bank can fluctuate credit, in times of natural economic contraction credit is expanded to create a contractible artificial inflation that spurs consumption and thus boost the economy. This is how every major depression has been avoided. If the Central Bank can avoid a Credit Contraction they can avoid major economic disasters.. so far there have only been two Credit Contractions .. 1929 and 2008. Ultimately what this means is that an economy can expand rapidly on artificial platforms when the natural or "real" economy is not actually seeing any growth at all.. and when the expansion of credit fails to meet in inflationary needs of the Central Bank, they can "monetize" the debt from the Treasury in a contractible and controlled manor.. thus inflating the economy simply through inflation alone.. this is like playing with fire because you can set of a deflationary spiral by deteriorating the buying power on consumers. Which happened in 2008. Oops.

So you can view the Central Banking system in the Western World as being a necessary evil that will ultimately collapse due to economies being built on stilts supported by the Reserves while the Real Economy is essentially a shadow beneath it..

But it also keeps the economy stable for very long periods of time.. It's been like 80 years since we had our last depression...

Putting a bank in charge of manipulating the economy and printing money is like putting a pedophile in charge of a daycare.

/TOA

since just the federal reserve, not the first and second charter banks of the u.s., the dollar has dropped in value 98%, not to mention with nixons help, we were taken off the standard that made our money valuable.

germany had a major banking problem right after ww1, it was intentional, and the same move by the same people is happening here...

we are not even supposed to have a centralized banking system here in the u.s. for the reasons we are facing now.


what has happened to us and our money is nothing short of treason, and should be dealt with now.