Why do conspiracy theorists and libertarians hate the Federal Reserve so much?

[Reynard32]

Originally Posted by gwynedd1

You think we always ran on bank credit?

"Always" could be argued either way, but every modern economy has run on credit for some time now. After all, in a digital world characterized by the Rule of Law, a promise to pay is as good as being paid.

Originally Posted by gwynedd1

If you absolutely believe that banks needed to stay open then zombie banks run by regulators also works.

Only if you somehow inject the liquidity that any sort of bank needs in order to function. I don't know what you mean by "FICA rebates". I will note that it is a delusion to believe that payroll taxes are somehow "your" money.

Originally Posted by gwynedd1

Speaking if Sheila Bair: "TARP wasn’t necessary"

Correct, but that wasn't known yet at the time. In hindsight, Paulson freaked and concluded that he needed quite a lot of money. He was right in that, but it turned out that the Fed was able to supply quite a lot simply by expanding its balance sheet. In the end, TARP came in handy, but it wasn't actually necessary.

Originally Posted by gwynedd1

And if they are not paying, why the free insurance.

??? Banks pay deposit insurance assessments to FDIC.

Originally Posted by gwynedd1

It relocated to 20th Street and Constitution Avenue

The Eccles Building opened in 1937. It has had just the one tenant in its history.

Originally Posted by gwynedd1

That isn't capitalism. The definition of entrepreneur is risk taker. It was risk free fraud. So why would I believe it it?

Capitalism is simply the worship of capital, And the cowboy capitalists certainly thought their fraud would be risk-free. I won't be here. You won't be here. It will all be somebody else's problem. Of course, that's not actually the way things worked out.

[gwynedd1]

Originally Posted by Reynard32

"Always" could be argued either way, but every modern economy has run on credit for some time now. After all, in a digital world characterized by the Rule of Law, a promise to pay is as good as being paid.

Japan sure doesn't run much on private credit. Wonder how they get by ? Easy, more of their money is public credit in the form public obligations.

Only if you somehow inject the liquidity that any sort of bank needs in order to function. I don't know what you mean by "FICA rebates". I will note that it is a delusion to believe that payroll taxes are somehow "your" money.

Oh how clever. Now we change the context as if I say anything about whose money? How dare the government "pick up FICA". Was that Goldman Sachs' money when their AIG stooge was bailed out?

We are talking about a public stimulus, not private accounts but you like to pick an choose. So what is it? Do we have a financial system of private accounts or do we have a financial system that needs intervention as a whole? Think I was discussing the latter.

Correct, but that wasn't known yet at the time. In hindsight, Paulson freaked and concluded that he needed quite a lot of money. He was right in that, but it turned out that the Fed was able to supply quite a lot simply by expanding its balance sheet. In the end, TARP came in handy, but it wasn't actually necessary.

None of it was necessary. It was bank accounting rules. All the damage was done.

??? Banks pay deposit insurance assessments to FDIC.

Right just like business is stupid enough to keep forgetting they need to pay half the FICA and don't lower salaries accordingly. Expense are passed on to the consumer. Oh, with one exception. When there is monopoly income the price is set by the indifference point. So if you are right, then the banks have monopoly profits. That what you are getting at?

Do you even know anything about economics ?

The Eccles Building opened in 1937. It has had just the one tenant in its history.


Capitalism is simply the worship of capital, And the cowboy capitalists certainly thought their fraud would be risk-free. I won't be here. You won't be here. It will all be somebody else's problem. Of course, that's not actually the way things worked out.

Oh here we go, someone with a monopoly on the meaning of an "ism".

[Reynard32]

Originally Posted by gwynedd1

Japan sure doesn't run much on private credit. Wonder how they get by ? Easy, more of their money is public credit in the form public obligations.

Japan's economy runs on credit, just as all the others do. We are talking here about commercial lines of credit, payables versus receivables, and such -- the sorts of everyday credit that gets things done and people paid. How Japan finances its official public debt is an entirely different story.

Originally Posted by gwynedd1

Oh how clever. Now we change the context as if I say anything about whose money? How dare the government "pick up FICA". Was that Goldman Sachs' money when their AIG stooge was bailed
out?

You still seem confused about what FICA is and does. As for AIG, they had to be picked up because their London office had made huge bets on one side of the CDS market and never hedged any of it. The problem was that those CDS's were behind the book value of banks all over the world. The only way to resolve that problem was to take the CDS side of AIG out of play. The insurance side was always fine and simply continued to be.

Originally Posted by gwynedd1

We are talking about a public stimulus, not private accounts but you like to pick an choose. So what is it? Do we have a financial system of private accounts or do we have a financial system that needs intervention as a whole? Think I was discussing the latter.

I'm unclear as to what you think you are discussing. I am discussing the need and means for shoring up the foundations of the financial system by restoring lost liquidity. This was not done for the benefit of banks and bankers, but to keep the whole edifice from collapsing on top of untold millions of people just like you.

Originally Posted by gwynedd1

None of it was necessary. It was bank accounting rules. All the damage was done.

You could not be more wrong. The small individual piece that was TARP turned out to have been helpful, but not necessary. This was in large part owing to the success of the parts that were not TARP. ARRA for one, but more importantly the complex swap facilities created on the fly by the Fed and Treasury, and the coordinated international strategy that Obama and Geithner were able to pull together at the Spring 2009 G-20 meetings.

Originally Posted by gwynedd1

Right just like business is stupid enough to keep forgetting they need to pay half the FICA and don't lower salaries accordingly.

Employers are required to pay all of FICA. The part of an emplyee's gross pay that appears to be deducted in order to pay for FICA is there to begin with only for that very purpose. It is not a reflection of any service you provide to your employer. If FICA were to go away, so would all of that portion of your gross pay.

Originally Posted by gwynedd1

Expense are passed on to the consumer. Oh, with one exception. When there is monopoly income the price is set by the indifference point.

Monopolist or not. incremental costs can be passed on to consumers only in the case of a favorable price elasticity of demand. FICA of course has nothing to do with this.

Originally Posted by gwynedd1

Do you even know anything about economics?

Quite a lot more than you do, actually. By both training and experience.

Originally Posted by gwynedd1

Oh here we go, someone with a monopoly on the meaning of an "ism".

It is what it is. When many people say "capitalism", what they often really mean is "markets," when markets are a part of all sorts of economic systems, some of which are flavors of capitalism and some of which are not. Capitalism itself however is indeed the worship of capital. Capital is what bestows growth and profits and therefore more capital upon us. Capital is the be-all and end-all of capitalism. All else pales.

[JYT]

Originally Posted by Du Pont

Conspiracy theorists: The fed isn't some magical organization made to strictly help the rich. Their purpose is to keep inflation in check (we NEED SOME inflation, deflation is toxic for the economy because it destroys new capital spending and hurts standard of living) and protect the US economy from economic downturns. So remember: it's not some hair-brained conspiracy to make the rich richer, that's just a side effect of big business.

Libertarians: Capitalism is not perfect on its own. Business is like a mischievous child, if not supervised it can get into a lot of trouble (and Uncle Sam is like a caring uncle who baby sits his nephew and punishes him if he misbehaves). If it were not for the Federal Reserve the 1929 stock market crash and 2008 crash would have been much worse. There is no way Wall Street would have stopped panic selling and we would have been much deeper in the pile. We needed a strong government agency to defend us and help make it easier to borrow to stimulate out economy. The damage was great so it took until now to truly see results.

Because the U.S. Constitution says the States are suppose to pay their debts in Gold and Silver coin, and they have a point. If they are not following that part of the U.S. Constitution just proves that people have to fight to uphold their 1st Amendment rights.