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Old 11-23-2008, 04:36 PM
 
Location: Heartland Florida
9,324 posts, read 23,251,727 times
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Quote:
Originally Posted by Randomstudent View Post
Since its establishment in 1913 the federal reserve has stablized the fluctuations in the value of the dollar, which resulted in the panics of the late 19th century and has made it a world class currency in the 20th century. I would say the fed has done pretty good.
If they have done so well, then why is a dollar today worth so much less than in 1913? Under their watch we have had a depression, several recessions and industry has faded away in favor of a system based on funny money. How much did the dollar vary between 1800 and 1900? A whole lot less than the loss of value from 1913 to today, that's for sure. All the progress we have made has been from technology, and fed funny money and big government have killed almost all innovation. Without the fed's expanding money supply we would never have gotten the big brother government we have today.
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Old 11-23-2008, 04:57 PM
 
Location: NC
10,005 posts, read 8,725,251 times
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Quote:
Originally Posted by tallrick View Post
If they have done so well, then why is a dollar today worth so much less than in 1913? Under their watch we have had a depression, several recessions and industry has faded away in favor of a system based on funny money. How much did the dollar vary between 1800 and 1900? A whole lot less than the loss of value from 1913 to today, that's for sure. All the progress we have made has been from technology, and fed funny money and big government have killed almost all innovation. Without the fed's expanding money supply we would never have gotten the big brother government we have today.
First answer have you ever heard of time value of money and inflation. That is why the dollar is worth less than it was 90 some years ago.

Second there were far more panics in the 19th century and money was much less stable than it is now. If you look at fluctuations in the business cycle from when it started being measured in the 1880s to today the boom bust cycle becomes much more stable in 1913 precisely because of the fed. You seem to either be ignoring or ignorant of the financial panics of 1819, 1837, 1857, 1873, and 1893 all of which caused depressions, including some serious ones.

Finally there would be almost no growth without a liquid financial system and the bank money you call "funny" and everyone knows that.

The fact of the matter is borrowing, bank money and investment is what allows an economy to grow. If we go back to the pre-fed dark ages where capital was severly restricted and we relied on gold finds to grow our economy we will again see depresions every 20 years or so if not with more frequency.
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Old 11-23-2008, 10:51 PM
 
Location: Heartland Florida
9,324 posts, read 23,251,727 times
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A liquid money system just means that money can be created at will for the select few who can borrow and speculate at the expense of others. Inflation is an expanding money supply and exists only to pump money to the top. Investment from domestic savings grows the strongest economy. However, money from thin air backed only by debt is inherently unstable. To make matters worse, while the money supply is created, additional money that does not exist is needed to pay the debt that went into creating the original sum. Where does that money come from? Additional loans from the central bank.

Besides gold there are other valuable commodities like silver, copper and the like. What is wrong with a non-inflationary money system where a person can simply save a bit every year, then retire on those reserves? Investment would come from those seeking to put their savings to work, such as owning stock in a company. Banks would be required to have reserves of real money for every bit they loan out. I know it hurts the idle rich, but it would benefit the productive members of society greatly. A central bank is a parasite that prevents prosperity of the many to benefit a select few.
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Old 11-24-2008, 12:58 AM
 
Location: Bethesda
2,876 posts, read 6,021,016 times
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The world shouldn't but I'm banking (pardon the pun lol) on the fact that we will. It's been inevitable since we got off the gold standard. Every day this financial crisis gets worse is a step closer to a global monetary system. Just as important of a result of this mess will be an global central bank. I'll admit it would be a boon to global trade and tourism but it won't help the problem at hand.
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Old 11-24-2008, 12:59 AM
 
Location: Bethesda
2,876 posts, read 6,021,016 times
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Quote:
Originally Posted by Randomstudent View Post
First answer have you ever heard of time value of money and inflation. That is why the dollar is worth less than it was 90 some years ago.

Second there were far more panics in the 19th century and money was much less stable than it is now. If you look at fluctuations in the business cycle from when it started being measured in the 1880s to today the boom bust cycle becomes much more stable in 1913 precisely because of the fed. You seem to either be ignoring or ignorant of the financial panics of 1819, 1837, 1857, 1873, and 1893 all of which caused depressions, including some serious ones.

Finally there would be almost no growth without a liquid financial system and the bank money you call "funny" and everyone knows that.

The fact of the matter is borrowing, bank money and investment is what allows an economy to grow. If we go back to the pre-fed dark ages where capital was severly restricted and we relied on gold finds to grow our economy we will again see depresions every 20 years or so if not with more frequency.
good points. Finance or econ major?
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Old 11-24-2008, 06:01 AM
 
Location: NC
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Quote:
Originally Posted by decafdave View Post
good points. Finance or econ major?
Thank you, I am an Econ minor. I am major in Political science with a focus on international political economy.
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Old 11-24-2008, 06:18 AM
 
Location: NC
10,005 posts, read 8,725,251 times
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Quote:
Originally Posted by tallrick View Post
A liquid money system just means that money can be created at will for the select few who can borrow and speculate at the expense of others. Inflation is an expanding money supply and exists only to pump money to the top. Investment from domestic savings grows the strongest economy. However, money from thin air backed only by debt is inherently unstable. To make matters worse, while the money supply is created, additional money that does not exist is needed to pay the debt that went into creating the original sum. Where does that money come from? Additional loans from the central bank.

Besides gold there are other valuable commodities like silver, copper and the like. What is wrong with a non-inflationary money system where a person can simply save a bit every year, then retire on those reserves? Investment would come from those seeking to put their savings to work, such as owning stock in a company. Banks would be required to have reserves of real money for every bit they loan out. I know it hurts the idle rich, but it would benefit the productive members of society greatly. A central bank is a parasite that prevents prosperity of the many to benefit a select few.
It doesn't mean money can be created at will, but it is very diffacult to explain. It involves loans being made the loan recipiant spending the money and the people he buys from re-invest the money in the bank. That is what creates bank money. It is not just created at random...the only problems arise when one is not careful who one loans money to.

Whats wrong with systems being based on gold is it is not possible to maintain for very long in today's economy thus the reason why Bretton-Woods collapsed in 1973 and that was only for trade between central banks. A gold standard restricts growth and the avaiblity of goods to a relatively unimportant commodity, which is inflexable and in short not a good idea if one wants to encourage trade and economic growth.
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Old 11-24-2008, 07:59 AM
 
Location: Heartland Florida
9,324 posts, read 23,251,727 times
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Bretton Woods collapsed because the US ran up the debt beyond what the fixed gold reserves were worth. From 33 dollars an ounce to hundreds in a short time, that was a sign of how bad things were. Shortly after that inflation started to ravage the market, and the destructive real estate bubble was born.

"It involves loans being made the loan recipiant spending the money and the people he buys from re-invest the money in the bank. That is what creates bank money"

This is a system doomed to fail because the "bank money" comes with strings attached in the form of interest. Where does the "interest" come from? Why is interest even added? It seems that if you can create money and wanted growth that interest would not be charged. Usury is why we are in this mess.
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Old 11-24-2008, 10:15 AM
 
Location: NC
10,005 posts, read 8,725,251 times
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Quote:
Originally Posted by tallrick View Post
Bretton Woods collapsed because the US ran up the debt beyond what the fixed gold reserves were worth. From 33 dollars an ounce to hundreds in a short time, that was a sign of how bad things were. Shortly after that inflation started to ravage the market, and the destructive real estate bubble was born.

"It involves loans being made the loan recipiant spending the money and the people he buys from re-invest the money in the bank. That is what creates bank money"

This is a system doomed to fail because the "bank money" comes with strings attached in the form of interest. Where does the "interest" come from? Why is interest even added? It seems that if you can create money and wanted growth that interest would not be charged. Usury is why we are in this mess.
First off, Brentton woods failed because economic activity surpassed what could be backed up by gold. This had been happening since the late 19th century when there was a desire to move away from the gold standard first became a political issue. Secondly Brentton woods failed because the US government has a very differnent role than it did when it opperated under the Gold standard. For much of the 19th century the main source of Government income was tariffs. Today that is impossible because of our current entitlements, regulatory schemes and the giant in the budget...our standing army. We can get rid of these things, but almost no one supports doing so. Additionally a gold standard would again squeeze growth as it did in the late 19th century remember WJB's famous cross of gold speach.

To answer the second part of your question, have you ever heard of value added and labor. Banks lend money to corporations---corporations through labor add value what ever good they sell making a profit. That profit grows the economy and pays interst and that is where intrest comes from. Being anti-usery imho is a medieval mindset that we thankfully left behind during the Italian renaissance. It is because of banks and usery that Europe repaced the Middle East with its anti-usery mindset as the leader in world trade during this time. Ofcouse if you do not like usery then simply neither a lender nor borrower be.
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Old 11-24-2008, 12:35 PM
 
Location: Pinal County, Arizona
25,107 posts, read 34,386,888 times
Reputation: 4893
Quote:
Originally Posted by Tricky D View Post
Your national debt already has proven that the US has no (self)control.
A significant part of the United States "national debt" includes foreign aid.

My suggestion is to:

1) Withdraw all foreign aid to all foreign nations

2) Withdraw from the United Nations and withdraw all financial support to the UN.

The two suggestions above would provide tremendous relief to the US National Debt
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