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She is arguing a postkeynesian view, that private banks lend out Fed money, which is a privilege we should revoke from them, and that Fed money should be pointed towards states and households, and then loosened. Her particular idea is unusual, which is that states should create banks to essentially be primary dealers.
He is arguing in his own little world without even listening to her. He is arguing a sort of Austrian view, that Fed policy should be tightened because we are going to have inflation. He fails to address her arguments that loosening isn't causing any more inflation, and he refuses to even attempt to understand her point that we should revisit the mechanism by which the Fed creates money. He just keeps berating her with "INFLATION INFLATION INFLATION BLAH BLAH BLAH"
But isn't her ideas only giving free rein of what has happened to the banks and created the housing crisis?.. she talks as if funding to the government should have no restraints and that can only mean more tax burden to all of us. Money printed is money that has to be paid back.
If I had a credit card with no limit and I bought one thousand mansions to live in and had to keep servants and wanted to borrow more money to keep it going wouldn't I eventually have to pay it back?
And if the debt grew to where it was impossible to pay it back.. there would be something down the road that would not be good for the credit card company to take on such spending by one entity and they would have to raise interest rates on everyone else who had a card to cover it.
This will happen to the banks to recoup money and losses in the future. In the same way, the government would spend and could not pay it back other than taxing all of us and interest rates on the government debt would choke the american people with more taxes.
This woman just wants to cover it all and print the money.
[quote=Cletus Awreetus-Awrightus;21475382]In my view, the "inmates" here are the private banks.
Nationalizing the Fed (in the sense that she's talking about) would force private banks to lend out deposits once more, no more Fed money, which would curtail all these lending bubbles they keep creating.
Schiff argues that this would allow the government to borrow as much as it wants --- she of course, delivers the news flash -- government already borrows as much as it wants. She's simply saying that private banks shouldn't be granted the same privilege as the Congress. I'd say that's reasonable, wouldn't you?[/quote
So it is a privilege of Congress to have an unlimited supply of funds. Can we point to that in the Constitution?
I agree that, for now, Congress borrows what it wants but haven't we seen the fall out from this behavior in other countries? How does it make sense to continue?
But isn't her ideas only giving free rein of what has happened to the banks and created the housing crisis?
No, it would do the opposite. Stopping the flow of money from the Fed to private banks would stop the bubbles from forming.
Going Schiff's route, and stopping the ability of governments to run deficits, would not stop the bubbles. It would have some effects -- it would shrink the size of government and/or increase taxes. Basically , that is approaching America's problems as if we were no different than Greece or Portugal or Ireland. The reality is that our problems are very different than theirs. The difference is that europeans have too much public government debt, and Americans have too much private banking and private household debt.
Now I do realize our public debt has grown in the past few years -- however this was not "created within the government." It was created on the private side, and then transferred later to the public sector by bailouts, et cetera. If we have another bubble, it won't be from government deficits, it will be from private lending just like the last one.
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.. she talks as if funding to the government should have no restraints
No, she simply corrects him by pointing out the fact that government has no restraints. She does not necessarily advocate this, she's just saying that's how it is.
She wants to talk about the flow of money from the Fed to the banks. That's topic #1 on her mind. Schiff isn't even cognizant of this flow of money, he keeps wanting to talk about the government's ability to run deficits.
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If I had a credit card with no limit and I bought one thousand mansions to live in and had to keep servants and wanted to borrow more money to keep it going wouldn't I eventually have to pay it back?
that's not a comparable analogy to how Federal budgeting works. It isn't the same as household budgeting, or state budgeting.
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And if the debt grew to where it was impossible to pay it back
that's impossible.
Say we owe China $10 trillion. We can theoretically print $10 trillion, and pay off the $10 trillion we owe them.
Keep in mind, I'm not saying that this wouldn't be without consequences, I'm just pointing out that it is impossible for us to "be unable to pay back our debts."
In this extreme scenario, there is a huge risk of dollar devaluation, sure. However, part of where Schiff goes wrong, is that he doesn't understand how small the federal budget deficit really is, compared to the size of the private debt burden. It isn't that it's "impossible" to have inflation via government deficits, it is just that, holy HELL our deficits would need to be so much bigger than they are right now. When viewed in comparison to the private debt burden, federal budget deficits suddenly don't look so daunting.
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This will happen to the banks to recoup money and losses in the future. In the same way, the government would spend and could not pay it back other than taxing all of us and interest rates on the government debt would choke the american people with more taxes.
This woman just wants to cover it all and print the money.
I don't think you, or schiff, understands what she wants.
Like I was saying, she's talking about the credit money that private banks create with help from the Fed, which forms the basis of corporate lending, municipal lending, credit card lending, mortgage lending, etc.. He's talking about the fiat money that politicians create via deficits, and borrowing from the Fed to finance things like Medicare and the military.
Private banks' credit money is what has been causing bubbles, not fiat money from deficits. I'm not saying that deficits "are a good thing", and neither is she; the argument is simply that deficits aren't the real problem here.
Last edited by Cletus Awreetus-Awrightus; 10-28-2011 at 12:21 PM..
So it is a privilege of Congress to have an unlimited supply of funds. Can we point to that in the Constitution?
Constitution? No, it's not in the constitution.
Can you point to the part in the constitution where it talks about the Fed lending to primary dealers at a discount window?
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I agree that, for now, Congress borrows what it wants but haven't we seen the fall out from this behavior in other countries?
yes we have. This risk is biggest for smaller countries with small economies and unfree markets.
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How does it make sense to continue?
I'm not arguing that it necessarily does make sense to continue allowing the Fed to allow congress to run deficits. I kinda lean toward small government. I would conceivably support a balanced budget amendment, if made in concert with drastic Fed and banking reform which eliminated primary dealers and returned to full reserve banking.
I'm arguing that if we fix this deficit problem, it isn't going to solve much of anything in the way of bubbles, or housing, or commodity inflation, or income inequality, or jobs. It simply isn't the panacea that Schiff and others make it out to be. In all likelihood , the steps we'd need to take to achieve that solution may actually make our short-term problems worse.
Last edited by Cletus Awreetus-Awrightus; 10-28-2011 at 12:48 PM..
No, it would do the opposite. Stopping the flow of money from the Fed to private banks would stop the bubbles from forming.
Going Schiff's route, and stopping the ability of governments to run deficits, would not stop the bubbles. It would have some effects -- it would shrink the size of government and/or increase taxes. Basically , that is approaching America's problems as if we were no different than Greece or Portugal or Ireland. The reality is that our problems are very different than theirs. The difference is that europeans have too much public government debt, and Americans have too much private banking and private household debt.
Now I do realize our public debt has grown in the past few years -- however this was not "created within the government." It was created on the private side, and then transferred later to the public sector by bailouts, et cetera. If we have another bubble, it won't be from government deficits, it will be from private lending just like the last one.
No, she simply corrects him by pointing out the fact that government has no restraints. She does not necessarily advocate this, she's just saying that's how it is.
She wants to talk about the flow of money from the Fed to the banks. That's topic #1 on her mind. Schiff isn't even cognizant of this flow of money, he keeps wanting to talk about the government's ability to run deficits.
that's not a comparable analogy to how Federal budgeting works. It isn't the same as household budgeting, or state budgeting.
that's impossible.
Say we owe China $10 trillion. We can theoretically print $10 trillion, and pay off the $10 trillion we owe them.
Keep in mind, I'm not saying that this wouldn't be without consequences, I'm just pointing out that it is impossible for us to "be unable to pay back our debts."
In this extreme scenario, there is a huge risk of dollar devaluation, sure. However, part of where Schiff goes wrong, is that he doesn't understand how small the federal budget deficit really is, compared to the size of the private debt burden. It isn't that it's "impossible" to have inflation via government deficits, it is just that, holy HELL our deficits would need to be so much bigger than they are right now. When viewed in comparison to the private debt burden, federal budget deficits suddenly don't look so daunting.
I don't think you, or schiff, understands what she wants.
Like I was saying, she's talking about the credit money that private banks create with help from the Fed, which forms the basis of corporate lending, municipal lending, credit card lending, mortgage lending, etc.. He's talking about the fiat money that politicians create via deficits, and borrowing from the Fed to finance things like Medicare and the military.
Private banks' credit money is what has been causing bubbles, not fiat money from deficits. I'm not saying that deficits "are a good thing", and neither is she; the argument is simply that deficits aren't the real problem here.
the larger the government debt the more likely the money to the states dwindles and local taxes are raised to keep up with the lack of federal dollars going to local spending of services and education. The only way to make up for larger government is more debt or less help to local and state levels of spending or higher taxes on the federal or state level. Having less debt is always healthier for every level.
The bail out money will grow as more of this mess keeps coming with more foreclosures and underwater houses being abandoned by their owners.
The government has had a part in this allowing the fed to give away cheap money while legislation has creating lack of over site.
We can't keep up with the spending. This is so big we can't even fathom how it will turn out but with some common sense we know it is not going to go away without a lot of pain for all Americans in the future.
The savings banks are not paying any interest today , the interest grew before the crisis and would feed the economy. With no growth of retirement monies at all , the economy has no growth . Interest has dried up.
Plus banks are lending now at 4%.. for 30 years.. they are not making much money with low interest. it is fueling the cost of housing.. believe this, I know, with every reduction of interest , the builders added thousands of dollars to the price of the same house.
Actually Schiff has more in common with what OWS should really be about---getting corporate $$$ out of Washington politicians pockets that write our financial laws.
What a stupid question. Of course it can. In fact, it worked just fine for me on Friday.
On Thursday, I called a medical center a block from my home and made an appointment for Friday. On Friday, I went there, met with the doctor, got diagnosed, got a shot and a couple of prescriptions and was on my way.
Total cost, without insurance, was $237, including the meds.
This was my first doctor visit in about five years. Quite the bargain, considering that the $237 wouldn't have even covered one month's insurance payment...
The "problem" with health care in this country is that everyone thinks that your insurance company should cover everything. People get ticked off about $20 copays. Unreal. Sure, you can get a policy that covers everything, but guess what - it's going to be expensive as hell, as it should be.
People should pay for the occasional stuff (like what I just did) out of pocket, and only carry insurance for catastrophic illnesses and events. Their premiums would be sooooo much cheaper, and they'd actually save money by paying for office visits and whatnot out of pocket.
Interesting. You never said if shopped around, compared prices, compared doctors, learned if the shots were "brand" or generic, etc, etc
You also took a snapshot approach. This is a poor example for an industry that spans so much.
Tell me, how much choice do you have when you are in an accident and picked up by an ambulance?
how much choice do you have once you reach a hospital re: who will provide treatment, surgery, care, etc?
how much choice do you have in picking an insurance package from your employer?
how much bargaining power do you have as an individual consumer to negotiate insurance price, or overall treatment costs?
how much choice does an adolescent have in the decision on where the family lives and their access to healthcare facilities?
Are these stupid questions?
The assumption(s) you make are:
1- I can pick up a phone and make my own medical decisions for daily care because...
2- all i need is catastrophic insurance coverage
So how much choice do you have regarding the lifetime insurance maximum payout....or did you even know there was such a thing?
healthcare as an industry is not a capitalistic venture for the consumer but it sure is a great money maker for those on the supply side
This guy shuts them all down and agrees with a lot of the reasons, explaining how it got there.
You see the blank look when they lost the debate...
Not even their buddies are helping.
The guys is giving an education to the brainwashed koolaid drinkers.
actually, i think the first conversation they were both wrong somewhat and that is a problem also. first, of all everybody is greedy to some extent-the poor want to take from others, for example, and the rich don't have a shutoff valve for their wealth/greed-where they think they ever have enough. i think the middle class may want more, but realizes that it is probably going to happen for them the way things are going. the bottom 50% earn under 33,000 a year in this country, and the other 50% earning 33,000 or more pay over 97% of the taxes.
i saw a funny comparison between republicans and democrats:
republican-that is my toy.
democrat-i am going to take eddie's toy and give it to peter.
which is a better approach? i don't see either one giving up their own toy.
i listened to a really good audio today, but it is long. (about 60 minutes and the first couple of minutes are introductory, but it gets better). i realize that 1 hour is pretty long to sit through anything but it could be listened to in increments or while doing something else.:
it simplifies some of the problems we are having and covers the OWS movement, federal reserve, gold, who gets the money first, GM creating credit, the bailouts, tea party, government corruption, why the media is not helpful, and the breakdown in the rule of law-but our problems really do come down to "who controls the money"?
everybody knows that there is something going on that is reducing their standard of living and making it more difficult to even think about getting ahead anymore, and it is likely to get worse due to the impossibility of the math.
Last edited by floridasandy; 10-28-2011 at 05:03 PM..
It's funny how Schiff defends Wal Mart, when Wal Mart has been known to drop their prices incredibly low in order to drive local businesses out of business and then he says if you don't like Wal Mart, then get a job elsewhere. Where else do you get a job when the corporate death star has put many local businesses and manufacturing in this country out of business due to the incessant need to drive prices as low as possible?
Also during the 50s, he never even acknowledges the fact that the Europe, Asia, and much of the rest of the entire world that were US's strongest competitors were still in shambles after WWII and were still rebuilding their infrastructure. There was virtually no competition for the US right after WWII which allowed us to get away with high wages, it probably had little to do with taxation and legislation. As a matter of fact, his tax claims make little sense. The income tax rate on the upper bracket during the 50s was over 90%!!!! even under Republican President Eisenhower!
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