Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The FED is audited all the time, and the FED should be independent. A central bank controlled by political whim (i.e., congress) would be a disaster.
The meetings are published, but with a lag.
Its funny that you suggest that I misunderstand inflation/deflation and then follow it with something wrong. Firstly, "prices increases" and "purchasing power of value of the dollar decrease" are identical. Secondly, these are both effects of inflation and not inflation in itself. Inflation is the increase in the money supply, which usually results in an increase in aggregate prices.
Comparing wages to the cost of commodities is ridiculous, the amount of money your average person spends on commodities is actually relatively small. Though wages over the last decade have not tracked increases in aggregate prices, they are a bit negative in real terms.
This as your previous comments are just strawman. Few people (even hardcore monetarists) think you can totally control an economy with monetary policy.
They also never had a depression.
Why in the world are you talking about Fannie and Freddie here? They have nothing to do with protecting banks. The only organization that officially "protects" banks is the FDIC. But they are not really protecting banks, rather the people that put money into banks. Member banks pay to be a member of the FDIC and under normal conditions the program requires zero tax dollars. The depression shows that its near impossible to have fractional reverse banking without some sort of deposit insurance, at least in the US its made explicit and the banks are paying into it.
The FEDs job is not to protect banks, its to control monetary policy. During this crisis the FED has made a number of measures to increase liquidity, this has the effect of helping banks and individuals alike. But its part of their monetary policy, not some policy to "protect banks". During this crisis the treasury (via TARP) borrowed money to some large financial companies, it did this to protect the financial system not particular banks. Where some institutions helped more than others by the treasuries actions? Sure, but there is no way around that. Allowing the financial system to collapse is not a solution.
You do realize that banks are failing each week right?
Yikes, where do I begin. So if the Fed was audited why are Congressman tyring to pass bill HR 1207? You mention a lag? So why does the Fed now actually make their decisions without the same lag? Yes, banks are failing every week which just shows the Fed has no idea of the problems and they will protect the big banks and nobody else. The government will not allow the financial system to collapse because their is too much involved and they have invested too much. If a company is too big to fail then they violate anti-trust laws. The government doesn't care about this though, even though small businesses are the heart of the american system.
The FDIC is somewhat of a joke. Do you not think the government doesn't have an involvement in the FDIC? It gives people the false security that their investments are secure because of what happened during the 1929 stock market crash. People don't realize althought their banks put in insurance money, that it still gives the banks a false sense of security and lending in which the banks take risks to do so. It also makes people think that the Federal Reserve is some great secure organization that has so much money that it can protect everyone.
I'm only talking about Fannie and Freddie because they are protecting all the bad loans which caused a lot of the problems that exist and will still exit for a couple of more years...and probably more. The government backs these loans and will continue to protect them. Just ask President Obama. George Bush and Barney Frank said the same.
You have to understand that aggregate prices are a basically a part of Keynesian economics which has failed and is it on its third try. You are wrong, just because prices increase doesn't mean it is inflation. Just because prices increase does not mean it is inflation, but when the value of the dollar is compremised then it their is instances of inflation. So tell me, has your food, energy, or basic commidity prices not increased? Has your salary increased at the same rate?
So if the Federal Reserve's job is to control monetary policy, why have they not fixed or solved the problem? We wouldn't be in any of these problems had it not been for the Fed...but yet they blame other instances which they say they couldn't forsee. And how has the Fed increase liquidity.... by printing money and creating money out of thin air? That does not represent production which actually adds to the economy and creates real jobs and money.
Your basic solution is that the Fed is solving a problem that they essentially created. You fail to realize that the same system that created most of the problems, is the the same system that they say they have the solutions for.
Also, what is the definition of a depression? You say their is no depression, but the economy suggest otherwise. The Federal Government will protect and say their is no depression at any cost because they don't want to lose their credibility and also lose their jobs. Your still dependent upon the government sayings and statistics to influence your opinions.
Since it's the fed's job to control monetary policy, shouldn't they have been able to control the real estate bubble and this crisis?
Not necessarily. Bubbles are not really a monetary phenomena, the FED started to tighten policy in 2004 and it did not slow down the real estate bubble at all. In fact the real estate bubble was most aggressive while the FED was tightening policy. Also, how exactly do you identify a bubble before its obvious? Once its obvious, its pretty much too late. It will have a mind of its own.
I think the FED has in some sense controlled this crisis though. The financial system did not collapse, we are not in a depression, etc.
Yikes, where do I begin. So if the Fed was audited why are Congressman tyring to pass bill HR 1207?
Because congress is filled with Monkeys? That bill is just for show, its vacuous.
Quote:
Originally Posted by LeavingMA
You mention a lag? So why does the Fed now actually make their decisions without the same lag?
What are you talking about? I said the FEDs meetings are published with a lag, that is to say the meetings are published but months/years after the fact. There are good reasons for this.
Quote:
Originally Posted by LeavingMA
Yes, banks are failing every week which just shows the Fed has no idea of the problems and they will protect the big banks and nobody else.
No idea of what problems? The FED is not in the business of protecting banks, that is something you stated and its inaccurate. In terms of the big banks, well there is a problem there. If you let them fail, they could bring down the whole financial system. These massive bank need to be better regulated or even taken apart. But its congress that has to do this, its not something the FED can do.
Quote:
Originally Posted by LeavingMA
The FDIC is somewhat of a joke. Do you not think the government doesn't have an involvement in the FDIC?
Huh? The FDIC is a government run organization, of course the government has involvement. But so what?
Quote:
Originally Posted by LeavingMA
It gives people the false security that their investments are secure because of what happened during the 1929 stock market crash.... It also makes people think that the Federal Reserve is some great secure organization that has so much money that it can protect everyone.
Again, you are mixing things up. The FDIC and the FED are two different organizations and the FDIC has nothing to do with the FED. How does the FDIC give people a false sense of security? Its an insurance backed by the full faith of the US government. Its as secure as you are going to get.
Quote:
Originally Posted by LeavingMA
I'm only talking about Fannie and Freddie because they are protecting all the bad loans which caused a lot of the problems that exist and will still exit for a couple of more years...and probably more.
How exactly do you "protect bad loans"? Fannie and Freddie are holding tons of bad loans, but they'd love to not be holding them! The government is protecting Fannie and Freddie, not the other way around.
Quote:
Originally Posted by LeavingMA
You have to understand that aggregate prices are a basically a part of Keynesian economics which has failed and is it on its third try.
What in the world? Measuring aggregate prices has nothing to do with Keynesian theory, its just a measurement.
Quote:
Originally Posted by LeavingMA
You are wrong, just because prices increase doesn't mean it is inflation.
I never claimed this.
Quote:
Originally Posted by LeavingMA
So tell me, has your food, energy, or basic commidity prices not increased? Has your salary increased at the same rate?
My income is increasing far more than the rate of inflation.
Quote:
Originally Posted by LeavingMA
So if the Federal Reserve's job is to control monetary policy, why have they not fixed or solved the problem?
What problem is that? Americans being short-sighted and lazy? The only problem the FED is responsible for solving are monetary problems and they have been pretty effective during this crisis at doing just that.
Quote:
Originally Posted by LeavingMA
And how has the Fed increase liquidity.... by printing money and creating money out of thin air? That does not represent production which actually adds to the economy and creates real jobs and money.
Firstly, yes that is how the FED increase liquidity. By essentially creating money out of thin air and using it in key markets. The goal here is not to increase production though, its to increase ahem liquidity. The financial system is the grease that aids production. The FEDs job is to make sure that the system is well greased, when the grease starts to freeze up it needs to heat it back up. Without the grease production would collapse, but having grease does not create production.
You seem to not understand that the sole role of the FED is to control monetary policy, i.e., make sure the system is appropriately greased.
Quote:
Originally Posted by LeavingMA
Also, what is the definition of a depression? You say their is no depression, but the economy suggest otherwise.
A depression is generally understood to mean a decline in GDP of more than 10% and in that sense we are pretty far from a depression.
Not necessarily. Bubbles are not really a monetary phenomena, the FED started to tighten policy in 2004 and it did not slow down the real estate bubble at all. In fact the real estate bubble was most aggressive while the FED was tightening policy. Also, how exactly do you identify a bubble before its obvious? Once its obvious, its pretty much too late. It will have a mind of its own.
I think the FED has in some sense controlled this crisis though. The financial system did not collapse, we are not in a depression, etc.
you contradicted yourself. if the fed cannot control bubbles, then there is no need for the federal reserve.
More gibberish. Please, skip stating how wrong you think I am and replace it with actual arguments that demonstrate that I'm wrong.
What I'm not saying is not particularly ambiguous to anybody that knows monetary history. The modern currency regime I'm referring is the post-Bretton woods system. Namely, a global system of fiat currencies that freely float against each other. Its "rather new", in that this system has only been in place since the 1970's. There has never been anything like it in the past, just isolated experiments in fiat money systems.
LOL Bretton Woods only operated 12 years and you don't know your history that you claim to know. The rest of the 20th century pretty much operated as we do now in terms of international settlements. In fact, Nazi Germany, which had no gold after WWII could have never financed re-armament without it. Back to my original comments on your attacks on others in this forum....
So your explanation on why the premise of this topic is incorrect is to accuse the people bringing it up of lacking of thought and intelligence in their thinking on the matter. Yet your only explanation is to say that we are in "uncharted territory" which most would conclude is, shall I say.... lacking in it's depth and signs of intelligent thinking. You can of course elaborate on why you think it is uncharted, but I suspect you won't. To do so means that you have to participate in the discussion.
While I do appreciate that you finally got around to elaborating, such as it is, you have only proven that you are guilty of what you have accused others of being in this topic... "vacuous". Furthermore, it is you who claimed everyone else here as lacking in intelligent thought so it is you who bear the burden of proving it so your indignation at being asked is unwarranted. It's also amusing to me that you accuse people of this, yet despite this, you have posted about 50 one-liners in this topic since that original statement. Surely someone who considers himself so far above this level of thinking would have moved on by now.
Not necessarily. Bubbles are not really a monetary phenomena, the FED started to tighten policy in 2004 and it did not slow down the real estate bubble at all. In fact the real estate bubble was most aggressive while the FED was tightening policy. Also, how exactly do you identify a bubble before its obvious? Once its obvious, its pretty much too late. It will have a mind of its own. ....
This is simply incorrect. The Federal Reserve made no significant changes in 2004. In fact it made no changes at all during this year. They didn't start to tighten monetary policy until the end of 2005 when they started to understand the significance of the bubble they created. This tightening did not peak until after the real estate markets had begun to collapse in the major bubble markets in the USA.
"mind of its own?" haha Bubbles are not creatures with minds though I suppose a novice might think of them in this manner. It's nothing more than an analogy to describe complex monetary phenomena that has failed.
Not necessarily. Bubbles are not really a monetary phenomena, the FED started to tighten policy in 2004 and it did not slow down the real estate bubble at all. In fact the real estate bubble was most aggressive while the FED was tightening policy. Also, how exactly do you identify a bubble before its obvious? Once its obvious, its pretty much too late. It will have a mind of its own.
Initially when I read about the bubble, I thought it was more of the banks fault because they were the ones who lent the money. As well as the Fed's fault because they have the ability to increase the money supply. But was it the other way around, that people, politicians, presidents, acts (like community reinvestment act) that pressured banks to lend? Not that the banks needed much pressure, since everybody was making money and times were 'good.'
It just seems though that since there is the ability to control monetary policy and the money supply that we should be able to have a society with stability. Stable real estate prices, stable wages, a stable unemployment rate, etc. During the bubble people were so happy that their homes were going up in value like it's magic. But it's not magic. Can't there be a way to have stability rather than this up and down roller coaster through taxes and monetary policy.
It just seems though that since there is the ability to control monetary policy and the money supply that we should be able to have a society with stability. Stable real estate prices, stable wages, a stable unemployment rate, etc. During the bubble people were so happy that their homes were going up in value like it's magic. But it's not magic. Can't there be a way to have stability rather than this up and down roller coaster through taxes and monetary policy.
We have not had stability since the Fed Reserve was founded.
The Fed serves the banks.
A good read on the history of the Fed is "The Creature from Jekyll Island".
That will open your eyes about stuff not taught in school.
The Fed was started by the banks and for the banks.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
