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.....The point of my comment was obvious. The modern currency regime is rather new and there are few if any historical parallels. As a result talking about how such systems "always" end up as is completely vacuous. The waters are uncharted, in that we have never been in a major financial crisis with a global fiat currency regime.
Your intentions, I agree are obvious. The conclusion there are no historic parallels to the economic crisis due to the fiat currency we have today is completely vacuous. (using your word of the day) There have been fiat currencies for hundreds of years and economic crisis related to them. I won't even mention the fact that even you are not sure of this since you qualified it with "few, if any". Well... I guess I did mention it. Using your logic, there can be absolutely none else your argument fails.
Just because waters are uncharted doesn't mean you can't predict the end result of sailing across them. There are ways to navigate without looking at charts based on prior knowledge and experience.
It does? How does one know? The modern currency regime is rather new, how does one know that it "always" results in X when there are really no viable historic examples? Of course, you don't. This sort of talk is all vacuous...we are in uncharted territory.
The fiat money system and central bank are nothing new. They have destroyed the currency in Zimbabwe, Germany (especially in the 20's), the United States, Australia, Great Britian, and basically most first-world countries. The Roman Empire did the same to pay for all its wars and expansion, as did other empires. It you look over the last century the value of money has depreciated and been worth less and less.
It you and I print money it is considered counterfeiting, but when the Federal Reserve does it, it seems to be considered good economic policy. Makes no sense to me. If you know how and why the Federal Reserve was created you would be even more upset.
There have been fiat currencies for hundreds of years and economic crisis related to them. I won't even mention the fact that even you are not sure of this since you qualified it with "few, if any". Well... I guess I did mention it.
How about you stop boring me with red herrings? I stated that " The modern currency regime is rather new", I never said that "fiat currencies" are rather new. There are a number of historic examples of fiat currencies, but there is no historic example of the modern global currency regime. There are not even examples of anything like the modern US monetary system.
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Originally Posted by lumbollo
Just because waters are uncharted doesn't mean you can't predict the end result of sailing across them.
If the waters are uncharted talking about how things "always" end up its drivel. You can try to forecast all you wish though.
It you and I print money it is considered counterfeiting, but when the Federal Reserve does it, it seems to be considered good economic policy. Makes no sense to me. If you know how and why the Federal Reserve was created you would be even more upset.
There are good reasons to have a central bank, why would one be upset about it? Oh...let me guess some tinfoil hat theories?
There are good reasons to have a central bank, why would one be upset about it? Oh...let me guess some tinfoil hat theories?
The central bank was created between because the big banks wanted to lend out money, but not take the risk when lending out the money. It is basically an agreement or collaboration between the government and big banks to protect themselves. They are allowed to lend out money that they don't have and be protected...also called fractional reserve lending. So the federal reserve will always protect the wealthy bankers and their investments. They do not look out for the common individual. They hardly ever believe in inflation and will manipulate their statistics to do so. They believe deflation is bad, when in many cases deflation makes our purchasing power go up. They also don't like it because inflation allows them to print money to pay off their current bills at what seems like less of a price.
As you may have noticed the big banks keep getting bigger but the government doesn't care about the small and medium-sized banks. The federal reserve claims they would be able to control and stop recessions and depressions but since its creation in 1913 we have had lots of recessions. The market is what should influence "rates" and will adjust accordingly. They try to adjust the rates to what they think they should be and also think they can micromanage the economy, which they can't. No individual or individuals can.
The central bank was created between because the big banks wanted to lend out money, but not take the risk when lending out the money.
Oh yeah? How does the central bank take the risk out of lending money? So when someone defaults on a loan the central bank forks out money to the bank? Of course not...this suggestion is silly.
The central bank was created to control monetary policy, rather than have monetary policy be dictated by external forces.
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Originally Posted by LeavingMA
They are allowed to lend out money that they don't have and be protected...also called fractional reserve lending.
Fractional banking existed far before the FED or any central bank. This practice is not the result of central banking, rather its allowed by most central banks.
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Originally Posted by LeavingMA
So the federal reserve will always protect the wealthy bankers and their investments.
The FED does not protect "wealthy bankers", it protects the value of the currency and increases liquidity in crisis. The latter can be seen as "protecting wealthy bankers", but its also protecting every day people too. Many are just too stupid to see that.
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Originally Posted by LeavingMA
They hardly ever believe in inflation and will manipulate their statistics to do so. They believe deflation is bad, when in many cases deflation makes our purchasing power go up. They also don't like it because inflation allows them to print money to pay off their current bills at what seems like less of a price.
This is gibberish. The FED, like most central banks has an inflation target. Sorta hard to do when you don't "believe in inflation". Furthermore, they are not the ones tracking changes in aggregate prices. Deflation and inflation are two sides of the same coin. Deflation, like inflation does nothing to ones purchasing power in the long run. Who cares, whether things cost less if you get paid less or vice verse. The FED has few bills, and their bills are paid from interest they gain from their holdings.
Inflation and deflation benefit different groups of people though, deflation will benefit anybody that is holding dollars. Where as inflation will benefit those with debt. Modest deflation is more problematic than modest inflation, both are harmful if they get out of control.
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Originally Posted by LeavingMA
As you may have noticed the big banks keep getting bigger but the government doesn't care about the small and medium-sized banks.
Businesses in numerous industries have been consolidated, this has nothing to do with the FED.
Quote:
Originally Posted by LeavingMA
The federal reserve claims they would be able to control and stop recessions and depressions but since its creation in 1913 we have had lots of recessions.
Oh yeah? How does the central bank take the risk out of lending money? So when someone defaults on a loan the central bank forks out money to the bank? Of course not...this suggestion is silly.
The central bank was created to control monetary policy, rather than have monetary policy be dictated by external forces.
Fractional banking existed far before the FED or any central bank. This practice is not the result of central banking, rather its allowed by most central banks.
The FED does not protect "wealthy bankers", it protects the value of the currency and increases liquidity in crisis. The latter can be seen as "protecting wealthy bankers", but its also protecting every day people too. Many are just too stupid to see that.
This is gibberish. The FED, like most central banks has an inflation target. Sorta hard to do when you don't "believe in inflation". Furthermore, they are not the ones tracking changes in aggregate prices. Deflation and inflation are two sides of the same coin. Deflation, like inflation does nothing to ones purchasing power in the long run. Who cares, whether things cost less if you get paid less or vice verse. The FED has few bills, and their bills are paid from interest they gain from their holdings.
Inflation and deflation benefit different groups of people though, deflation will benefit anybody that is holding dollars. Where as inflation will benefit those with debt. Modest deflation is more problematic than modest inflation, both are harmful if they get out of control.
Businesses in numerous industries have been consolidated, this has nothing to do with the FED.
The FED makes no such claim.
Wow, drink much koolaid lately. Do you work for the Fed? The Federal Reserve refuses to be audited and can spend and create billions and trillions of dollars and doesn't have to answer to anyone. There meetings are held in secret. We have no clue as to where or when they have decided to place their money. It was basically created by the big bankers. By the way Congress has the authority to "coin" and "regulate" money. The founding fathers also wanted a gold standard because they knew of inflation when they messed up issuing Continental dollars at staggering amounts that were worth nothing.
You also, like Ben Bernanke misunderstand inflation and deflation. Inflation doesn't necessarily mean prices increase but purchasing power or the value of the dollar decrease. The opposite is true for deflation in many instances, but their can be some exceptions. In the last 10 years commodities have increased substantially but yet the average pay of an american worker does not increase at the same %. In Zimbabwe there was a quote that they were all billionaires but yet couldn't afford anything. That is what inflation into hyperinflation can cause.
The Federal Reserve has done nothing to protect the value of the dollar and it is naive to think that a bunch of individuals could control the economy by artificially moving around interest rates. This gives people the false idea to borrow because it is cheap and make bad investments. By the time they realize the market has changed and their investments are bad, it is already too late and the Federal Reserve is way behind. Take a look at Japan and the lost decade...they still haven't recovered. They also had a large real estate bubble and kept interest rates at very low levels with no results over a very long period of time. They still have never completely recovered.
I'm fine with fractional reserve lending, but at each bank's own risk. The bank itself can be as conservative and risky as possible. The problem is the Federal Reserve, our government, and Fannie and Freddie protect them making them take risks they normally wouldn't or would think twice about, and will refuse to let many of the big banks go under.
How about you stop boring me with red herrings? I stated that " The modern currency regime is rather new", I never said that "fiat currencies" are rather new. There are a number of historic examples of fiat currencies, but there is no historic example of the modern global currency regime. There are not even examples of anything like the modern US monetary system......
Again you are simply wrong, but we have all come this conclusion about your arguments. Give me a definite time period by what you men with "rather new" and clarification of "modern currency regime" LOL, and I will give you an example. Both terms are so ambiguous to be meaningless without being put in context. I will give you the opportunity to do so.
Again you are simply wrong, but we have all come this conclusion about your arguments. Give me a definite time period by what you men with "rather new" and clarification of "modern currency regime" LOL, and I will give you an example. Both terms are so ambiguous to be meaningless without being put in context .
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.
The Federal Reserve refuses to be audited and can spend and create billions and trillions of dollars and doesn't have to answer to anyone.
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.
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Originally Posted by LeavingMA
There meetings are held in secret.
The meetings are published, but with a lag.
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Originally Posted by LeavingMA
You also, like Ben Bernanke misunderstand inflation and deflation. Inflation doesn't necessarily mean prices increase but purchasing power or the value of the dollar decrease. The opposite is true for deflation in many instances, but their can be some exceptions. In the last 10 years commodities have increased substantially but yet the average pay of an american worker does not increase at the same %.
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.
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Originally Posted by LeavingMA
The Federal Reserve has done nothing to protect the value of the dollar and it is naive to think that a bunch of individuals could control the economy by artificially moving around interest rates.
This as your previous comments are just strawman. Few people (even hardcore monetarists) think you can totally control an economy with monetary policy.
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Originally Posted by LeavingMA
They also had a large real estate bubble and kept interest rates at very low levels with no results over a very long period of time. They still have never completely recovered.
They also never had a depression.
Quote:
Originally Posted by LeavingMA
I'm fine with fractional reserve lending, but at each bank's own risk. The bank itself can be as conservative and risky as possible. The problem is the Federal Reserve, our government, and Fannie and Freddie protect them making them take risks they normally wouldn't or would think twice about, and will refuse to let many of the big banks go under.
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?
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