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I have great respect for the Bill Gates' of the world, because I know what they had to do to get where they are. They don't just sit behind a desk and watch the money roll in. They are watching every aspect of their operation, looking at profit and loss reports, planning for new products, solving production problems, consulting with their engineers and marketing departments, etc. They work hard too. I flatly reject this notion that these people do not earn their money.
Harborlady, I'm in agreement with your post, the way I see it is the financial crisis won't be resolved until the U.S. financial system is restored to health, transparency, and integrity.
Many of the 'too big to fail' institutions are insolvent. Their liabilities exceed assets, this is something I would like the banks and the administration to admit.
I don't think they will because finance is America's leading and most powerful industry at about 24% of GDP compared to 12% which is manufacturing. The power of Wall Street has allowed them to manipulate politicians and government regulators.
Bear Stearns, Lehman, Goldman Sachs and other 'TBTF' investment banks routinely lent $35-$50 US per dollar of assets. These very same banks would borrow money at 1%, invest it in sleazy subprime mortgages at 4%, earning a net of 3%. Hedge fund managers on average only had to pay 15% income tax.
When money replaced productivity to create money, we were bound for a massive correction/collapse.
When this happened these Wall st hucksters used their clout to pressure both the Bush and Obama administration to bail them out. It is with ironic doom that many of the people responsible for the disaster that is Goldman Sachs are the same alumni who have been managing both the Bush and Obama 'rescue plan'.
Now we have Geithner blocking realistic financial reform, with more of the same 'bailout' schemes such as PPIF.
If the banks won't admit their true losses or Obama continues to prop them up. We are headed down the road toward Japan's 'zombie banks' and what Russia, France's Nicholas Sarkozy and Germany's Angela Merkel rightly fear; deficit spending created inflation.
Russia, and Europe both face declining populations and can not saddle future generations with monster deficits like the U.S.
So what do we do? Well my answer is the finance industry and the administration must fire the con men who ran these businesses into the ground. The bankers, traders, brokers and people responsible at the credit rating agencies of committing fraud should be behind bars like Bernie Madoff.
Then temporarily nationalize the banks and break them into smaller firms that are not too big to fail, and more importantly less able to control and manipulate the U.S. government.
Last edited by mcmastersteve; 04-05-2009 at 05:27 PM..
Hmm... am I the only one who thinks global currency and global governance are a good thing?
We have one... it's called the USD (for now). It's not a true international currency, but fairly close when it comes to trading bulk commodities and backing smaller currencies. Look up Bretton Woods some time and see why the USD is the prominent currency for finance and trade.
IMO, it's awful having one currency. It seems convenient, but you end up shafting smaller local economies. Monetary policy needed for one region of an area is not needed for another and can lead to high inflation where it is not needed. For example, currencies backed by USD that has just had a large increase in money supply will be devalued. If they used the USD by itself, even, it becomes more expensive to do trade with other nations (and many of these local economies do). It's one of the reasons why the US has so many different costs based on area (cost to live in NYC is not the same as the Midwest). Many blame "supply and demand" for that problem. This should mainly affect real estate prices (scarcity of land) and not so much large-scale global consumables prices (ie. Coke, McDs, etc.), which it doesn't as long as monetary policy keeps stability. IDK if that makes sense, because I'm a bit out of it with cold medicine (sorry).
Quote:
You don't understand fiat currency do you? The US Dollar actually was real money before 1971. It was back by gold, and years before that by silver aswell. When nixon took the USA off the gold standard, our dollar became a "FIAT" currency. This means it's not backed by anything of real value. So add 40 years to 1971....
A real currency is one that has faith and confidence in it by its users. That's really it. It doesn't matter about metal or paper. What can gold and silver be used for? Jewelry, some tools, paints, etc.. However, you can't eat it. It can't give you entertainment (unless you like staring at it). It isn't some magical thing that fulfills all your needs. This is why I find it ridiculous that people call it "real' money and paper money worthless. Magically, we removed gold and we had inflation. That's not quite how it happened.
One argument that I hear is because you can't dig up an infinite amount of gold, it keeps a money supply stable. Well, most of the money supply isn't made of physical currency (metal OR paper).
Most of it is made by expanding deposits through fractional reserves. Even if you have a gold backed currency, as long as you have this fractional reserve system, you will have inflation if you don't have an increase in production to back up the newly created currency. Which is what has happened in much of the West. If you look at when inflation started, it was when America became a more consumer-based economy. This started an increased demand cycle in the 60s, and we used policy to keep unemployment low (i.e. more employed consumers= more inflation). In the 70s, we started shipping manufacturing overseas (less physical capital and goods pegged to more dollars). In the 80s, this trend continued. In the 90s, we saw a surge in employment AND production, but little inflation. And, finally, we saw much of that production go overseas, again, and we increased consumerism to boost up our economy. This included: cheap credit (money creation w/o increased production = inflation), real estate bubble, and other bubbles. And, now, here we are today: an inflated currency due to decreased production, not because of fiat.
How about going BACK to the way we were,using the Constitution and Bill Of Rights to guide our path?
Get rid of the Federal Reserve,it is crazy that the USA has to pay a private company for its own currency.
Go back to a policy of our currency being backed by something more tangible than a promise....this would then limit how much can be spent.
Dismantle the IRS and the tax code.It is unconstitutional and leads to fraud and waste.
Here is the gist of his 2008 economic plan:
The four areas that the plan covers are: 1. Tax Reform: Reduce the tax burden and eliminate taxes that punish investment and savings, including job-killing corporate taxes. 2. Spending Reform: Eliminate wasteful spending. Reduce overseas commitments. Freeze all non-defense, non-entitlement spending at current levels. 3. Monetary Policy Reform: Expand openness with the Federal Reserve and require the Fed to televise its meetings. Return value to our money. 4. Regulatory Reform: Repeal Sarbanes/Oxley regulations that push companies to seek capital outside of US markets. Stop restricting community banks from fostering local economic growth.
1. Going backwards sometimes means taking all your tires out with spikes. Our economy is global and ill thought out. I'm not sure that vision you're painting can deal with the scale we've expanded to since those times. I'm certain we need a better plan but over simplifying can go too far. One picture (broad brush) I can imagine as healthy is ensuring the fundementals of our economy are beyond the reach of international influence. Our own energy, food, water supply etc needs should remain in our control. As we speak my water supply is owned by a german corporation. I think this is a very unhealthy situation, and consequence of privatizing what amounts to be monopoly arrangements leaves everyone but the monopoly vulnerable. That is until people physically revolt as they did in south america. International trade should be our excess economic activity spilling over or crossing into our borders. When we lose our ability to opt out of anything we're more vulnerable.
2. Federal reserve= privatized monopoly. You said abolish, then you said monitor. Change should happen, but defining that change is vague. Comes back down to accountability being on page 1. We need to flesh that out more but I'm afraid for the most part it's so far beyond our intellectual ability to grasp, it winds up being ordinary people trying to figure out brain surgery. That ain't pretty. Back when christ was a child the Fed had a less ham handed role than it's had the past 30yrs. They were supposed to be independent stewards, beyond the reach of fashionable politics, but it appears to me that republican agenda and Fed agenda have been working tandem and has nothing to do with the greater good being served. Dems are the zag of the zig and that just keeps stalemate situations in place.
3. IRS serves a function. That function needs to be redefined. I'd like to see streamlined taxation that's far more straightfoward than it's currently written but CPA's enjoying the mire that prevents ordinary people from doing their own taxes would prefer status quo. Essentially, if the tax payer is accountable for any error in interpretation of legalease language, I think the tax code should be written to that lowest common denomenator for full compliance. The board is tilted to favor accountants and lawyers, not ordinary people trying to stay in the lines.
4. we cannot lower taxes until we get caught up on our bills. corporate taxes should remain competitive worldwide. They factually are right now. We cannot return the value of the dollar without tax revenue to restore it properly. I was gladly paying an extra $100 yr taxes during clinton years knowing our debt was going in the opposite direction so substantially. It was fiscally responsible. It's how I live, how my country dictates I live as individual (being accountable), and I expect to see ALL players in the greater system held to the exact same standard uniformly. That's the basis of justice.
5. One thing you didn't mention re: sarbane oxley regs-- what are they attempting to correct with this legislation? Railing at a law blindly because you don't like structure isn't logical. Fences hold things in and they keep other things out. So lets quit demanding the absence of fences and instead focus more on effective rewards and deterrents systems to better determine where that fence should be, how many gates, and the terms of those gates opening. No, not overly elaborate blah blah, but straightforward terms that don't piggyback a million and one loophole clauses. That's where the BS levels get to eyeball level and if that were a line item vote among every american, I'd bet the farm everyone would vote yes to abolish that nonsense.
6. I'm listening only so far as constructive plans are being discussed respectfully. The bashing habit of some regular bloggers is anti american. Not because they aren't entitled to an opinion, but because they've entitled themselves to lie for the superficial appearance of winning. They have no respect for anyone. Not even for themselves. I want nothing to do with hate groups.
As you can see, the CURRENCY supply hasn't really increased much, while the other monetary aggregates are growing exponentially without production to back up said money supply.
Wow you guys know more then a lot of the people I speak to. But Do you all understand the federal reserve is a private bank? It's a complete violation of the U.S Constitution. ARTICLE 1, SECTION 8 OF THE CONSTITUTION STATES THAT ONLY CONGRESS SHALL HAVE THE POWER TO COIN (CREATE) MONEY AND REGULATE THE VALUE THEREOF.
The federal reserve is a quasi-public entity, meaning it's a government corporation. The gov appoints BOD and they do the rest. It's much like Amtrak and CPB. It's not uncommon to have these.
Now, the federal reserve does NOT coin money. The treasury and BEP create money, as appropriated by congress. This COINED money is given to the Federal Reserve to distribute. They have the right to hold on to a portion of it to control reserves of banks. They also use monetary policy to expand deposits and create loans. They have not unconstitutionally coined money. The value of the money adjusts according to the number of goods and services in an economy at once compared to money supply. The Fed does not stick an artificial "worth" to paper money in terms of a resource, so again, it's constitutional.
So what do we do? Well my answer is the finance industry and the administration must fire the con men who ran these businesses into the ground. The bankers, traders, brokers and people responsible at the credit rating agencies of committing fraud should be behind bars like Bernie Madoff.
Then temporarily nationalize the banks and break them into smaller firms that are not too big to fail, and more importantly less able to control and manipulate the U.S. government
Agreed! I'm an engineer and economics major, and I find it funny that I need a license to practice ECE as a "professional", yet the finance industry doesn't require a license to work in that field as a professional. Which one has more effect on everyone: an ECE building a bad computer, or a financial firm filled with many dimwits hacking up a currency and blowing it on consumer loans?
JFK tried to get rid of the Fed by printing US Notes because he realized that if private super rich bankers own the Fed & they loan money to the government, they essentially own the government.
EO 11,110 was intended to ease the process of removing silver certificates from the economy to be replaced by small denomination Federal Reserve Notes. This gave the Fed MORE power, it did not try to undermine them. Why would the Fed kill a president who's giving them more power?
Harborlady, I'm in agreement with your post, the way I see it is the financial crisis won't be resolved until the U.S. financial system is restored to health, transparency, and integrity.
Many of the 'too big to fail' institutions are insolvent. Their liabilities exceed assets, this is something I would like the banks and the administration to admit.
I don't think they will because finance is America's leading and most powerful industry at about 24% of GDP compared to 12% which is manufacturing. The power of Wall Street has allowed them to manipulate politicians and government regulators.
Bear Stearns, Lehman, Goldman Sachs and other 'TBTF' investment banks routinely lent $35-$50 US per dollar of assets. These very same banks would borrow money at 1%, invest it in sleazy subprime mortgages at 4%, earning a net of 3%. Hedge fund managers on average only had to pay 15% income tax.
When money replaced productivity to create money, we were bound for a massive correction/collapse.
When this happened these Wall st hucksters used their clout to pressure both the Bush and Obama administration to bail them out. It is with ironic doom that many of the people responsible for the disaster that is Goldman Sachs are the same alumni who have been managing both the Bush and Obama 'rescue plan'.
Now we have Geithner blocking realistic financial reform, with more of the same 'bailout' schemes such as PPIF.
If the banks won't admit their true losses or Obama continues to prop them up. We are headed down the road toward Japan's 'zombie banks' and what Russia, France's Nicholas Sarkozy and Germany's Angela Merkel rightly fear; deficit spending created inflation.
Russia, and Europe both face declining populations and can not saddle future generations with monster deficits like the U.S.
So what do we do? Well my answer is the finance industry and the administration must fire the con men who ran these businesses into the ground. The bankers, traders, brokers and people responsible at the credit rating agencies of committing fraud should be behind bars like Bernie Madoff.
Then temporarily nationalize the banks and break them into smaller firms that are not too big to fail, and more importantly less able to control and manipulate the U.S. government.
Moral hazard can be solved within capitalist framework by refusing to pay their salaries up front the way they've leveraged the terms and conditions for themselves. I believe pareto principle got too skewed when salaries became 500:1 within one company because it represented profits removed from middle class & shareholders alike to feed the top. Diagnosing the problems of american business the past 30yr trend, the distance between company performance and salaries has gotten so disconnected it's like a surreal landscape from Dali. One company, one profit pie, one captain and one crew in one country. The every man woman and child for themselves plan doesn't cut it for a large undertaking & has a corrosive effect on the host civilization. Parity restored to 30:1 or even 50:1 makes most sense. Limiting the size of a corporation will keep eggs out of one basket in industry as anti trust law intended.
The list of crooks cannot be limited to commerce. Those greasing the track in government need the same perp walk happening in their respective party. Whatever forces in DC coercing politicians into shady dealings needs to be taking that walk with them. I offer you this exibit B, beyond the obvious characters like Tom Delay notoriety exhibit A. http://www.post-gazette.com/pg/09088/959114-455.stm
Seems to me the primary definitions of the job in service to the true greater good need to be revised. When Pennsylvania thrives because they stole grace and favor away from WV, VA, & OH, we're in effect pitting states against each other economically. Whomever has the biggest lawyer wins. This is destructive. It must change.
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You said abolish, then you said monitor. Change should happen, but defining that change is vague. Comes back down to accountability being on page 1. We need to flesh that out more but I'm afraid for the most part it's so far beyond our intellectual ability to grasp, it winds up being ordinary people trying to figure out brain surgery. That ain't pretty. Back when christ was a child the Fed had a less ham handed role than it's had the past 30yrs. They were supposed to be independent stewards, beyond the reach of fashionable politics, but it appears to me that republican agenda and Fed agenda have been working tandem and has nothing to do with the greater good being served. Dems are the zag of the zig and that just keeps stalemate situations in place.
