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By Truth To Power
#14611376
misterash13 wrote:The federal reserve is the cause of all of our financial issues.

No. Other countries have financial issues, and they do not have the Federal Reserve, and the USA had financial issues before the Federal Reserve. The Fed is just a way of administering the debt-money system, which is the real cause of most financial issues.
We would not be $18 trillion in debt and our government could not engage in out of control spending were it not for the cheap money policies of the fed.

You don't understand the debt money system. When money is debt, borrowing is needed to avoid deflation. If, as in recent years, firms and households don't want to borrow, government has to do it, or the economy will collapse in deflation.
Everything you need to know about the fed and more...
http://www.libertytruthbomb.com/the-fed.html

First, you should know that the Fed's job is to administer the inherently unjust and unstable debt money system. Debt money is the problem, not the Fed. Does your source explain that?
By EU rope
#14611393
"It is well enough that people of the nation
do not understand our banking and monetary
system, for if they did, I believe there would be
a revolution before tomorrow morning."

Henry Ford

Yeah, I guess Henry Ford was no fool.
I like Bill Still and his work.
User avatar
By quetzalcoatl
#14611431
Truth To Power wrote:You don't understand the debt money system. When money is debt, borrowing is needed to avoid deflation. If, as in recent years, firms and households don't want to borrow, government has to do it, or the economy will collapse in deflation.


That's getting pretty close. A few nitpicks, though. It needs to be made very clear that it is not sovereign debt that causes debt deflation, it is private borrowing. And the offset to private deleveraging is not government debt per se, it is government spending in the private sector. We are accustomed to government spending being accompanied by the issuance of debt instruments, but there is no operational necessity for this. It is merely a legal/institutional arrangement. It is perfectly feasible for sovereign governments to spend in excess of taxes without the issuance of debt instruments.

So this is how it works. Private debt increases the broad measure of money in circulation, which increases private spending to some degree. This stimulates production and employment. Once the increase of private debt runs up against debt service costs, the debt bubble will burst. The printing presses are now running in reverse as trillions of dollars are annihilated by falling asset prices. The government can offset this annihilation of money in two ways; decreasing taxes or increasing spending. These are the primary options by which governments create money to offset its annihilation in the private sector. The issuance of debt instruments does nothing to alleviate debt deflation. QE is misguided as well, as it supports asset prices but creates comparatively little actual activity in the economy.

In any case, the Fed simply reacts to these broad forces rather than causing them. Maybe Henry Ford should have stuck to his Protocols of the Elders of Zion publishing ventures - his monetary views were bunk.
By Truth To Power
#14611458
quetzalcoatl wrote:That's getting pretty close. A few nitpicks, though. It needs to be made very clear that it is not sovereign debt that causes debt deflation, it is private borrowing.

Yes, because private debtors have to get money from somewhere to repay their debts, while governments can issue money.
And the offset to private deleveraging is not government debt per se, it is government spending in the private sector.

No, government spending financed by taxation or borrowing of existing money will not offset private debt deleveraging. Only when government borrows new debt money from banksters does it offset the annihilation of debt money by private debt repayments.
We are accustomed to government spending being accompanied by the issuance of debt instruments, but there is no operational necessity for this. It is merely a legal/institutional arrangement. It is perfectly feasible for sovereign governments to spend in excess of taxes without the issuance of debt instruments.

Correct.
So this is how it works. Private debt increases the broad measure of money in circulation, which increases private spending to some degree. This stimulates production and employment. Once the increase of private debt runs up against debt service costs, the debt bubble will burst.

Right.
The printing presses are now running in reverse as trillions of dollars are annihilated by falling asset prices.

No. The printing presses are running in reverse because repayments of debt, which annihilate debt money, are not offset by new borrowing.
The government can offset this annihilation of money in two ways; decreasing taxes or increasing spending.

No. Decreasing taxes by itself does no good, as it does not affect the deflationary spiral. It has to support the money supply, by either borrowing more debt money into existence or issuing money itself.
These are the primary options by which governments create money to offset its annihilation in the private sector. The issuance of debt instruments does nothing to alleviate debt deflation.

False. See above. Issuing debt money -- not borrowing existing money -- directly alleviates debt deflation.
QE is misguided as well, as it supports asset prices but creates comparatively little actual activity in the economy.

Correct. But that is what QE is for.
In any case, the Fed simply reacts to these broad forces rather than causing them.

No, the Fed largely causes these forces, albeit indirectly. Low interest rates encourage borrowing, which leads to the debt money spiral.
User avatar
By quetzalcoatl
#14611462
Well, low interest rates only encourage borrowing when the psychology of lenders and borrowers is not excessively fearful, as happens in a deflation spiral. Also, government spending directly creates money in the private sector by bypassing private lending - so, yes it is in fact a much superior way to combat deflation than simply re-igniting private debt. Another way of creating money is debt forgiveness funded directly by the government.
By Rich
#14611621
quetzalcoatl wrote:We are accustomed to government spending being accompanied by the issuance of debt instruments, but there is no operational necessity for this. It is merely a legal/institutional arrangement. It is perfectly feasible for sovereign governments to spend in excess of taxes without the issuance of debt instruments.
Exactly! And while this was a dangerous freedom for government treachuries in the stagflation of the seventies and eighties, it is very different in a period of deflation /under inflation. I've been arguing for proper monetisation since the start of the crash. Arguable some level of monetisation before the crash might have been helpful if combined with higher interest rates.
User avatar
By QatzelOk
#14611790
Truth To Power wrote:No. Other countries have financial issues, and they do not have the Federal Reserve, and the USA had financial issues before the Federal Reserve.


Actually, most modern Western nations have a similar institution to the Federal Reserve (controlled by the same ethnic mafia) that manages money flow. Why do so many members of the same ethnicity control monetary policy in so many nations? And are we even allowed to ask this question?

Likewise, the USA had problems before the Fed was created. But the nation sinking into a spiral of debt wasn't one of them. It was the banks that kept going out of business, rather than the entire nation-state, as is the case now.

Our new Prime Minister's father - Pierre Elliot Trudeau - threw away Canada's Nationalized monetary institution (which existed since the Great Depression) in 1974, and that's when Canada started to go into the red. At exactly that moment. Liberal red.

Israel could live off a fraction of the interest of Canada's debt. I wonder if it does.
By Truth To Power
#14611882
Truth To Power wrote:No. Other countries have financial issues, and they do not have the Federal Reserve, and the USA had financial issues before the Federal Reserve.

QatzelOk wrote:Actually, most modern Western nations have a similar institution to the Federal Reserve (controlled by the same ethnic mafia) that manages money flow.

That was my point. It is the debt money system that is the problem, not the Federal Reserve per se. The system could be administered by any number of different methods and institutions (and is in different advanced countries), and would still have the same basic characteristics.
Why do so many members of the same ethnicity control monetary policy in so many nations?

Who are you talking about?
And are we even allowed to ask this question?

You seem to have.
Likewise, the USA had problems before the Fed was created. But the nation sinking into a spiral of debt wasn't one of them.

But periodic crashes were.
It was the banks that kept going out of business, rather than the entire nation-state, as is the case now.

I doubt the USA is going out of business.
Our new Prime Minister's father - Pierre Elliot Trudeau - threw away Canada's Nationalized monetary institution (which existed since the Great Depression) in 1974, and that's when Canada started to go into the red. At exactly that moment. Liberal red.

But there have been three solid Conservative majority governments since then, and none of them ever even mentioned restoring the Bank of Canada's monetary role.
Israel could live off a fraction of the interest of Canada's debt. I wonder if it does.

Ah. That's who.

You are going to get nowhere, I promise you, by attacking and blaming a particular ethnic or religious group. There have been plenty of rich, greedy takers of other persuasions who pocketed billions from the debt money system. Attack the idea, the system. That's the real problem, and that can't be dismissed as bigotry.
User avatar
By QatzelOk
#14612490
Truth To Power wrote:You are going to get nowhere, I promise you, by attacking and blaming a particular ethnic or religious group. There have been plenty of rich, greedy takers of other persuasions who pocketed billions from the debt money system. Attack the idea, the system. That's the real problem, and that can't be dismissed as bigotry.

Our current banking system is administered by a mafia. That explains why it works so well in pillaging the working class of 3% of its surplus income and transferring it to mafia members.

Fractional Reserve Banking is a flawed system, and its flaws have been known for a century. The problem is that its "flaw" is that it transfers money to a parasitic part of the population who then have the luxury of buying the political process and mass media brainwashing with all that easy cash.

Any ethnic mafia would dream of being in charge of an institutionalized scam like this one. But the danger of letting a mafia control the money supply... is that they might one day become racist tyrants who deform entire cultures in order to keep them stupid, disorganized, and in a constant state of panic.
By Truth To Power
#14612506
Truth To Power wrote:You are going to get nowhere, I promise you, by attacking and blaming a particular ethnic or religious group. There have been plenty of rich, greedy takers of other persuasions who pocketed billions from the debt money system. Attack the idea, the system. That's the real problem, and that can't be dismissed as bigotry.

QatzelOk wrote:Our current banking system is administered by a mafia. That explains why it works so well in pillaging the working class of 3% of its surplus income and transferring it to mafia members.

It's more like 10%, there's nothing "surplus" about it, and the debt money system would still pillage producers and consumers if its administration and ownership were distributed randomly in the population.
Fractional Reserve Banking is a flawed system, and its flaws have been known for a century.

You don't even understand the system's flaw, which is debt money, NOT fractional reserves.
The problem is that its "flaw" is that it transfers money to a parasitic part of the population who then have the luxury of buying the political process and mass media brainwashing with all that easy cash.

Sure. But let's focus on the system's inherent injustice, not the ethnic or religious identity of those who have been clever enough to make themselves its beneficiaries. The system would be no more benign if it were the Spanish, Inuit, or Samoans in charge.
Any ethnic mafia would dream of being in charge of an institutionalized scam like this one.

In fact, anyone who wants something for nothing, ethnic mafia or otherwise.
But the danger of letting a mafia control the money supply... is that they might one day become racist tyrants who deform entire cultures in order to keep them stupid, disorganized, and in a constant state of panic.

Was the problem with slavery that it was white Christians who owned the slaves?

Hello?
User avatar
By Lexington
#14612522
Truth to Power wrote:You don't even understand the system's flaw, which is debt money, NOT fractional reserves.


Maybe I don't understand what you mean by "debt money", but how would you have a system with fractional reserves and not "debt money"?
User avatar
By QatzelOk
#14612538
Truth To Power wrote:Was the problem with slavery that it was white Christians who owned the slaves?

Hello?

The "Christians" who owned slaves had been forced to become Christian a thousand years previously. They were forced, like slaves, to believe in a magic man to whom they would forever be in debt because of their "original sin."

Brainwashinig people into being slaves is a huge part of the capitalism that gave us debt-based currency which is the lifeblood of fractional reserve banking. It couldn't exist any other way.

And Truth, I notice how you're attacking the critics of the Federal Reserve more than you're attacking the Federal Reserve itself. This is probably because of all the brainwashing that they've been able to sponsor with their limitless access to other people's earnings.
User avatar
By KlassWar
#14612546
Scrap it and replace it with a fully public and fully state-controlled central bank ASAP. Monetary policy is an important lever of economic planning and private interests should be kept the fuck away from it.
User avatar
By quetzalcoatl
#14612551
KlassWar wrote:Scrap it and replace it with a fully public and fully state-controlled central bank ASAP. Monetary policy is an important lever of economic planning and private interests should be kept the fuck away from it.


This is correct as far as it goes. Just as important is a recognition that monetary policy is not the be-all and end-all of economic policy. The conspiracy theorists are just as wrong as market monetarist Scott Sumner.
User avatar
By KlassWar
#14612568
quetzalcoatl wrote:This is correct as far as it goes. Just as important is a recognition that monetary policy is not the be-all and end-all of economic policy. The conspiracy theorists are just as wrong as market monetarist Scott Sumner.


Of course it's not the only lever: There's plenty others, from trade policy through wage and price subsidies/controls, through controlling access to public investment and credit all the way to flat out production and distribution mandates (among others). Monetary policy simply happens to be a very important one, all the more reason to keep all the corporate creeps the fuck away.
By Truth To Power
#14612982
Truth to Power wrote:You don't even understand the system's flaw, which is debt money, NOT fractional reserves.

Lexington wrote:Maybe I don't understand what you mean by "debt money", but how would you have a system with fractional reserves and not "debt money"?

Debt money is money created as interest-bearing debt, so banks can effectively create their own reserves, as long as they can find borrowers. Debt money is not created ex nihilo, but from the borrower's undertaking (and legal obligation) to repay it. Fractional reserves just means banks don't have to have reserves to cover all their liabilities. This is the key point almost no one understands, because they swallow the usual fairy tale about how fractional reserves let banks create money. That's not how the system actually works.

If you still had fractional reserves, but instead of allowing banks to create money to lend (presumably a government Mint would issue it instead), they had to actually have the money, and transfer it from their own account into the borrower's account, the economy would not be dependent on private bank lending (and thus firm, household, and/or government borrowing) to sustain the money supply. Lending would not create all new money, any more than it does when you lend your kid money for tuition, or charge something on your credit card, and the money supply would be under the direct control of the Mint.
By Truth To Power
#14612986
Truth To Power wrote:Was the problem with slavery that it was white Christians who owned the slaves?

QatzelOk wrote:The "Christians" who owned slaves had been forced to become Christian a thousand years previously. They were forced, like slaves, to believe in a magic man to whom they would forever be in debt because of their "original sin."

Who forced them to convert? You are thinking of Islam, not Christianity.
Brainwashinig people into being slaves is a huge part of the capitalism that gave us debt-based currency which is the lifeblood of fractional reserve banking. It couldn't exist any other way.

Sure it could. Like I said, you just don't understand it.
And Truth, I notice how you're attacking the critics of the Federal Reserve more than you're attacking the Federal Reserve itself. This is probably because of all the brainwashing that they've been able to sponsor with their limitless access to other people's earnings.

Nonsense. The UK doesn't have the Fed, Canada doesn't, and Japan, France, Germany, etc. don't either. But they all use debt money, and they all have the same problem of borrowing being needed to sustain the money supply. You are being deceived into thinking the Fed is the problem. It's not. Debt money is.
User avatar
By Lexington
#14613204
Truth To Power wrote:Debt money is money created as interest-bearing debt, so banks can effectively create their own reserves, as long as they can find borrowers.


They can't create new reserves since reserves are things like vault cash which come from the central bank.

Truth To Power wrote:Debt money is not created ex nihilo, but from the borrower's undertaking (and legal obligation) to repay it. Fractional reserves just means banks don't have to have reserves to cover all their liabilities. This is the key point almost no one understands, because they swallow the usual fairy tale about how fractional reserves let banks create money. That's not how the system actually works.

If you still had fractional reserves, but instead of allowing banks to create money to lend (presumably a government Mint would issue it instead), they had to actually have the money, and transfer it from their own account into the borrower's account, the economy would not be dependent on private bank lending (and thus firm, household, and/or government borrowing) to sustain the money supply. Lending would not create all new money, any more than it does when you lend your kid money for tuition, or charge something on your credit card, and the money supply would be under the direct control of the Mint.


This is what confuses me, since this doesn't sound like fractional reserve banking, it sounds like full reserve banking.
By Truth To Power
#14613448
Truth To Power wrote:Debt money is money created as interest-bearing debt, so banks can effectively create their own reserves, as long as they can find borrowers.

Lexington wrote:They can't create new reserves since reserves are things like vault cash which come from the central bank.

No, pretty much any demand deposit can serve as reserves, including ones the bank creates.

"The process by which banks create money is so simple, the mind is repelled." -- John Kenneth Galbraith
Truth To Power wrote:Debt money is not created ex nihilo, but from the borrower's undertaking (and legal obligation) to repay it. Fractional reserves just means banks don't have to have reserves to cover all their liabilities. This is the key point almost no one understands, because they swallow the usual fairy tale about how fractional reserves let banks create money. That's not how the system actually works.

If you still had fractional reserves, but instead of allowing banks to create money to lend (presumably a government Mint would issue it instead), they had to actually have the money, and transfer it from their own account into the borrower's account, the economy would not be dependent on private bank lending (and thus firm, household, and/or government borrowing) to sustain the money supply. Lending would not create all new money, any more than it does when you lend your kid money for tuition, or charge something on your credit card, and the money supply would be under the direct control of the Mint.

This is what confuses me, since this doesn't sound like fractional reserve banking, it sounds like full reserve banking.

I'm not sure where the confusion is arising because under the scenario above, the usual fairy tale about banks creating money by relending customer deposits that have been paid out from previous loan proceeds would actually be true.

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