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Wooiy Ideas Are for SheepIt all works fine with growth and dutiful lending by banks. Money is, or should be created thru growth. Unfortunately we have a central bank, the Feral Reserve, who believes they can reverse prime the economy by printing money, QE, to encourage growth. Instead they created asset inflation. Witness the stock market at an all time high even though we have had very slow growth since the 2008 recession. QE has also created high housing cost and made the wealth gap even worse.
Not that I'm defending QE as a policy (because I'm not), but people who bash it forget that the world economy was on the brink of disaster. Would you have let banks fail and the economy to implode, or would you have done something different? If so, what?
You talk as if the bailout worked and diverted disaster. The reality is we don't know how it will eventually unfold. Adding trillions of dollars into the economy and making too big to fail banks even bigger, driving asset prices thru the roof while creating less 2% growth will have consequences.
What those consequences are and the ultimate severity of pain caused is still in question.
I think what you're saying is that the bailout averted the disaster in 2008, but may have caused another, potentially larger problem long term.
However, none of the money created via QE has circulated in the economy. What QE did was drive down the price of borrowing such that it has enticed the wealthy to borrow money at one rate, let's just say 2% and turn around and invest in markets. The thought is that if they can earn a return higher than 2% then basically it's free money.
I agree that this policy has driven the demand for assets, perhaps we might say artificially.
However, the real question is, are the loans made adequately capitalized?
If so, as loans fail bank investors (that that invest via investor capital common and preferred stock) will lose value.
If there is enough capital, the system will self-adjust, though it will have the effect of transferring wealth from investors to those that took and defaulted on those loans which present another issue altogether.
The other possibility is that as interest rates rise, investors will slowly withdraw their capital and repay their loans. The stock market will fall and companies will have to go back to "old fasioned" methods of capitilization and value, things like;
Investing in labor plant and equipment
Stop utilizing buy backs as a way to increase value.....
If this is done slowly markets will adjust.
The question is, is there adaquate incentive for the wealthy to repay the loans they took, or should they just default?
That is the real underlying problem. We saw what happens in 2008 when a market isn't adaquatly capitlized and the incentive of default outweighs the incentive to repay.
The Big Bank Bailout
In an article Secrets and Lies of the Bailout, Matt Taibbi says “It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyper concentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.
After the original $700 billion bailout, the ongoing bailout was kept very secret because Chairman Ben Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort. In fact, $7.7 trillion of the secret emergency lending was only disclosed to the public after Congress forced a one-time audit of the Federal Reserve in November of 2011. After the audit the public found out the bailout was in trillions not billions; and that there were no requirements attached to the bailout money - the banks could use it for any purpose.
Few thoughts....
First, it's really hard for me to comment on the entirety of the claims here. I will agree with this article in Forbes that I found when I Googled "The Big Bank Bailout" which says some of the same things you are saying.
There is undoubtedly financial corruption and the result is massive wealth transfers. IMO, much of it is the result of the speed of markets made possible by computer technologies. It also affords too much anonymity IMO...
That said, taxpayers aren't really funding this stuff...At least not directly. The explanation for that is long and requires that I go into a lot of underlying detail I'm going to skip here...For now unless you insist I explain.
The Fed is independently audited every year.
The problem isn't the Fed, or even the government, though they are FAR from perfect and need many changes. The Forbes article identified the problem, wholesale banking corruption and a lack of accountability.
The Fed to my knowledge has no enforcement arm, that is left to the Federal government and this is where the Federal government fails and must be reformed.
But again, the general population doesn't understand how the system we have works and as a result vote people into Congress to do things like "audit the Fed" (which, btw has nothing to do with auditing the Fed, it's about taking control of monetary policy) and running "balanced budgets", not doing things like removing the influence of money from government and getting rid of things like Citizens United and the idea that money is speach.
It's guys like Todd who promote ideas like banks lending customer deposits to other customers and the idea that the supply of savings affects in the interest rate that is so wrong he doesn't even understand the question, never mind the answer (and I say that with all the respect I can). Something I'll continue to debate with him you can make up your own mind about the strength of that argument.
In the end, the problem, IMO, is there are people making money hand over fist, who can use that idle money to influence policy. Things won't change until we can separate the influence of money on our government officials. I try not to mix policy decisions and fiscal reality because it often confuses people, but this thread is really a mix of policy and fiscal reality.
Politics and money is like peanut butter and jelly. Good luck separating the two.
Ultimately, economics has a natural ebb and flow. If the Fed or any other central bank thinks they can divert down times and maintain a consistent growth in the economy, we will suffer. Our founders warned us against a central bank- Our founding fathers were against the federal reserve and central banking system..
The Fed exist at the pleasure of our government, and the Fed allows our government to borrow without consequences, but for how long?
Where do banks get the money to lend? I thought it was clarified by the 1913 fed bill and the 1930(?) fiat bill. The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %. The fiat bill states verbatum, that "it is really not necessary", to have a commodity base for your money. So the commodity that serves as the base for that 90 % of your money is your physical life and your dividable estate. That is why population exchanges and deportations were invented and loved at the end of ww2.
I think this means that they can lend out $10000 = 10 * $1000. The 10 % of the $10000 is the deposit, and the 90 % i.e. $9000 is the money that is created by your signature, to complete your loan ammount that you borrow in this example.Where do banks get the money to lend? I thought it was clarified by the 1913 fed bill and the 1930(?) fiat bill. The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %. The fiat bill states verbatum, that "it is really not necessary", to have a commodity base for your money. So the commodity that serves as the base for that 90 % of your money is your physical life and your dividable estate. That is why population exchanges and deportations were invented and loved at the end of ww2.
The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %.
Can you translate that into English?
Pretend a bank has a single $1000 deposit.
How much do you think they can lend out?
I think this means that they can lend out $10000 = 10 * $1000. The 10 % of the $10000 is the deposit, and the 90 % i.e. $9000 is the money that is created by your signature, to complete your loan ammount that you borrow in this example.Where do banks get the money to lend? I thought it was clarified by the 1913 fed bill and the 1930(?) fiat bill. The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %. The fiat bill states verbatum, that "it is really not necessary", to have a commodity base for your money. So the commodity that serves as the base for that 90 % of your money is your physical life and your dividable estate. That is why population exchanges and deportations were invented and loved at the end of ww2.
The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %.
Can you translate that into English?
Pretend a bank has a single $1000 deposit.
How much do you think they can lend out?
It all works fine with growth and dutiful lending by banks. Money is, or should be created thru growth. Unfortunately we have a central bank, the Feral Reserve, who believes they can reverse prime the economy by printing money, QE, to encourage growth. Instead they created asset inflation. Witness the stock market at an all time high even though we have had very slow growth since the 2008 recession. QE has also created high housing cost and made the wealth gap even worse.
Not that I'm defending QE as a policy (because I'm not), but people who bash it forget that the world economy was on the brink of disaster. Would you have let banks fail and the economy to implode, or would you have done something different? If so, what?
You talk as if the bailout worked and diverted disaster. The reality is we don't know how it will eventually unfold. Adding trillions of dollars into the economy and making too big to fail banks even bigger, driving asset prices thru the roof while creating less 2% growth will have consequences.
What those consequences are and the ultimate severity of pain caused is still in question.
I think what you're saying is that the bailout averted the disaster in 2008, but may have caused another, potentially larger problem long term.
However, none of the money created via QE has circulated in the economy. What QE did was drive down the price of borrowing such that it has enticed the wealthy to borrow money at one rate, let's just say 2% and turn around and invest in markets. The thought is that if they can earn a return higher than 2% then basically it's free money.
I agree that this policy has driven the demand for assets, perhaps we might say artificially.
However, the real question is, are the loans made adequately capitalized?
If so, as loans fail bank investors (that that invest via investor capital common and preferred stock) will lose value.
If there is enough capital, the system will self-adjust, though it will have the effect of transferring wealth from investors to those that took and defaulted on those loans which present another issue altogether.
The other possibility is that as interest rates rise, investors will slowly withdraw their capital and repay their loans. The stock market will fall and companies will have to go back to "old fasioned" methods of capitilization and value, things like;
Investing in labor plant and equipment
Stop utilizing buy backs as a way to increase value.....
If this is done slowly markets will adjust.
The question is, is there adaquate incentive for the wealthy to repay the loans they took, or should they just default?
That is the real underlying problem. We saw what happens in 2008 when a market isn't adaquatly capitlized and the incentive of default outweighs the incentive to repay.
The Big Bank Bailout
In an article Secrets and Lies of the Bailout, Matt Taibbi says “It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyper concentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.
After the original $700 billion bailout, the ongoing bailout was kept very secret because Chairman Ben Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort. In fact, $7.7 trillion of the secret emergency lending was only disclosed to the public after Congress forced a one-time audit of the Federal Reserve in November of 2011. After the audit the public found out the bailout was in trillions not billions; and that there were no requirements attached to the bailout money - the banks could use it for any purpose.
Few thoughts....
First, it's really hard for me to comment on the entirety of the claims here. I will agree with this article in Forbes that I found when I Googled "The Big Bank Bailout" which says some of the same things you are saying.
There is undoubtedly financial corruption and the result is massive wealth transfers. IMO, much of it is the result of the speed of markets made possible by computer technologies. It also affords too much anonymity IMO...
That said, taxpayers aren't really funding this stuff...At least not directly. The explanation for that is long and requires that I go into a lot of underlying detail I'm going to skip here...For now unless you insist I explain.
The Fed is independently audited every year.
The problem isn't the Fed, or even the government, though they are FAR from perfect and need many changes. The Forbes article identified the problem, wholesale banking corruption and a lack of accountability.
The Fed to my knowledge has no enforcement arm, that is left to the Federal government and this is where the Federal government fails and must be reformed.
But again, the general population doesn't understand how the system we have works and as a result vote people into Congress to do things like "audit the Fed" (which, btw has nothing to do with auditing the Fed, it's about taking control of monetary policy) and running "balanced budgets", not doing things like removing the influence of money from government and getting rid of things like Citizens United and the idea that money is speach.
It's guys like Todd who promote ideas like banks lending customer deposits to other customers and the idea that the supply of savings affects in the interest rate that is so wrong he doesn't even understand the question, never mind the answer (and I say that with all the respect I can). Something I'll continue to debate with him you can make up your own mind about the strength of that argument.
In the end, the problem, IMO, is there are people making money hand over fist, who can use that idle money to influence policy. Things won't change until we can separate the influence of money on our government officials. I try not to mix policy decisions and fiscal reality because it often confuses people, but this thread is really a mix of policy and fiscal reality.
Politics and money is like peanut butter and jelly. Good luck separating the two.
Ultimately, economics has a natural ebb and flow. If the Fed or any other central bank thinks they can divert down times and maintain a consistent growth in the economy, we will suffer. Our founders warned us against a central bank- Our founding fathers were against the federal reserve and central banking system..
The Fed exist at the pleasure of our government, and the Fed allows our government to borrow without consequences, but for how long?
Our founders warned us against a central bank
Is that why they created one in 1791?
The Fed exist at the pleasure of our government
Created by Act of Congress, can be dissolved by Act of Congress.
the Fed allows our government to borrow without consequences,
Not sure what you mean here.
No,,it is why they never renewed its 20 year charter and it died after 2 decades.
Congress has no reason or incentive to dissolve the FR. I'm actually shocked you don't know this, but you are fortunate I am here to educate you. No thanks necessary. Monetizing the debt -
Why the Nation's Central Bank Is Making the Government Debt Worse
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When the Fed buys U.S. Treasuries, it allows the government to borrow more while keeping interest rates low. Photo: Katrina Charmatz/Getty Images
By Kimberly Amadeo
Updated July 14, 2017
A nation monetizes its debt when it converts debt to credit or cash. It frees up capital that's locked in the debt and puts it into circulation. The only way it can do this is with its central bank. The central bank purchases the government debt and replaces it with credit. The bank puts the debt on its balance sheet. It creates the credit out of thin air. A central bank is the only bank that can legally do this.
The Federal Reserve monetizes the U.S. debt when it buys U.S. Treasury bills, bonds and notes. When the Federal Reserve purchases these Treasurys, it doesn't have to print money to do so. It issues credit to the Federal Reserve member banks that hold the Treasurys. It then puts the Treasurys on its own balance sheet. It does this through an office at the Federal Reserve Bank of New York. Everyone treats the credit just like money, even though the Fed doesn't print cold hard cash.
No,,it is why they never renewed its 20 year charter
Right. They were against a central bank, but they created one in 1791.
And still against it when they created a new one in 1816.
Glad they were so loud in their warnings against a central bank.
I am here to educate you.
Gee, thanks. When are you going to start? I'm always happy to learn something new.
Wooiy Ideas Are for SheepIt all works fine with growth and dutiful lending by banks. Money is, or should be created thru growth. Unfortunately we have a central bank, the Feral Reserve, who believes they can reverse prime the economy by printing money, QE, to encourage growth. Instead they created asset inflation. Witness the stock market at an all time high even though we have had very slow growth since the 2008 recession. QE has also created high housing cost and made the wealth gap even worse.
Not that I'm defending QE as a policy (because I'm not), but people who bash it forget that the world economy was on the brink of disaster. Would you have let banks fail and the economy to implode, or would you have done something different? If so, what?
You talk as if the bailout worked and diverted disaster. The reality is we don't know how it will eventually unfold. Adding trillions of dollars into the economy and making too big to fail banks even bigger, driving asset prices thru the roof while creating less 2% growth will have consequences.
What those consequences are and the ultimate severity of pain caused is still in question.
I think what you're saying is that the bailout averted the disaster in 2008, but may have caused another, potentially larger problem long term.
However, none of the money created via QE has circulated in the economy. What QE did was drive down the price of borrowing such that it has enticed the wealthy to borrow money at one rate, let's just say 2% and turn around and invest in markets. The thought is that if they can earn a return higher than 2% then basically it's free money.
I agree that this policy has driven the demand for assets, perhaps we might say artificially.
However, the real question is, are the loans made adequately capitalized?
If so, as loans fail bank investors (that that invest via investor capital common and preferred stock) will lose value.
If there is enough capital, the system will self-adjust, though it will have the effect of transferring wealth from investors to those that took and defaulted on those loans which present another issue altogether.
The other possibility is that as interest rates rise, investors will slowly withdraw their capital and repay their loans. The stock market will fall and companies will have to go back to "old fasioned" methods of capitilization and value, things like;
Investing in labor plant and equipment
Stop utilizing buy backs as a way to increase value.....
If this is done slowly markets will adjust.
The question is, is there adaquate incentive for the wealthy to repay the loans they took, or should they just default?
That is the real underlying problem. We saw what happens in 2008 when a market isn't adaquatly capitlized and the incentive of default outweighs the incentive to repay.
The Big Bank Bailout
In an article Secrets and Lies of the Bailout, Matt Taibbi says “It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyper concentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.
After the original $700 billion bailout, the ongoing bailout was kept very secret because Chairman Ben Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort. In fact, $7.7 trillion of the secret emergency lending was only disclosed to the public after Congress forced a one-time audit of the Federal Reserve in November of 2011. After the audit the public found out the bailout was in trillions not billions; and that there were no requirements attached to the bailout money - the banks could use it for any purpose.
Few thoughts....
First, it's really hard for me to comment on the entirety of the claims here. I will agree with this article in Forbes that I found when I Googled "The Big Bank Bailout" which says some of the same things you are saying.
There is undoubtedly financial corruption and the result is massive wealth transfers. IMO, much of it is the result of the speed of markets made possible by computer technologies. It also affords too much anonymity IMO...
That said, taxpayers aren't really funding this stuff...At least not directly. The explanation for that is long and requires that I go into a lot of underlying detail I'm going to skip here...For now unless you insist I explain.
The Fed is independently audited every year.
The problem isn't the Fed, or even the government, though they are FAR from perfect and need many changes. The Forbes article identified the problem, wholesale banking corruption and a lack of accountability.
The Fed to my knowledge has no enforcement arm, that is left to the Federal government and this is where the Federal government fails and must be reformed.
But again, the general population doesn't understand how the system we have works and as a result vote people into Congress to do things like "audit the Fed" (which, btw has nothing to do with auditing the Fed, it's about taking control of monetary policy) and running "balanced budgets", not doing things like removing the influence of money from government and getting rid of things like Citizens United and the idea that money is speach.
It's guys like Todd who promote ideas like banks lending customer deposits to other customers and the idea that the supply of savings affects in the interest rate that is so wrong he doesn't even understand the question, never mind the answer (and I say that with all the respect I can). Something I'll continue to debate with him you can make up your own mind about the strength of that argument.
In the end, the problem, IMO, is there are people making money hand over fist, who can use that idle money to influence policy. Things won't change until we can separate the influence of money on our government officials. I try not to mix policy decisions and fiscal reality because it often confuses people, but this thread is really a mix of policy and fiscal reality.
Politics and money is like peanut butter and jelly. Good luck separating the two.
Ultimately, economics has a natural ebb and flow. If the Fed or any other central bank thinks they can divert down times and maintain a consistent growth in the economy, we will suffer. Our founders warned us against a central bank- Our founding fathers were against the federal reserve and central banking system..
The Fed exist at the pleasure of our government, and the Fed allows our government to borrow without consequences, but for how long?
Despite the corporate public-relations experts who pose as independent academic economists, there is nothing natural about the economy. It is controlled by the Loot 'n' Scoot private-sector oligarchy until the government is forced to intervene.
You're making my point, thank you. All attempts at a central bank have failed. Yes, that includes the current version chartered in 1913 ( a very bad year for the US, formation of FR, Amendment 16&17 ratified).
So I am unclear on your position. Are in favor of a central bank, opposed to a central bank, or don't know what you think?
You're making my point, thank you. All attempts at a central bank have failed. Yes, that includes the current version chartered in 1913 ( a very bad year for the US, formation of FR, Amendment 16&17 ratified).
So I am unclear on your position. Are in favor of a central bank, opposed to a central bank, or don't know what you think?
You're making my point, thank you.
Your point was the Founders warned us against a Central Bank.
And I pointed out that those same Founders, in 1791, created a Central Bank.
If that was your point, you're welcome.
All attempts at a central bank have failed.
How has the Federal Reserve failed? 104 years later, still here.
So I am unclear on your position
Just as you were unclear on the position of the Founders.
Are in favor of a central bank,
They're a useful, though imperfect, tool.
You're making my point, thank you. All attempts at a central bank have failed. Yes, that includes the current version chartered in 1913 ( a very bad year for the US, formation of FR, Amendment 16&17 ratified).
So I am unclear on your position. Are in favor of a central bank, opposed to a central bank, or don't know what you think?
You're making my point, thank you.
Your point was the Founders warned us against a Central Bank.
And I pointed out that those same Founders, in 1791, created a Central Bank.
If that was your point, you're welcome.
All attempts at a central bank have failed.
How has the Federal Reserve failed? 104 years later, still here.
So I am unclear on your position
Just as you were unclear on the position of the Founders.
Are in favor of a central bank,
They're a useful, though imperfect, tool.
So you seem to think they didn't warn about a central bank because we have had central banks? I am very clear that some of our founders were vehemently opposed to a central bank, as is anyone who reads history-
Our founding fathers were against the federal reserve and central banking system.
Our founding fathers were against the federal reserve and central banking system
A central bank was established later, however, and had a 20 year run, when Andrew Jackson destroyed it in 1836. On his death bed he was asked what his greatest accomplishment in his life was he said “I KILLED THE BANK”
To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty or profusion and servitude." --Jefferson 1816
How has the Federal Reserve failed? Ask why it was created, and you'll discovery the answer. Again, you have to read history.
In 1913 when the Fed was founded, its principal function was to make sure the U.S. banking system could endure bank runs created by unforeseen financial shocks. The agency was to accomplish this task by loaning to its member banks when the banks needed more liquidity. These loans were to be paid in Federal Reserve Notes, a new banknote that the Fed was given the legal authority to issue.
However, as economist Milton Friedman and coauthor Anna Schwartz explain in "A Monetary History of the United States," just over a decade after its creation, the Fed actually created the panic it was founded to stop. Their policies, Friedman and Schwartz argue, spiraled what could have been an ordinary recession into the Great Depression.
Even Ben Bernanke, a member of the Fed's board of governors at the time and later the Fed chair, said in a 2002 speech, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
In 1933 when the Great Depression officially ended, Congress created the Federal Deposit Insurance Corporation (FDIC). It was tasked with offering government-funded deposit insurance to banks, essentially overlapping the purpose of the Fed.
With the FDIC providing insurance coverage up to a specified limit, the Fed was really only left with the task of catching the banking shocks the FDIC misses.
However, the Fed really shouldn't be choosing winners and losers in the banking world. It should not be saving some banks by claiming they are "too big to fail" while letting other massive banks go under (like Lehman Brothers, the fourth largest bank in the world in 2008).
Yea, they have been a booming success....SARCASM!
You're making my point, thank you. All attempts at a central bank have failed. Yes, that includes the current version chartered in 1913 ( a very bad year for the US, formation of FR, Amendment 16&17 ratified).
So I am unclear on your position. Are in favor of a central bank, opposed to a central bank, or don't know what you think?
You're making my point, thank you.
Your point was the Founders warned us against a Central Bank.
And I pointed out that those same Founders, in 1791, created a Central Bank.
If that was your point, you're welcome.
All attempts at a central bank have failed.
How has the Federal Reserve failed? 104 years later, still here.
So I am unclear on your position
Just as you were unclear on the position of the Founders.
Are in favor of a central bank,
They're a useful, though imperfect, tool.
So you seem to think they didn't warn about a central bank because we have had central banks? I am very clear that some of our founders were vehemently opposed to a central bank, as is anyone who reads history-
Our founding fathers were against the federal reserve and central banking system.
Our founding fathers were against the federal reserve and central banking system
A central bank was established later, however, and had a 20 year run, when Andrew Jackson destroyed it in 1836. On his death bed he was asked what his greatest accomplishment in his life was he said “I KILLED THE BANK”
To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty or profusion and servitude." --Jefferson 1816
How has the Federal Reserve failed? Ask why it was created, and you'll discovery the answer. Again, you have to read history.
In 1913 when the Fed was founded, its principal function was to make sure the U.S. banking system could endure bank runs created by unforeseen financial shocks. The agency was to accomplish this task by loaning to its member banks when the banks needed more liquidity. These loans were to be paid in Federal Reserve Notes, a new banknote that the Fed was given the legal authority to issue.
However, as economist Milton Friedman and coauthor Anna Schwartz explain in "A Monetary History of the United States," just over a decade after its creation, the Fed actually created the panic it was founded to stop. Their policies, Friedman and Schwartz argue, spiraled what could have been an ordinary recession into the Great Depression.
Even Ben Bernanke, a member of the Fed's board of governors at the time and later the Fed chair, said in a 2002 speech, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
In 1933 when the Great Depression officially ended, Congress created the Federal Deposit Insurance Corporation (FDIC). It was tasked with offering government-funded deposit insurance to banks, essentially overlapping the purpose of the Fed.
With the FDIC providing insurance coverage up to a specified limit, the Fed was really only left with the task of catching the banking shocks the FDIC misses.
However, the Fed really shouldn't be choosing winners and losers in the banking world. It should not be saving some banks by claiming they are "too big to fail" while letting other massive banks go under (like Lehman Brothers, the fourth largest bank in the world in 2008).
Yea, they have been a booming success....SARCASM!
So you seem to think they didn't warn about a central bank because we have had central banks?
You seemed to be claiming that all the Founders were against a Central Bank.
You said, "Our founding fathers were against the federal reserve and central banking system."
You didn't say some founding fathers, most founding fathers, a majority of founding fathers........
Apparently enough were for a Central Bank that they voted into existence a Central Bank.
You agree?
On his death bed he was asked what his greatest accomplishment in his life was he said “I KILLED THE BANK”
Love fake quotes.
To preserve our independence, we must not let our rulers load us with perpetual debt.
Yes, too much debt is bad. Whether we have a Fed or not.
Ask why it was created,
The Panic of 1907.
In 1913 when the Fed was founded, its principal function was to make sure the U.S. banking system could endure bank runs created by unforeseen financial shocks. The agency was to accomplish this task by loaning to its member banks when the banks needed more liquidity.
Yes. Liquidity is always the issue in a panic.
However, as economist Milton Friedman and coauthor Anna Schwartz explain in "A Monetary History of the United States," just over a decade after its creation, the Fed actually created the panic it was founded to stop.
They didn't create the panic.
They sure as hell screwed the pooch by removing liquidity instead of opening the spigots.
I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
Absolutely!!!
And they didn't do it again.
However, the Fed really shouldn't be choosing winners and losers in the banking world. It should not be saving some banks by claiming they are "too big to fail" while letting other massive banks go under (like Lehman Brothers
The Fed didn't save the banks or kill Lehman, that was Congress, the President and TARP.
the fourth largest bank in the world in 2008
LOL!
Fourth largest investment bank in the US.
You're making my point, thank you. All attempts at a central bank have failed. Yes, that includes the current version chartered in 1913 ( a very bad year for the US, formation of FR, Amendment 16&17 ratified).
So I am unclear on your position. Are in favor of a central bank, opposed to a central bank, or don't know what you think?
You're making my point, thank you.
Your point was the Founders warned us against a Central Bank.
And I pointed out that those same Founders, in 1791, created a Central Bank.
If that was your point, you're welcome.
All attempts at a central bank have failed.
How has the Federal Reserve failed? 104 years later, still here.
So I am unclear on your position
Just as you were unclear on the position of the Founders.
Are in favor of a central bank,
They're a useful, though imperfect, tool.
So you seem to think they didn't warn about a central bank because we have had central banks? I am very clear that some of our founders were vehemently opposed to a central bank, as is anyone who reads history-
Our founding fathers were against the federal reserve and central banking system.
Our founding fathers were against the federal reserve and central banking system
A central bank was established later, however, and had a 20 year run, when Andrew Jackson destroyed it in 1836. On his death bed he was asked what his greatest accomplishment in his life was he said “I KILLED THE BANK”
To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty or profusion and servitude." --Jefferson 1816
How has the Federal Reserve failed? Ask why it was created, and you'll discovery the answer. Again, you have to read history.
In 1913 when the Fed was founded, its principal function was to make sure the U.S. banking system could endure bank runs created by unforeseen financial shocks. The agency was to accomplish this task by loaning to its member banks when the banks needed more liquidity. These loans were to be paid in Federal Reserve Notes, a new banknote that the Fed was given the legal authority to issue.
However, as economist Milton Friedman and coauthor Anna Schwartz explain in "A Monetary History of the United States," just over a decade after its creation, the Fed actually created the panic it was founded to stop. Their policies, Friedman and Schwartz argue, spiraled what could have been an ordinary recession into the Great Depression.
Even Ben Bernanke, a member of the Fed's board of governors at the time and later the Fed chair, said in a 2002 speech, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
In 1933 when the Great Depression officially ended, Congress created the Federal Deposit Insurance Corporation (FDIC). It was tasked with offering government-funded deposit insurance to banks, essentially overlapping the purpose of the Fed.
With the FDIC providing insurance coverage up to a specified limit, the Fed was really only left with the task of catching the banking shocks the FDIC misses.
However, the Fed really shouldn't be choosing winners and losers in the banking world. It should not be saving some banks by claiming they are "too big to fail" while letting other massive banks go under (like Lehman Brothers, the fourth largest bank in the world in 2008).
Yea, they have been a booming success....SARCASM!
So you seem to think they didn't warn about a central bank because we have had central banks?
You seemed to be claiming that all the Founders were against a Central Bank.
You said, "Our founding fathers were against the federal reserve and central banking system."
You didn't say some founding fathers, most founding fathers, a majority of founding fathers........
Apparently enough were for a Central Bank that they voted into existence a Central Bank.
You agree?
On his death bed he was asked what his greatest accomplishment in his life was he said “I KILLED THE BANK”
Love fake quotes.
To preserve our independence, we must not let our rulers load us with perpetual debt.
Yes, too much debt is bad. Whether we have a Fed or not.
Ask why it was created,
The Panic of 1907.
In 1913 when the Fed was founded, its principal function was to make sure the U.S. banking system could endure bank runs created by unforeseen financial shocks. The agency was to accomplish this task by loaning to its member banks when the banks needed more liquidity.
Yes. Liquidity is always the issue in a panic.
However, as economist Milton Friedman and coauthor Anna Schwartz explain in "A Monetary History of the United States," just over a decade after its creation, the Fed actually created the panic it was founded to stop.
They didn't create the panic.
They sure as hell screwed the pooch by removing liquidity instead of opening the spigots.
I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
Absolutely!!!
And they didn't do it again.
However, the Fed really shouldn't be choosing winners and losers in the banking world. It should not be saving some banks by claiming they are "too big to fail" while letting other massive banks go under (like Lehman Brothers
The Fed didn't save the banks or kill Lehman, that was Congress, the President and TARP.
the fourth largest bank in the world in 2008
LOL!
Fourth largest investment bank in the US.
Ok, which founders voted for the formation of a central bank?
The reality is, you are a lazy poster. You simply give off-handed retorts without any supporting links, which might be tolerable if you were clever or informed. Unfortunately in this case, you have been neither. Based on this exchange I suspect you struggle financially, or are certainly not wealthy by any standard. That's ok, there is always The Government safety net for folks like you.
Apologies, I thought you meant the net difference in savings.
So the net difference is zero?
What I'm saying is that most of the money that in circulation in this country is already saved. When people save rather than spend, doesn't increase or decrease the level of savings. It simply shifts who holds that savings.
When people save rather than spend, doesn't increase or decrease the level of savings.
When people spend rather than save, doesn't increase or decrease the level of savings.
So then you'd agree that savings (or not saving) don't increase or decrease the availability of lendable funds?
You think saving harms the economy, it's a "demand leakage".
But if all current savings were spent, total savings would remain unchanged.
You're making my point, thank you. All attempts at a central bank have failed. Yes, that includes the current version chartered in 1913 ( a very bad year for the US, formation of FR, Amendment 16&17 ratified).
So I am unclear on your position. Are in favor of a central bank, opposed to a central bank, or don't know what you think?
You're making my point, thank you.
Your point was the Founders warned us against a Central Bank.
And I pointed out that those same Founders, in 1791, created a Central Bank.
If that was your point, you're welcome.
All attempts at a central bank have failed.
How has the Federal Reserve failed? 104 years later, still here.
So I am unclear on your position
Just as you were unclear on the position of the Founders.
Are in favor of a central bank,
They're a useful, though imperfect, tool.
So you seem to think they didn't warn about a central bank because we have had central banks? I am very clear that some of our founders were vehemently opposed to a central bank, as is anyone who reads history-
Our founding fathers were against the federal reserve and central banking system.
Our founding fathers were against the federal reserve and central banking system
A central bank was established later, however, and had a 20 year run, when Andrew Jackson destroyed it in 1836. On his death bed he was asked what his greatest accomplishment in his life was he said “I KILLED THE BANK”
To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty or profusion and servitude." --Jefferson 1816
How has the Federal Reserve failed? Ask why it was created, and you'll discovery the answer. Again, you have to read history.
In 1913 when the Fed was founded, its principal function was to make sure the U.S. banking system could endure bank runs created by unforeseen financial shocks. The agency was to accomplish this task by loaning to its member banks when the banks needed more liquidity. These loans were to be paid in Federal Reserve Notes, a new banknote that the Fed was given the legal authority to issue.
However, as economist Milton Friedman and coauthor Anna Schwartz explain in "A Monetary History of the United States," just over a decade after its creation, the Fed actually created the panic it was founded to stop. Their policies, Friedman and Schwartz argue, spiraled what could have been an ordinary recession into the Great Depression.
Even Ben Bernanke, a member of the Fed's board of governors at the time and later the Fed chair, said in a 2002 speech, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
In 1933 when the Great Depression officially ended, Congress created the Federal Deposit Insurance Corporation (FDIC). It was tasked with offering government-funded deposit insurance to banks, essentially overlapping the purpose of the Fed.
With the FDIC providing insurance coverage up to a specified limit, the Fed was really only left with the task of catching the banking shocks the FDIC misses.
However, the Fed really shouldn't be choosing winners and losers in the banking world. It should not be saving some banks by claiming they are "too big to fail" while letting other massive banks go under (like Lehman Brothers, the fourth largest bank in the world in 2008).
Yea, they have been a booming success....SARCASM!
The "invisible Hand" Is the One Picking Your PocketWooiy Ideas Are for SheepIt all works fine with growth and dutiful lending by banks. Money is, or should be created thru growth. Unfortunately we have a central bank, the Feral Reserve, who believes they can reverse prime the economy by printing money, QE, to encourage growth. Instead they created asset inflation. Witness the stock market at an all time high even though we have had very slow growth since the 2008 recession. QE has also created high housing cost and made the wealth gap even worse.
Not that I'm defending QE as a policy (because I'm not), but people who bash it forget that the world economy was on the brink of disaster. Would you have let banks fail and the economy to implode, or would you have done something different? If so, what?
You talk as if the bailout worked and diverted disaster. The reality is we don't know how it will eventually unfold. Adding trillions of dollars into the economy and making too big to fail banks even bigger, driving asset prices thru the roof while creating less 2% growth will have consequences.
What those consequences are and the ultimate severity of pain caused is still in question.
I think what you're saying is that the bailout averted the disaster in 2008, but may have caused another, potentially larger problem long term.
However, none of the money created via QE has circulated in the economy. What QE did was drive down the price of borrowing such that it has enticed the wealthy to borrow money at one rate, let's just say 2% and turn around and invest in markets. The thought is that if they can earn a return higher than 2% then basically it's free money.
I agree that this policy has driven the demand for assets, perhaps we might say artificially.
However, the real question is, are the loans made adequately capitalized?
If so, as loans fail bank investors (that that invest via investor capital common and preferred stock) will lose value.
If there is enough capital, the system will self-adjust, though it will have the effect of transferring wealth from investors to those that took and defaulted on those loans which present another issue altogether.
The other possibility is that as interest rates rise, investors will slowly withdraw their capital and repay their loans. The stock market will fall and companies will have to go back to "old fasioned" methods of capitilization and value, things like;
Investing in labor plant and equipment
Stop utilizing buy backs as a way to increase value.....
If this is done slowly markets will adjust.
The question is, is there adaquate incentive for the wealthy to repay the loans they took, or should they just default?
That is the real underlying problem. We saw what happens in 2008 when a market isn't adaquatly capitlized and the incentive of default outweighs the incentive to repay.
The Big Bank Bailout
In an article Secrets and Lies of the Bailout, Matt Taibbi says “It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyper concentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.
After the original $700 billion bailout, the ongoing bailout was kept very secret because Chairman Ben Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort. In fact, $7.7 trillion of the secret emergency lending was only disclosed to the public after Congress forced a one-time audit of the Federal Reserve in November of 2011. After the audit the public found out the bailout was in trillions not billions; and that there were no requirements attached to the bailout money - the banks could use it for any purpose.
Few thoughts....
First, it's really hard for me to comment on the entirety of the claims here. I will agree with this article in Forbes that I found when I Googled "The Big Bank Bailout" which says some of the same things you are saying.
There is undoubtedly financial corruption and the result is massive wealth transfers. IMO, much of it is the result of the speed of markets made possible by computer technologies. It also affords too much anonymity IMO...
That said, taxpayers aren't really funding this stuff...At least not directly. The explanation for that is long and requires that I go into a lot of underlying detail I'm going to skip here...For now unless you insist I explain.
The Fed is independently audited every year.
The problem isn't the Fed, or even the government, though they are FAR from perfect and need many changes. The Forbes article identified the problem, wholesale banking corruption and a lack of accountability.
The Fed to my knowledge has no enforcement arm, that is left to the Federal government and this is where the Federal government fails and must be reformed.
But again, the general population doesn't understand how the system we have works and as a result vote people into Congress to do things like "audit the Fed" (which, btw has nothing to do with auditing the Fed, it's about taking control of monetary policy) and running "balanced budgets", not doing things like removing the influence of money from government and getting rid of things like Citizens United and the idea that money is speach.
It's guys like Todd who promote ideas like banks lending customer deposits to other customers and the idea that the supply of savings affects in the interest rate that is so wrong he doesn't even understand the question, never mind the answer (and I say that with all the respect I can). Something I'll continue to debate with him you can make up your own mind about the strength of that argument.
In the end, the problem, IMO, is there are people making money hand over fist, who can use that idle money to influence policy. Things won't change until we can separate the influence of money on our government officials. I try not to mix policy decisions and fiscal reality because it often confuses people, but this thread is really a mix of policy and fiscal reality.
Politics and money is like peanut butter and jelly. Good luck separating the two.
Ultimately, economics has a natural ebb and flow. If the Fed or any other central bank thinks they can divert down times and maintain a consistent growth in the economy, we will suffer. Our founders warned us against a central bank- Our founding fathers were against the federal reserve and central banking system..
The Fed exist at the pleasure of our government, and the Fed allows our government to borrow without consequences, but for how long?
Despite the corporate public-relations experts who pose as independent academic economists, there is nothing natural about the economy. It is controlled by the Loot 'n' Scoot private-sector oligarchy until the government is forced to intervene.
Silly- economies are naturally occurring wherever there is commerce, trade and exchange. May I suggest you read The Wealth of Nations, which gives an outstanding acccount of the "free hand" in capitalism.
The "invisible Hand" Is the One Picking Your PocketWooiy Ideas Are for SheepIt all works fine with growth and dutiful lending by banks. Money is, or should be created thru growth. Unfortunately we have a central bank, the Feral Reserve, who believes they can reverse prime the economy by printing money, QE, to encourage growth. Instead they created asset inflation. Witness the stock market at an all time high even though we have had very slow growth since the 2008 recession. QE has also created high housing cost and made the wealth gap even worse.
Not that I'm defending QE as a policy (because I'm not), but people who bash it forget that the world economy was on the brink of disaster. Would you have let banks fail and the economy to implode, or would you have done something different? If so, what?
You talk as if the bailout worked and diverted disaster. The reality is we don't know how it will eventually unfold. Adding trillions of dollars into the economy and making too big to fail banks even bigger, driving asset prices thru the roof while creating less 2% growth will have consequences.
What those consequences are and the ultimate severity of pain caused is still in question.
I think what you're saying is that the bailout averted the disaster in 2008, but may have caused another, potentially larger problem long term.
However, none of the money created via QE has circulated in the economy. What QE did was drive down the price of borrowing such that it has enticed the wealthy to borrow money at one rate, let's just say 2% and turn around and invest in markets. The thought is that if they can earn a return higher than 2% then basically it's free money.
I agree that this policy has driven the demand for assets, perhaps we might say artificially.
However, the real question is, are the loans made adequately capitalized?
If so, as loans fail bank investors (that that invest via investor capital common and preferred stock) will lose value.
If there is enough capital, the system will self-adjust, though it will have the effect of transferring wealth from investors to those that took and defaulted on those loans which present another issue altogether.
The other possibility is that as interest rates rise, investors will slowly withdraw their capital and repay their loans. The stock market will fall and companies will have to go back to "old fasioned" methods of capitilization and value, things like;
Investing in labor plant and equipment
Stop utilizing buy backs as a way to increase value.....
If this is done slowly markets will adjust.
The question is, is there adaquate incentive for the wealthy to repay the loans they took, or should they just default?
That is the real underlying problem. We saw what happens in 2008 when a market isn't adaquatly capitlized and the incentive of default outweighs the incentive to repay.
The Big Bank Bailout
In an article Secrets and Lies of the Bailout, Matt Taibbi says “It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyper concentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.
After the original $700 billion bailout, the ongoing bailout was kept very secret because Chairman Ben Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort. In fact, $7.7 trillion of the secret emergency lending was only disclosed to the public after Congress forced a one-time audit of the Federal Reserve in November of 2011. After the audit the public found out the bailout was in trillions not billions; and that there were no requirements attached to the bailout money - the banks could use it for any purpose.
Few thoughts....
First, it's really hard for me to comment on the entirety of the claims here. I will agree with this article in Forbes that I found when I Googled "The Big Bank Bailout" which says some of the same things you are saying.
There is undoubtedly financial corruption and the result is massive wealth transfers. IMO, much of it is the result of the speed of markets made possible by computer technologies. It also affords too much anonymity IMO...
That said, taxpayers aren't really funding this stuff...At least not directly. The explanation for that is long and requires that I go into a lot of underlying detail I'm going to skip here...For now unless you insist I explain.
The Fed is independently audited every year.
The problem isn't the Fed, or even the government, though they are FAR from perfect and need many changes. The Forbes article identified the problem, wholesale banking corruption and a lack of accountability.
The Fed to my knowledge has no enforcement arm, that is left to the Federal government and this is where the Federal government fails and must be reformed.
But again, the general population doesn't understand how the system we have works and as a result vote people into Congress to do things like "audit the Fed" (which, btw has nothing to do with auditing the Fed, it's about taking control of monetary policy) and running "balanced budgets", not doing things like removing the influence of money from government and getting rid of things like Citizens United and the idea that money is speach.
It's guys like Todd who promote ideas like banks lending customer deposits to other customers and the idea that the supply of savings affects in the interest rate that is so wrong he doesn't even understand the question, never mind the answer (and I say that with all the respect I can). Something I'll continue to debate with him you can make up your own mind about the strength of that argument.
In the end, the problem, IMO, is there are people making money hand over fist, who can use that idle money to influence policy. Things won't change until we can separate the influence of money on our government officials. I try not to mix policy decisions and fiscal reality because it often confuses people, but this thread is really a mix of policy and fiscal reality.
Politics and money is like peanut butter and jelly. Good luck separating the two.
Ultimately, economics has a natural ebb and flow. If the Fed or any other central bank thinks they can divert down times and maintain a consistent growth in the economy, we will suffer. Our founders warned us against a central bank- Our founding fathers were against the federal reserve and central banking system..
The Fed exist at the pleasure of our government, and the Fed allows our government to borrow without consequences, but for how long?
Despite the corporate public-relations experts who pose as independent academic economists, there is nothing natural about the economy. It is controlled by the Loot 'n' Scoot private-sector oligarchy until the government is forced to intervene.
Silly- economies are naturally occurring wherever there is commerce, trade and exchange. May I suggest you read The Wealth of Nations, which gives an outstanding acccount of the "free hand" in capitalism.
May I suggest that you quit being a sucker for Recommended Reading and instead consider the mercenary motives of those who recommend that self-serving propaganda.
I think this means that they can lend out $10000 = 10 * $1000. The 10 % of the $10000 is the deposit, and the 90 % i.e. $9000 is the money that is created by your signature, to complete your loan ammount that you borrow in this example.Where do banks get the money to lend? I thought it was clarified by the 1913 fed bill and the 1930(?) fiat bill. The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %. The fiat bill states verbatum, that "it is really not necessary", to have a commodity base for your money. So the commodity that serves as the base for that 90 % of your money is your physical life and your dividable estate. That is why population exchanges and deportations were invented and loved at the end of ww2.
The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %.
Can you translate that into English?
Pretend a bank has a single $1000 deposit.
How much do you think they can lend out?
$9000 is the money that is created by your signature, to complete your loan ammount that you borrow in this example.
If your bank has $1000 in deposits and you loan me $10,000....your loan check is gonna bounce when I deposit it into another bank.
I think this means that they can lend out $10000 = 10 * $1000. The 10 % of the $10000 is the deposit, and the 90 % i.e. $9000 is the money that is created by your signature, to complete your loan ammount that you borrow in this example.Where do banks get the money to lend? I thought it was clarified by the 1913 fed bill and the 1930(?) fiat bill. The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %. The fiat bill states verbatum, that "it is really not necessary", to have a commodity base for your money. So the commodity that serves as the base for that 90 % of your money is your physical life and your dividable estate. That is why population exchanges and deportations were invented and loved at the end of ww2.
The fed bill goes at 10 % so your signature on your loan papers creates 90 % of the money that you borrow, after the bank puts in that 10 %.
Can you translate that into English?
Pretend a bank has a single $1000 deposit.
How much do you think they can lend out?
$9000 is the money that is created by your signature, to complete your loan ammount that you borrow in this example.
If your bank has $1000 in deposits and you loan me $10,000....your loan check is gonna bounce when I deposit it into another bank.
No, because the law says that that 90 % is backed by the fed reserve. Also, by the time you deposit, your loan is already sold off.
