Do you understand why the Federal Reserve is Bad?

[g5000]

A man write a check for $100 for some goods.

The receiver of the check uses it to buy more parts to make more goods. He makes 20 dollars profit from the $100 of parts he buys.

The check is continually used up the chain with each person making a profit from the goods or parts he buys.

The tenth person cashes the check and it bounces.

All told, $200 profit has been made by the ten people who used the check as payment for the items they later sold at a markup.

The ten people get together and pay for the $100 bounced check, and still have $100 left over.

All from a completely bogus piece of paper.

This is the dynamic nature of money.


When a bank makes a loan, money is created for that loan. And this is where the anti-Fedder story always stops. Oh, look! Inflationary printing of money!

However, the person receiving the loan uses that money for their business, generating profits. They keep some of the profit and use some to pay the interest on the loan. When the principal is repaid, the money that was created is then destroyed. That's the part all of these bogus films leave out. The institution which made the loan receives interest profit, and the company that borrowed the money made a profit it otherwise could not have made without the loan.

Anti-Fedders leave out the wealth creation and economic growth that was made possible by this arrangement.

...and when the business who originated the loan fails? Then "fake" money enters the market for good with no interest return to the fed or the cash that originated the loan. right?

The bank which made the loan takes a loss. Which is why they perform due diligence before making the loan.

The created money is destroyed by the bank taking that loss.

 

[g5000]

Where is the inflation at, by the way? Shouldn't we be seeing it by now?

You don't see the inflation? are you living in a bubble?

I don't see inflation above normal levels. Nor does anyone else.

Don't confuse relative price increases with inflation.

 

[Obamanation]

A man write a check for $100 for some goods.

The receiver of the check uses it to buy more parts to make more goods. He makes 20 dollars profit from the $100 of parts he buys.

The check is continually used up the chain with each person making a profit from the goods or parts he buys.

The tenth person cashes the check and it bounces.

All told, $200 profit has been made by the ten people who used the check as payment for the items they later sold at a markup.

The ten people get together and pay for the $100 bounced check, and still have $100 left over.

All from a completely bogus piece of paper.

This is the dynamic nature of money.


When a bank makes a loan, money is created for that loan. And this is where the anti-Fedder story always stops. Oh, look! Inflationary printing of money!

However, the person receiving the loan uses that money for their business, generating profits. They keep some of the profit and use some to pay the interest on the loan. When the principal is repaid, the money that was created is then destroyed. That's the part all of these bogus films leave out. The institution which made the loan receives interest profit, and the company that borrowed the money made a profit it otherwise could not have made without the loan.

Anti-Fedders leave out the wealth creation and economic growth that was made possible by this arrangement.

...and when the business who originated the loan fails? Then "fake" money enters the market for good with no interest return to the fed or the cash that originated the loan. right?

The bank which made the loan takes a loss. Which is why they perform due diligence before making the loan.

The created money is destroyed by the bank taking that loss.

OK, so what happens when the US gov't spends money that it doesn't have? The Fed "prints" the cash for them and....?

 

[bripat9643]

What do you prefer? A return to the gold standard?

Exactly!

 

[Obamanation]

Where is the inflation at, by the way? Shouldn't we be seeing it by now?

You don't see the inflation? are you living in a bubble?

I don't see inflation above normal levels. Nor does anyone else.

Don't confuse relative price increases with inflation.

I guarantee my money isn't going as far as it did 5 years ago. Shoot, between gas, milk, and meat alone --- I see a DRAMATIC increase since 2008.

 

[g5000]

...and when the business who originated the loan fails? Then "fake" money enters the market for good with no interest return to the fed or the cash that originated the loan. right?

The bank which made the loan takes a loss. Which is why they perform due diligence before making the loan.

The created money is destroyed by the bank taking that loss.

OK, so what happens when the US gov't spends money that it doesn't have? The Fed "prints" the cash for them and....?

Ah! So you see the problem with politicians being in charge of the money supply then! They are already indirectly printing money with this deficit spending, and they do it to buy votes regardless of the negative impact on our money.

That is not the Fed's doing. That is the doing of your elected officials. The Fed has no choice in the matter.

The Federal government sells bonds to raise money it does not have. The borrowed money does not come just from the Fed. It comes from other countries, investors, sovereigns, pension funds, Wall Street, etc.

 

[Obamanation]

What do you prefer? A return to the gold standard?

Exactly!

yeah me too...

Our fiat economy will destroy itself eventually!

 

[C_Clayton_Jones]

What do you prefer? A return to the gold standard?

Along with a return to the horse-drawn carriage, a 50 percent infant mortality rate, and an average life expectancy of 40 years.

 

[Obamanation]

The bank which made the loan takes a loss. Which is why they perform due diligence before making the loan.

The created money is destroyed by the bank taking that loss.

OK, so what happens when the US gov't spends money that it doesn't have? The Fed "prints" the cash for them and....?

Ah! So you see the problem with politicians being in charge of the money supply then! They are already indirectly printing money with this deficit spending, and they do it to buy votes regardless of the negative impact on our money.

That is not the Fed's doing. That is the doing of your elected officials. The Fed has no choice in the matter.

The Federal government sells bonds to raise money it does not have. The borrowed money does not come just from the Fed. It comes from other countries, investors, sovereigns, pension funds, Wall Street, etc.

...and with that we get the inflation that is killing America and making it nearly impossible for lower income workers to make ends meet. So EVIL corporations aren't the problem at all. We would all be able to pay for meat, gas, and milk if the gov't would fix their spending problems...

 

[g5000]

What Is the Gold Standard? | University of Iowa Center for International Finance and Development

However, the operation of the gold standard in reality caused many problems. When gold left a nation, the ideal balancing effect would not occur immediately. Instead, recessions and unemployment would often occur. This was because nations with a balance of payments deficit often neglected to take appropriate measures to stimulate economic growth. Instead of altering tax rates or increasing expenditures - measures which should stimulate growth - governments opted to not interfere with their nations' economies. Thus, trade deficits would persist, resulting in chronic recessions and unemployment.

This is evidence by the fact we had more frequent and longer lasting recessions and depressions before we went off the gold standard during the Great Depression. And the sooner a country went off the gold standard, the sooner they recovered from the Great Depression.

With the outbreak of the first world war in 1914, the international trading system broke down and nations valued their currencies by fiat instead, i.e. governments took their currencies off the gold standard and simply dictated the value of their money. Following the war, some nations attempted to reinstate the gold standard at pre-war rates, but drastic changes in the global economy made such attempts futile. Britain, which had previously been the world's financial leader, reinstated the pound at its pre-war gold value, but because its economy was much weaker, the pound was overvalued by approximately 10%. Consequently, gold swept out of Britain, and the public was left with valueless notes, creating a surge in unemployment. By the time of the second world war, the inherent problems of the gold standard became apparent to governments and economists alike.

 

[Mad Scientist]

I will watch the video in a moment, but the idea of someone like Nancy Pelosi being in charge of the money printing press is about as insane as it gets.

Yes, unelected, unaccountable International Banker is much better.

Yes, a person educated in finance is a far superior choice than a demagogue who will print money just before every election no matter how inflationary it gets.

Pravda say that the Federal Reserve is printing $85 Billion Dollars a month in new money.

This is not inflationary?

Pravda also say that US Gov't borrow operating funds from Federal Reserve every year and pay Interest to the Federal Reserve like it's a loan.

This is not true?

Also, we are told that the US Congress can authorize Constitutional, Interest Free Money that does not make every American a Debt Slave.

This is ALSO not true?

 

[g5000]

Yes, unelected, unaccountable International Banker is much better.

Yes, a person educated in finance is a far superior choice than a demagogue who will print money just before every election no matter how inflationary it gets.

Pravda say that the Federal Reserve is printing $85 Billion Dollars a month in new money.

This is not inflationary?

No. If the Fed did not print this money, we would have entered another Great Depression. Inflation is about more than the supply of money. You also have to take into account the velocity of that money. And it has been very sluggish.

Pravda also say that US Gov't borrow operating funds from Federal Reserve every year and pay Interest to the Federal Reserve like it's a loan.

This is not true?

As I said, most of the interest paid to the Federal Reserve is returned to the Treasury. By law.

Also, we are told that the US Congress can authorize Constitutional, Interest Free Money that does not make every American a Debt Slave.

This is ALSO not true?

Yes, Congress can print money and inflate the shit out of it and make every American's savings and paycheck worthless. The last thing you want is Congress's hands directly on the printing press controls.

 

[bripat9643]

Modern Monetary Theory Primer - New Economic Perspectives

Unadulterated quackery

 

[g5000]

Modern Monetary Theory Primer - New Economic Perspectives

Unadulterated quackery

Then break it down. It should be fun watching you try to unpack it.

 

[Obamanation]

OK, so what happens when the US gov't spends money that it doesn't have? The Fed "prints" the cash for them and....?

Ah! So you see the problem with politicians being in charge of the money supply then! They are already indirectly printing money with this deficit spending, and they do it to buy votes regardless of the negative impact on our money.

That is not the Fed's doing. That is the doing of your elected officials. The Fed has no choice in the matter.

The Federal government sells bonds to raise money it does not have. The borrowed money does not come just from the Fed. It comes from other countries, investors, sovereigns, pension funds, Wall Street, etc.

...and with that we get the inflation that is killing America and making it nearly impossible for lower income workers to make ends meet. So EVIL corporations aren't the problem at all. We would all be able to pay for meat, gas, and milk if the gov't would fix their spending problems...

So it's not that people don't have enough money --- the problem is that gov't creates inflation by spending money they don't have and that is where poor people come from. If Gas was still $2 a gallon, smokes were still $1.25, hamburger was still $1.85/lb, and milk was still $2.25 a gallon --- not to mention health insurance, housing, etc.

The bottom line is that the evil gov't printing money is the problem, and corporations are victims just like the rest of us...

 

[LoneLaugher]

G,

You are doing a great job in this thread. The patience you have is impressive....as is your command of the subject matter.

Thanks.

 

[editec]

He who controls the amount of money in circulation is that economy's master.

Suffice it to say if you know beforehand that the amount of money in circulation is going to go down or go up, you can position yourself to clean up on the change.

And that INSIDER TRADING is the LEAST of the problems stemming from the system we have today, too.

The money supply ought to only increase or decrease when the production of REAL ASSETS change.

That is NOT how the FED works, today.

That is NOT how the FED ever worked, either.

WE have had 16 recession/depressions since 1913. (7 in my working lifetime alone!)

Clearly the FED either can do nothing about them or, much worse, is causing at least SOME of them.

 

[LoneLaugher]

Nutters think we have high inflation right now? Go figure.

 

[LoneLaugher]

As long as the government spends our money......even borrowed money.....on shit that does not compete with the private sector.......the spending will not cause inflation.

 

[editec]

What do you prefer? A return to the gold standard?

I would NOT mind if we went back to the days before the the Breet-Woods international agreements fell apart (around 67 or so).

Now that system did include GOLD, but only as a marker between nations specie exchange rates.

Why did it fall arpart?

LYNDON JOHNSON'S double whammy of the cost of Viet Nam AND his GREAT SOCIETY cost so much, that he started inflating the money supply despite (AND USING SOCIAL SECURITY LIKE A DEBIT ACCOUNT) the fact that according to that INTERNATIONAL agreement he could not legally do that.

The FRENCH, regognizing that LBJ was diluting the USD send a warship into New York Harbor demanding their GOLD Reserves because of this scam.

After that the USD was in no way shape or form limited by the total gold reserves, and the international gold standard and agreement about exchange rates fell apart.

See why I am NOT a political partisan?

Because every POTUS in my lifetime has screwed up this nation economically, regardless of their political affiliation.