Easy Money--Why ?

Discussion in 'Economy' started by dilloduck, Sep 27, 2008.

  1. dilloduck
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    dilloduck Diamond Member

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    Why did the Fed, the friendly Bank of the United States, make money so easily available that the regulation of this flow was such a hot topic ?
     
  2. Paulie
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    Paulie Platinum Member

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    I answered you in the other thread where you asked, sorry it took me so long to reply though, I had to handle some issues around the house.

    Here's what I posted:

     
  3. CA95380
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    CA95380 USMB Member

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    :eusa_shhh: I'm not about to touch this one! lol

    I will wait until you explain why you think they did, first. :lol:
     
  4. dilloduck
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    dilloduck Diamond Member

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    Thanks for the answer--I guess some threads need merging. Im' really tired of everyone refusing the look behind the curtain here.
     
  5. Paulie
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    Paulie Platinum Member

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    From the other thread...I'll just do my own version of merging:

    The fractional reserve system of banking is flawed, in that there is exponentially more money lent out than kept in reserves. If there were ever a run on the banks, it would be pandemonium. The FDIC has nothing CLOSE to the amount available that it would need to cover all deposit liabilities. This however, is how all banks run. If there ever WERE a run on the banks, where do you think the money would come from to cover all the liabilities that the FDIC can not cover? And who do you think would foot the bill?

    In regards to the Fed, yes, they make too much money available. Their answer to every problem is to make more money available, rather than let the market cleanse itself of the bad paper that was already causing the problem.

    When I say bankers, I mean people like the Rothschilds, the Warburgs, the Fed board of governors, etc. It's those extremely wealthy banking families, and all the minions they use to do their dirty work at central banks. Case in point, Bernanke and Greenspan, for two recent and recognizable names.

    I think the last fed chairman who made a GOOD move, was Paul Volcker when he raised rates up to almost 20% around 1980 to cleanse the excess from the 70's recession. The problem though, was during the Reagan years, deficits became the way to do business, and a lot of money was printed to finance it. The Fed rate went from around 19% in 1980 to 6% in 1986. That's almost a 70% drop in only 6 years.

    [​IMG]

    The banking crisis in the 80's led to more severe rate cuts, bringing the rate down to around 3% in the early 90's during THAT credit crisis, which then sparked the dot-com bubble due to all the newly available money.

    I'm hoping gonegolfin will come along to help out here as well. I think I'm pretty right about this, but I don't count out the fact that I could be off on some things.

    EDIT: Also note, that when deficit spending became big and the national debt was expanded so much, it was due to defense spending and increasing military escapades. The end of the Cold War was a big loss. I believe that's why so many people believe 9/11 was an inside job. It gave the reason to increase defense spending again, and increase the military empire.
     
    Last edited: Sep 27, 2008
  6. dilloduck
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    dilloduck Diamond Member

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    Any non-partisan help is appreciated. If we have a flawed banking system to begin with then I guess it's pretty difficult to expect any great results to come out of it. We just continue playing as if the right hand doesn't know what the left hand is doing yet point fingers at who is to blame.
    Apparently neither of the major parties has the balls to face the real problem for fear that they will lose power. All I can see is that the Fed has America financially blackmailed.
     
  7. Paulie
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    Paulie Platinum Member

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    There was nothing partisan about it, btw. Just because I mentioned Reagan doesn't mean I'm blaming a side. It's just a simple fact that spending increased as much as it did starting in his terms. Congress was just as much to blame, and I believe control of congress was split during that time, with the Dems having a large majority in the house and the R's controlling the Senate.

    Regardless, you're starting to realize now why so many people got so enthusiastic about a candidate who was willing to take this issue on in the mainstream. You NEVER heard anyone call the Fed out in presidential campaigns. Not like Ron Paul, anyway.

    In my opinion, it's the single most important issue we face. Much bigger than any so-called threat of terrorism. It's the one thing keeping conservatives from getting what they really want. That, and the annoying social issue wedges that have been thrown into the mix. If we're ever to have real fiscal conservatism in this country, the Fed has to go.
     
  8. dilloduck
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    dilloduck Diamond Member

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    Sorry-- I wasn't being sarcastic as usual. I seriously meant to thank you for the non-partisan explanation. How is congress to blame for the abundance of cheap money ?
     
  9. Paulie
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    Paulie Platinum Member

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    I meant congress was as much to blame as Reagan for the spending increases, not the availability of cheap money. Although, congress is certainly to blame on an indirect scale.

    Congress could agree to abolish the board of governors of the Fed and enact a new monetary policy, but they don't. Paul crafts that legislation once every couple years and submits it to his committee, but it never makes it out.

    Congress is to blame because of their inaction. Most of them are owned by the same people who pull the strings at the central bank. If they aren't, they are in duress through potential blackmail. I believe most members of congress are dirty, and that should they ever get out of line, they would simply be brought down on whatever dirty deeds they've done throughout the years.

    I believe they are ALLOWED to be corrupt to a certain extent, as it is held over their heads as a way to control them should they ever decide they have a conscience.

    But what do I know, I'm a kook. Ask RGS.
     
  10. editec
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    editec Mr. Forgot-it-All

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    You folks seem to believe that the majority of money borrowed in this nation is done for real estate.

    Compare the amount of money borrowed by all the real estate purchasers in America to the amount borrowed by corporations and get back to us with what you find, would you?

    Heard this AM that Maine couldn't find a lending source for its bonds for infrastructure projects this week.

    Heard also that Sweden trying to borrow sell some bonds and they market wouldn't lend them any money for less than 15% APR!

    One commenter quipped they'd be better off funding their public works projects on credit cards than by selling long term government insured bonds.

    This liquidity crises is going to shut down businesses and governments shortly, ya' know?

    I'm starting to think that may not be such a bad thing, and yet at the same time I'm pondering what sort of arsenal I should be stocking up on to weather this imminent fall of civilization?

    I'm finding it ironic that the GREAT KONG called government as we know it might take its final fall, and no revolution (from either right or left) will be necessary to make it happen.

    No, it wasn't the airplane that killed the beast.

    T'was greed that killed it.
     
    Last edited: Sep 27, 2008

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