The Fed could have offset the decrease created by bank failures by engaging in bond purchases, but it did not.
See, the bank failures happened first. Yes, they also, later, tightened when they should have loosened.
You claimed that Bernanke said the Fed caused the Depression.
They certainly made it worse and longer, but they didn't cause the bank failures, they didn't stop the failures by buying bonds.
You should actually read the stuff I link. It would stop you from making a fool of yourself.
They were deliberately tightening even before the stack market crash and bank failures. Reading on...
And since there were margin loans of up to 90% of the stock's value, when the market crashed, the banks failed.
It's so funny how everything you seem to believe is contradicted by the facts, isn't it?
Do you support a balanced Federal budget and reducing the national debt?
You bet. The solution is not the Treasury printing and spending "interest free money".
Oh? Then what's your solution? Cutting spending and raising taxes? Or are you just for cutting spending?
Gee, since you know about the money multiplier, and government debt is the basis for all the money multiplying going on, what you you think happens when the government reduces debt? Can you say "money supply contraction", also known as deflation, also known as depression, which is exactly what the Fed did from 1928 to 1932.
The evidence is there, Toddster. All you need to do is see it.
By the way, issuing US Notes to pay off the national debt, then replacing it with commodity backed money and eliminating FRB would eliminate the debt and put the country of a stable course, with no more "business cycle".
And best of all, no more leeches sucking 1-10% of the productive labor simply because they're allowed to create the money supply.
What the hell is wrong with that scenario?
Oh? Then what's your solution? Cutting spending and raising taxes? Or are you just for cutting spending?
I'm for cutting spending. We're taxed enough.
Gee, since you know about the money multiplier, and government debt is the basis for all the money multiplying going on
LOL! When I borrow to buy a house, the money supply increases.
Nice job revealing your lack of understanding of our money system.
Um, where do you think all the money comes from initially? Trees?
Nope, the Fed creates it from their "reserves", which the vast majority is Treasuries. You know, government debt. Although to be honest, over the last few years the Fed has been buying up all those crappy MBSs from the commercial banks, so they are becoming more of the basis for the base money supply than federal securities. How do I know that? Well, the Fed conveniently publishes their balance sheet daily. Here's today's :
FRB: H.4.1 Release--Factors Affecting Reserve Balances--February 21, 2013
In either case, it's debt that is the basis for all the money in existence.
what you you think happens when the government reduces debt?
We don't become Greece?
You're funny. You don't even realize we already are Greece. They're calling this March 1st thing 'sequestration'. I call it 'austerity', same as Greece. If 'sequestration' happens, Federal salaries will be cut, same as Greece.
Can you say "money supply contraction", also known as deflation, also known as depression, which is exactly what the Fed did from 1928 to 1932.
So we can't reduce government debt, ever, just because you're afraid the money supply will contract?
What if government debt shrinks and the money supply remains constant?
Or would that make you cry too?
Nope, cause it can't happen. I won't bother to tell you why, since you wouldn't understand.
By the way, issuing US Notes to pay off the national debt, then replacing it with commodity backed money and eliminating FRB would eliminate the debt
Damn are you dumb. Greatly inflate the money supply to pay off the debt. It works for Zimbabwe.
What you fail to understand is that issuing debt free money isn't what Zimbabwe did. They issued more debt created money, which required
more debt issued money, and so on. And they certainly didn't issue that money with an eye toward introducing commodity money.
Commodity backed money? LOL! The government should buy billions (trillions?) worth of gold or silver and issue currency against it?
How silly you are. You're using current fiat money "worth" to value a commodity, which carries an intrinsic value of its own, completely ignoring the monetary inflation the Fed has carried out. I thought I already posted how a silver dollar has retained its value relative to goods and service far better than FRNs over the last 40 years.
And if the government decided to issue new silver dollars, to be equivalent to today's FRNs, all you would have to do is reduce the silver content to 1/30th of what it was in 1960 to account the the inflation of FRNs since then.
We're just Zimbabwe in slow motion, but the motion is getting faster.
And how do you eliminate FRB?
Right now, by law (sort of, the Fed does it on their own, arbitrarily) banks can loan out between 90 and 100% of their deposits. Just change the law to say they have to keep 100% of demand deposits. Easy as that.
Your idea is to allow CDs and 100% loans against them. That's FRB, you silly git.
Obviously, you don't understand the difference between FRB and investment, do you? As I posted before, the money storage/clearing function would operate at 100% reserves. People who wanted a 'return' on their money would invest in those CDs hoping to get a decent return. However, if the borrower defaults on the loan, they lose their investment. Same as buying a corporate bond today. It's your money that you invest in the bond, and if the company goes under with insufficient assets to pay back all the creditors, you lose some of all of your money. That's the risk in the risk/reward paradigm. Or did you think the chance of gain doesn't come with the chance of loss?
And where does the debt elimination happen? Spell it out.
By eliminating the Fed and having the government issue debt-free money, just like Lincoln did. You have heard of Greenbacks, right?
Oh, and I accept your unspoken capitulation on the subject of whether the Fed actively contracted the money supply before and during the start of the Great Depression. Evidence and facts trump opinion very nicely, don't they?
