Fed Up

[Kevin_Kennedy]

The Federal Reserve's recent and unprecedented actions in the realm of monetary policy have provoked a backlash among the American people. Trillions of dollars worth of loans and guarantees have been provided to Wall Street firms, while Main Street Americans suffocate under harsh taxation, the prospect of higher debt levels and increasing inflation. These events have awakened many Americans to problems with the Fed's loose monetary policy, the bubbles it has created in the past and the potential hyperinflation it might cause in the future.

One of the fallacies of modern economics is the idea that a central bank is required in order to keep inflation low and promote economic growth. In reality, it is the central bank's monetary policy that causes inflation and depresses economic growth. Inflation is an increase in the supply of money, which in our day and age is directly caused or initiated by central banks. All other things being equal, inflation results in a rise in prices. A so-called "mild" rate of inflation of 3% per year leads to a 56% rise in prices over a 15-year period. Even a "low" rate of inflation of 2% per year leads to a 35% rise over that same period. How is that conducive to long-term growth?

Fed Up - Forbes.com

 

[editec]

One of the fallacies of modern economics is the idea that a central bank is required in order to keep inflation low and promote economic growth.

I don't think anyone believes that is the purpose of FED.

In reality, it is the central bank's monetary policy that causes inflation and depresses economic growth.

Half right.

What caused inflation and depressed economic growth BEFORE the FED existed?

You see, the FED can be a problem, but the FED does not have to exist for that same problem to manifest.

All it takes are BANKS which lend out money too rapidly, or, if we decentralize and eliminate the FED and a the single currency system, all it takes is private banks which print up too much money.

What it really takes is not a FED but bad banking practices no matter WHAT charter those banks have.

Inflation is an increase in the supply of money, which in our day and age is directly caused or initiated by central banks.

Yes, inflation is caused by the money supply rising faster than the amount of good and services an economy is producing without doubt.

OR...

inflation is caused by the money supply not changing when the amount of goods and services are reduced for reasons having NOTHING TO DO with the banking system.

For example, the spiking in oil prices which is inflates the price of petroeum products (read pretty much everything) has nothing to do with monetary policy.

 

[Kevin_Kennedy]

One of the fallacies of modern economics is the idea that a central bank is required in order to keep inflation low and promote economic growth.

I don't think anyone believes that is the purpose of FED.

In reality, it is the central bank's monetary policy that causes inflation and depresses economic growth.

Half right.

What caused inflation and depressed economic growth BEFORE the FED existed?

You see, the FED can be a problem, but the FED does not have to exist for that same problem to manifest.

All it takes are BANKS which lend out money too rapidly, or, if we decentralize and eliminate the FED and a the single currency system, all it takes is private banks which print up too much money.

What it really takes is not a FED but bad banking practices no matter WHAT charter those banks have.

Inflation is an increase in the supply of money, which in our day and age is directly caused or initiated by central banks.

Yes, inflation is caused by the money supply rising faster than the amount of good and services an economy is producing without doubt.

OR...

inflation is caused by the money supply not changing when the amount of goods and services are reduced for reasons having NOTHING TO DO with the banking system.

For example, the spiking in oil prices which is inflates the price of petroeum products (read pretty much everything) has nothing to do with monetary policy.

It's true that inflation could occur without the Federal Reserve, but that is only true under a fiat monetary system. If we had sound money the supply of money would only increase with an increase in the supply of the commodity backing the currency, which would probably be gold.

 

[editec]

One of the fallacies of modern economics is the idea that a central bank is required in order to keep inflation low and promote economic growth.

I don't think anyone believes that is the purpose of FED.



Half right.

What caused inflation and depressed economic growth BEFORE the FED existed?

You see, the FED can be a problem, but the FED does not have to exist for that same problem to manifest.

All it takes are BANKS which lend out money too rapidly, or, if we decentralize and eliminate the FED and a the single currency system, all it takes is private banks which print up too much money.

What it really takes is not a FED but bad banking practices no matter WHAT charter those banks have.

Inflation is an increase in the supply of money, which in our day and age is directly caused or initiated by central banks.

Yes, inflation is caused by the money supply rising faster than the amount of good and services an economy is producing without doubt.

OR...

inflation is caused by the money supply not changing when the amount of goods and services are reduced for reasons having NOTHING TO DO with the banking system.

For example, the spiking in oil prices which is inflates the price of petroeum products (read pretty much everything) has nothing to do with monetary policy.

It's true that inflation could occur without the Federal Reserve, but that is only true under a fiat monetary system. If we had sound money the supply of money would only increase with an increase in the supply of the commodity backing the currency, which would probably be gold.

Yes , I quite agree with you on that point

Just as suicide will prevent a common cold, the gold standard will certainly prevent inflation.

 

[Toro]

Franky, I don't hear much backlash towards the Fed, at least not from ordinary people. There's a fair amount of backlash towards the spending of the administration however.

 

[editec]

Franky, I don't hear much backlash towards the Fed, at least not from ordinary people. There's a fair amount of backlash towards the spending of the administration however.

Yup.

The FED and its relationship to the banking problem is damned confusing.

But everybody can understand government over-spending.

 

[Old Rocks]

Franky, I don't hear much backlash towards the Fed, at least not from ordinary people. There's a fair amount of backlash towards the spending of the administration however.

Yes, and a lot of backlash toward the extroidenary salaries and bonuses of the people who created this debacle.

 

[Kevin_Kennedy]

Franky, I don't hear much backlash towards the Fed, at least not from ordinary people. There's a fair amount of backlash towards the spending of the administration however.

Yes, and a lot of backlash toward the extroidenary salaries and bonuses of the people who created this debacle.

That seems to be at odds with what Toro is saying, because it was the Fed that chiefly created this debacle.

 

[Neubarth]

Gentlemen, all I know is that the FED can buy up Trillions of Dollars of US Government Debt, and when we pay interest on that debt the FED takes that money and puts it in the US Treasury.

The obvious conclusion that can be reached from that reality is that the FED could buy up all of our debt and we would never really have to pay interest on it.

That is the best lending system in the world. The hell with GOLD.

 

[Kevin_Kennedy]

They would buy the debt by creating money, which would debase the currency.

 

[Neubarth]

They would buy the debt by creating money, which would debase the currency.

Kevin, the Fed does not print money. That is handled by the treasury and is done in accordance with need.

Just because the Fed buys debt does not mean that the Fed has some how managed to get control of the dollar printers.

We need not print money to borrow it in this electronic age.

 

[Toro]

Franky, I don't hear much backlash towards the Fed, at least not from ordinary people. There's a fair amount of backlash towards the spending of the administration however.

Yes, and a lot of backlash toward the extroidenary salaries and bonuses of the people who created this debacle.

That seems to be at odds with what Toro is saying, because it was the Fed that chiefly created this debacle.

If you ask most people, they will not know that the Fed is at least partially responsible for the mess. It's an esoteric argument that is above most people's grasp. Or interest.

 

[Kevin_Kennedy]

They would buy the debt by creating money, which would debase the currency.

Kevin, the Fed does not print money. That is handled by the treasury and is done in accordance with need.

Just because the Fed buys debt does not mean that the Fed has some how managed to get control of the dollar printers.

We need not print money to borrow it in this electronic age.

I didn't say they printed money, I said they create money which debases the currency.

 

[Kevin_Kennedy]

Yes, and a lot of backlash toward the extroidenary salaries and bonuses of the people who created this debacle.

That seems to be at odds with what Toro is saying, because it was the Fed that chiefly created this debacle.

If you ask most people, they will not know that the Fed is at least partially responsible for the mess. It's an esoteric argument that is above most people's grasp. Or interest.

Yes, I agree. I was simply being a smart-ass because Old Rocks refuses to believe that the Federal Reserve had anything to do with the downturn.

 

[BaronVonBigmeat]

They would buy the debt by creating money, which would debase the currency.

Kevin, the Fed does not print money. That is handled by the treasury and is done in accordance with need.

Just because the Fed buys debt does not mean that the Fed has some how managed to get control of the dollar printers.

We need not print money to borrow it in this electronic age.

The fed does not own a literal printing press that it feeds paper and ink into, of course. But when it buys debt, it is using electronic dollars that are made up out of thin air. The government then spends these new dollars, which enter circulation and expand the money supply.

Then once the money makes it's way into banks, fractional reserve lending takes over, ie banks lend out more money than they have. When all is said and done, the bulk of the money expansion has actually been done by banks lending money into existence, and the original amount created by the fed has been amplified by approximately 10:1. This increase in credit drives interest rates down, which allows the government to borrow cheaply, and also benefits interest-rate sensitive industries (the most recent example being home builders).

 

[sealybobo]

They would buy the debt by creating money, which would debase the currency.

Kevin, the Fed does not print money. That is handled by the treasury and is done in accordance with need.

Just because the Fed buys debt does not mean that the Fed has some how managed to get control of the dollar printers.

We need not print money to borrow it in this electronic age.

The fed does not own a literal printing press that it feeds paper and ink into, of course. But when it buys debt, it is using electronic dollars that are made up out of thin air. The government then spends these new dollars, which enter circulation and expand the money supply.

Then once the money makes it's way into banks, fractional reserve lending takes over, ie banks lend out more money than they have. When all is said and done, the bulk of the money expansion has actually been done by banks lending money into existence, and the original amount created by the fed has been amplified by approximately 10:1. This increase in credit drives interest rates down, which allows the government to borrow cheaply, and also benefits interest-rate sensitive industries (the most recent example being home builders).

I've seen money be printed and shredded at the Federal Reserve.

And they not only print it, they give it away at their own descretion.

The fed cannot account for the whereabouts of $9 trillion worth of off-balance sheet transactions over the course of the past eight months. Nor can it explain the $1 trillion expansion of the Fed’s balance sheet since last September.
When pressed by Rep. Alan Grayson (D-FL), Coleman said she could not provide any information on those investigations and claimed that she had no authority to look into the practices of the Fed. Instead she said, her job was simply to oversee the Federal Reserve’s Board of Governors. She reiterated that statement in an email to Bloomberg News, who originally broke the story of the gaping holes in the Fed’s balance sheet.
“By law, we are the Office of Inspector General for the Board of Governors only,” the statement said. “Consistent with our authority, we cannot conduct a direct audit of Reserve Bank operations.”
One Penny Sheet » Federal Reserve Cannot Account for $9 Trillion video

 

[mascale]

Hollywood Studio execs know best about "Generally Accepted Accounting Principles." Anyone has to admire the Federal Reserve Board: Which has finally learned a thing or two about "Generally Accepted Accounting Principles!"

That aside, All science of economics relies on the assumption of scare goods and resources. Inflation is built-in to all reasoning about economics. More Scarity, more inflation. More economics, more logical Fallacy of Affirming The Consequent. It is not logical to premise inflation, and then create various conclusions about inflation.

Inflation is about computing, so it makes better sense to understand how any computed "inflation," might in fact be the consequence of computing. If (Deity) has More Money Than Donald Trump, and then gets a substantial raise: Then believers will be paying higher prices. The Obamas kept the money. That may not count for much. The Kennedys keep the money: That's a lot money. Just start counting Kennedys!

Where does the money come from? Higher Prices. Are higher prices inflation?

No one will say so, if they are smart!

"Crow, James Crow: Shaken, Not Stirred."
(If this is a Reagan Trajectory, then there are Colored Shoe Laces around someplace, right? Even Hollywood Execs know a thing or two--about the Colored Shoe Laces! No doubt Her Majesty's government: Will also be amused! Liberals!)

 

[sealybobo]

Hollywood Studio execs know best about "Generally Accepted Accounting Principles." Anyone has to admire the Federal Reserve Board: Which has finally learned a thing or two about "Generally Accepted Accounting Principles!"

That aside, All science of economics relies on the assumption of scare goods and resources. Inflation is built-in to all reasoning about economics. More Scarity, more inflation. More economics, more logical Fallacy of Affirming The Consequent. It is not logical to premise inflation, and then create various conclusions about inflation.

Inflation is about computing, so it makes better sense to understand how any computed "inflation," might in fact be the consequence of computing. If (Deity) has More Money Than Donald Trump, and then gets a substantial raise: Then believers will be paying higher prices. The Obamas kept the money. That may not count for much. The Kennedys keep the money: That's a lot money. Just start counting Kennedys!

Where does the money come from? Higher Prices. Are higher prices inflation?

No one will say so, if they are smart!

"Crow, James Crow: Shaken, Not Stirred."
(If this is a Reagan Trajectory, then there are Colored Shoe Laces around someplace, right? Even Hollywood Execs know a thing or two--about the Colored Shoe Laces! No doubt Her Majesty's government: Will also be amused! Liberals!)

Soooo you're saying you agree?

 

[Toddsterpatriot]

Kevin, the Fed does not print money. That is handled by the treasury and is done in accordance with need.

Just because the Fed buys debt does not mean that the Fed has some how managed to get control of the dollar printers.

We need not print money to borrow it in this electronic age.

The fed does not own a literal printing press that it feeds paper and ink into, of course. But when it buys debt, it is using electronic dollars that are made up out of thin air. The government then spends these new dollars, which enter circulation and expand the money supply.

Then once the money makes it's way into banks, fractional reserve lending takes over, ie banks lend out more money than they have. When all is said and done, the bulk of the money expansion has actually been done by banks lending money into existence, and the original amount created by the fed has been amplified by approximately 10:1. This increase in credit drives interest rates down, which allows the government to borrow cheaply, and also benefits interest-rate sensitive industries (the most recent example being home builders).

I've seen money be printed and shredded at the Federal Reserve.

And they not only print it, they give it away at their own descretion.

The fed cannot account for the whereabouts of $9 trillion worth of off-balance sheet transactions over the course of the past eight months. Nor can it explain the $1 trillion expansion of the Fed’s balance sheet since last September.
When pressed by Rep. Alan Grayson (D-FL), Coleman said she could not provide any information on those investigations and claimed that she had no authority to look into the practices of the Fed. Instead she said, her job was simply to oversee the Federal Reserve’s Board of Governors. She reiterated that statement in an email to Bloomberg News, who originally broke the story of the gaping holes in the Fed’s balance sheet.
“By law, we are the Office of Inspector General for the Board of Governors only,” the statement said. “Consistent with our authority, we cannot conduct a direct audit of Reserve Bank operations.”
One Penny Sheet » Federal Reserve Cannot Account for $9 Trillion video

The fed cannot account for the whereabouts of $9 trillion worth of off-balance sheet transactions over the course of the past eight months.

Grayson cannot account for the orifice he pulled that number from.

 

[Toddsterpatriot]

They would buy the debt by creating money, which would debase the currency.

Kevin, the Fed does not print money. That is handled by the treasury and is done in accordance with need.

Just because the Fed buys debt does not mean that the Fed has some how managed to get control of the dollar printers.

We need not print money to borrow it in this electronic age.

The fed does not own a literal printing press that it feeds paper and ink into, of course. But when it buys debt, it is using electronic dollars that are made up out of thin air. The government then spends these new dollars, which enter circulation and expand the money supply.

Then once the money makes it's way into banks, fractional reserve lending takes over, ie banks lend out more money than they have. When all is said and done, the bulk of the money expansion has actually been done by banks lending money into existence, and the original amount created by the fed has been amplified by approximately 10:1. This increase in credit drives interest rates down, which allows the government to borrow cheaply, and also benefits interest-rate sensitive industries (the most recent example being home builders).

ie banks lend out more money than they have.

Of course that is not the case.
Every loan is fully funded.