Time to eliminate the Fed?

[georgephillip]

The ONLY way our economy will ever be fixed is to completely abolish the Fed! it is a private own company that is illegally in existence! Money from thin air?! Just how long did we think THAT would work?! GAME OVER

It might not be the money from thin air that's the problem as much as the debt on the money from thin air.

If Treasury were to spend trillions of dollars directly into the economy on projects like nation-wide high speed rail and universal broadband instead of using the Fed to loan the money into circulation, millions of Americans would go back to work and, as I understand it, all those $trillions pouring into the economy would not cause inflation because the workers would be spending the money on goods and services.

Lincoln did something similar during the Civil War with Greenbacks.

 

[antagon]

i dont see why americans are so vehiment bent on condemning the fed, save for not having completely looked into the role it plays. while the reserve rates a few years ago could be added to their many errors, operating such a modern reserve system is crucial for a modern economy. banks and the treasury could not maintain balance alone.

antagon

In 2009 something inspired Joseph Stiglitz to say our government would have been better off funding a federally-owned bank than doling out trillions of dollars to private investment banks and CEOs who speculated their way into bankruptcy.

"If we had used the $700 billion to create a new financial institution, allowed it to lever 10:1, which is very modest compared to the 30:1 we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs.

"So the issue here is not about lending. It's really about saving the bankers.

"And what we confused was saving the banks versus saving the bankers and their shareholders." (Campaigning For State-Owned Banks)

http://www.usmessageboard.com/economy/112568-greenspan-the-congress-was-responsible-4.html#post2196125 ... that was my last commentary to your stiglitz proposals.

otherwise, is lending capacity needed independent from credit worthiness? that is what got us here in the first place.

 

[georgephillip]

i dont see why americans are so vehiment bent on condemning the fed, save for not having completely looked into the role it plays. while the reserve rates a few years ago could be added to their many errors, operating such a modern reserve system is crucial for a modern economy. banks and the treasury could not maintain balance alone.

antagon

In 2009 something inspired Joseph Stiglitz to say our government would have been better off funding a federally-owned bank than doling out trillions of dollars to private investment banks and CEOs who speculated their way into bankruptcy.

"If we had used the $700 billion to create a new financial institution, allowed it to lever 10:1, which is very modest compared to the 30:1 we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs.

"So the issue here is not about lending. It's really about saving the bankers.

"And what we confused was saving the banks versus saving the bankers and their shareholders." (Campaigning For State-Owned Banks)

I agree with biting the bullet but I do not think it follows that we know enough to impose a workable solution. Blanche Lincoln and her attempt to force a transition to transparency was the best idea proposed worldwide in financial reform and it did not fly. This mess will be revisited several times.

Whatever her motives, Blanche Lincoln's attempts to rein in derivatives met the same fate as Brooksley Born did in 1998 when Larry Summers called Born to tell her if she continued to call for transparency her efforts would lead to the worst financial crisis since WWII.

I'm afraid this mess will be back sooner than any of us imagine.
Only worse.

 

[georgephillip]

i dont see why americans are so vehiment bent on condemning the fed, save for not having completely looked into the role it plays. while the reserve rates a few years ago could be added to their many errors, operating such a modern reserve system is crucial for a modern economy. banks and the treasury could not maintain balance alone.

antagon

In 2009 something inspired Joseph Stiglitz to say our government would have been better off funding a federally-owned bank than doling out trillions of dollars to private investment banks and CEOs who speculated their way into bankruptcy.

"If we had used the $700 billion to create a new financial institution, allowed it to lever 10:1, which is very modest compared to the 30:1 we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs.

"So the issue here is not about lending. It's really about saving the bankers.

"And what we confused was saving the banks versus saving the bankers and their shareholders." (Campaigning For State-Owned Banks)

http://www.usmessageboard.com/economy/112568-greenspan-the-congress-was-responsible-4.html#post2196125 ... that was my last commentary to your stiglitz proposals.

otherwise, is lending capacity needed independent from credit worthiness? that is what got us here in the first place.

antagon:

Sorry. I still don't have the answer to your question of how to patch up the deflation.
Maybe you could simplify the concept a little?

As far as what got us here in the first place, was it the disconnect between enough credit-worthy borrowers and required lending capacity or was it the amount of money gambled on each mortgage?

Recently I read of a $38 million pool of mortgages that eventually cost investors $280 million in losses before the principle was wiped out.

I'll look for the source.

 

[Wry Catcher]

Does anyone really understand the Fed (No Neubarth, I don't need a psychotic or psychic to respond)?
It seems to me the idea of a central bank under private control in control of a nations currency is a bit bizarre.

 

[Kevin_Kennedy]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

 

[Wry Catcher]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

Um, Kevin, you need to explain. That is not my understandintg.

 

[antagon]

antagon

In 2009 something inspired Joseph Stiglitz to say our government would have been better off funding a federally-owned bank than doling out trillions of dollars to private investment banks and CEOs who speculated their way into bankruptcy.

"If we had used the $700 billion to create a new financial institution, allowed it to lever 10:1, which is very modest compared to the 30:1 we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs.

"So the issue here is not about lending. It's really about saving the bankers.

"And what we confused was saving the banks versus saving the bankers and their shareholders." (Campaigning For State-Owned Banks)

http://www.usmessageboard.com/economy/112568-greenspan-the-congress-was-responsible-4.html#post2196125 ... that was my last commentary to your stiglitz proposals.

otherwise, is lending capacity needed independent from credit worthiness? that is what got us here in the first place.

antagon:

Sorry. I still don't have the answer to your question of how to patch up the deflation.
Maybe you could simplify the concept a little?

As far as what got us here in the first place, was it the disconnect between enough credit-worthy borrowers and required lending capacity or was it the amount of money gambled on each mortgage?

Recently I read of a $38 million pool of mortgages that eventually cost investors $280 million in losses before the principle was wiped out.

I'll look for the source.

i say private sector shenanigans in the futures market and an entity like what stiglitz suggests (fannie mae) combined to create greater supply of credit than was demanded by worthy sources. the bar of worthiness was dropped to accommodate the available business.

there were trillions of dollars vaporized in a deflationary collapse, $700 billion was applied to replace some of that in inflationary congressional 'stimulus' directed recklessly at the behest of bankers, among billions more 'spent' by the fed cordoning foul assets banks accumulated and cope with anymore. that's oversimplified.

to go one further, there was an explosion and water was spread on the fire. stiglitz suggests using the water for a public pool instead. non sequitur solutions.

 

[Kevin_Kennedy]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

Um, Kevin, you need to explain. That is not my understandintg.

Well it's not private, because no private organization would have their chairman nominated by the President of the U.S. and confirmed by the U.S. Senate. Not to mention its ability to inflate the money supply. But it's not entirely public either because it's not owned by the federal government, but by the member banks.

 

[Wry Catcher]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

Um, Kevin, you need to explain. That is not my understandintg.

Well it's not private, because no private organization would have their chairman nominated by the President of the U.S. and confirmed by the U.S. Senate. Not to mention its ability to inflate the money supply. But it's not entirely public either because it's not owned by the federal government, but by the member banks.

Are those in control accountable to the Congress or the President of the United States? Are their activities public and open to aduts and inspection by members of the public? If not, they are not public employees and are part of the private sector.
As a public employee I was required to complete an economic interest fom every year, are those employees of the Fed required to provide a full and complete disclosure of their economic interests?

 

[Kevin_Kennedy]

Um, Kevin, you need to explain. That is not my understandintg.

Well it's not private, because no private organization would have their chairman nominated by the President of the U.S. and confirmed by the U.S. Senate. Not to mention its ability to inflate the money supply. But it's not entirely public either because it's not owned by the federal government, but by the member banks.

Are those in control accountable to the Congress or the President of the United States? Are their activities public and open to aduts and inspection by members of the public? If not, they are not public employees and are part of the private sector.
As a public employee I was required to complete an economic interest fom every year, are those employees of the Fed required to provide a full and complete disclosure of their economic interests?

Not being employed by the Fed or any of the member banks I have no idea what forms they may have to fill out. As for those in control of the Fed, such as the Chairman, they have hearings in front of Congress, but they're not really accountable.

 

[Wry Catcher]

Well it's not private, because no private organization would have their chairman nominated by the President of the U.S. and confirmed by the U.S. Senate. Not to mention its ability to inflate the money supply. But it's not entirely public either because it's not owned by the federal government, but by the member banks.

Are those in control accountable to the Congress or the President of the United States? Are their activities public and open to aduts and inspection by members of the public? If not, they are not public employees and are part of the private sector.
As a public employee I was required to complete an economic interest fom every year, are those employees of the Fed required to provide a full and complete disclosure of their economic interests?

Not being employed by the Fed or any of the member banks I have no idea what forms they may have to fill out. As for those in control of the Fed, such as the Chairman, they have hearings in front of Congress, but they're not really accountable.

"not really accountable" is NOT accountable.
I still don't understand the entire process, and wonder why we have a Fed which is not open, transparent and completely accountable to the American public (gee, I sound like a conservative).

 

[Kevin_Kennedy]

Are those in control accountable to the Congress or the President of the United States? Are their activities public and open to aduts and inspection by members of the public? If not, they are not public employees and are part of the private sector.
As a public employee I was required to complete an economic interest fom every year, are those employees of the Fed required to provide a full and complete disclosure of their economic interests?

Not being employed by the Fed or any of the member banks I have no idea what forms they may have to fill out. As for those in control of the Fed, such as the Chairman, they have hearings in front of Congress, but they're not really accountable.

"not really accountable" is NOT accountable.
I still don't understand the entire process, and wonder why we have a Fed which is not open, transparent and completely accountable to the American public (gee, I sound like a conservative).

Well we're in agreement. Hopefully the Fed audit is restored to its original language in conference, but I wouldn't hold my breath.

 

[william the wie]

Whatever her motives, Blanche Lincoln's attempts to rein in derivatives met the same fate as Brooksley Born did in 1998 when Larry Summers called Born to tell her if she continued to call for transparency her efforts would lead to the worst financial crisis since WWII.

I'm afraid this mess will be back sooner than any of us imagine.
Only worse.

Can't argue with your reasoning although I think Larry Summers was and is full of crap on this one. Would there be major transitional instability during the switchover, quite possibly. But as the 2000-1 and 2003-8 sequels to Born's proposal proved postponing a necessary step just increases the costs. Worse yet those transitional effects would be over in less than 6 months but the 100s of trillions of dollars of worldwide derivatives coursing through the US economy should have at least a 1% spin off in back office fees and such forever. Stupid politics and stupid economics.

 

[Neubarth]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

It is not a public private hybrid. It is not controlled by the Federal Government. It is simply a mythical bank that we want the rest of the world to accept as real, so it can drive the prices of borrowed money down for our sake.

It can create money (Electronically) out of thin air, and it has the capacity to eliminate debt just by snapping its fingers. Crazy insan pieces of shit like Ron Paul would try to eliminate that just at the time that we need the Fed the most in history. If enough stupid pieces of stinking fetid shit like Ron Paul have their way, they can bankrupt the United States by claiming that we need to do away with the FED and own all of the debt that they could have erased. I sure hope he dies soon.

That has to be the craziest thing I have ever heard of, but what the hell, if CRAZY people are in the majority, they can destroy a damn good thing and destroy the whole country in the process.

 

[Kevin_Kennedy]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

It is not a public private hybrid. It is not controlled by the Federal Government. It is simply a mythical bank that we want the rest of the world to accept as real, so it can drive the prices of borrowed money down for our sake.

It can create money (Electronically) out of thin air, and it has the capacity to eliminate debt just by snapping its fingers. Crazy insan pieces of shit like Ron Paul would try to eliminate that just at the time that we need the Fed the most in history. If enough stupid pieces of stinking fetid shit like Ron Paul have their way, they can bankrupt the United States by claiming that we need to do away with the FED and own all of the debt that they could have erased. I sure hope he dies soon.

That has to be the craziest thing I have ever heard of, but what the hell, if CRAZY people are in the majority, they can destroy a damn good thing and destroy the whole country in the process.

It's been well established that you have no idea what you're talking about on this subject.

 

[georgephillip]

Whatever her motives, Blanche Lincoln's attempts to rein in derivatives met the same fate as Brooksley Born did in 1998 when Larry Summers called Born to tell her if she continued to call for transparency her efforts would lead to the worst financial crisis since WWII.

I'm afraid this mess will be back sooner than any of us imagine.
Only worse.

Can't argue with your reasoning although I think Larry Summers was and is full of crap on this one. Would there be major transitional instability during the switchover, quite possibly. But as the 2000-1 and 2003-8 sequels to Born's proposal proved postponing a necessary step just increases the costs. Worse yet those transitional effects would be over in less than 6 months but the 100s of trillions of dollars of worldwide derivatives coursing through the US economy should have at least a 1% spin off in back office fees and such forever. Stupid politics and stupid economics.

How can the derivatives coursing through the world's economy have a greater dollar value than global GDP?

Is it credible a $38 million pool of mortgages could generate $280 million in total losses for investors before the principal was wiped out?

When does Larry Summers open his hedge fund?

 

[industry7]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

It is not a public private hybrid. It is not controlled by the Federal Government. It is simply a mythical bank that we want the rest of the world to accept as real, so it can drive the prices of borrowed money down for our sake.

It can create money (Electronically) out of thin air, and it has the capacity to eliminate debt just by snapping its fingers. Crazy insan pieces of shit like Ron Paul would try to eliminate that just at the time that we need the Fed the most in history. If enough stupid pieces of stinking fetid shit like Ron Paul have their way, they can bankrupt the United States by claiming that we need to do away with the FED and own all of the debt that they could have erased. I sure hope he dies soon.

That has to be the craziest thing I have ever heard of, but what the hell, if CRAZY people are in the majority, they can destroy a damn good thing and destroy the whole country in the process.

I can't tell if you're really in love with the fed, or being sarcastic. Regardless, the fed is not a mythical bank. It is a collection of 12 privately owned reserve banks, plus a large collection of member banks. By the way, ANY bank in this country can and does create money out of thin air on a regular basis. Also, any bank in this country can, if it wants to, eliminate any debt it owns (although they almost never will, since it goes against the entire reason for the bank to exist).

What people seem to have forgotten is that there is one entity in this country, which is not a bank, but which has the ability to create money. That is the US gov't.

 

[industry7]

The Fed isn't a private bank as many claim, but it's also not completely controlled by the federal government. It's a public-private hybrid.

The fed is owned by shareholders who are private citizens. The fed works within regulations set forth by gov't committees, but is free to do anything it wants within those regulations. Although in reality, it pretty much does whatever it wants regardless of the gov't.

 

[Wry Catcher]

FRBSF: Crisis & Response

I'm going to read the attached, I invite others to do so too. Not because I believe the FED will provide all the answers, or even evaluate what they've done during the past 24 months objectively, but because it may provide me with sufficient information to ask appropriate questions & evaluate the answers.