"responsibly?" LMAO Since when do we need the fed to manipulate the dollar? How about we let the market decide what the dollar is worth.
In defense of the bailout and the Federal Reserve
- Thread starter Doctor Pot
- Start date
Doctor Pot
Well-Known Member
I admit, the US has a huge trade deficit. This is a problem, there's no doubt about that. And yes, the unfunded social security and medicare are major problems too. Bush really dropped the ball on this one. But the US still exports a lot and the US government still makes a lot of money each year from taxes, so we're a long way from being insolvent. If we keep doing the same thing we've been, our problems will indeed get worse, but there's still time to fix it. And if the US economy does collapse, at least we'll have the satisfaction of knowing the rest of the world is going down with us.
No we are not. This is just not true. The value of the dollar has gone up consistently over the last several months. Check out:
INO Equities Stocks Indexes - U.S $ INDEX (NYBOT
X) Price Chart and QuoteEconomically, stagflation is considered an anomaly, higher prices combined with stagnation. We are most certainly NOT in stagflation, we're in a garden-variety recession. During a regular recession, deflation occurs. This is when the demand for dollars goes up and prices go down. Look it up, read the news. Have gas prices gone up or down lately?
But where do most people have that $10,000? In a bank. And the bank has loaned that money to someone else. So that money is actually credit that can be borrowed by others. Macroeconomically, the amount of cash in circulation is insignificant.
I actually agree, the US has serious economic issues. We import more than we export. But I stand by my main point that deficit spending is the correct course of action during a bad recession combined with DEFLATION. Which is what we are currently in.
The problem with gold is that everyone has to accept it as valuable and a valid form of payment otherwise it is worthless. See where I'm going with this? Everyone knows that the value of currency decreases over time; it's called inflation. It doesn't have to end somewhere, it can go on indefinitely. And other countries' currency is prone to inflation more than ours, (with a few exceptions), but we're still stable relatively.
If we "let the market decide", the value of the dollar can and will fluctuate wildly. The law of the market is the law of supply and demand. This works great for commodities, but sucks when you apply it to currency, since currency is the gauge you're supposed to use to measure the value of other things. That's how bank runs get started. The demand for dollars increases a little. People start to pull their money out of banks. This causes the value of the dollar to increase even more. More people pull their money out of banks. Bank runs were common during the 19th century, and were devastating to the economy.
medicineman
New Member
Dr Pot, I value your opinion so may I ask you this question? Is it possible to change from the FED which is a private entity, to government based and created currency? And if so, how so? I would really like to see us nationalize the monetary system and throw those private bankers out without a cent, cancel the national debt and start over fresh. Is this something that could or should be done? Thanks in advance.
offgridgrower
Well-Known Member
this proxy wont let me do multi, and I dont wanna go back and quote the responses so here it goes to who replied to my earlier post:
what do you mean what scientist can fix our social and economic problems , any scientist, engineer or scholar that is sent to study whatever problem we have them solve , because that what they do, solve problems. FED, government, world bank, your local police and justice system, are not here to solve any problems, yet this is who the people of this country and the rest of the world look to solve their problems, their economic problems, their housing problems, their education problems.
I and I mean we as growers have an upper hand because we have knowledge that can at least produce a good that will always be valuable to someone with goods or services we need, so who needs money then? The ramifacations are upon us now just look at what is happening here and abroad these are not good times my friend, and its only going to get worse before it gets better, but dont you think that is part of the agenda anyway, I only hope I or my children are not around to see the new world order go down, as I belive it is in its beginning stages now. yes I do belive that agenda has been in play for a long time coming, it is the reasons that keep our beloved scientists from making their knowledge practical and useful to the rest of humanity! because it is this knowledge that can destroy that new world order.
what do you mean what scientist can fix our social and economic problems , any scientist, engineer or scholar that is sent to study whatever problem we have them solve , because that what they do, solve problems. FED, government, world bank, your local police and justice system, are not here to solve any problems, yet this is who the people of this country and the rest of the world look to solve their problems, their economic problems, their housing problems, their education problems.
I and I mean we as growers have an upper hand because we have knowledge that can at least produce a good that will always be valuable to someone with goods or services we need, so who needs money then? The ramifacations are upon us now just look at what is happening here and abroad these are not good times my friend, and its only going to get worse before it gets better, but dont you think that is part of the agenda anyway, I only hope I or my children are not around to see the new world order go down, as I belive it is in its beginning stages now. yes I do belive that agenda has been in play for a long time coming, it is the reasons that keep our beloved scientists from making their knowledge practical and useful to the rest of humanity! because it is this knowledge that can destroy that new world order.
offgridgrower
Well-Known Member
Absoultely!! it can and should be done, but it wont Obama was put into office by the powers that look to put the NWO agenda in play, look at how much money they spent to put him in office!! No Obama wont be making Greenbacks anytime soon!!
medicineman
New Member
Are you advocating Pot for currency? Here's the deal, Only about 20% of Americans use pot on a continuous basis, so trading among them may be feasible, but the grocery store isn't about to accept pot for groceries, the gas station will not accept pot for gas, etc. I agree, it should be de-criminalized, and Hemp farming brought back, but you are fighting some pretty hefty lobbies from the Chemical, pharmaceutical, and other affected business areas. The chances of Hemp and pot being legalized and adapted to the society are slim-to-none. Sorry Bro.
TheBrutalTruth
Well-Known Member
Hemp would not a good currency. Why would people grow corn, wheat, and other crops if they could just grow hemp and have a ready form of currency on hand?
Gold on the other hand is a lot more difficult to attain, and is fairly rare.
medicineman
New Member
There may be some significant gold left to find. No-one has found the hiding place of the lost Inca gold yet. Maybe it's just a fable and again it could be true. The story I heard suggests there is more gold there than exists in all the rest of the world, but there is a very strong curse on it. So my question is: If you knew the whearabouts, would you dismiss the curse as childish and go get the gold?
TheBrutalTruth
Well-Known Member
No, even if it is not truly cursed, it is still cursed, as in there'd be a giant karmic debt attached to taking it.
Now, perhaps, if I did know it's whereabouts, I might let the Peruvian Government know where it's at, and maybe ask for a small finder's fee, like .5%, or $1 Million, what ever is smaller.
offgridgrower
Well-Known Member
no im not saying use pot as currency today or ever, but it will be something to trade with when you can no longer buy goods with the dollar. I bet you I can find a gas station attendant and a grocery person that will make a deal with me for my goods right now, even more so when the shit goes down.
hom36rown
Well-Known Member
Our trade defecit is a huge problem. Americans have lived beyond their means for years, now we are going to have to make a painful transition. You say we still export a lot, but that doesnt mean a thing if we have a trade defecit, we arent gaining any real wealth. We still have tax revenues, but for that to even help our debt we are going to have to make extensive spending cuts. Soon enough, our tax revenues wont even be enough to pay the interest on our debt. And as this recession gains momentum, tax revenues will undoubtedly go down, and rasing taxes will just hurt our economy more. And paying our creditors back with an increasingly devalued dollar certainly isnt incentivising anyone to invest here. The rest of the world isnt going to keep taking worthless IOUs in exchange for their exports. We can turn our economy around, but it is going to take years of underconsuming, saving, and a complete change in the infrastucture of our economy. If our economy collapses it will indoubtedly cause some interference in foreign markets, foreign central banks are filled with US dollars, but the rest of the world will recover quicker than us.I admit, the US has a huge trade deficit. This is a problem, there's no doubt about that. And yes, the unfunded social security and medicare are major problems too. Bush really dropped the ball on this one. But the US still exports a lot and the US government still makes a lot of money each year from taxes, so we're a long way from being insolvent. If we keep doing the same thing we've been, our problems will indeed get worse, but there's still time to fix it. And if the US economy does collapse, at least we'll have the satisfaction of knowing the rest of the world is going down with us.
the value of the dollar has gone up because of a massive deleveraging due to US institutions selling off all their assets to pay their debts. That and when people pull their money out of the market and stop consuming this lowers the ammount of money in circulation . The dollar has been rallying, but once it stops it is going to drop like a stone.No we are not. This is just not true. The value of the dollar has gone up consistently over the last several months. Check out:
INO Equities Stocks Indexes - U.S $ INDEX (NYBOT
Right, right now we are experiencing deflation, but all the money we created out of thin air is going to come back to bite us in the ass real soon.
Not only do they loan out your $10,000, but they create an additonal $70,000 of credit on top of that. another fundamental flaw in our system.
Our economy does have serious issues, and printing money isnt going to solve them, it is just going to rob americans of their savings. What we should be doing, is cutting spening and taxes, deregulating and ecouraging more manufacturing based jobs. Propping up failed corporations, and creating money our of thin air isnt going to help anyone. Inflating the money supply has postponed our problems in the past, but things have reached their tipping point. We are not going to be able to spend our way to prosperity, it just isnt going to happen, and the more we mess with the market, the more we just fuck it up.
Doctor Pot
Well-Known Member
Honestly I don't think the private component of the Federal Reserve is a huge deal, because I don't see a conflict of interests. What's bad for banks is usually bad for everyone else too. And I think that doing what you propose would destabilize our monetary system to an extent that we can't afford, especially now. The current system was a compromise between people who thought there should be no central bank and the people who thought there should. Anyway, I think the biggest problem is that people don't understand how it works and we tend to be understandably afraid of big powerful things we don't really comprehend. There's no conspiracy though. I guess one thing we have to accept on faith is that our constitutional right to freedom of speech and of the press would efficiently root out any conspiracies of that magnitude, ie, there would be movies like Zeitgeist that aren't mostly BS. Here are some good, easily comprehensible articles on the Federal Reserve you might get something from:
The Straight Dope: How much money is there? With the U.S. borrowing so much, why aren't we broke?
The Straight Dope: Who owns the Federal Reserve?
The Straight Dope: Who benefits from the national debt?
True, but there is a counteracting force. As the dollar goes down, our products become more competitive internationally. I worked for a company once whose main competitor was Sweden. As the dollar dropped relative to the Euro, the company I worked for received more international business and the Swedish company received less. So eventually the world will level out some. Granted, that does mean we won't make ten times the wage of your average Asian, but it does mean we're not entirely screwed.
Do you have any way of explaining this prediction? This crisis shrank the money supply, by lowering the value of people's savings accounts. Could you do me a favor and read the three articles I posted above?
You seem to be operating under the assumption that it's a zero-sum game. It's not. Generating money does cause inflation, but if that inflation is low and manageable, it won't cause major problems.
It's not a bug, it's a feature! Seriously though, it enables businesses to get easier credit which stimulates the economy.
Yes, that's the intuitive thing to do, but unfortunately this whole thing is extremely counterintuitive. Anyway, those articles I linked to explain the system better than I would.
Doctor Pot
Well-Known Member
Actually, I read something about this yesterday. They're investing in both healthy and unhealthy banks to avoid giving preference to failing banks. Obviously, rewarding failure is not something that makes a lot of sense, so healthy banks are getting a boost too.
medicineman
New Member
Either we're insisting that our descendants bear some of the cost of the massive infrastructure they'll inherit from us, or we're holding a big party for ourselves (or a favoured clique) and leaving them the bill.
Now this last part makes perfect sense to me, the favored clique thing as that is what it appears to be (To me) I think those explanations were way oversimplified and laden with barriors to the truth. Nowhere did it mention the private bankers that benefit from the massive interest payments we the taxpayer send them every April 15Th. It also mentioned that it provided protection from economic meltdown, Uhhh, oh no it didn't, in fact it may have been part and parcel to it, at least share in some of the complicity. I guess the average dummy may think those explanations to be enough, but with my overactive conspiracy theory mind, that was just scratching the surface. Now please tell me you don't actually take those three pieces to be the ultimate truth, I feel you are way smarter than that? Lets delve a little deeper, say what, we can't, because all the real info is hidden from public scrutiny, now you're talking. BTW, this Cecil Adams is billed as a comedian along with his straight dope bullshit, so using him as an answerman is highly suspect, no personal disparagement to you implied.', but it's like you gave me the "dummies guide to the federal reserve", I may be a dummy, but not quite that gullible. Peace.
Now this last part makes perfect sense to me, the favored clique thing as that is what it appears to be (To me) I think those explanations were way oversimplified and laden with barriors to the truth. Nowhere did it mention the private bankers that benefit from the massive interest payments we the taxpayer send them every April 15Th. It also mentioned that it provided protection from economic meltdown, Uhhh, oh no it didn't, in fact it may have been part and parcel to it, at least share in some of the complicity. I guess the average dummy may think those explanations to be enough, but with my overactive conspiracy theory mind, that was just scratching the surface. Now please tell me you don't actually take those three pieces to be the ultimate truth, I feel you are way smarter than that? Lets delve a little deeper, say what, we can't, because all the real info is hidden from public scrutiny, now you're talking. BTW, this Cecil Adams is billed as a comedian along with his straight dope bullshit, so using him as an answerman is highly suspect, no personal disparagement to you implied.', but it's like you gave me the "dummies guide to the federal reserve", I may be a dummy, but not quite that gullible. Peace.
Doctor Pot
Well-Known Member
The bankers aren't the ones that make all that money, the banks are. There's a difference. The interest payments on the national debt pay people with savings bonds and money market funds that hold US treasury bonds, for instance. So indirectly, that money pays part of the interest on savings accounts that are invested in treasury bonds, not bankers' income so much. And private retirement funds and the like are no small piece of the pie.
I don't think those pieces are the ultimate truth, but I believe they're a simplified form of the truth. To understand it better you'd probably have to take a few college-level courses in macroeconomics.
Cecil Adams writes a column that's published in alternative newspapers. He did write the first two articles, but the last one was written by someone else and published on his site. All in all, he's a very reliable source of information. I've read the majority of his articles.
As far as it providing protection from meltdown, it does, at least in that it prevents overreactions during tough economic times. Why exactly do you disagree with the articles anyway? Is it that they contradict your ideas regarding how the Fed works?
FLoJo
Well-Known Member
i guess in the end we have to agree to disagree, because no matter what point anyone brings up there is always going to be a counter. we could go on indefinitely debating how money really works and who owns the fed, makes the money etc. but the fact is that no matter how much we study economics and policies, its not always how it works out in the real world because what may work in one situation, may not be true in another and vice versa. i guess we will just have to wait and see how it all pans out
FLo
FLo
TheBrutalTruth
Well-Known Member
I don't disagree with the articles, just how you are attempting to spin them.
Clearly, one of the articles stated that increasing debt leads to increasing taxation, and it also stated pretty blatantly that creating a lot of money would lead to inflation.
Clearly, if inflation is a bad thing, then it is a bad thing no matter what quantity of it there is.
Especially, considering that the real trend of prices, up to the introduction of fiat currency, was a downward trend where things tended to get cheaper.
Now, you are going to say that things getting cheaper is a bad thing, but I disagree, if people are able to purchase more luxuries isn't that a good thing. If government is discouraged from borrowing because it will effectively owe more in the future than it owes today is that also not a good thing?
Then there's the entire fact that by borrowing all this money today we are robbing the future to pay for the past, and present. Increasing taxes to pay for this stupidity is ultimately a suicidal end, that will lead to an impoverished America that any one with any ability left long ago.
Why stay in a nation where if you make the slightest effort you get taxed 50 - 75 - 90%?
Why bother doing a damn thing when the government will give you food, shelter and clothing for jerking off all day?
Socialism is an economic dead end, because it encourages mediocrity, sloth and stupidity, and discourages making use of one's ability, energy and intelligence.
Besides, taxes can not really be raised with out drastically negative effects on the economy. I can not imagine what the real effects are on the economy with our current tax rates of 18% to 38% on Federal Taxes (Federal Income, FICA), and an additional 0 - 10% (State Income Taxes) on top of that, and even more in the form of sales taxes.
Ironically, in addition to its penchant for hiring foreign mercenaries, and importing foreign slaves to do everything for them, another thing that did in the Roman Empire was its high tax rates. If a person in the middle can not afford to try climbing higher then it leads to no growth. If a person near the top can make more money through the use of slave labor, or cheap imported labor then the system is inherently going to lead to the rich getting richer, the poor and middle classes getting poorer.
This is especially true, when some one in the middle already pays more than 33% taxes. Unlike the rich, the middle can not afford this kind of taxation. Not that I'm about to stop objecting to the current system with its morally and ethically deficient practice of involuntary servitude.
At this point in time the best thing for the United States to do would be to bite the bullet, cut off all government services, pay off the debt, pass a balanced budget amendment and then resume where it left off.
Of course, it matters little, because if the government ends up on the hook for the full $7.7 Trillion that they have guaranteed then this country will be effectively insolvent.
http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=news
Of course that might be for the best, before it finishes enslaving the rest of the country to itself, or as some would argue, to business.
http://en.wikipedia.org/wiki/Taxation_in_the_United_States
Not to mention that I disagree with your entire view on money. Money is defined by 5 characteristics.
Durability - It must be able to remain money for extended periods of time, or as long as it is needed to be used as a medium of exchange.
Portability - It must be portable.
Homogeneous - or Uniform, that is it should remain money regardless of how much, or how little of it there is.
Divisible - Can be reduced to smaller amounts quickly.
Valuable - it must be valuable, because if it isn't then what good does it do as a medium of exchange.
Our current Fiat Currency is moderately durable, its portable, its homogeneous, and its moderately divisible, but only because it is issued in differing values, or divisions.
But it is not valuable, and that is why it can't be viewed as real money.
You've also left out a lot of the problems with Fractional Reserve Banking in your statements, especially our current system of 10% Reserves.
$100,000 can morph into $900,000 in loans, despite there only being $100,000 in currency in circulation. What's worse is the fact that the money to pay the interest on these loans doesn't exist so in the end the banks end up with all the money, or they would if they didn't continuously loan it out, or have competition from firms that mine gold, silver and other valuable resources from the ground in the creation of money.
Now, I might admit that switching to a Gold Standard might be problematic, but I have to disagree with your statements on why. I think that the largest reason why a Gold Standard would be problematic would be those 40% taxes mentioned above, that effectively takes 30% of the GDP out of the hands of the private and into the hands of government.
No real form of money could survive having 30% of itself vanish from circulation with out rampant deflation. However, by virtue of its fiat currency the Federal Reserve creates rampant inflation, and there is a consensus among some groups that real inflation is much higher than the Fed's CPI, which has been continuously screwed with.
Doctor Pot
Well-Known Member
That's ridiculous. Too much of just about anything can be bad. Vitamin A is an essential nutrient, but toxic in large quantities. Taxes are necessary for the defense and administration of a nation, but too much tax is bad.
No, because the reason everything got cheaper was that everyone lost money. By all means, I'm certainly not suggesting that the government borrow massive amounts all the time, but during a recession, that may be necessary to stabilize the dollar and the economy.
Nah, the US can always borrow more money from the Federal Reserve to pay the interest. They wouldn't have to raise taxes.
Who says that it will?
We're not talking about socialism.
This would be a catastrophe for the country and the economy. The economy would become so bad, there wouldn't be enough tax revenue to pay off anything.
That money has to be paid over time, not all at once. Paying it isn't impossible.
Ah, but it is valuable. If your money has no value, I will gladly provide you with an address you can mail it all to. I'm sure you won't do this, because your money has value to you.
Well, many people have savings accounts that pay interest, so that money would be going to them too. But you're right about the fact that the money doesn't exist. Therefore, it has to be generated somehow.
World population is increasing faster than gold reserves can. This alone makes metal-backed currency problematic. The biggest problem though, is bank runs. We haven't had one of these since the US went off the gold standard, so most people forget this part of history.