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(CNBC)   Since pressuring banks to make loans worked out so well last time, the feds are now pressuring banks to buy up the ever-mounting pile of government debt. This will end badly, and we will be lucky to get out alive   (cnbc.com ) divider line
    More: Scary, sovereign debt, capital requirements, toxic asset, bankruptcy, minority  
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4111 clicks; posted to Main » on 01 Jun 2012 at 2:21 AM (4 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-06-01 11:02:47 AM  

Joe Blowme: Yugoboy: urban.derelict: edmo: Well, why not? Government bailed the banks out of their stupidity. Now it's time to return the favor.

Not stupidity; you think tons of senators didn't get kickbacks from the companies they bailed out? I can almost guarantee everyone of them GOT NEW CARS.

/i wish I could beat the stupid out of people

Modern bribery doesn't work that way...

It's more about campaign war chests being filled, superPACs being funded by banks/rich people, lobbyist/consultancy positions available after retirement.

It's not that I think they're clean, but they're not so stupid (usually) as to do a straight up bribe like that. When you put up at least a front of barrier between briber and bribed there's plausable deniability and (as John Edwards just proved) the pretty certain knowledge that you're going to get away with it. They learned from ABSCAM.

Just one more reason we need term limits for all elected officials


No. That just increases the incentive to corruption, because they've only got so long to collect their boodle and get out. It also strips the legislative bodies of everyone who knows how to get anything done on a regular basis, and thus transfers power into the hands of unelected staffers, lobbyists, and bureaucrats. California has term limits. The government is at best, the same farking mess it always was without them.
 
2012-06-01 11:06:54 AM  
US and European regulators are essentially forcing banks to buy up their own government's debt-a move that could end up making the debt crisis even worse, a Citigroup analysis says.

But its ok if the US govt is buying up the banks debt, right citigroup?
 
2012-06-01 11:09:54 AM  

edmo: First sentence: "US and European regulators are essentially forcing banks to buy up their own government's debt"

Well, why not? Government bailed the banks out of their stupidity. Now it's time to return the favor.


And the biggest lie is that anyone is "forcing" anyone to do anything. 30 year bonds were at 2.67% yesterday, their lowest level since before Obama's inauguration. The world (including domestic investors) is *begging* to buy US bonds. People are willing to take a loss just to have it in US bonds. It's incomprehensible how we aren't borrowing MASSIVE amounts of money right now and putting people to work. We have 300,000 long term unemployed that could be currently rebuilding our nations highways and bridges, and an untold number of of millions who could be selling them clothes, cars and televisions with their freshly printed paychecks.

Welcome to the land of austerity in a time of recession becuase a blacky black man who plays for Team Donkey is currently in office ...... we're all bathed in the DERP of the lamb now.
 
2012-06-01 11:20:18 AM  
oh boy, who got herp-derp in the derp-herp thread?
 
2012-06-01 11:26:51 AM  

forgotmydamnusername: Joe Blowme: Yugoboy: urban.derelict: edmo: Well, why not? Government bailed the banks out of their stupidity. Now it's time to return the favor.

Not stupidity; you think tons of senators didn't get kickbacks from the companies they bailed out? I can almost guarantee everyone of them GOT NEW CARS.

/i wish I could beat the stupid out of people

Modern bribery doesn't work that way...

It's more about campaign war chests being filled, superPACs being funded by banks/rich people, lobbyist/consultancy positions available after retirement.

It's not that I think they're clean, but they're not so stupid (usually) as to do a straight up bribe like that. When you put up at least a front of barrier between briber and bribed there's plausable deniability and (as John Edwards just proved) the pretty certain knowledge that you're going to get away with it. They learned from ABSCAM.

Just one more reason we need term limits for all elected officials

No. That just increases the incentive to corruption, because they've only got so long to collect their boodle and get out. It also strips the legislative bodies of everyone who knows how to get anything done on a regular basis, and thus transfers power into the hands of unelected staffers, lobbyists, and bureaucrats. California has term limits. The government is at best, the same farking mess it always was without them.


Ouch, good point.
 
2012-06-01 11:36:05 AM  
Worth repeating

Worth repeating

jaypgreene.files.wordpress.com
 
2012-06-01 11:55:49 AM  

talan123: urban.derelict: SomeAmerican: Does anyone believe that our governments will use the time to improve their fiscal positions? Or is it more likely that our politicians will say "great, now it's a problem for somebody else, so let the free money flow!"
[lh5.googleusercontent.com image 640x279]

[fbcdn-sphotos-a.akamaihd.net image 552x720]

/[fbcdn-sphotos-a.akamaihd.net image 640x512]
//http://www.esoterictube.com/the-money-masters.html
/Federal Reserve Act, 1913

The Federal Reserve bankers are buttressing their unfathomable wealth with every dollar the U.S. government spends.

1.) The Federal Reserve System is not a private entity any more than the post office. It was created by an act of congress and is regulated by congress, the people who are running it are appointed by your congressman just like every other single government agency.

2.) It does not control the money supply, it controls the interest rates that banks and the government can borrow at. The Treasury is the government agency in charge of said supply.

3.) The Fed is required by law to give 97% of all profits back to the federal government and the 3% is used to run it. It gave back around $80 Billion dollars last year.

4.) The Federal Reserve System was created to keep the Federal Government from running out of money. The Panic of 1907 forced JP Morgan to save it because the federal government ran out of money, the thinking in creating the fed was that next time JP Morgan wasn't going to be there to save them and they were right.

5.) A gold back currency is the most easily manipulated currency out there and historically been incredibly difficult to operate under. President Roosevelt used to change the price of gold because he wanted to, rather than what the markets wanted, which was a good thing back then because the markets were f*cked. He would change the price on a whim, now imagine somebody else doing that who isn't elected.

6.) The US is currently borrowing at ~1.67% for 10 years which me ...


1.) The Fed indeed was created by Congress but if you think they have any control over the Fed's operation you need to look again. It took Bloomberg 3 years and a FOI request to find out who got bailed out by the Fed during the 2007-2008 crisis. Additionally there has never been a full audit of the Federal Reserve since it began. And the people that run it are picked from a list given to the president by the banking industry.

2.) By being the sole producer of Federal Reserve notes, which are required by law to be "Money", I would very much say that they control the money supply. The Fed buys T-Bills by issuing credit to Primary dealer banks (print money). This adds reserves to the banking system - causing the money supply to spike.

3.) Shareholders of the Federal Reserve receive a 6% dividend (tax free), and your big banking buddies get to borrow money from the discount window (for free) and lend it to the government. Additionally, banks can keep excess reserves at the fed and earn interest on them.

4.) I could argue that the current iteration of the central bank was created by the big wealthy bankers of the time as a way to expand their profits. Cheap money, easy credit - all borrowed using US tax payers as collateral. What better way of securing your position at the top of the banking food chain than to have a perpetual source of free money. Borrow 1 dollar from the Fed and loan out 9.

5.) Not easier to manipulate than a federal reserve note. Fiat currencies allow for fractional reserve banking, leading to credit booms and busts. For more visit Mises.org or read Mises theory of money and credit.

6.) Not sure what your point is here, but do you really believe that inflation is only the 2% or so being claimed? What happens when nobody is around to buy our governments debt? Interest rates have to go up, meaning that suddenly the interest payment on our debt is going to spiral quickly out of control.

7.) Use salt, use copper, use bullets. The whole idea of what money is has been distorted throughout the years. Money is simply a universally sought after commodity allowing for indirect exchange between consumers and producers. Money should be market driven, not decreed by law by a government. Get rid of the monopoly the Fed has on interest rates and money supply and you'll see a rising middle class again.

8.) Well, besides the fact that we are not a democracy but rather a constitutional republic, I don't see how a central bank counterfeiting money to enable a government to fly to the moon is a good thing. When you increase the money supply you indirectly steal wealth from holders of that money. Remember money is a commodity of exchange and subject to supply and demand just like anything else. You jack up the supply of that commodity by creating it out of thin air then you devalue the existing supply, meaning that everyone is a little bit poorer. Over time, the middle class can't keep up with inflation and slowly become lower class and then poor, and then dependent on the state for assistance.
 
2012-06-01 12:26:39 PM  
Yeah they really had to twist those banks' arms to play the system from both sides, betting against toxic debt that they themselves serviced. Then the government went the additional step of slamming the banks with a bailout and constructing a taxpayer funded bailout-fund in anticipation of the next time they harass the banks into making a fortune by detonating the world economy.

Damn government.

/derp
 
2012-06-01 12:34:12 PM  

urban.derelict: liam76: There are a number of other errors with your info graphic, but this is the most straightforward to dismiss.

Cry me a f*cking river, i didn't make it, quit picking pepper from fly sh*t and look at the bigger... picture


You didn't make it but you are posting it as some sort of proof.

It is in fact garbage.

If your "big picture" is made up of little lies, your big picture is a lie.
 
2012-06-01 01:06:08 PM  

InmanRoshi: edmo: First sentence: "US and European regulators are essentially forcing banks to buy up their own government's debt"

Well, why not? Government bailed the banks out of their stupidity. Now it's time to return the favor.

And the biggest lie is that anyone is "forcing" anyone to do anything. 30 year bonds were at 2.67% yesterday, their lowest level since before Obama's inauguration. The world (including domestic investors) is *begging* to buy US bonds. People are willing to take a loss just to have it in US bonds. It's incomprehensible how we aren't borrowing MASSIVE amounts of money right now and putting people to work. We have 300,000 long term unemployed that could be currently rebuilding our nations highways and bridges, and an untold number of of millions who could be selling them clothes, cars and televisions with their freshly printed paychecks.

Welcome to the land of austerity in a time of recession becuase a blacky black man who plays for Team Donkey is currently in office ...... we're all bathed in the DERP of the lamb now.


Dude, we have a $trillion deficit. You know we have to pay back everything we borrow, right? Sure, those rates are good but there is a tipping point where investors are no longer so sanguine about lending you money.

I agree with the idea of Keynesian economics but there is a limit. We are currently running trillion dollar deficits. That in itself is a massive Keynesian stimulus.
 
2012-06-01 01:33:42 PM  
Since when is asking banks (asking - not telling) to lend money in the neighborhoods where they take deposits and do their other business "pressure"?
And the CRA was written in 1977... that's a long time and five presidents before the recent wave of bank bullsh*ttery... yet the dumbasses are still trying to push the "it was poor peoples' fault" meme as an excuse for the banks' bad behavior.

This is the same asinine reasoning behind blaming Clinton's signing of the Gramm-Leach-Billey act for all the same bank bullsh*ttery... "if he hadn't changed the law, we wouldn't have had to go and do stupid, greedy, and possibly illegal things. He made us do it!"

Morans.
 
2012-06-01 01:35:19 PM  

Ratpoop: 3.) Shareholders of the Federal Reserve receive a 6% dividend (tax free), and your big banking buddies get to borrow money from the discount window (for free) and lend it to the government. Additionally, banks can keep excess reserves at the fed and earn interest on them.


This is the inflation cap that the Fed tries to stay under, correct? If the Fed inflates the money supply more than that its owners lose money.

6% inflation is pretty bad, so the owners of the Fed have a monetary incentive to keep inflation low.

The Fed is not evil, merely misunderstood.
 
2012-06-01 01:40:11 PM  

talan123: There is nothing that is even remotely factually correct in those graphics outside of the coincidences in the timing of the assassinations that have been proven many times to contain no conspiracies outside of their immediate members.


You. are. delusional.

fbcdn-sphotos-a.akamaihd.net

/what's the national deficit at today?

Debeo Summa Credo: Dude, we have a $trillion deficit. You know we have to pay back everything we borrow, right? Sure, those rates are good but there is a tipping point where investors are no longer so sanguine about lending you money.


Hey, anyone remember -- how long ago was it -- when ...Whatever their name was threatened to lower the U.S.'s A+ credit rating? How about defaulting on our debt ceiling?

/all empires collapse, history has taught us this
//you're stupid if you don't think the international bankers are robbing the U.S. blind
/Congress doesn't care because they also are robbing the country blind, big fat worthless but legal stacks of money being given out
//Bush just 'misplaces $2.1B USD in iraq...whoops; just f*ckin' airdropped pallets of USD in Iraq... guards? what guards?
/fbcdn-sphotos-a.akamaihd.net
//Yeah...fantastic coincidence that two presidents, both of whom attempting to end int'l bankers' runs on the country got assassinated...
/he who controls the present controls the future
//he who controls the past controls the present
/"History will judge me." -GWB (someone who knows what the f*ck he's talking about)
//but, you know, don't do any f*cking research just run your retarded f*cking mouths
/tinyurl.com/carlylegrp ffs
//oh, and what does the MSM do? They marginalize anyone who promotes alternative stories; labels them 'conspiracy theorists' to sway the public against them
/people don't believe because they don't want to believe, it would shatter their fragile little worldviews that their government is run by criminal cartels
 
2012-06-01 01:41:29 PM  

Phil McKraken: The Fed is not evil, merely misunderstood.


Oh, jesus farking christ
 
2012-06-01 01:43:50 PM  

urban.derelict: crazy talk


I thought Abraham Lincoln was killed by a vampire avenging the vampire deaths that Lincoln was responsible for...a feud going back to when Abe's mom was killed by a vampire in Southern Indiana.
 
2012-06-01 02:01:16 PM  

Phil McKraken: Ratpoop: 3.) Shareholders of the Federal Reserve receive a 6% dividend (tax free), and your big banking buddies get to borrow money from the discount window (for free) and lend it to the government. Additionally, banks can keep excess reserves at the fed and earn interest on them.

This is the inflation cap that the Fed tries to stay under, correct? If the Fed inflates the money supply more than that its owners lose money.

6% inflation is pretty bad, so the owners of the Fed have a monetary incentive to keep inflation low.

The Fed is not evil, merely misunderstood.


No - the Fed has no monetary incentive to keep inflation low merely a congressional mandate to manage inflation (but they lie about the number). The Fed is just the tool used by banking industry to counterfeit money. A bank receives a credit deposit from the Fed - let's say $1,000,000.00. This money is just a journal entry - essentially a made up number. They give this million to Bank A at 0% or close enough to it. Bank A then goes and makes 9,000,000.00 worth of loans in the market. Collecting interest on 9mm worth of loans all stemming from a free deposit of 1mm from the Federal reserve. So a 1,000,000.00 journal entry becomes 10,000,000.00 in new money (this is inflation). They have every incentive in the world to keep inflation going as it creates massive profits for banks. Those who get to use the new money (Banks) reap the benefits, while you and I see our dollars purchasing power decline.
 
2012-06-01 02:05:17 PM  
I learned everything I need to know about economics from YouTube videos. The Five Jew Bankers have already infiltrated every other form of communication.

My screencaps, let me show you them.
 
2012-06-01 02:08:58 PM  

poot_rootbeer: I learned everything I need to know about economics from YouTube videos. The Five Jew Bankers have already infiltrated every other form of communication.

My screencaps, let me show you them.


You could learn a lot from Youtube. Here is a pretty good one put out by the Mises folks. Helps explain the theory of money and the ways in which the Federal Reserve acts to disrupts markets.

Link
 
2012-06-01 02:11:39 PM  
THREEPEAT!

img167.imageshack.us
 
2012-06-01 04:44:42 PM  

Ratpoop: Phil McKraken: Ratpoop: 3.) Shareholders of the Federal Reserve receive a 6% dividend (tax free), and your big banking buddies get to borrow money from the discount window (for free) and lend it to the government. Additionally, banks can keep excess reserves at the fed and earn interest on them.

This is the inflation cap that the Fed tries to stay under, correct? If the Fed inflates the money supply more than that its owners lose money.

6% inflation is pretty bad, so the owners of the Fed have a monetary incentive to keep inflation low.

The Fed is not evil, merely misunderstood.

No - the Fed has no monetary incentive to keep inflation low merely a congressional mandate to manage inflation (but they lie about the number). The Fed is just the tool used by banking industry to counterfeit money. A bank receives a credit deposit from the Fed - let's say $1,000,000.00. This money is just a journal entry - essentially a made up number. They give this million to Bank A at 0% or close enough to it. Bank A then goes and makes 9,000,000.00 worth of loans in the market. Collecting interest on 9mm worth of loans all stemming from a free deposit of 1mm from the Federal reserve. So a 1,000,000.00 journal entry becomes 10,000,000.00 in new money (this is inflation). They have every incentive in the world to keep inflation going as it creates massive profits for banks. Those who get to use the new money (Banks) reap the benefits, while you and I see our dollars purchasing power decline.


You are simplifying to the point of distorting the process, its purpose and its effects.
 
2012-06-01 05:29:11 PM  
Perhaps this is oversimplification, but isn't having The Fed lending money to private banks at no interest and then taking in a lot of it to buy US debt kind of like the US Govt just printing money? If I'm getting the process, it's kind of like a financial feedback loop. Doesn't the feedback loop just keep going until the system recognizes that the US taxpayer cannot pay it back? If so, what happens then?

/genuinely curious
 
2012-06-01 06:41:26 PM  

urban.derelict: Summercat: ....sounds like we've got a gold nutter RONPAULbot here. I'm trying to pretend I'm drunk as a rainbow stripped skunk, anyone want to take a stab at this?

Congratulations, you're a moron.

For the record, RONPAUL is for the gold standard because the value of gold can't be *easily* manipulated (like, say, the housing market, or the technology market) to provide for artificial wealth which then gets yanked at regular intervals (2008, 2001, respectively) so a small fraction of people/corporations make out like bandits while they scam the ever-living sh*t out of everyone else who based their financial decisions on market value. (See FB IPO)

/derp derp laugh at the... smart people who know how the world operates
//as long as you're talking you're not learning anything, Summerpussy
/now stop being stupid and give me a month of TF for schooling you


You're not schooling anyone. You're advocating a position that you know "something" about.

And for the record, yes, gold can be manipulated. It's called hoarding or cornering.

Also, too...our floating currency based economy worked quite well right up until....get this, the banks were successfully able to convince congress to deregulate the F.I.R.E. sector.
 
2012-06-01 06:59:27 PM  
Awww..I offended Drew with the truth and he censored me to make himself feel better about himself.
 
2012-06-01 07:16:23 PM  

Phil McKraken: Ratpoop: Phil McKraken: Ratpoop: 3.) Shareholders of the Federal Reserve receive a 6% dividend (tax free), and your big banking buddies get to borrow money from the discount window (for free) and lend it to the government. Additionally, banks can keep excess reserves at the fed and earn interest on them.

This is the inflation cap that the Fed tries to stay under, correct? If the Fed inflates the money supply more than that its owners lose money.

6% inflation is pretty bad, so the owners of the Fed have a monetary incentive to keep inflation low.

The Fed is not evil, merely misunderstood.

No - the Fed has no monetary incentive to keep inflation low merely a congressional mandate to manage inflation (but they lie about the number). The Fed is just the tool used by banking industry to counterfeit money. A bank receives a credit deposit from the Fed - let's say $1,000,000.00. This money is just a journal entry - essentially a made up number. They give this million to Bank A at 0% or close enough to it. Bank A then goes and makes 9,000,000.00 worth of loans in the market. Collecting interest on 9mm worth of loans all stemming from a free deposit of 1mm from the Federal reserve. So a 1,000,000.00 journal entry becomes 10,000,000.00 in new money (this is inflation). They have every incentive in the world to keep inflation going as it creates massive profits for banks. Those who get to use the new money (Banks) reap the benefits, while you and I see our dollars purchasing power decline.

You are simplifying to the point of distorting the process, its purpose and its effects.


What about it is distorted?
 
2012-06-01 07:21:36 PM  

alphalemming: Perhaps this is oversimplification, but isn't having The Fed lending money to private banks at no interest and then taking in a lot of it to buy US debt kind of like the US Govt just printing money? If I'm getting the process, it's kind of like a financial feedback loop. Doesn't the feedback loop just keep going until the system recognizes that the US taxpayer cannot pay it back? If so, what happens then?

/genuinely curious


Then we crash. If you are really curious you can read up on the Austrian school of economics. They explain the role a central bank plays in the expansion of credit and how it distorts markets .

Check out Mises.org
 
2012-06-01 07:27:11 PM  

X-boxershorts: urban.derelict: Summercat: ....sounds like we've got a gold nutter RONPAULbot here. I'm trying to pretend I'm drunk as a rainbow stripped skunk, anyone want to take a stab at this?

Congratulations, you're a moron.

For the record, RONPAUL is for the gold standard because the value of gold can't be *easily* manipulated (like, say, the housing market, or the technology market) to provide for artificial wealth which then gets yanked at regular intervals (2008, 2001, respectively) so a small fraction of people/corporations make out like bandits while they scam the ever-living sh*t out of everyone else who based their financial decisions on market value. (See FB IPO)

/derp derp laugh at the... smart people who know how the world operates
//as long as you're talking you're not learning anything, Summerpussy
/now stop being stupid and give me a month of TF for schooling you

You're not schooling anyone. You're advocating a position that you know "something" about.

And for the record, yes, gold can be manipulated. It's called hoarding or cornering.

Also, too...our floating currency based economy worked quite well right up until....get this, the banks were successfully able to convince congress to deregulate the F.I.R.E. sector.


If gold were acting as money in a free market - and somebody decided to try and corner it then the market uses different money. Remember that our federal reserve notes aren't money because the market chooses, but because it is required by law.

And under a gold standard banks would be self regulating - if they tried to expand credit beyond their held reserves then competitors would come in and demand reserves - tanking the bank.
 
2012-06-01 07:41:06 PM  
10 year note is now below 1.5%, never thought I'd live to see the day...

The world financial community is in a literal debt buying frenzy, nobody is being forced to buy anything

If I could get somebody to loan me money at 1.47 percent, I'd take as much as they'd give me, and buy equal parts of Dow, McDonalds, Coke, Wal Mart, and Exxon Mobil (which would yield over twice rate in just dividends alone)
 
2012-06-01 07:48:05 PM  

alphalemming: Perhaps this is oversimplification, but isn't having The Fed lending money to private banks at no interest and then taking in a lot of it to buy US debt kind of like the US Govt just printing money? If I'm getting the process, it's kind of like a financial feedback loop. Doesn't the feedback loop just keep going until the system recognizes that the US taxpayer cannot pay it back? If so, what happens then?

/genuinely curious


The Fed lends at near 0% but that necessarily a good thing for the banks for their general activity. Banks do not want this over the long haul because customers are going to pull their money from their accounts because the horrifically low interest rates from the banks themselves. There simply is too much money in the system right now being held out of the economy which is why inflation has been tamed.

Treasuries are the single safest investment you can make because it's backed by the US Government, a government that held an election during the civil war and said President came close to handing the Republic over to his opponent while still paying its debts. The Fed is getting paid back by The Federal Government paying out those treasuries they purchased during less stressful times which keeps the entire thing flowing, the market recognizes this because there really isn't any alternative. Also you have remember that the Fed isn't the only one entity buying those treasuries, so are foreign governments, banks, and foreign banks. They all want the Treasuries because then their money is safe. They also like to loan against it. It creates money, which if used wisely can then add wealth to a nation.

Now if the system lost trust in the government like another big Debt Ceiling fight like they are planning only without the bluffing again then things are going to go from not pretty to atrocious very quickly. Assuming that happens, then all companies that are within the US are considered to be the same credit or lesser which means the credit market freezes. When a credit market freezes, then you have lines at the ATM and bank runs. When the banks go under then the financial markets disappear quickly which means all of the bonds are gone and all of the pay checks are gone. After that then it's down to weeks as the lights everywhere go out as everything collapses. It's that important for the US to maintain it's credibility in the market.

This system arose because, frankly, we are the only people who write crap down and are willing to do what needs to be done when the time comes.

Right now we don't have a debt problem, we have a lack of action/growth problem. If we could get back to 3.5% growth a year then those treasuries they are selling right now would be worth about 20% less while the country would be 34% richer meaning we can pay it off with a check; A 10-YR Treasury yield of 2% means you pay $98 right now and in ten years the Federal government pays $100. This is entirely doable and it's entirely the fault of the Republican party.
 
2012-06-01 09:09:31 PM  
OK, I watched the von Mises institute linked above. (which I chuckled to learn is just down the road in Auburn, AL - War Eagle!) and see how it all came together. I see that money multiplies over a thousand times before it hits the street. Fiat currency is a bad thing, particularly in how it disguises huge problems, got it.

What now? Gold backed money is more solid than what we have now, in spite of its ability to be manipulated. Suppose it's a good idea to do anyway. How do we get there? How do we retain a free market (as free as we can make it anyway) when and if the current currency craters? Make Ron Paul interim President? Then what?
 
2012-06-01 11:34:06 PM  
Educate yourself, turn off your tv and read. Anything from Mises institute will be good. Learn the Austrian business cycle theory and understand it. Learn what money is and what purpose it serves. Then go tell everyone you know about what you learn. Even if they don't listen at first just keep spreading the truth.

Ron Paul is one of the most outspoken critics of the Fed in our government. Listen to what he says, and spread the word of peace and sound money. His idea to end the stranglehold is to eliminate legal tender laws and introduce competing currencies. This will slowly end the Fed's monopoly over our money. Once you eliminate the Fed the markets will start to normalize and free themselves. Understand that asset prices are very inflated and eventually they'll come down to earth.

In short - join the Ron Paul revolution!

Even now his supporters are taking over the GOP from the inside out. Very interesting to watch.

If all this can happen then you can sit back and start to see the United States prosper again.
 
2012-06-01 11:56:21 PM  
Goldbuggery and anti-Federal Reserve conspiracy theories are just a proxy for anti-Semitism, with 'cabal of international bankers' just a dog whistle for 'the Jews'. Discuss.
 
2012-06-02 12:46:09 AM  

BoothbyTCD: Goldbuggery and anti-Federal Reserve conspiracy theories are just a proxy for anti-Semitism, with 'cabal of international bankers' just a dog whistle for 'the Jews'. Discuss.


up-ship.com
 
2012-06-02 01:35:14 AM  

Ratpoop: Educate yourself, turn off your tv and read. Anything from Mises institute will be good. Learn the Austrian business cycle theory and understand it. Learn what money is and what purpose it serves. Then go tell everyone you know about what you learn. Even if they don't listen at first just keep spreading the truth.

Ron Paul is one of the most outspoken critics of the Fed in our government. Listen to what he says, and spread the word of peace and sound money. His idea to end the stranglehold is to eliminate legal tender laws and introduce competing currencies. This will slowly end the Fed's monopoly over our money. Once you eliminate the Fed the markets will start to normalize and free themselves. Understand that asset prices are very inflated and eventually they'll come down to earth.

In short - join the Ron Paul revolution!

Even now his supporters are taking over the GOP from the inside out. Very interesting to watch.

If all this can happen then you can sit back and start to see the United States prosper again.


I have read up on Austrian economics and I have read up on the Federal Reserve System, I have read up on Mires. The Federal Reserve System is, by far, the most fair and equitable way to manage a banking system, it's a terrible system but it is still better than everything else.

When the system ran without any regulations or regulators, as in no FDIC or central banking of any kind, the average life span of a bank was five years. Five years until it collapsed and took all of their customers money with them. It was making commerce impossibly difficult because nothing could be planned out in the long term. As the markets have shown us the last few years, just because something is old doesn't mean you should return to it.

The Austrian School of economics is mostly nonsense and I use mostly in it's most generous of terms. It doesn't use any actual data to back up it's claims but rather it uses praxeology to push through it's theories, the people who are pushing it have faith that those theories are right without anything backing it up. People who argue against it are told that they haven't read enough or do not understand what it is about even though they see what is happening on the ground.

People who want deflation want a return to Great Depression economics. It's that simple. As the money supply becomes tighter and tighter, the burden goes from lender to the borrower and there tend to be more borrowers in a society. I cannot fathom why people want to return to the great depression as the Austrian and their cycles want people to get back to, a constant tightening of the money supply leads to people having less and less money to spend which closes up businesses due to lack of customers. Gold is not money, it is not wealth, it is a metal that can be used to represent wealth in certain points of our society's evolution, salt long predates it because we have to preserve food.

Ron Paul is just too outdated in his thinking to even be able to comprehend what is needed to take this country out of it's funk. He wants to turn the country back to the Articles of the Confederation which collapsed in seven years which was back when it took four months cross the oceans. How long do you think it would last nowadays?
 
2012-06-02 04:03:57 AM  
I'm a believer in adjusting things rather than abandoning entire systems, particularly when no plan exists toward a replacement system. There's usually a lot of perfectly good road between the ditches that ideologues like to crash and splash through.

Couldn't making federal reserve meetings and operations transparent work? I say this conditionally; suspecting that if the American people suddenly knew what was going on they would just burn the damn thing down.

Suppose the data from auditing the fed were released to the public in raw form, not as a pig in lipstick like reports are now such as inflation which omits energy and food costs, or unemployment which omits long term unemployed and those underemployed. Wouldn't it be better to have the raw numbers chewed over by many economists, rather than by 12 bankers?

How about an audit of funds currently in circulation being used to prompt a slow draw down of cash to bring the number of dollars in circulation to more adequately reflect the value of the economy? Would this actually increase trust in the dollar long haul, after world markets could be reasonably sure the paper were worth a more defined amount?

Suppose the cash reserve were to be intentionally reduced, wouldn't the markets weather that better knowing what was going on? Business plans rely on some ability to project what the operating environment is and is going to be.

Couldn't the money supply be tightened or loosened gradually in response to a 6 month trend across many economic metrics? I would think that market volatility would be reduced if knowing the fed's interest rate weren't such a guessing game.

I know these are a lot of questions, but I'd be interested in hearing what others think. I'm blessed with a lack of ideology on this but I might be oversimplifying too.
 
2012-06-02 04:30:52 AM  
MythDragon:
I used to think that gold was a better answer than oil. Until I tried to run my car using gold for lubrication. Not only was it crazy expensive, it didn't work well at all. My engine siezed after only a few blocks.

Yeah, yeah, nice bullshiat story. But, literally, with that idiocy, you demonstate, without question, that you really have no idea what money is, other than the fact that you know you can buy things with it.

The commodity being used as the standard of value does NOT have to be as "large" as the entire economy. It simply has to be stable in value. Gold is the most stable commodity on Earth, in terms of actual value.

Now, before everybody comments how they have seen gold prices change a lot, let me point out that you are looking at it incorrectly. When you see "gold go up" that isn't what is happening; when "gold goes up" in a price in dollars, that means that the dollar went DOWN.

The same quantities, such as a month staying in a rooming house, seeing entertainment every night, and having simple restaurant meals. That's about 2 to 3 troy ounces of gold... and that is the price in ancient Rome, 16th century Florence, 18th century America, 19th century London, or New York, today.

If you want a ritzier month, you will have to add gold to your taste. But you would add the same EVERYWHERE, and about the same amount for similar indulgences. (You can't quite value an 60" HD Plasma Screen any time other than NOW, because the item did not exist.)

That's what stability is -- pick your level, and every society in recorded history would give you the same style of service for the same amount of the commodity. The only commodities remotely like this are the precious metals, and some of them aren't stable, as the supply varies too much, it "rusts" away over time, and sudden advances in mining, for instance, make SOME of the precious metals vary in price... but not gold.
 
2012-06-02 08:49:03 AM  

Mentat: So are we still pushing the "poor people killed the economy" meme?


Um, what meme is that? Pretty sure even the rightest of the right-wingers still acknowledges that the banking crash was more or less the fault of bad banking practices. Not a lot of poor people running banks there.

GeneralJim: Gold is the most stable commodity on Earth, in terms of actual value.

...

When you see "gold go up" that isn't what is happening; when "gold goes up" in a price in dollars, that means that the dollar went DOWN.


No. When you normalize by a metric involving overall buying power like a Consumer Price Index the value of gold still fluctuates wildly. For instance, over the course of 2010 the price of gold changed by roughly 30%. The bureau of labor statistics tabulated change in CPI for that period was roughly 3%.

CPI is basically the cost (in dollars, in the case of BLS) of the goods and services people use in everyday life, so a 3% increase corresponds to a 3% decrease in the real value of the dollar. If the price of gold increased 30% but the overall value of the dollar dropped 3% that means that in 2010 the real value of gold, decoupled from changes in the value of the dollar, increased by (roughly) thirty-four percent. If you paid for X amount of, say, food or lodging with three oz of gold in January 2010 in a gold-based economy the same service would require another ounce that december.

This is not an atypical value fluctuation for gold, either, like most materials that are only really useful in entirely optional applications (jewelry, in this case) there is nothing whatsoever to keep the value stable, whether the reserve quantity or production/year is constant or not (hint: for gold, it's not, which makes it even less stable).
 
2012-06-02 08:53:53 AM  

alphalemming: Suppose the data from auditing the fed were released to the public in raw form, not as a pig in lipstick like reports are now such as inflation which omits energy and food costs, or unemployment which omits long term unemployed and those underemployed. Wouldn't it be better to have the raw numbers chewed over by many economists, rather than by 12 bankers?


They are. The BLS, which produces the CPI I used in the previous post (includes energy and food costs and so on) is a government agency and posts full methodologies for its statistics. There are an assload of .gov sites that essentially info-dump the entire operations of the federal government into public and you can go over most of the raw numbers if you like.

The short, snappy versions are just the stuff in the equivalent of the reports' abstracts, or stuff the random untrained newspeople seized on as important when combing through the same data we all get.
 
2012-06-02 12:33:05 PM  
talan123:
7.) If you are going to use something to back up your currency, use salt. It has been used much longer than gold, thousands of years older in fact and it actually has uses for the average man.

No. Salt fails several tests for being a quality currency: First, it is not phsicallly stable, certainly over time; if you leave it outside, it will melt if it rains or snows. Second, it fails at stability; as something that used to be produced by drying out seawater, salt is mined right now in several huge deposits, salt used to be worth a lot more than it is now, based on how difficult it was to produce. And, daily prices fluctuate like for any other commodity. Third, it fails the convenience test:

Two questions:

1. How much salt would it take to equal the value of a $100,000.00 house? I just looked up the price of a palette of salt, and it was $307.44. Using salt as money, that would be about 326 palettes of salt. A bit unwieldy, eh? So, to be useful, a "salt standard" would have to have a paper currency as a "receipt" for it. To be fair, that is more convenient in a currency based upon gold as well. But, that same house would be 60 Canadian Maple Leaf gold coins, an amount of gold one could carry.

2. If salt were money, how many people would start drying out sea water rather than, say, collecting deposit cans from the trash, and how much room would salt production take up?

No doubt there are many other problems. People who don't know about money somehow feel that whatever backs money needs to be "useful" more than gold is. This is false. The quality that makes a commodity useful as a backing for money is stability of value. That's gold's forte'.
 
2012-06-02 12:42:09 PM  
talan123:
8.) The money supply is not free because it is based on the faith and credit of the United States government. A government that came out of civil war holding an election, a first for a democracy, and came out of said war more politically stable which was again a first. It is based on the fact that the United States government can and does anything needs to, no other government has yet to land on the moon and return said people safely or launched probes that have penetrated the solar systems edge and continue to operate after 30 years. It has the federal reserve system which can operate independently of politicians which was a first. It can drop hundreds of billions of dollars onto the market whenever it feels a need to and be taken seriously to prevent serious economic damage.

The Federal Reserve System is the answer to non-democratic money supply issues.

The Treasury department COULD print money. But, the Federal Reserve System creates money -- AND charges interest on it. Just what is the benefit to the United States of paying interest versus NOT paying interest?
 
2012-06-02 01:11:10 PM  
The One True TheDavid:
Also I have trouble finding anybody who'll rent to me because I have no credit rating. Not a bad credit rating, that would be okay, but a non-existent one. I've even been accused of giving a false name and/or SSN. They give me blank uncomprehending stares when I say I can't afford credit, regardless of what the fools who try to give me credit cards might think.

Then again a friend who's a lawyer tells me that SSI can't be attached and there's nothing creditors can really do to me but win a judgment on paper. Maybe I should apply for as many credit cards as I can; it might be good for a laugh as well as a new laptop, some decent boots, my first coat in 12 years not bought from a thrift store, a moving company and a pet fee.

Here's a plan for getting credit. It worked well for me.

First, buy some clothes at a very nice men's store. Make it a private store, not a big chain. And, they need to have in-house credit. When you have found the right store, prepare a purchase, as in picking out a reasonable amount of clothes, perhaps including those boots you want -- a few hundred dollars, anyway. Then, offer to buy the clothes if you can put down 25%, and put the rest on store credit. Since clothes at such stores are about 75% gross profit, you are, in essence, putting down the cost to the store of the clothes, and promising to pay their profit. Almost any store will take that bet.

Then, pay this store credit RELIGIOUSLY. Pay it a few days early, and pay the suggested monthly amount. This is not the cheapest way to do it, as you are paying more in interest than necessary, but you are actually buying a credit rating with the money.

Next up, don't get the best possible price on a computer -- go to a computer store which has, again, store credit. After you have been paying on your clothing account for four or five months, find that computer you want at a store with in-house credit, and buy it, offering about 50% down. If they won't go for that, take whatever it is, even if it is 75% down. Again, pay RELIGIOUSLY. Do I really need to point out that if you are late with payments, or make short payments it won't help?

Pay on the computer for a few months. At that point, use the clothing store and the computer store as credit references, and get a "consumer consolidation loan" from your bank. Offer the computer as collateral. Pay off the clothing store and the computer store with the proceeds of the loan, and, again, pay the bank loan religiously, and pay the minimum due each month. Resist the urge to pay the sucker off right away.

When you have paid the loan off, you will have two store loans, and a bank loan all paid off, with three happy creditors. Use those references, and apply for a credit card at your bank with a TINY credit limit, just a couple hundred dollars. With your credit references, you will probably get it. Put money in savings to back it, if you have to, but don't bother with a debit card. Use it for purchases all over the place, but never go over, or challenge, your credit limit. Make the minimum payment each month.

Within a year, they will be calling you to offer you a larger credit line. Accept it. After a year of gradually increasing credit, and your RELIGIOUS payments on the card, you will have very good credit.

You're welcome.
 
2012-06-02 01:20:06 PM  
Phil McKraken:
The Fed is not evil, merely misunderstood.

www.dreadcentral.com
The Federal Reserve:
Misunderstood Monster

 
2012-06-02 01:31:39 PM  
alphalemming:
Perhaps this is oversimplification, but isn't having The Fed lending money to private banks at no interest and then taking in a lot of it to buy US debt kind of like the US Govt just printing money? If I'm getting the process, it's kind of like a financial feedback loop. Doesn't the feedback loop just keep going until the system recognizes that the US taxpayer cannot pay it back? If so, what happens then?

/genuinely curious

You have it pretty close to exactly right. And, what happens is what happened to currency in Germany between the world wars: hyperinflation. People got paid twice a day, so they could run out an buy something, anything -- a couple eggs, whatever, because prices would be much higher at the end of the day. They quit paying attention to the denomination of the bills, and priced things by the number of bags of money to buy it.

This kind of crap leads, inevitably, to the collapse of the currency involved. When the currency collapses, it's good to have lots of loans, as in a big mortgage, and some gold and/or silver. Pay off your mortgage with a silver dollar, when the U.S. dollar gets cheap enough.
 
2012-06-02 01:41:21 PM  
talan123:
Right now we don't have a debt problem, we have a lack of action/growth problem.

Are you out of your tiny little mind? The U.S. owes over $15.6 TRILLION dollars. You don't see that as a problem? And, taking it to the level of debt as a percentage of GDP, the graph is scary.

www.usgovernmentspending.com

 
2012-06-02 02:38:22 PM  
Why is it the banks are these seemingly fragile creatures who cannot help but be bullied by the big bad Gubmint when anything bad happens?
 
2012-06-02 02:51:00 PM  
GeneralJim: good advice. Hopefully some people will take it.

I did it in a similar fashion but it had a twist, which might help people in the military. I opened a STAR card on an Army base, through the PX, because I needed new glasses and had no insurance at the time. The great thing about those accounts is it's really just a credit union for shopping with the PX. They approved my no-history application because they can take the money back from your military paycheck if you don't pay it yourself. Fortunately I had an example of what not to do with credit in my ex-boyfriend from a couple of years earlier, so I paid that thing religiously. About a year of that and I had a good enough credit rating to get other accounts opened, and I've taken great care not to screw them up. I did run the balance up a couple of times near the limit but between a car sale, tax returns, and inheritance I haven't carried a balance in over a year. I think at this point I could charge about $20k but I don't use it for much other than making purchases online ($50 liability if card is stolen) or subscriptions (so I don't get an accidental overdraft or something).
 
2012-06-02 03:11:07 PM  
alphalemming:
OK, I watched the von Mises institute linked above. (which I chuckled to learn is just down the road in Auburn, AL - War Eagle!) and see how it all came together. I see that money multiplies over a thousand times before it hits the street. Fiat currency is a bad thing, particularly in how it disguises huge problems, got it.

What now? Gold backed money is more solid than what we have now, in spite of its ability to be manipulated. Suppose it's a good idea to do anyway. How do we get there? How do we retain a free market (as free as we can make it anyway) when and if the current currency craters? Make Ron Paul interim President? Then what?

What now? If it were my decision, I'd get a gold-backed currency ready (printed, at banks on reserve.) This would be WITHOUT the Federal Reserve, which would be disbanded. The last act of the Fed would be to create enough money (current dollars) to cover our national debt, which would be paid off. Next, pass a balanced budget amendment to the Constitution, in which, except in time of foreign invasion of the U.S., Congress MUST collect enough each year to cover what they spend. That's the downside of hard currency -- you can't just spend it if you don't have it.

Additionally, a law, or perhaps part of the balanced budget amendment, would be that the exchange rate of the currency would be fixed, and could not be diddled for temporary gain of the government. Personally, I would suggest the "Decigram" as the unit of currency - a 1-DG note could be exchanged for a tenth of a gram of gold. In Friday's prices, a gram of gold costs just about US$ 52. That makes a DG $5.20, Split into cents, that's about .052 for the cent coin, giving the value of about a nickel for the cent.

Interestingly, the WWII U.S. dollar was worth around $20 in today's dollars. Some stuff in 1942 prices:

Car: $1,100
Gasoline: 19 cents/gal
House: $6,950
Bread: 9 cents/loaf
Milk: 60 cents/gal
Postage Stamp: 3 cents
Stock Market: 119
Average Annual Salary: $2,400
Minimum Wage: 30 cents per hour
 
2012-06-02 03:14:35 PM  
BoothbyTCD:
Goldbuggery and anti-Federal Reserve conspiracy theories are just a proxy for anti-Semitism, with 'cabal of international bankers' just a dog whistle for 'the Jews'. Discuss.

Horseshiat. End of discussion.
 
2012-06-02 03:23:57 PM  
talan123:
When the system ran without any regulations or regulators, as in no FDIC or central banking of any kind, the average life span of a bank was five years. Five years until it collapsed and took all of their customers money with them. It was making commerce impossibly difficult because nothing could be planned out in the long term.

You are conflating the Fed with the FDIC. Something like the FDIC needs to be in place, collecting premiums from banks, and backing deposit accounts at the banks, in case of failure. There is NO benefit to the Fed.

And, stability is good -- but one of the BEST kinds of stability is the stability of the value of money. If you lend out $100, and when you get the $100 back, that $100 will only buy what cost $80 when you lent it out, you have lost $20. The interest must INCLUDE that $20 to break even. I also note that in this situation, the government will tax that $20 as if it were profit. Inflation benefits government.

When the money is very stable, and people trust it, as in when it is gold-backed, interest rates are normally around 2%. Now, people figuring interest rates (when not being swamped by the Fed releasing money to lend, essentially for free) need to add inflation into the interest rates. That's why, when Jimmy Carter was President, the prime rate went up to over 21%. Inflation was high, and people lending money wanted the money they got back at the end of a loan to buy at least a tad more than the money bought when they lent it out.
 
2012-06-02 03:29:39 PM  
talan123:
People who want deflation want a return to Great Depression economics. It's that simple. As the money supply becomes tighter and tighter, the burden goes from lender to the borrower and there tend to be more borrowers in a society. I cannot fathom why people want to return to the great depression as the Austrian and their cycles want people to get back to, a constant tightening of the money supply leads to people having less and less money to spend which closes up businesses due to lack of customers. Gold is not money, it is not wealth, it is a metal that can be used to represent wealth in certain points of our society's evolution, salt long predates it because we have to preserve food.

This paragraph offers nothing of value, only derp. Loosening or tightening the money supply is irrelevant to the value of the currency. The government should have a reserve of cash, which it can lend out when the commercial markets get tight. We have Fort Knox... and gold notes can easily be issued against it, and lent out to banks, thus adding to available M1 (the money supply).

Seriously, you have essentially EVERYTHING wrong in the above paragraph. You need some study time.
 
2012-06-02 03:45:56 PM  
alphalemming:
I'm a believer in adjusting things rather than abandoning entire systems, particularly when no plan exists toward a replacement system. There's usually a lot of perfectly good road between the ditches that ideologues like to crash and splash through.

Couldn't making federal reserve meetings and operations transparent work? I say this conditionally; suspecting that if the American people suddenly knew what was going on they would just burn the damn thing down.

Let's say you have a job, and let's say you get paid for your job. Would you approve of a change that means that when you get paid, you start paying interest on the money you just got paid? That is EXACTLY what the Fed is. I doubt that making the meetings at which your interest rate on your own money was set transparent would make you feel much better about it. YMMV


Suppose the data from auditing the fed were released to the public in raw form, not as a pig in lipstick like reports are now such as inflation which omits energy and food costs, or unemployment which omits long term unemployed and those underemployed. Wouldn't it be better to have the raw numbers chewed over by many economists, rather than by 12 bankers?

Again, all of this is worrying about the details of HOW you are charged interest on your own money. The basic concept is wrong.


How about an audit of funds currently in circulation being used to prompt a slow draw down of cash to bring the number of dollars in circulation to more adequately reflect the value of the economy? Would this actually increase trust in the dollar long haul, after world markets could be reasonably sure the paper were worth a more defined amount?

You are trying to simulate the effect of having a stable currency. A decent step, but why not simply have a stable currency? Lots less bother, and you are not relying upon politicians to keep the currency stable.


Suppose the cash reserve were to be intentionally reduced, wouldn't the markets weather that better knowing what was going on? Business plans rely on some ability to project what the operating environment is and is going to be.

Again, this is "stable-currency-light," a "trust us" approach which could be overturned at any time by a vote. A stable, gold-backed currency is THE way to go for the maximum of this effect.


Couldn't the money supply be tightened or loosened gradually in response to a 6 month trend across many economic metrics? I would think that market volatility would be reduced if knowing the fed's interest rate weren't such a guessing game.

Yes, but that is best accomplished by a federal government treasury either collecting or releasing gold-backed currency.


I know these are a lot of questions, but I'd be interested in hearing what others think. I'm blessed with a lack of ideology on this but I might be oversimplifying too.

No, you have the right ideas -- just that you are trying to simulate a proper system within a system based upon unstable currency. It's WAY too hard to do that. It's like trying to turn the furnace on and off all day and night to keep the right temperature, rather than letting the thermostat do the work. Getting up in the middle of the night to turn on the furnace for 20 minutes MIGHT work, but... why go through all the hassle?
 
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