What is the Job of the Fed Res

But even more dangerous to the economy is the velocity of money. When prices are declining it is an investment in itself just to hold on to money. This leads to less income, which leads to less employment, which leads to greater demand for jobs, which leads to lower wages... it is a perpetual cycle of doom.

 

Every argument we've made is speculation.

The point is, what matters is what incomes do relative to prices. Price inflation does not happen in isolation. If prices go up 10% but incomes go up 12%, folks are better off. If prices don't change but incomes go down 2%, People are worse off.

The difference is for people with fixed obligations like mortgages are worse off with deflation, while those with fixed incomes are worse off with inflation.

 

OK

why?

 

Less spending... less movement of money

 

Why does it equate to less spending?

 

If prices are going to be less in the future, why would someone spend now?

 

It should be clear that it's the job of any central bank to transfer wealth from the workers to the plutocracy.

 

The economy doesn't need more cash. The quantity of the money supply does not matter to economic growth.

The Austrians got it years before you stopped singing Hosannahs to the central bankers for the real estate growth they promised you would never end.

 

LOL!!! So what's your definition of "growth"?

 

Your "if" is just as big.

My point remains valid. As long as they can purchase more goods and services, deflation isn't necessarily bad.

Then it wouldn't matter, but what's your point? I could just as easily ask the same question of you.

No, I'm not. More importantly, such an assumption has no relevance to our contention. You claimed that under my system all the power would go to the money owners, but they already have all the power under the system you support.

 

Their job is to steal everything from the rest of us. That is their job.
They create "CRISIS", to "Alert the people" and then "Offer their Solution"
Their job is to lie to the people for the purpose of taking everything.
Well, whats a private for profit bank gonna do?

 

I would not say that. I would argue that their goal is to provide an economic environment in which them and their cronies are the only beneficiaries. Therefore, I am with Ron Paul and his sentiments to end the Fed, but I am not for his exact approach. The goal should be, as James Madison stated when he described the manner to control factions in Federalist No.58, to control the financial sector's effects. To do so, you need to simply end the structures that do its dirty work. However, from my perspective, Ron Paul's policies go too far and take on a Jacksonian feel, which would entail not just ending the Federal Reserve, but destroying the entire investment sector.

 

Who mentioned the Republicans? Certainly not me.

Getting a raise or a better job is not always an option, especially for the poor.

That's certainly true, however, if your income does not outpace inflation, your standard of living will decrease. For some people, the poor especially, outpacing inflation is very difficult. They do the same amount of work, but they are able to obtain less goods and services. Seems immoral that they should be forced into such an arrangement by a government monopoly on money.

Of course. Those people are fortunate. However, some people are not so lucky. Some people - mostly poor people - have a much harder time indexing their wages to inflation. I doubt many of them even know about indexing their wages to inflation.

Because of inflation, their savings are worth less than they otherwise would be.

More importantly, higher inflation usually correlates with lower interest rates, so it is unlikely that savings would earn more than inflation. At least, that's the relationship one must derive from monetary supply if you believe in the fundamentals...

 

My "if" is our current reality. You are the one asking them to do something that doesn't currently exist.

Yes, that point does remain valid

But you can't ask that question, because I can point you to actual data that exists. You can't point me to anything that proves the economy is better off with deflation because we now do everything in our power to prevent it. Once again, I'm advocating what America actually does, so America is my evidence. You are saying America would be better off doing something else... yet you can't explain why or point to any example of why. If deflation was good for the economy I'm sure some country would try to run perpetual deflation until wages were $.25 and the cost of bread was a penny. But why aren't any countries doing that?

No they don't. Investors and producers have all the power. Because if you sit on your money, you lose value, so in order to not lose value you have to put your money to use in order to make more money.

 

There are also two other forms of inflation that the graph doesn't show. They are cost-push inflation, and demand-push inflation.

 

True, but if they're paying less for goods and services, it could be a net benefit or a wash.

 

Just consider the mirror image of your scenario and that's my argument.

I would call it a draw in terms of theory.

 

Ethereal has destroyed the liberal position defending the FED in this thread.

Absolutely eviscerating it.

And not a single leftist poster attempted to counter my points in my post, even having posted in three threads, and again here.

 

You make some good arguments, subdermal. What exactly is your opinion on Ron Paul's monetary policy?

 

I would destroy your post but you have me on ignore so it would be a waste of time.

 

Not for unskilled laborers and poor people.

I'm simply espousing a contrary hypothesis. Your hypothesis is no more valid.

Sure I can.

What if they don't have any dollars?

Anyone can point to data that exists. I can point to data that exists. Finding data is simple. Distinguishing between noise and signal, however, is a different story, and neither you nor any other economist has demonstrated that inflation is any better than deflation. It is pure speculation on your part. Any scientist can tell you that.

Bankers and speculators have all the money, and they use that money to obtain real property. In the end, real property is all the matters. They own plant and land and it's because they obtained it with dollars, dollars that are legitimized by and filtered through our cartelized banking system.

 

Those are misnomers. Inflation is solely the result of an increased money supply.

 

I'd be happy if they admitted that their opinion is not an immutable economic law.

Economics is not a science; at best, it's a philosophy; at worst, it's a religion.

I try to keep it philosophical, but proponents of the central bank are dogmatic...

 

What's wrong with them? They can eat, buy cars, get shelter. Much more than they could get in the 1800s when deflation and a lack of money made them slaves.

Well I have a test for my hypothesis, you don't. So you have to explain why your theory would work better than the current theory. And I will already let you know that it won't work, it has been tried, and economists figured out over a century ago that deflation is a destructive force to the economy.

Sure we have. The Great Depression is a perfect example of the destructive force of deflation. It wasn't until the massive Govt spending spree of WWII that we got out of it. That was 15 years of depression because they tried to let the economy build itself out. Ever since that we learned that inflation is good. Almost every period of deflation we've had has been followed by a recession/depression. And if you understood why, it would make sense.

I have plenty of money and I'm not a banker or speculator. And all the people I work around have plenty of money and none of us have ever been bankers or speculators.

 

Actually, the better description is that the state of the money supply is a determinant of what type of inflation an economy is facing. An increase in the money supply could be utilized to meet the demands of a wartime economy. However, the root cause of that inflation is demand. Cost-push inflation is simply an increase in the prices of goods and services when there are no alternatives available. In the case of cost-push inflation, there are more dollars in relation to goods and services. The money supply doesn't necessarily have to increase, just be greater in proportion to good and services. Essentially, it is not the fact that the money supply increases that causes inflation in the case of the two above forms. In the case of velocity-based inflation, the rate at which the money supply increases is the root cause.