Why End The Fed?

When you couple it with a moral hazard generated by decades of reckless government regulation, then yes it does.

I disagree with your opinion. Austrian economists were talking about the housing bubble at least that early.

Bitten? I disagree that bailing out reckless lending instutions amounts to them being "bitten by their greed".

Shoddy lending practices are a result of insulation from the threat of failure that comes with free market competition.

Inflation is caused by reckless Federal Reserve monetary policy. The Federal Funds rate, which also has an indirect effect on the interest rates banks charge on ARMs, is also set by the Fed. It's not the ARM that is the source of the problem; it is Federal Reserve policy.

Yet another reason why the Fed should be abolished.

I agree, which is why the moral hazard must be eliminated so that lenders aren't tempted to use such risky and volatile tricks.

Individuals who engage in the practices you are describing are the ones that fail under a free market. Under the current system of excessive government regulation, they are ensured to be insulated from failure by socializing the costs of their failures onto taxpayers, while at the same time millions are still losing their homes.

For the greater good of the greater number, of course.

I have semantically changed no defintion. Private entities are only ever too big to fail when they have government undermining the free market with regulations that favor the private entity.

 

I disagree with your opinion. The Dems are just as bought off by special interests as the Republicans are.

Except that most of the Dems in Congress and the White House have been their longer than most of the Republicans. So there has been more time for them to sellout than the Tea Party has had to sell out.

 

When you couple it with many other factors that induced these shoddy practices, then it is not longer the interest rate that is the principle factor.

Good for them. The facts speak for themselves.

So then why aren't they engaging in the shoddy lending practices you are arguing low interest rates caused? Interest rates are lower than ever. If interest rates were the cause, banks should be giving money away now. Why aren't they?

So why aren't they doing it now? Your argument is illogical, unless you are claiming that the banks are no long insulated.

You are acting like interest rates would not fluctuate but for the Fed. They would fluctuate even more.

No one has presented to me a realistic, viable, and superior alternative.

I agree, which is why big banks should be busted up.

No, they reap their profits and big bonuses from short term profit. When the (*)(*)(*)(*) hits the fan, most are gone. Free market.

That would entail more regulation of markets to prevent the shoddy practices (like they did with the SEC and margin limits on stocks, which I'm sure you disagree with) that allowed the overleveraging which fueled the bubble.

Sure you did. You simply claimed nothing is too big to fail.

 

But no the super rich and big business like their Republicans.

Just look at the policies. Republicans are forever trying to cut taxes, cut regulations, cut benefits and programs that help the poorer, eliminate minimum wage, etc.

Sell out to whom?

 

gee wiz you are freakin' easy.

 

I don't think so. Or, maybe I do think so but I recognize that we'd be slaves anyway. I don't know about you, but I don't want to lay railroad tracks or work in silver mines at 11,000 feet.

The banks could always take your homes. The question is would we have those homes in the first place without the Fed.

 

Straw man. I never claimed it was the "prinicple" factor.

Looks like a housing bubble was apparent around 2001 to me.

The facts speak for themselves.

Repetetive. I already answered these questions. The velocity of money is low, so lending is not as high as it was about 5 years ago.

I'm not acting like anything. Interest rates would fluctuate naturally, rather than artificially, under a free market.

Another straw man.

Pure speculation.

Free banking.

The Fed and the govt are working hard to ensure that will never, ever happen to the most influential Fed member banks. How ironic that you take a position that contradicts the Fed.

What's wrong with profit? What's wrong with businesses that can't compete, failing?

Feel free to prove it by showing me where I claimed "nothing is too big to fail".

 

Nonsense. It was the super rich and big business that got Obama elected:

http://www.opensecrets.org/pres08/contrib.php?cid=N00009638

University of California $1,648,685
Goldman Sachs $1,013,091
Harvard University $878,164
Microsoft Corp $852,167
Google Inc $814,540
JPMorgan Chase & Co $808,799
Citigroup Inc $736,771
Time Warner $624,618
Sidley Austin LLP $600,298
Stanford University $595,716
National Amusements Inc $563,798
WilmerHale LLP $550,668
Columbia University $547,852
Skadden, Arps et al $543,539
UBS AG $532,674
IBM Corp $532,372
General Electric $529,855
US Government $513,308
Morgan Stanley $512,232
Latham & Watkins $503,295

When did they ever do that?

Special interests.

 

Then we agree it is not.

1) It is still within historical deviations
2) You have the benefit of compiled data in hindsight.

I see. The low "velocity of money" is why banks aren't they engaging in the shoddy lending practices you are arguing low interest rates caused.

Please explain how low "velocity of money" prevents banks from engaging in shoddy lending practices you are arguing low interest rates caused.

And then please explain why is the "velocity of money" is low now even when interest rates are so low.

Why not just cut to the chaste and asnwer straight up instead of playing these little semantic games?

And thus would cause the same problems with ARM loans. That's my point.

Rational estimation. Market factors swing prices much more volatily than govt controlled prices.

Repeat: No one has presented to me a realistic, viable, and superior alternative. I agree you've presented a fantasy based on Byzantine evidence.

How are they doing that?

What evidence is there for that?

Nothing is wrong with profit. Straw man.

Your argument we should just let them fail.

 

I believe, personally in the gold standard. I don't think it's going to make us rich, but it's a lot harder to get yourself into trouble with it, and a lot harder to monkey around with.

In a Gold Standard Economy, a dollar will be worth the same amount. Your 1910 dollar will be worth a dollar in 2010, and in 3010. So it's a lot harder to lower people's income without lowering the dollar amounts. In a debt economy, the dollar has gone in one direction -- basically down. So in order for a person to have his dollar from 2010 = his dollar from 1910, he's going to need more than one 2010 dollar. (actually, you need almost $100 [http://www.measuringworth.com/uscompare/relativevalue.php]) So you pretty much force the entire economy to run to stay in place. Sure you'd feel richer with $100 in your pocket, but what you have might be the equivilent of pocket change in 1910.

The other problem you run into with a debt backed currency is that it's hard to prevent a government from using the printing press to print their way out of debt. The debt is based on dollars, but since I can make more dollars by printing them, my $1 trillion debt is a lot less if I can double the amount of dollars in circulation, thus cutting the value of each dollar I owe in half. It's an accounting trick -- based on the measurement used. If we said you owe me $1 trillion in gold, you couldn't get away with that, double the amount of currency and you owe $2 trillion instead of $1 trillion. But since the measure is $1 trillion in dollars, if I can devalue the dollar enough, my $1 trillion payment is actually $500 billion. So governments have no real disincentive to taking on a lot of debt -- if it gets to be too much, you simply print more money and use that to pay the debt. Now government can grow and take on more "problems" without worrying about affording things. If you thought that you could support your kids by drawing pictures of money, you'd do a lot more than you would if you could only spend the money you earned. Which means that government causes inflation to pay for ecnomic problems stemming from inflation. Nice little circle.

 

Friedman's ideal monetary system would consist of a gold standard and no Federal Reserve. If the Federal Reserve is to remain in existence, Friedman argues that there should be a constantly increasing money supply to promote an ideal level of GDP growth.

Personally, I conclude that the Federal Reserve cannot be eliminated. The global economic crisis which would result from its dissolution would be unprecedented. A new Great Depression would ensue. Still, the United States Central Bank, and the banking system as a whole needs to be liberalized.

First, let me say that ideally speaking, I am an opponent of social and corporate welfare. However, there is no existing framework to allow for complete erosion of these governmental norms. Wall Street and Main Street feel entitled to government assistance, as a means of 'leveling the playing field.' More often than not, the federal government does little to accomplish such, and if they do, they are highly inefficient.

Consequently, as part of a monetary system reform initiative, I would promote a true leveling of the playing field by pushing social and corporate welfare roles into the private sector.

Instead of government Social Security, all individuals should be able to have a strong storage of wealth as well as a viable means of investment with little to no risk for retirement. These funds could also be of use when buying quality health insurance, as well as emergency money if one is unemployed. My full solution is the following:

Corporate welfare is a different animal. Due to the quasi-private nature of the Federal Reserve, the institution gives way to collusion. Financial entities are able to wield tremendous power over our monetary policy, up until the point that they hold the majority of our Treasury Securities. While Treasury Securities are essentially certificates of government debt, they are also private savings. Investors trade these private savings on secondary markets. Unfortunately, the majority of these traders are major depository institutions, not individuals. In addition, foreign nations hold significant amounts of United States Treasury securities.

http://www.gao.gov/special.pubs/longterm/debt/ownership.html

The Government Accountability Office shows that as of June 2010, official institutions hold two-thirds of United States Treasury securities. Only one-third investors in Treasury Securities are private holders, whom according to Treasury definitions are individuals.

The individual citizen is a disadvantaged stakeholder in open market operations. More equitable distribution of United States Treasury securities would drastically benefit the average citizen. Not only would such an effort alleviate disdain towards the Federal Reserve, but would provide a risk-free investment to more citizens than ever before.

I could also talk about financial bailouts, and government financing as a whole, but I will leave those topics for a different post.

 

Austrian economists did not have any benefit of hindsight, and they accurately predicted what a catastrophe would happen, based on the reckless monetary policy of the Federal Reserve, coupled with harmful government regulations in place.

Because the velocity of money is low, the rate at which loans are being extended by banks these days are well below what they were a few years ago. Which means banks are being more selective as to who they are loaning to, rather than recklessly loaning to anybody who walks into the door.

Low interest rates obviously do not necessarily stimulate the velocity of money by itself. There are many, many other factors which affect the velocity of money.

You would have a valid point if that were what I was doing. In fact I was clarifying my position from your mischaracterizations.

Baseless claim. Unless you'd care to prove that free market interest rates fluctuate more wildly in amplitude and frequency compared to a centrally managed market.

Depends on how you define "govt controlled prices". Do you mean literal price controls?

What does "Byzantine evidence" have to do with Free Banking?

By bailing out the most influential Fed member banks when they get into trouble.

It is the Fed which ensured that the biggest banks would not be broken up. You support the Fed, but yet your position on the issue contradicts the Fed's actions.

Sure, rather than the state robbing me at gunpoint to prop up an inherently greedy, corrupt, and unstable system. And now we are seeing receipients of bailout money, like JP Morgan, still engaging in fraud and losing billions of dollars. Or Goldman Sachs execs pocketing bailout money as part of their fat yearly bonuses.

 

Mike Rogers called it in his 2003 book "Adventure Capitalist."

 

Here is a video of Ron Paul talking about the forming housing bubble on Sept. 6, 2001.

http://www.youtube.com/watch?v=XDKWm92EvhU

 

that's how we help the common man.

 

It's being done for the good of the country of course. A fine example of Collectivist economics in action.

 

Jeez you are freakin' slow.

 

The people who invented the Federal Reserve, discovered and developed the concept of sovereign credit over centuries.

And it is the principle of sovereign national credit that allows us to live. Most of us would not be here if the US had stayed on the gold/silver monetary system.

The Federal Reserve folks allow us to access our national credit which we didn't understand for a long time.

It is not their fault that we wasted a century of human effort and lives on wars of aggression that solved no problems and only created more problems. It is we who rushed off to war like reactionary crazies time after time, and are still at it.

The vast wealth we wasted on those wars could have remade the world several times.

In the middle 1940's the Federal Reserve told Congress that taxes are no longer needed to fund government expenses. It is all possible through the sovereign credit of the United States.

What did the geniuses in Congress choose? More taxes and more war!

Instead of making the American People free of taxes, they imposed more taxes. Instead of Peace, they chose suffering, slaughter, and destruction for millions of people.

If we had instituted interest free loans to Americans for business and houses, given each head of household a monthly dividend check of say 1000 bucks a month, and made all Americans tax free and let each man be king of his house, nearly everyone in the world would have become American by now.

Instead of the Beauty of Truth, Mercy, Faith, we chose to be ugly, cruel, liars and vicious. If it were not for the Grace of "nature's God" we would have had the nuclear Armageddon we so desperately planned to carry out.

Since we embraced desolating hatred to the point of adoration, we set in motion the inevitable desolation wherein friends and foes compete to do us the perfect harm.

 

Ron Paul probably reads the Daily Reckoning. They were pointing at the housing bubble in the 90's when folks were taking on second mortgages to throw money into the stock market.

 

You'd have to show me a comprehensive history of Austrian predictions. Austrians have predicted many things inaccurately as well, such as the claim that we would have hyperinflation by now.

How does that prevent shoddy loans?

Does high velocity of money cause shoddy loans?

Like what?

Look at prices in other free markets.

That was what I asked you!

They are working to make sure those banks will never be broken up by bailing them out?

Where did the Fed do that?

De-regulation is the answer. Because this shows we can trust the private sector businesses to do the right thing.

 

http://wiki.mises.org/wiki/Austrian_predictions

Prove that Austrains claimed that we would have hyperinflation "by now".

It means banks are being more careful who they are lending to.

When it's coupled with a moral hazard it does.

http://www.preservearticles.com/201012281811/factors-influencing-velocity-of-money.html

Vague generalization that does not prove your claim.

You're the one who brought up the subject of Byzantine evidence, not me.

They certainly prevented them from being broken up by bailing them out.

When the Fed selectively bailed out the most influential member banks while allowing other large, but obviously less influential member banks, to catastrophically fail.

Considering that the crisis was caused by excessive government regulation and disastrous monetary policy that created a moral hazard in which banks were encouraged to engage in shoddy lending practices, I'd say you have a point there. The private sector either does the right thing or it fails.

Contrast to the excessively regulated system you support, which rewards bad behavior by propping up banks it deems "too big to fail", while simultaneously doing nothing to prevent millions of homes from being foreclosed on by the "too big to fail" lenders. Not to mention the billions in bailout money lost in fraud and corruption, with fat cat CEOs pocketing the money or donating it in the form of campaign contributions to certain politicians.

 

There was very little evidence of any housing bubble being formed in or before 1999.

 

Inflation is a far more totalitarian measure of taxation than a direct income tax is.

 

I see Ivan88 post this same message on every FED thread. Does anyone else wonder if it is some sort of bot?

 

I'm sorry, I wasn't clear. I wanted a comprehensive list, not just the cherry picked ones that were generally right in a self serving article by the proponent.

http://www.hyperinflation-us.com/

.

So you agree that interest rates themselves do not dictact how careful banks are, and therefore the shoddy lending practices were not a function of low interest rates?

Don't we have moral hazard now?

http://www.preservearticles.com/201012281811/factors-influencing-velocity-of-money.html

Could you quote the pertinent language that describes the "many, many other factors which affect the velocity of money"?

Reference to how how other markets behave is the best evidence to support my claim. Prove that a "free market" in interest rates would behave any differnt than other markets with their volatile price swings based on supply and demand. I don't see any reason to thing a market for money would be any different.

Memory problems?

http://www.politicalforum.com/polit...orhless-fallen-society-21.html#post1061076771

http://www.politicalforum.com/polit...at-about-gold-standard-12.html#post1060786714

http://www.politicalforum.com/polit...al-reserve-system-part-2-a-2.html#post4890671

http://www.politicalforum.com/polit...on-federal-reserve-system-41.html#post4858881

http://www.politicalforum.com/polit...on-federal-reserve-system-36.html#post4839754​

Let me know if you need more examples to job your memory.

That prevented them from going out of business and taking the economy down with them. It doesn't prevent the Govt from breaking them up.

Other than Merryl, which other of the largest financial institutions did the Fed not include in the bail out?

You conclusion comes from a false premise.

Your conclusion comes from a false presumption.