Ok, who here wants to end the fed and other central banks? It is my contention that central bankers own the earth right now and we need to end their vicious parade of power. I suggest we the people start trading Gold and Silver and no paper. Whose with me?
I’ll be temping this thread tomorrow for it’s vacuous nature and troll-like smell. How could central bankers possibly own the earth? And what is a ‘central’ banker? A banker at the center of everything mayhaps? A conspirator in general banking?
Gold and paper are long past forms. Digital currency is now and the future.
You are aware the FED doesn’t actually keep their “profits” aren’t you? What did you think, that they just pocket that money? Central banks don’t own the world. In fact they don’t even own the assets on their own balance sheet. Technically speaking, those assets are more considered yours than theirs.
And if you abolish the FED like so many who don’t understand how the economy actually works propose, that means that Congress would be in charge of monetary policy. You might want to think about that one. Who would you rather have in charge? Some of the smartest most educated economics experts from the worlds best Ivy league schools, or guys that think woman have a gene that blocks babies being born after being raped?
You are aware the FED doesn’t actually keep their “profits” aren’t you? What did you think, that they just pocket that money? Central banks don’t own the world. In fact they don’t even own the assets on their own balance sheet. Technically speaking, those assets are more considered yours than theirs.
And if you abolish the FED like so many who don’t understand how the economy actually works propose, that means that Congress would be in charge of monetary policy. You might want to think about that one. Who would you rather have in charge? Some of the smartest most educated economics experts from the worlds best Ivy league schools, or guys that think woman have a gene that blocks babies being born after being raped?[/quote]
America had no central bank from 1776-1913. The currency was essentially stable during that time. A dollar saved was a dollar earned. Can’t say the same today.
Yes, the same applies today as it always has. Although it is true that nominally speaking the US dollar has lost nearly all of it’s purchasing power, on further analysis this is of course ludicrous. It’s only true for those foolish enough to put their money in a shoe box or under their mattress. If you were to have placed a dollar in a government guaranteed and fully insured low interest bearing investment it would not have lost any purchasing power. You are making a very common mistake, and that is confusing nominal numbers with real numbers. The financial world will make more sense to you if you start using inflation adjusted real return values factoring in all interest and growth rates in your assessments. It’s incredibly easy to use math and statistics to make numbers lie, but if you have to be disingenuous to prove a point, it’s probably not a point worth making in the first place. 
Anywhere there is a concentration of power, people will find a way to leverage it to their own advantage.
Human nature is the enemy.
[quote]Anywhere there is a concentration of power, people will find a way to leverage it to their own advantage.
Human nature is the enemy.[/quote]
Very true, to an extent. But decisions still have to be made right? The economy does in fact need some basic governance. Bank rates need to be kept within certain band widths, policies need to be instituted to promote higher employment, inflation needs to be kept within certain ranges, and the business cycles need to be controlled to avoid extended periods of extreme booms or busts.
It’s so easy for people to point fingers and say the FED is responsible for all our problems. Ok well it’s not, but let’s go with that for a second. If we abolish the FED, what then?
Do you actually have any actionable plans for the future of our economy, or do you just want to abolish the FED with absolutely no back up plan for what to do when things go wrong? Got anything that resembles a functional economy that doesn’t involve a group of experts making decisions? 
I’m not at all convinced that it’s in the power of government to manage the economy for the better. What would they do, anyway? Either you keep the money supply steady, or else you indulge in Keynesian stimulus, quantitative easing and the like. The activist approach doesn’t seem to do a lot of good in the long run. As for keeping money steady, that would be far less of an issue if we didn’t have fiat money.
Japan’s going into a triple dip recession. How’s Keynesian stimulus working out for them?
May as well let the economy go its way. In the US, before the government started messing with credit and farm prices, depressions were frequent but brief. After they did, we got the Roaring Twenties, followed by the Great Depression. How is that an improvement?
And in recent decades, the overall trend is a long, slow decline. We’re being managed to death.
I’d be happy if I just had my own currency and my own printing press. Then I’d be free of the infamous “household finances” constraint and would be able to operate under the “the sky’s the limit” financial model the Fed uses. Anytime I needed more spending money I’d just fire up the printing presss and wouldn’t stop until I’d produced enough Windollars to stimulate my personal finances with enough left over to quantitatively ease my vacation plans. Just to set the right tone all my bills would either have John Maynard Keynes or Warren Buffet’s visages on them. As an extra touch I’d embed a holographic strip in my currency that implanted a subliminal suggestion that Windollars were backed by “the full faith and credit of God Almighty?”
I’d clean up!
While I can certainly appreciate that everybody deserves to have their own opinions, and while I try my best to understand and respect others opinions, I’m sorry but when it comes to the FED and monetary policy, most people just don’t know what they are talking about. I’m sorry if that sounds direct, rude, or disrespectful, but it’s just the plain truth. If you ask the average person what the FED does, they have no clue.
I have no idea why the average person thinks this stuff is so easy. It would be like a non engineer trying to tell an engineer how to build a better bridge. A person with no medical experience trying to tell a doctor how to perform an open heart surgery. A guy who’s never studied accounting trying to tell a real accountant a better way to do their taxes. People might be arrogant enough to think they know what they are talking about without ever having specialized in it or ever had a job related to the field, but that doesn’t mean they have valid points. In pretty much every other aspect of our lives, people understand their own limitations and try their best to stay in their lane. Yet when it comes to the economy, all of a sudden everybody’s an armchair expert. I’m sorry, but Bernanke and Yellen are just way better equipped to steer us in the right direction than you or I.
Oh boy… It seems most people think the FED’s sole job is to print money and fuck the country up or something. Nothing could be further from the truth. The FED can’t print money, they aren’t a profit organization, and they are there to make sure that OTHERS in the financial industry don’t fuck the country up (which they did in the past and would again given the opportunity) The FED has several mandates that the financial industry and the economy as a whole simply can’t control themselves. It’s far from just the money supply.
So again, let’s give your opinions a day in court. If we listen to you and abolish the FED, what then? Got any ideas who’s going to regulate the economy? Who’s going to set bank rates? Who’s going to ensure inflation stays in check? Who’s going to make sure depressions don’t last 15 years? I know you’re not actually suggesting that independent banks would do that on their own are you? Somehow I can’t see Goldman Sachs acting in my best interest. Maybe you’re saying the government should do that then? Are you saying the Obama administration is up to the challenge? Actually, I have no idea what you’re saying. It’s not practical, it just makes good fodder for FOX news and Glenn Beck to talk about. Abolishing the FED would be an EPIC disaster !
I don’t want the FED gone, I want them to function better. I don’t want the government gone, I want them to do the jobs they are elected to do. I don’t want Obamacare repealed, I want it improved upon. I don’t want the economy left alone to collapse under the weight of capitalism, I just want it to function smoother. That’s how things should work. You come up with good ideas in principle, and then you do what you can to make them function as best they can.
The FED, while clearly not perfect, is by far the best option we’ve got to manage a 16 trillion dollar economy, 320 million fairly selfish people, and a banking industry that would kill their grandmother if it made them an extra dollar. I know people don’t always know why, especially in times of economic hardship, but trust me we’re so much better off with central banks here than if they were gone. We just have to work to make them even better that’s all.
The Fed hasn’t a clue, either.
I can see how much thought you’ve put into the opinions you hold. When asked a direct question like, what would YOU suggest we do instead of the system you seem to want to remove, all we get is:
Well at least you’ve admitted you don’t have a clue, but you still seem to require the security of more company in your ignorance. Well sorry to say my friend, they actually do know what they are doing. Like I said, I would never say the system is perfect as there are several areas of regulation that I would personally want to see tightened up if it were up to me, but in general it’s the best system we have available to us. That is of course until Rowland takes a crack at the simple and direct question I’ve asked twice now about what system would be better, with just crickets chirping for a response. 
Since this now third version of a Federal Reserve system has been in place, the US has in fact experienced relatively more stability then it has in it’s long history. Market cycles, inflation, and employment rates are much more controlled compared to pre-Fed days. People might point to the great depression and the financial crisis as proof it hasn’t, but to gain some perspective on what things were like before, you just need to take a short walk to the crisis of 1907 or any number of dozens of other crisis experienced pre-Fed for some real perspective on how bad things can get without a central organizing body with power to act in a crisis. As an added benefit to this long period of relative stability, the fed has made you the tax payer money in the process. A typical year for the FED would be to distribute about 2% of earnings to member banks in the form of dividends, about 2% remains within member banks as retained earnings, and about 96% of all profit made within the Federal Reserve banking system is returned to the treasury every year. And you’d know this if instead of listening to the media to get your wildly incorrect facts about the Fed, you just looked for yourself at any one of the dozens of audits that have been performed on the Federal Reserve banking system, the entire board of governors, and all member banks. Oh that’s right I forgot, Ron Paul says the Fed has never been audited. :roflmao:
[quote=“BrentGolf”]I can see how much thought you’ve put into the opinions you hold. When asked a direct question like, what would YOU suggest we do instead of the system you seem to want to remove, all we get is:
Well at least you’ve admitted you don’t have a clue, but you still seem to require the security of more company in your ignorance. Well sorry to say my friend, they actually do know what they are doing.
[/quote]
I was trying to give them the benefit of the doubt. I’d like to believe they’re not screwing us over on purpose.
Of course the Fed has a clue. My favorite economist, former Fed Chairman Ben Bernanke had so many clues about the gathering storm clouds in the American economy before the most severe economic downturn since the Great Depression that it wasn’t even funny.
[quote]House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.[/quote] – October, 2005, B.B.
[quote]With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.[/quote] November, 2005, B.B.
[quote]Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.[/quote] February 2006, B.B.
[quote]Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.[/quote] February 2007, B.B.
[quote]At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.[/quote] March 2007, B.B.
[quote]All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.[/quote] May 2007, B.B.
[quote]The Federal Reserve is not currently forecasting a recession.[/quote] January 2008, B.B.
[quote]They will make it through the storm.[/quote] January 2008, B.B. two months before Fannie Mae and Freddie Mac collapsed
[quote]Following the bursting of the housing bubble in mid-2007, the United States entered a severe recession. The United States entered 2008 during a housing market correction and a subprime mortgage crisis.
The National Bureau of Economic Research (NBER) dates the beginning of the recession as December 2007. According to the Department of Labor, roughly 8.7 million jobs were shed from February 2008 - February 2010, and GDP contracted by 5.1%, making the Great Recession the worst since the Great Depression. Unemployment rose from 4.7% in November 2007 to peak at 10% in October of 2009.
The bottom, or trough, was reached in the second quarter of 2009 (marking the technical end of the recession, defined as at least two consecutive quarters of declining GDP). The NBER, dating by month, points to June 2009 as the final month of the recession.
The recovery since 2009 has been weak and both GDP and job growth remain erratic and uneven. Unemployment as of September 2014 was 5.9%, considered somewhat high by American standards, with about 10.3 million jobs created since February 2010. American household wealth has plunged to levels not seen since 1992, with incomes dropping to 1996 levels when adjusted for inflation. Nearly 50 million Americans (16%) are in poverty, up from 12.1% in 2007.[/quote] The Great Recession, December 2007-June 2009, Wikipedia
Most people just aren’t interested in evidence, facts, or reality. They just have their opinions and aren’t interested in anything that says otherwise. Whether it’s the earth is 6000 years old, climate change is a myth, Obama isn’t American, or the Fed is printing money.
It would be a way more interesting conversation if people knew what the fed was, what they do, why they do it, and how they do it. That way we could actually debate the merits, and maybe try to to come up with some things they could be doing differently going forward to ensure some of the problems we are facing actually don’t repeat in the future. You know, progress.
But no, instead it’s the equivalent of people covering their ears and going, LA LA LA I can’t hear you La La La I’m not listening… Alright, whatever, have a nice day. Careful of the flying unicorns on your way home from work today
I thought rowland mustered some pretty good evidence, facts, and reality there.
I think it’s perfectly valid to question whether the fed is actually able to perform the functions in its mandate, and whether it should be doing so. Several economists have actually asserted that attempting to correct recessions is a bit like catching a bullet with your teeth - technically doable, but not likely to end well. Is it even physically possible to “control” the economy? And are there other options available? For example, much that’s good about capitalism is made to happen via business regulations (such as “thou shalt not tip your industrial waste into the drinking water supply”), not monetary policy. Does it matter if “the economy” goes up and down? As long as everyone can eat and keep a roof over their heads, is it really a big deal if 30% of the population are unemployed sometimes? Just thinking out loud here.
And as far as I am aware, the Fed does, in fact, print money, or at least commands it to be printed by the Mint. That’s not ALL it does - more usually, it acts as a ‘money buffer’ by either selling bonds (and therefore withdrawing currency) or by bulk lending to banks (injecting currency) - but it wouldn’t be able to control the money supply without that particular lever available.
So do I, absolutely, and that’s always my hope when discussions like this come up. That people will actually base an argument on facts and reality, and expand it to make a broader point. At no time have I ever said there is only one correct opinion here. I’m fully aware there are good points to be made on both sides. In fact I’ve stated several times I’m also not happy with a few things they did. But the fact based discussion the country so desperately needs is rarely if ever what we get. Right out of the gate, it’s an unbelievable amount of nonsense and utterly false claims. All time is wasted unpacking the bullshit, and it never gets to an interesting debate. It’s really quite infuriating. Imagine your discussions with climate science deniers and you’ll have a pretty good idea how I feel discussing Economics with people. 
I’ve asked that question not only in this thread a few times, but literally hundreds of other times to countless people over the past 5 years. You know what the answer is? … uh… well… I don’t care, fuck the fed. And that’s the best argument put forth so far. 
If people hate the system so much, and think it’s such an evil in the world, surely they will be able to articulate a better way to do things right? Surely at some point we’ll hear some kind of solution to the problem right? Abolish the fed, AND THEN WHAT ???
That would be incorrect. In a very crude explanation, money printing would be by definition inflationary. Credit swaps between the fed and member banks on the other hand is by no means inflationary on it’s own and it need not increase the money supply. The only way the money supply is increased and inflation would be expected is if the banks actually loaned that money out. If and when that happens, the money multiplier effect of our fractional reserve banking system kicks in, money supply increases, and inflation happens. The more money that is loaned out, the stronger this effect. Some say this is the end of the world, but if this were to happen though, growth would also be occurring that would need to be weighed against the negative aspects of the inflation in the first place. A fact people conveniently like to ignore. Also, the fed receives income from the credit they have swapped for which about 96% of is returned to the Treasury to pay for things like the national debt, again ignored by most. The swaps also have a more organic effect on interest rates which is clearly a good thing during a recovery, again something money printing can’t do. We could go on, the differences are many.
Why can’t people see these are not at all the same thing? While it’s true that QE could increase the money supply, and it could lead to inflation under certain circumstances, that need not be the case. We could very easily see deflation over the coming years (as myself and several others been warning about for a long time now)
But if a broader discussion is actually going to happen we can ignore the (quite massive) difference between swaps and printing money and focus on the big picture.
Are central banks the enemy of whom? The enmity of central banks are projected to…
That would be incorrect. In a very crude explanation, money printing would be by definition inflationary. Credit swaps between the fed and member banks on the other hand is by no means inflationary on it’s own and it need not increase the money supply. The only way the money supply is increased and inflation would be expected is if the banks actually loaned that money out. . . . [/quote]
Encouraging banks to start lending again was the whole point of QE.
[quote]When the crisis struck, big central banks like the Fed and the Bank of England slashed their overnight interest-rates to boost the economy. But even cutting the rate as far as it could go, to almost zero, failed to spark recovery. Central banks therefore began experimenting with other tools to encourage banks to pump money into the economy. One of them was QE.
[color=blue]To carry out QE central banks create money by buying securities, such as government bonds, from banks, with electronic cash that did not exist before. The new money swells the size of bank reserves in the economy by the quantity of assets purchased—hence “quantitative” easing. Like lowering interest rates, QE is supposed to stimulate the economy by encouraging banks to make more loans.[/color] The idea is that banks take the new money and buy assets to replace the ones they have sold to the central bank. That raises stock prices and lowers interest rates, which in turn boosts investment. Today, interest rates on everything from government bonds to mortgages to corporate debt are probably lower than they would have been without QE. If QE convinces markets that the central bank is serious about fighting deflation or high unemployment, then it can also boost economic activity by raising confidence. Several rounds of QE in America have increased the size of the Federal Reserve’s balance sheet—the value of the assets it holds—from less than $1 trillion in 2007 to more than $4 trillion now.[/quote] - The Economist, ‘What Is Quantitative Easing?’
And while it’s true the Fed can’t and doesn’t print momey - only the U.S. Treasury can do that - the Fed did create money when it swapped its high liquidity asset, newly created cash reserves, for banks’ low liquidity assets, government and mortgage bonds, in an attempt to stimulate the economy by getting banks to start lending again.
As Nobel Prize winning economost Joseph Stiglitz and others have pointed out though, U.S. banks didn’t take the $4 trilllion and inject it into the U.S. economy in the form of stimulatory loans but either sat on it or invested it in emerging markets in Asia and Latin America or healthier markets in Canada, Germany, New Zealand and Australia instead, causing disruptive assets (eg. housing) and commodities inflationary pressures in those places.
[quote]In 2009 and 2010, emerging market asset bubbles began to strongly reinflate due to global carry trades in which investors borrowed capital from deflation-prone countries with low interest rates (like the U.S. and Japan) and deployed it into higher-yielding investments in non-deflation-prone economies such as those in emerging markets. By late-2010, capital flows to emerging markets had risen to $825 billion – a level that exceeded the last peak in 2006-2007, while inflows to Asian economies rose 60% above their prior peak. Dilma Rousseff, the President of Brazil and a trained economist, has frequently decried the large pool of speculative capital that has sought returns in emerging market assets, calling it a “liquidity tsunami” due to its ability to cause inflation, overheating and asset bubbles in emerging market economies. The economic bubbles in Canada and Australia have inflated for similar reasons (rising commodities prices & carry trades) as the emerging markets bubble.
The U.S. Federal Reserve’s $600 billion Quantitative Easing 2 (QE2) program that began in the fall of 2010 caused commodities prices to surge and resulted in a new wave of fears over emerging market asset bubbles and economic overheating. In early 2011, the Bank of England’s Andrew Haldane warned of emerging market asset bubbles due to capital inflows from advanced economies and the IMF warned of “signs of overheating” in emerging market economies. By the summer of 2011, emerging market economies were red-hot and The Economist magazine published a “temperature gauge” to show which emerging market economies were most overheated, with Argentina, Brazil, Hong Kong and India at the top of the list. Around the same time, Joachim Fels, a top Morgan Stanley economist, warned that the BRIC nations faced an “elevated risk of credit bubbles and rising defaults” and BRIC banks began to show the signs of a credit crisis.[/quote]
Bottom line is QE saved the U.S. economy from a much worse fate but at what price? That remains to be seen now that the Fed is unwinding QE and the chickens are coming home to roost. The alternative? The same one facing Abenomics now. Shoot the third arrow of true structural reform to eliminate the root causes of all the economic dislocations in the first place or die.
awwww the uneducated greatness of hipster drivel. Thank you American education system.