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Pluto
Joined: 19 Dec 2006
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 Posted: Wed Jun 03, 2009 8:25 am Post subject: |
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| Chancellor Angela Merkel wrote: |
| "I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line," Ms. Merkel said in a speech in Berlin. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time." |
http://online.wsj.com/article/SB124398546796379239.html
This may be populist posturing ahead of elections, but it's still nice to see a politician, even if foreign, shining some light on this subject. And I don't know what she means by being back in the same situation in ten years time when we may very well still be in the same situation in ten years time.. |
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kotakji
Joined: 23 Oct 2006
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| Posted: Wed Jun 03, 2009 12:22 pm Post subject: |
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| On a slightly different topic- did gold have significantly less commodity value during the gold standard times, or were we really running around with currency whose smallest denomination had the purchasing power of about fifty cents today? Any currency historians out there? |
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mole
Joined: 06 Feb 2003
Location: Act III
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| Posted: Wed Jun 03, 2009 12:49 pm Post subject: |
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| kotakji wrote: |
| On a slightly different topic- did gold have significantly less commodity value during the gold standard times, or were we really running around with currency whose smallest denomination had the purchasing power of about fifty cents today? Any currency historians out there? |
Think outside the fiat fraud. A dollar was defined as a certain weight in gold. |
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kotakji
Joined: 23 Oct 2006
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| Posted: Wed Jun 03, 2009 3:55 pm Post subject: |
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| mole wrote: |
| kotakji wrote: |
| On a slightly different topic- did gold have significantly less commodity value during the gold standard times, or were we really running around with currency whose smallest denomination had the purchasing power of about fifty cents today? Any currency historians out there? |
Think outside the fiat fraud. A dollar was defined as a certain weight in gold. |
Thanks but that's not what I meant- I know what the gold standard is. I mean the intrinsic purchasing power of the gold. If 20 dollars was one Oz of gold, then one penny was 1/2000 oz of gold. Now to me it seems that is a unwieldy, large value of money for making small transactions. IE if I were to go down the corner store and buy a peppermint and the smallest coin available is worth 1/2000th of an oz of gold, then that's one expensive peppermint. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Wed Jun 03, 2009 5:18 pm Post subject: |
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| ^ There used to be half-pennies. |
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kotakji
Joined: 23 Oct 2006
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| Posted: Wed Jun 03, 2009 5:26 pm Post subject: |
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| Pluto wrote: |
| ^ There used to be half-pennies. |
Thanks that's more of what I was interested in, I notice Wiki states however that "the 1857 half cent would be equivalent to $0.12 in current money." That's still a large value for small purchases. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Aug 26, 2009 4:27 am Post subject: |
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The Nation ran a good article on the Fed a couple weeks back. It's long, so I'll only post the last few paragraphs.
http://www.thenation.com/doc/20090803/greider
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Dismantling the Temple
Many in Congress will be afraid to take on the temple and reluctant to violate the taboo surrounding the Fed. It will probably require popular rebellion to make this happen, and that requires citizens who see through the temple's secrets. But the present crisis has not only exposed the Fed's worst failures and structural flaws; it has also introduced citizens to the vast potential of monetary policy to serve the common good. If Ben Bernanke can create trillions of dollars at will and spread them around the financial system, could government do the same thing to finance important public projects the people want and need? Daring as it sounds, the answer is, Yes, we can.
The central bank's most mysterious power--to create money with a few computer keystrokes--is dauntingly complicated, and the mechanics are not widely understood. But the essential thing to understand is that this power relies on democratic consent--the people's trust, their willingness to accept the currency and use it in exchange. This is not entirely voluntary, since the government also requires people to pay their taxes in dollars, not euros or yen. But citizens conferred the power on government through their elected representatives. Newly created money is often called the "pure credit" of the nation. In principle, it exists for the benefit of all.
In this emergency, Bernanke essentially used the Fed's money-creation power in a way that resembles the "greenbacks" Abraham Lincoln printed to fight the Civil War. Lincoln was faced with rising costs and shrinking revenues (because the Confederate states had left the Union). The president authorized issuance of a novel national currency--the "greenback"--that had no backing in gold reserves and therefore outraged orthodox thinking. But the greenbacks worked. The expanded money supply helped pay for war mobilization and kept the economy booming. In a sense, Lincoln won the war by relying on the "full faith and credit" of the people, much as Bernanke is printing money freely to fight off financial collapse and deflation.
If Congress chooses to take charge of its constitutional duty, it could similarly use greenback currency created by the Federal Reserve as a legitimate channel for financing important public projects--like sorely needed improvements to the nation's infrastructure. Obviously, this has to be done carefully and responsibly, limited to normal expansion of the money supply and used only for projects that truly benefit the entire nation (lest it lead to inflation). But here is an example of how it would work.
President Obama has announced the goal of building a high-speed rail system. Ours is the only advanced industrial society that doesn't have one (ride the modern trains in France or Japan to see what our society is missing). Trouble is, Obama has only budgeted a pittance ($8 billion) for this project. Spain, by comparison, has committed more than $100 billion to its fifteen-year railroad-building project. Given the vast shortcomings in US infrastructure, the country will never catch up with the backlog through the regular financing of taxing and borrowing.
Instead, Congress should create a stand-alone development fund for long-term capital investment projects (this would require the long-sought reform of the federal budget, which makes no distinction between current operating spending and long-term investment). The Fed would continue to create money only as needed by the economy; but instead of injecting this money into the banking system, a portion of it would go directly to the capital investment fund, earmarked by Congress for specific projects of great urgency. The idea of direct financing for infrastructure has been proposed periodically for many years by groups from right and left. Transportation Secretary Ray LaHood co-sponsored legislation along these lines a decade ago when he was a Republican Congressman from Illinois.
This approach speaks to the contradiction House Speaker Pelosi pointed out when she asked why the Fed has limitless money to spend however it sees fit. Instead of borrowing the money to pay for the new rail system, the government financing would draw on the public's money-creation process--just as Lincoln did and Bernanke is now doing.
The bankers would howl, for good reason. They profit enormously from the present system and share in the money-creation process. When the Fed injects more reserves into the banking system, it automatically multiplies the banks' capacity to create money by increasing their lending (and banks, in turn, collect interest on their new loans). The direct-financing approach would not halt the banking industry's role in allocating new credit, since the newly created money would still wind up in the banks as deposits. But the government would now decide how to allocate new credit to preferred public projects rather than let private banks make all the decisions for us.
The reform of monetary policy, in other words, has promising possibilities for revitalizing democracy. Congress is a human institution and therefore fallible. Mistakes will be made, for sure. But we might ask ourselves, If Congress were empowered to manage monetary policy, could it do any worse than those experts who brought us to ruin? |
An interesting idea. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Wed Aug 26, 2009 5:24 am Post subject: |
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^ a very interesting idea - and one that's been proven to work. The greenbacks differed from Fed fraud notes in the sense that they did not redistribute wealth from the people into a few private hands. They were essentially interest free, which is the main point. Interest could be attached to them, but all would be apportioned back to the American people. Just think: $450 billion per year in saved money, currently paid to the private Fed just to cover the interest on debt we owe it, could be given back to the people or used for public works.
Either way, money should be created as value in an economy (ie spent into existence), not as debt. If the government could create our money for us as a service to the people (not discounting private competing currencies, with usury made illegal), then currency would be stable (no wild speculation like we have now) and there would be no more business cycles. The system of fraud and instability we have now would be ended. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Wed Aug 26, 2009 6:15 am Post subject: |
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| ^I think you'll like what Milton Friedman had to say about monetary policy. His bete noir was the Federal Reserve also, although he didn't support a strict gold standard either. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Aug 26, 2009 9:05 am Post subject: |
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| kotakji wrote: |
| Pluto wrote: |
| ^ There used to be half-pennies. |
Thanks that's more of what I was interested in, I notice Wiki states however that "the 1857 half cent would be equivalent to $0.12 in current money." That's still a large value for small purchases. |
How often do you spend less than 12 cents at the store? |
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Pluto
Joined: 19 Dec 2006
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| Posted: Tue Sep 01, 2009 4:41 pm Post subject: |
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Is Ben Bernanke The "Machiavelian Monster" Equivalent Of Nicholas Biddle? - from Zero Hedge
Click the link for a good illistration of the Fed in the beginning of the comments section by Project Mayhem.
| Quote: |
Mises does a great profile of Nicholas Biddle (1786-1844), president of the Second Bank of the United States - the central bank that preceded the Federal Reserve, and provides some useful analogues to not just the current Chairman of the Fed, but to all Fed-friendly crony insitutions that are doing all in the power to perpetuate the hegemony of Wall Street.
Like Ben Bernanke today, Nicholas Biddle cultivated the veneer of a benign civil servant calculating serenely far above the political fray. In reality he, like Bernanke, was up to his neck in the backroom game of power.
When Biddle's bureaucratic cradle was rocked, he quickly morphed into a Machiavellian monster. Keep that in mind as Ben Bernanke gets progressively cornered by Ron Paul and the bourgeoning anti-Fed movement. (Already the Fed is less popular than the IRS.)
When you hear about the Federal Reserve Transparency Act getting stalled in committee, think of Daniel Webster, bought and paid for with central bank money. When you read Fed apologia in the New York Times, The Economist, and the Wall Street Journal denouncing the "reckless populism" of the Act, think of the newspaper editors in Biddle's pocket. |
Click here for the Mises article.
It makes you think though. While Bernanke may seem mild mannered in front of Congress and the Public, what type of discrete, gentlemanly corruptionare Fed officials engaged in? |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Wed Sep 02, 2009 3:01 pm Post subject: |
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| visitorq wrote: |
^ a very interesting idea - and one that's been proven to work. The greenbacks differed from Fed fraud notes in the sense that they did not redistribute wealth from the people into a few private hands. They were essentially interest free, which is the main point. Interest could be attached to them, but all would be apportioned back to the American people. Just think: $450 billion per year in saved money, currently paid to the private Fed just to cover the interest on debt we owe it, could be given back to the people or used for public works.
Either way, money should be created as value in an economy (ie spent into existence), not as debt. If the government could create our money for us as a service to the people (not discounting private competing currencies, with usury made illegal), then currency would be stable (no wild speculation like we have now) and there would be no more business cycles. The system of fraud and instability we have now would be ended. |
"In particular, a number of observers are especially interested in "United States Notes" (also called "United States Currency Notes"). It has been argued by some that these are an especially desirable form of currency because they are issued directly by the Treasury, and not through the Federal Reserve System.
United States Notes are the "greenbacks" that were first issued by the Treasury during the civil war. They were the first paper currency declared by the government to be legal tender; and they too, were backed only by the full faith and credit of the United States. They were issued in amounts large enough to cause a significant inflation at the time. Efforts were made after the war to withdraw them. Their number was frozen by statute in the amount of $347 million outstanding in 1878. The sum outstanding remained constant until 1982, when the law was changed to a ceiling amount of $300 million (with no floor). They have since largely been withdrawn as they have been paid in to banks by customers.
As explained below, there is no meaningful economic difference between Federal Reserve Notes and United States Notes. They are both unbacked paper money declared to be legal tender by the U.S. government. They cost the same to produce. They have identical propensity to generate inflation if issued in excessive amounts. To the extent that they are issued, they generate savings to the government in the same amount: in the case of U.S. Notes, the Treasury is able to borrow less because it can spend the notes instead, thereby saving interest expense; in the case of Federal Reserve Notes, the Fed is able to buy back from the public more of the Treasury's outstanding debt, and then turn the interest from the securities back to the Treasury's general fund. "
http://home.hiwaay.net/~becraft/FRS-myth.htm#hd15 |
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visitorq
Joined: 11 Jan 2008
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| Posted: Wed Sep 02, 2009 9:51 pm Post subject: |
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| jaykimf wrote: |
| visitorq wrote: |
^ a very interesting idea - and one that's been proven to work. The greenbacks differed from Fed fraud notes in the sense that they did not redistribute wealth from the people into a few private hands. They were essentially interest free, which is the main point. Interest could be attached to them, but all would be apportioned back to the American people. Just think: $450 billion per year in saved money, currently paid to the private Fed just to cover the interest on debt we owe it, could be given back to the people or used for public works.
Either way, money should be created as value in an economy (ie spent into existence), not as debt. If the government could create our money for us as a service to the people (not discounting private competing currencies, with usury made illegal), then currency would be stable (no wild speculation like we have now) and there would be no more business cycles. The system of fraud and instability we have now would be ended. |
"In particular, a number of observers are especially interested in "United States Notes" (also called "United States Currency Notes"). It has been argued by some that these are an especially desirable form of currency because they are issued directly by the Treasury, and not through the Federal Reserve System.
United States Notes are the "greenbacks" that were first issued by the Treasury during the civil war. They were the first paper currency declared by the government to be legal tender; and they too, were backed only by the full faith and credit of the United States. They were issued in amounts large enough to cause a significant inflation at the time. Efforts were made after the war to withdraw them. Their number was frozen by statute in the amount of $347 million outstanding in 1878. The sum outstanding remained constant until 1982, when the law was changed to a ceiling amount of $300 million (with no floor). They have since largely been withdrawn as they have been paid in to banks by customers.
As explained below, there is no meaningful economic difference between Federal Reserve Notes and United States Notes. They are both unbacked paper money declared to be legal tender by the U.S. government. They cost the same to produce. They have identical propensity to generate inflation if issued in excessive amounts. To the extent that they are issued, they generate savings to the government in the same amount: in the case of U.S. Notes, the Treasury is able to borrow less because it can spend the notes instead, thereby saving interest expense; in the case of Federal Reserve Notes, the Fed is able to buy back from the public more of the Treasury's outstanding debt, and then turn the interest from the securities back to the Treasury's general fund. "
http://home.hiwaay.net/~becraft/FRS-myth.htm#hd15 |
You again? You still haven't replied to my last post on the Bernanke thread, where I basically debunked that "Fed Myths" source of yours (if you have anything to add to it, I'd appreciate it if you would do so). It seems you just stumbled upon it as some kind of a cure-all to even the most obvious and fact-based criticisms of the Fed, when in fact it contains little evidence, and some demonstrable, outright lies.
The government does not receive its interest back from the Fed (at least there is zero proof or evidence of it whatsoever). The Fed is the largest holder of government debt by far, in the whole world (despite what your article falsely states). The Fed is legalized fraud which has tangled everyone into a gigantic ponzi scheme. Everyone in the US is heavily in debt, despite being the most powerful economy on earth, because of the debt-based, fraudulent Fed system.
Anyway, the greenbacks were issued during the civil war to avoid getting the government tangled up in debt to private banks (mostly offshore). Under those extreme circumstances, issuing an inflationary amount was acceptable. Greenbacks may not have been perfect, but far more beneficial to the common public than Fed notes are in every single way. It also helps force the Treasury not to spend too much without public support, and therefore curbs corruption. With the Fed, the corruption is ruinous, right out in the open, and gives the public no say. |
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mole
Joined: 06 Feb 2003
Location: Act III
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| Posted: Thu Sep 03, 2009 3:59 am Post subject: |
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| Pre-ordered weeks ago, my fresh copy of Dr. Ron Paul's End The Fed just arrived. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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