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Modern Market Economy Brings Ruin
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visitorq

Joined: 11 Jan 2008

Posted: Mon May 21, 2012 10:35 am Post subject:

jaykimf wrote:

atwood wrote:

My question is still valid; so the banks forced people to speculate?

Hey atwood, We all know there are several posters here who are misguided (to put it mildly), and one in particular who seems unable to refrain from being rude and insulting. Personally, I think it is a complete waste of time to respond to anything such persons say. My advice is to ignore such persons and restrict yourself to debating with those who are reasonable enough to allow their opinions to be swayed by logical argument and the presentation of facts.

Hey jaykim, you forgot to post your hiwaay.net link Laughing

Therefore your entire post is a waste of space (I was so looking forward to debunking it yet again).

P.S. you'd better get off your high horse before you trip and fall off. Hypocrite.

atwood

Joined: 26 Dec 2009

Posted: Mon May 21, 2012 2:55 pm Post subject:

[quote="visitorq"]

atwood wrote:

"True free market, " "completely free market"--anyone but a literalist like yourself would realize they refer to the same thing.

The only joke here is that you feel the need to twist my statements as you attempt to justify your simplistic, ideology-driven argument.

I don't twist anything. I quote you word for word. Sorry that your literal words have trapped you and directly contradict your prior argument, but that can't be helped (you can't have it both ways). Maybe you should be more careful with what you write, and stop trying to come off as so smart. It's not like anyone here is buying it- you've made some pretty embarrassing blunders, like claiming that individuals have the same money-creation powers as banks.

Basically you've shot yourself in the foot on the credibility front talking about things you don't really understand, and yet you keep coming back with snarky remarks trying to act clever. Pretty typical, really.[/quoteI I never made that claim. That you now feel compelled to post completely dishonest statements shows you have no argument.

visitorq

Joined: 11 Jan 2008

Posted: Mon May 21, 2012 3:01 pm Post subject:

atwood wrote:

I never made that claim. That you now feel compelled to post completely dishonest statements shows you have no argument.

Oh, you wish you could cover your tracks on that one. Go back to page 3 and read comm's description of fractional reserve banking. Your direct response was the following:

Quote:

Individuals can use leverage as well as banks.

In other words (using your direct quote), you didn't even realize that banks have the ability to create money, whereas individuals do not. Your astounding, unmitigated ignorance was laid completely bare for all to see.

Fat_Elvis

Joined: 17 Aug 2006
Location: In the ghetto

Posted: Mon May 21, 2012 3:59 pm Post subject:

Kuros wrote:

Unposter has a point.

Frankly, I'm getting tired of these constant ideological back-and-forths on this forum. Of course Greenspan's Fed was reckless. Of course that's partly because there wasn't enough regulation, but of course money was also too easy for too long. Yes, the gov't set up all the foundations of the New Crash and Depression: early on, Fannie and Freddie, birthed to develop securitization, and later the FEC's special exemptions for the very biggest of banks from their leverage ratios. You could also say the whole thing was a continuation of the Savings and Loans crisis from the 80s, which shows you where we'll be again once the "recovery" comes. But on the other hand you might say at least we had Glass-Steagal, which wasn't actually crushed until the Citigroup Relief Act of 1999. Things didn't start to go bad until the private sector, Wall Street, really came to town in the early 00s. But yes, over 95% of housing is gov't insured in the U.S., compared to about 33% of health care.

But I'm also pretty sure fractional reserve banking is inevitable, and some sort of central bank is necessary. But not this monstrosity. Bernanke bailed out the whole world, and then he covered it up. It was opaque and dishonest, even if you're going to argue it was the right thing to do.

Unposter is right. It comes back to us. I realize that the big players have taken over and dominated the system. But that's always the threat in a democracy. Still, I'd argue the American Oligarchy has a different set of morals than the American Middle-Class. But he's right, its got more to do with particulars and decisions, both individual and collective, than simply free market vs. socialism.

Hallelujah! Reducing everything to this simple dichotomy is overly reductive.

Zyzyfer

Joined: 29 Jan 2003
Location: who, what, where, when, why, how?

Posted: Mon May 21, 2012 6:40 pm Post subject:

I wanted to just read but wow atwood is getting hammered - and I don't mean ideologically. If this were a two-sided flame war I wouldn't give a toss, but it's not. And I'd rather say something directly than go around reporting posts.

visitorq wrote:

I don't twist anything. I quote you word for word. Sorry that your literal words have trapped you and directly contradict your prior argument, but that can't be helped (you can't have it both ways).

It's pretty easy for someone not entrenched in opposing atwood to gather atwood's meaning in the sentence you quoted. You didn't trap atwood with atwood's literal words.

visitorq wrote:

...and yet you keep coming back with snarky remarks trying to act clever. Pretty typical, really.

You and comm have been passing out snarky insinuations implying that atwood is an idiot practically the entire thread. A couple of choice comments from yourself on page seven alone:

Quote:

Have you been drinking?

Quote:

It's quite straightforward and obvious if you have a brain in your head and are capable of thought...

I've noticed in other threads I've browsed that you tend to be the one who turns snarky in arguments.

visitorq

Joined: 11 Jan 2008

Posted: Mon May 21, 2012 8:05 pm Post subject:

Zyzyfer wrote:

visitorq wrote:

I don't twist anything. I quote you word for word. Sorry that your literal words have trapped you and directly contradict your prior argument, but that can't be helped (you can't have it both ways).

It's pretty easy for someone not entrenched in opposing atwood to gather atwood's meaning in the sentence you quoted. You didn't trap atwood with atwood's literal words.

visitorq wrote:

...and yet you keep coming back with snarky remarks trying to act clever. Pretty typical, really.

You and comm have been passing out snarky insinuations implying that atwood is an idiot practically the entire thread. A couple of choice comments from yourself on page seven alone:

Quote:

Have you been drinking?

Quote:

It's quite straightforward and obvious if you have a brain in your head and are capable of thought...

I've noticed in other threads I've browsed that you tend to be the one who turns snarky in arguments.

You decided to chime in just for this? What a waste of time. The snarkiness most certainly began with atwood. It wouldn't even matter much, if he wasn't so clueless about the subject at hand.

atwood

Joined: 26 Dec 2009

Posted: Mon May 21, 2012 8:39 pm Post subject:

visitorq wrote:

Zyzyfer wrote:

visitorq wrote:

I don't twist anything. I quote you word for word. Sorry that your literal words have trapped you and directly contradict your prior argument, but that can't be helped (you can't have it both ways).

It's pretty easy for someone not entrenched in opposing atwood to gather atwood's meaning in the sentence you quoted. You didn't trap atwood with atwood's literal words.

visitorq wrote:

...and yet you keep coming back with snarky remarks trying to act clever. Pretty typical, really.

You and comm have been passing out snarky insinuations implying that atwood is an idiot practically the entire thread. A couple of choice comments from yourself on page seven alone:

Quote:

Have you been drinking?

Quote:

It's quite straightforward and obvious if you have a brain in your head and are capable of thought...

I've noticed in other threads I've browsed that you tend to be the one who turns snarky in arguments.

You decided to chime in just for this? What a waste of time. The snarkiness most certainly began with atwood. It wouldn't even matter much, if he wasn't so clueless about the subject at hand.

You lie like a bear rug.

comm

Joined: 22 Jun 2010

Posted: Mon May 21, 2012 9:00 pm Post subject:

Zyzyfer wrote:

You and comm have been passing out snarky insinuations implying that atwood is an idiot practically the entire thread.

I'm usually pretty patient with people, in fact I think I was pretty polite in the first few pages of this thread... But atwood spent several posts either having no idea what fractional reserve banking is, or using feigned ignorance to downplay its relevance. Referring to fractional reserve banking (the ability of banks to create their own money through loans) he said:

atwood wrote:

More nonsense. Individuals can use leverage as well as banks.

When I explained in detail what fractional reserve banking is, he said:

atwood wrote:

An individual can borrow to invest just like banks can do. Banks can borrow more because they have greater credit.

People borrow a lot more than they have to buy homes and start businesses. Credit is a big, big part of the economy and one reason the American economy has been so successful.

Not everyone has studied economics formally, but when you reply to a specific topic it's good to know a little something about it. And as I'm sure most of us here know, money creation through fractional reserve banking has -nothing- to do with a bank's "ability to borrow more", nor is it something that individuals can use.

I'm on this particular forum to hear thought-out arguments from other people, refine my own ideas, and occasionally be proven wrong in a way that advances my own knowledge. I'll be more than happy to indulge atwood's opinion on fractional reserve banking (which he was attempting to expound above) when he has some idea of what it is that we're talking about. But as the above pretty clearly demonstrates, this topic (and, as it happens, several others in this thread) he knows absolutely nothing about.

geldedgoat

Joined: 05 Mar 2009

Posted: Mon May 21, 2012 9:18 pm Post subject:

atwood wrote:

ontheway wrote:

Typical free market nonsense is the highest form of illogic and shouldn't be taught at any university that actually values knowledge and education. It's amazing that guys as dumb as me have college degrees at all.

All of our current economic and social problems are caused by too much government, too much socialism, too much involvement of the "public sphere" and too much "democracy" resulting in wars around the world, the teetering US world empire, thousands of dead US military personnel and hundreds of thousands of innocents in countries around the world, huge overconsumption of energy and world wide pollution due to totally misdirected infrastructure development on a socialist model, waste of trillions of dollars on the wrong infrastructure, massive inflation (the dollar has lost 99% of its value since the government created the Fed in 1913 for example), unemployment, under-employment, slow economic growth in the best times, recessions and depressions at other times, massive incarceration of innocent people (victimless crimes and the war on drugs), real crime rates up to 80% induced by failed government policies, massive government debt and failed government schools just to mention a few things.

Thanks for the chuckle. Too much democracy--you gotta love it. If only we put everything in J. P. Morgan's hands, the world would be a paradise.

This is atwood's first post in this thread. Note the intentional misquotes he added to ontheway's post. It's fairly clear who began the insults.

visitorq

Joined: 11 Jan 2008

Posted: Mon May 21, 2012 9:21 pm Post subject:

comm wrote:

Yep. He (she?) was so totally out to lunch, it was just embarrassing...

I mean, it's totally fine to not know about something, but then to come on here and start acting like some kind of know-it-all is pretty ridiculous.

atwood

Joined: 26 Dec 2009

Posted: Tue May 22, 2012 4:26 am Post subject:

comm wrote:

Zyzyfer wrote:

You and comm have been passing out snarky insinuations implying that atwood is an idiot practically the entire thread.

atwood wrote:

More nonsense. Individuals can use leverage as well as banks.

When I explained in detail what fractional reserve banking is, he said:

atwood wrote:

People borrow. Businesses borrow. Banks borrow.

Banks do it on a larger scale, more systematically. That's patently obvious, just as is it obvious the notion that the Fed and the large banks are responsible for the entire economy is simplistic.

So ramble on about fractional reserve banking; it is less than persuasive in supporting the opinions expressed that the Fed has been responsible for every recession in the U.S. and that the dollar is worth almost nothing since going off the gold standard even though the standard of living in the U.S. has continued in to increase in that time period--from Levitown to McMansions and on and on.

It's great that Milton Friedman left behind so many disciples; too bad he wasn't always right. For example, the above quoted opinion that the Fed caused the Depression by contracting the monetary supply, implying that the Fed could control the economy. So why, after all the money the current Fed has pumped into the economy, isn't it humming right along? And why are the Friedman acolytes criticizing the current Fed for doing what Friedman said it should do and wringing their hands over hyperinflation?

You say you want to have a well-thought out argument, but the posts I responded to were all based on assumptions derived from ideology. Sorry to rain on your parade with a little common sense.

The

comm

Joined: 22 Jun 2010

Posted: Tue May 22, 2012 5:37 am Post subject:

atwood wrote:

It's great that Milton Friedman left behind so many disciples; too bad he wasn't always right. For example, the above quoted opinion that the Fed caused the Depression by contracting the monetary supply, implying that the Fed could control the economy. So why, after all the money the current Fed has pumped into the economy, isn't it humming right along? And why are the Friedman acolytes criticizing the current Fed for doing what Friedman said it should do and wringing their hands over hyperinflation?

So what you're saying is:
The Fed is pumping money into the economy and that's not helping. Even worse, it's causing high levels of inflation in the process (it's obviously not hyperinflation yet, but I like where your head's at). And again, you're saying that the Fed's control of the money supply is turning out to be a vain attempt to modify short-run macro-economic outcomes at the expense of medium to long-term economic outcomes?
If you really believe that, you've made my day.

On the other hand, you kinda let me down with this:

atwood wrote:

I want to reiterate that Fractional Reserve Banking is -not- simply borrowing and investing the borrowed money. If I give you $11, you can invest $11. Maybe you will use that as collateral for a small loan that you then invest... but you -will- pay interest on that loan whether your investment comes through or not. If I give a bank $11, it can legally invest $100 without borrowing anything else. That's an extra $89 in investment money that they do not pay interest on to anyone, since it wasn't borrowed.

Now, perhaps you've confused who was arguing what, but I wasn't claiming that fractional reserve banking had caused depressions. I only stated that it was a profound example of how the state gives preferential treatment to certain institutions (in this case, the ability to create money and then invest it). Similarly, the Federal Reserve gives preferential treatment to its owners, under the assumption that "what's good for JP Morgan is good for America".

Basically, the reason that the Fed had to perform backdoor bailouts is because investment banks had taken my $11 deposit and invested $100... then they lost that $100 and could not legally invest or lend any more money. So to save the ridiculous system, the Federal Reserve started "loaning" massive amounts of Fed-created money to these banks at near 0% interest, which the banks could then loan to the U.S. government (and others) for a profit. Jon Stewart explains the absurdity of the situation here.

young_clinton

Joined: 09 Sep 2009

Posted: Tue May 22, 2012 6:10 am Post subject:

comm wrote:

Some people simply aren't going to be engineers, scientists, or skilled labor in new fields.

People have been saying stuff like that for years. You have to have people watch the robots and make manual adjustments. You always will.

comm wrote:

However, so long as these nations remain democratic republics, I think a stable solution will be established... That is, unless our sovereign debt is allowed to destroy us first.

The USA is mostly in debt to itself. Hardly likely it is going to destroy itself. Why are people starting to invest in dollars and taking thier money out of Euros and developing nation currencies?

jaykimf

Joined: 24 Apr 2004

Posted: Tue May 22, 2012 10:09 am Post subject:

Here is an interesting speech given by Ben Bernanke back in 2004 called Money, Gold, and the Great Depression. http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
The conclusion:

Quote:

Some important lessons emerge from the story. One lesson is that ideas are critical. The gold standard orthodoxy, the adherence of some Federal Reserve policymakers to the liquidationist thesis, and the incorrect view that low nominal interest rates necessarily signaled monetary ease, all led policymakers astray, with disastrous consequences. We should not underestimate the need for careful research and analysis in guiding policy. Another lesson is that central banks and other governmental agencies have an important responsibility to maintain financial stability. The banking crises of the 1930s, both in the United States and abroad, were a significant source of output declines, both through their effects on money supplies and on credit supplies. Finally, perhaps the most important lesson of all is that price stability should be a key objective of monetary policy. By allowing persistent declines in the money supply and in the price level, the Federal Reserve of the late 1920s and 1930s greatly destabilized the U.S. economy and, through the workings of the gold standard, the economies of many other nations as well.

I realize that there are some who believe they know everything there is to know about the topic, who will dismiss it out of hand because it is written by Ben Bernanke after all. But I highly recommend reading the whole speech to those who are actually willing to consider what he says before dismissing him as an idiot.

Interestingly enough, the Gold standard has also been implicated in the Dutch Tulip Mania of the 1630's.

Quote:

But what made this episode unique was that the government policy did not expand the supply of money through fractional reserve banking which is the modern tool. Actually, it was quite the opposite. As kings throughout Europe debased their currencies, through clipping, sweating or by decree, the Dutch provided a sound money policy, which called for money to be backed one hundred per cent by specie. This policy, combined with the occasional seizure of bullion and coin from Spanish ships on the high seas, served to attract coin and bullion from throughout the world.

The end result was a large increase in the supply of coin and bullion in 1630s Amsterdam. Free coinage laws then served to create more money from this increased supply of coin and bullion, than what the market demanded. This acute increase in the supply of money served to foster an atmosphere that was ripe for speculation and malinvestment, which manifested itself in the intense trading of tulips.

atwood

Joined: 26 Dec 2009

Posted: Tue May 22, 2012 2:30 pm Post subject:

comm wrote:

atwood wrote:

Nope, not what I'm saying regarding the Fed. I'm just pointing out how no matter what the Fed does, some, like you, are going to blame it come hell or high water.. And although the economy is not where it was or will be, without the Fed's actions, things could well be much worse.

The system is not ridiculous; it's the lack of regulation and oversight. Sure the banks should never have been able to profit the way they did with the bailout money; the Fed and Geitner should have hammered out more restrictive terms and put more force to bear on having the banks solve the problems they created. But they trusted the market.

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