Does anyone think we need the Fed?

[Mike Mitrosky]

What I find odd is that on your own website The Silver Bear Cafe you state the opposite and claim that the Fed produces the bills and then sells them to the government.

well one, thats not my webite.. and two I have to dumb it down somewhat. In effect, the fed sells our own money to us. We go into debt to buy it, and then we get taxed to finance it.

And amazingly you'er the only one smart enough to figure this one out.
Are you sure you're not really a Sunni?

Lots of people have figured it out.. Its a no brainer.

America can make this for 4 cents:

Or it can pay $100 to buy this from the federal reserve:

Why in the hell would you want the country to go into debt to buy its currency instead of just creating it itself?

 

[Mike Mitrosky]

Moving the economy away from a fractional banking system would collapse the economy because credit would implode and make last fall's financial collapse look like a picnic.

Whether or not the Federal Reserve system is the best system, central banks with an "elastic currency" (how very 1920s of you) generally are more adaptive and have less volatility in the economy.

Id be fine with letting the fed do what it does as long as we could have competing currencies in silver and/or gold.

Over time youll see that "elastic" is just another word for "volatile"

 

[Toro]

well one, thats not my webite.. and two I have to dumb it down somewhat. In effect, the fed sells our own money to us. We go into debt to buy it, and then we get taxed to finance it.

We do not go into debt to create Federal Reserve notes. Federal reserve notes are exchanged for government debt, which is held as an asset on the balance sheet. Holding government debt is not the same thing as going into debt.

 

[The Rabbi]

I get the idea that you're a crank.
Look at P2 where it says any surplus goes to the Treasury. I guess that's the same with Fed Ex too, right?

 

[Toro]

Id be fine with letting the fed do what it does as long as we could have competing currencies in silver and/or gold.

Over time youll see that "elastic" is just another word for "volatile"

A gold/silver standard would mean that the money supply would be reliant on the profitability of mining firms and the political whims of third world countries. It makes little sense from an economic perspective to be reliant on an industry that was irrational for three decades and from a political perspective to be reliant on countries that are often basket cases.

 

[The Rabbi]

Id be fine with letting the fed do what it does as long as we could have competing currencies in silver and/or gold.

Over time youll see that "elastic" is just another word for "volatile"

A gold/silver standard would mean that the money supply would be reliant on the profitability of mining firms and the political whims of third world countries. It makes little sense from an economic perspective to be reliant on an industry that was irrational for three decades and from a political perspective to be reliant on countries that are often basket cases.

And it would cause a massive deflation. There isn't a whole lot of gold/silver in the world. This was the issue in the 19thc, not enough capital.

 

[Mike Mitrosky]

I get the idea that you're a crank.
Look at P2 where it says any surplus goes to the Treasury. I guess that's the same with Fed Ex too, right?

Sure their "surplus" goes back to the treasury..But theres a few issues with that. One the real issue is seignorage and that the debt is created in the first place. Also we dont really know what the fed does because its books are not open to a government audit. They can transfer govt debt to member banks or other places and then no money is remitted back to the treasury. Basically around the $23 or so billion the fed collects they remit back approx $19 or $20 billion. But we really dont know whats going on behind the scenes.. And theres no reason for this debt to be created in the first place.


Another problem comes from the fractional reserve banking system which uses these created federal reserve notes as reserves to make out loans and such. These banks in turn will create more checkbook money on top of the paper federal reserve notes so that we get a very unstable and very inflationary environment that all the while makes it impossible for all debts to get paid off.

The system is always taking somebody's house, car, business, property etc. Thats how it works.

Our currency is debt and we continually have to go into debt to buy more of it.

 

[Mike Mitrosky]

Id be fine with letting the fed do what it does as long as we could have competing currencies in silver and/or gold.

Over time youll see that "elastic" is just another word for "volatile"

A gold/silver standard would mean that the money supply would be reliant on the profitability of mining firms and the political whims of third world countries. It makes little sense from an economic perspective to be reliant on an industry that was irrational for three decades and from a political perspective to be reliant on countries that are often basket cases.

You only believe this because this is what youve been taught. I understand there is a good deal of cognitive dissonance on this topic with some people but you really do have to be open to information and be willing to allow your beliefs to come under critique with this.

 

[Toro]

Id be fine with letting the fed do what it does as long as we could have competing currencies in silver and/or gold.

Over time youll see that "elastic" is just another word for "volatile"

A gold/silver standard would mean that the money supply would be reliant on the profitability of mining firms and the political whims of third world countries. It makes little sense from an economic perspective to be reliant on an industry that was irrational for three decades and from a political perspective to be reliant on countries that are often basket cases.

You only believe this because this is what youve been taught. I understand there is a good deal of cognitive dissonance on this topic with some people but you really do have to be open to information and be willing to allow your beliefs to come under critique with this.

Dude, I was once told I was the largest owner of gold stocks in my fund in the southeastern United States. Plus, I own a lot of gold now. So I don't need you telling me about cognitive dissonance.

I'd suggest you answer the criticism. Why would the United States entrust its monetary system to an industry that has historically been run poorly and to a group of unstable poor countries that are often hostile to the United States?

 

[Toro]

Id be fine with letting the fed do what it does as long as we could have competing currencies in silver and/or gold.

Over time youll see that "elastic" is just another word for "volatile"

A gold/silver standard would mean that the money supply would be reliant on the profitability of mining firms and the political whims of third world countries. It makes little sense from an economic perspective to be reliant on an industry that was irrational for three decades and from a political perspective to be reliant on countries that are often basket cases.

And it would cause a massive deflation. There isn't a whole lot of gold/silver in the world. This was the issue in the 19thc, not enough capital.

Exactly.

At today's market rates, to back the $1 trillion in Federal Reserve notes in circulation would require 20% of all the gold mined in the history of the world at current market rates to back it up. Good luck with that.

 

[Kevin_Kennedy]

A gold/silver standard would mean that the money supply would be reliant on the profitability of mining firms and the political whims of third world countries. It makes little sense from an economic perspective to be reliant on an industry that was irrational for three decades and from a political perspective to be reliant on countries that are often basket cases.

You only believe this because this is what youve been taught. I understand there is a good deal of cognitive dissonance on this topic with some people but you really do have to be open to information and be willing to allow your beliefs to come under critique with this.

Dude, I was once told I was the largest owner of gold stocks in my fund in the southeastern United States. Plus, I own a lot of gold now. So I don't need you telling me about cognitive dissonance.

I'd suggest you answer the criticism. Why would the United States entrust its monetary system to an industry that has historically been run poorly and to a group of unstable poor countries that are often hostile to the United States?

I know you don't agree, but I'd just like to point out that the supply of gold is irrelevant. Unless the U.S. owns no gold at all, we wouldn't be entrusting our monetary policy to anyone.

 

[The Rabbi]

I get the idea that you're a crank.
Look at P2 where it says any surplus goes to the Treasury. I guess that's the same with Fed Ex too, right?

Sure their "surplus" goes back to the treasury..But theres a few issues with that. One the real issue is seignorage and that the debt is created in the first place. Also we dont really know what the fed does because its books are not open to a government audit. They can transfer govt debt to member banks or other places and then no money is remitted back to the treasury. Basically around the $23 or so billion the fed collects they remit back approx $19 or $20 billion. But we really dont know whats going on behind the scenes.. And theres no reason for this debt to be created in the first place.


Another problem comes from the fractional reserve banking system which uses these created federal reserve notes as reserves to make out loans and such. These banks in turn will create more checkbook money on top of the paper federal reserve notes so that we get a very unstable and very inflationary environment that all the while makes it impossible for all debts to get paid off.

The system is always taking somebody's house, car, business, property etc. Thats how it works.

Our currency is debt and we continually have to go into debt to buy more of it.

Your description of the fractional reserve system baffles the mind. If I deposit $1000 in the bank what are they supposed to do with it? Stick it in the vault?

 

[The Rabbi]

You only believe this because this is what youve been taught. I understand there is a good deal of cognitive dissonance on this topic with some people but you really do have to be open to information and be willing to allow your beliefs to come under critique with this.

Dude, I was once told I was the largest owner of gold stocks in my fund in the southeastern United States. Plus, I own a lot of gold now. So I don't need you telling me about cognitive dissonance.

I'd suggest you answer the criticism. Why would the United States entrust its monetary system to an industry that has historically been run poorly and to a group of unstable poor countries that are often hostile to the United States?

I know you don't agree, but I'd just like to point out that the supply of gold is irrelevant. Unless the U.S. owns no gold at all, we wouldn't be entrusting our monetary policy to anyone.

This is why there was no inflation in Europe after Spain began mining large quantities of gold and silver in the New World?

 

[Mike Mitrosky]

I get the idea that you're a crank.
Look at P2 where it says any surplus goes to the Treasury. I guess that's the same with Fed Ex too, right?

Sure their "surplus" goes back to the treasury..But theres a few issues with that. One the real issue is seignorage and that the debt is created in the first place. Also we dont really know what the fed does because its books are not open to a government audit. They can transfer govt debt to member banks or other places and then no money is remitted back to the treasury. Basically around the $23 or so billion the fed collects they remit back approx $19 or $20 billion. But we really dont know whats going on behind the scenes.. And theres no reason for this debt to be created in the first place.


Another problem comes from the fractional reserve banking system which uses these created federal reserve notes as reserves to make out loans and such. These banks in turn will create more checkbook money on top of the paper federal reserve notes so that we get a very unstable and very inflationary environment that all the while makes it impossible for all debts to get paid off.

The system is always taking somebody's house, car, business, property etc. Thats how it works.

Our currency is debt and we continually have to go into debt to buy more of it.

Your description of the fractional reserve system baffles the mind. If I deposit $1000 in the bank what are they supposed to do with it? Stick it in the vault?

When you stick $1,000 in the bank should that give the banking system the right to multiple that money 9 times over and create an extra $9,000 ?

 

[The Rabbi]

Sure their "surplus" goes back to the treasury..But theres a few issues with that. One the real issue is seignorage and that the debt is created in the first place. Also we dont really know what the fed does because its books are not open to a government audit. They can transfer govt debt to member banks or other places and then no money is remitted back to the treasury. Basically around the $23 or so billion the fed collects they remit back approx $19 or $20 billion. But we really dont know whats going on behind the scenes.. And theres no reason for this debt to be created in the first place.


Another problem comes from the fractional reserve banking system which uses these created federal reserve notes as reserves to make out loans and such. These banks in turn will create more checkbook money on top of the paper federal reserve notes so that we get a very unstable and very inflationary environment that all the while makes it impossible for all debts to get paid off.

The system is always taking somebody's house, car, business, property etc. Thats how it works.

Our currency is debt and we continually have to go into debt to buy more of it.

Your description of the fractional reserve system baffles the mind. If I deposit $1000 in the bank what are they supposed to do with it? Stick it in the vault?

When you stick $1,000 in the bank should that give the banking system the right to multiple that money 9 times over and create an extra $9,000 ?

Yes. Why not? What law prevents it?

 

[pinqy]

When you stick $1,000 in the bank should that give the banking system the right to multiple that money 9 times over and create an extra $9,000 ?

You're answering a quesiton with a question. Please answer what exactly the bank should do with deposited funds. Obviously you don't think they should multiply it 9 times over, but since they don't do that (not directly, anyway) that's irrelevant. The question is whether money should be restricted to currency only, which you seem to be implying, or whether, as you state, there should be some kind of limit. So what limit do you propose (between 0 and 9 apparently) and what mechanism or means would be the limiting factor?

 

[Toro]

You only believe this because this is what youve been taught. I understand there is a good deal of cognitive dissonance on this topic with some people but you really do have to be open to information and be willing to allow your beliefs to come under critique with this.

Dude, I was once told I was the largest owner of gold stocks in my fund in the southeastern United States. Plus, I own a lot of gold now. So I don't need you telling me about cognitive dissonance.

I'd suggest you answer the criticism. Why would the United States entrust its monetary system to an industry that has historically been run poorly and to a group of unstable poor countries that are often hostile to the United States?

I know you don't agree, but I'd just like to point out that the supply of gold is irrelevant. Unless the U.S. owns no gold at all, we wouldn't be entrusting our monetary policy to anyone.

What you are saying is only true in a closed economy. In an open economy, gold will flow and out of the country. Since gold is money, inflation and deflation will be dependent on the global production of gold.

Also, a country cannot have a fixed stock of gold in a gold system. The reason for this is that as the economy grows, the demand for money grows. If the supply of money is static as the demand for money rises, real interest rates will rise and choke off economic activity. Thus a fixed gold system is harmful to the economy as it lowers the rate of growth. There is no reason for this to happen.

 

[Mike Mitrosky]

Your description of the fractional reserve system baffles the mind. If I deposit $1000 in the bank what are they supposed to do with it? Stick it in the vault?

When you stick $1,000 in the bank should that give the banking system the right to multiple that money 9 times over and create an extra $9,000 ?

Yes. Why not? What law prevents it?

Can you create $9,000 out of thin air? Wouldn't you get arrested for counterfeiting if you did that?

 

[Mike Mitrosky]

When you stick $1,000 in the bank should that give the banking system the right to multiple that money 9 times over and create an extra $9,000 ?

You're answering a quesiton with a question. Please answer what exactly the bank should do with deposited funds. Obviously you don't think they should multiply it 9 times over, but since they don't do that (not directly, anyway) that's irrelevant. The question is whether money should be restricted to currency only, which you seem to be implying, or whether, as you state, there should be some kind of limit. So what limit do you propose (between 0 and 9 apparently) and what mechanism or means would be the limiting factor?

We need to let the market decide. The limiting factor should be the banks ability to redeem notes for specie IMO.

 

[The Rabbi]

When you stick $1,000 in the bank should that give the banking system the right to multiple that money 9 times over and create an extra $9,000 ?

Yes. Why not? What law prevents it?

Can you create $9,000 out of thin air? Wouldn't you get arrested for counterfeiting if you did that?

It's not out of thin air. It's out of deposits in the bank.