Was the Fed created by democrats or Republicans?

[presonorek]

currency deflation

This is something people alive today have never experienced. Can you explain problems associated with deflation and how devastating it can be? Some people think inflation but it is actually necessary. The alternative is much worse. What do you see as potential problems in regards to deflation? And how does it compare to problems associated with inflation?

 

[JohnDB]

A fiat currency's value is based loosely upon a country's exports and GDP.

If your currency is based on apple exports and a drought destroys the trees....your currency is worthless.

Now the US Dollar is the Reserve Currency for almost every nation on the planet. Noted exceptions are Russia, PRC, Iran and etc.

The EU wanted the Euro to be the reserve currency....it didn't work out. OPEC trades in Euro...which keeps Dollars inexpensive.

If the Dollar gets too strong (deflation) it is then dumped on the open market because the different countries do not need such large reserves...which then creates a surplus of dollars called hyperinflation.

The US Dollar is used by most nations as a reserve currency for several reasons. Mostly the stability of its value vx any other currency. Also the size of the USA economy is such that California has a larger Economy than Japan....and Japan's economy is larger than Russia by an order of magnitude.

 

[Toddsterpatriot]

They loan it out again .

What do they do with the profit?

 

[presonorek]

What do they do with the profit?

Lend it out for more profit.

 

[Toddsterpatriot]

Yes. Although you don’t have to.

Why should my family declare bankruptcy?
If I do, is my family still worth $30 billion?

 

[Toddsterpatriot]

Lend it out for more profit.

They don't lend it out.

 

[presonorek]

They don't lend it out.

Then I am stumped. What do they do with it? Fund the Israeli Military?

 

[Toddsterpatriot]

Then I am stumped. What do they do with it? Fund the Israeli Military?

It goes to the US Treasury.
Which makes sense, because the Fed is part of the US government.

 

[CrusaderFrank]

One of the best explanations of 1893 Panic.

Root cause: government trying to set price of silver

The Silver Panic | Lawrence W. Reed

 

[CrusaderFrank]

"I think it safe to assert that every commercial crisis can be traced to an unnecessary inflation of the currency, or to an improvident expansion of credit. The operation of the Sherman Law has been to flood this country with paper money without providing any method whatever for its redemption. The circulating medium has become so redundant that the channels of commerce have overflowed and gold has been expelled." -- Bourke Cockran (D-NY)

Before the NYTimes got Woke and sucked, "The repeal bill passed the House on August 28th by a wide margin. President Cleveland’s forceful leadership prompted the Senate to do likewise in October. The New York Times heralded the occasion: "The Treasury is released from this day from the necessity of purchasing a commodity it does not require, out of a money chest already depleted, and at the risk of dangerous encroachment upon the gold reserve."

 

[Toddsterpatriot]

I think it safe to assert that every commercial crisis can be traced to an unnecessary inflation of the currency, or to an improvident expansion of credit.

How do you prevent "improvident expansion of credit"?

 

[CrusaderFrank]

How do you prevent "improvident expansion of credit"?

Most of the time, like 99% of the time, it's from government meddling; the other 1% was when, for example Spain had a massive influx of South American silver which caused massive inflation in Spain

 

[Toddsterpatriot]

Most of the time, like 99% of the time, it's from government meddling; the other 1% was when, for example Spain had a massive influx of South American silver which caused massive inflation in Spain

During a boom, even if the government doesn't meddle, you eventually get too much credit thrown at the boom. Railroads, radio, internet. Can't be helped. When people are free, they're free to make unwise loans and investments.

 

[CrusaderFrank]

During a boom, even if the government doesn't meddle, you eventually get too much credit thrown at the boom. Railroads, radio, internet. Can't be helped. When people are free, they're free to make unwise loans and investments.

Exactly! And it self corrects because as the brilliant attorney Ari Rothstein used to say "nothing is more educational than a real cash loss"

 

[Toddsterpatriot]

Exactly! And it self corrects because as the brilliant attorney Ari Rothstein used to say "nothing is more educational than a real cash loss"

Attorney? Or gambler?

 

[CrusaderFrank]

Attorney? Or gambler?

Related's in-house attorney in the 1980's, hell of a chess player too