bobbyw24
07-12-2009, 10:27 AM
http://seekingalpha.com/instablog/429369-shalom-hamou/12928-ron-paul-vs-bernanke
Ron Paul vs. Bernanke.
"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure.
This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgement.
In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour-costs of production plus an allowance for risk and the costs of skill and supervision.
Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital.
Interest to-day rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.
An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant."
John Maynard Keynes, 1st Baron Keynes of Tilton
June 5th,1883 – April 21th, 1946
The General Theory of Employment, Interest, and Money.
Chapter 24: Concluding Notes on the Social Philosophy
Toward Which the General Theory Might Lead, Paragraph II.
13 December 1935
Abstract:
I am going to side with Ron Paul against Bernanke. I have been the devil's advocate for Friedrich August von Hayek [confer: Chapter III, Paragraph 3: Liquidation and Creative Destruction.] against John Maynard Keynes. It will be easier to be against Bernanke who has no credible economic theory apart from the imperious necessity to protect vested interests.
Arguments:
The Case for Auditing the FED:
Conflict of Interest:
Although we were rather confident about the make up of the FED balance sheet till Bernanke came in. We already know that its make up is, at less unconventional.
I suspect that it contains now illegal assets bought in an arbitrarily manner, at arbitrary prices.
I smell stocks and AAA corporate bonds bought at a deep discount.
The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act (signed by Woodrow Wilson), it is a quasi-public and quasi-private (government entity with private components) banking system[1] that comprises (1) the presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the United States Department of the Treasury, each with its own nine-member board of directors; (4) numerous other private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils. Since February 2006, Ben Bernanke has served as the Chairman of the Board of Governors of the Federal Reserve System. Donald Kohn is the current Vice Chairman (Term: June 2006–June 2010).
Who are these mysterious private stock holders? What justifies their existence? Just curious.
What is the Market price of the shares of the Federal Reserve Bank of New York? I want some, that would solve the Bill Zucker problem: I would get some TARP!
Why the FED didn't they take those shares against their bailout? Foreclosure is the privilege of the poor?
Don't these private stoch holder have a vested interest in the scarcity of capital?
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
Adam Smith
5 June 1723 – 17 July 1790
An Inquiry into the Nature and Causes of the Wealth of Nations.
Book I, Chapter X, Of Wages and Profit in the Different Employments of Labour and Stock, Paragraph 86.
March 9th, 1776
I have reasons to believe that the private stock holders would naturally be favoured by a Bernanke who call his stock holders systemic [confer my upcoming article: Chapter III, Paragraph 7: Systemic Risk.].
Why did they bail out these stock holders and not other borrowers that defaulted. For example the owners of the mortgages?
By bailing them out they gave them a negative incentive to renegotiate on a large scales the defaulting mortgages, which would, then, be in their best interests:
"...and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."
Adam Smith
5 June 1723 – 17 July 1790
An Inquiry into the Nature and Causes of the Wealth of Nations.
Book IV, Chapter II: Of Restraints Upon the Importation from Foreign Countries of Such Goods as can be Produced at Home, Paragraph 1.
March 9th, 1776
Numerous events have been bothering me:
Why did The Bear Stearns Companies Inc., Merrill Lynch and Lehman Brothers allowed to collapse or be bought (Sometimes at a discount confer Bears Stearns.) when Goldman Sachs and Morgan Stanley beneficed from a fast track admission as bank holding companies? How is decided who goes bankrupt, who get bought and at what price and who does makes the decision?
Why were undue pressures exerted on Bank of America?
Once you admit the fact of buying below Market price you condone any arbitrary behaviour. At what premia? Does that premium depends on the access to Bernanke? Who gets the biggest premium? I make the wild bet that Goldman, who never accepted deposits although it is a bank holding company with all the privileges attached to that status!
If the congress wanted to prevent those illegal behaviours they could have just read the papers Professor Bernanke has written, that would have prevented them from confirming him. He overtly condoned the use of illegal behaviours by central banks:
"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.
However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."
Prof. Benjamin Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For presentation at the ASSA meetings, Boston MA,
January 9, 2000.
"Those who don't read have no advantage over those who can't"
These out of the Market transactions distort or stifle the meaningful functioning of our markets.
"To be sure, energy money issues present policy-makers and citizens with difficult trade-off to consider and decisions to make outside the market process. The concentration of oil reserves capital in politically volatile areas of the world is an ongoing concern.
But that concern and others, one hopes, will be addressed in a manner that, to the greatest extent possible, does not distort or stifle the meaningful functioning of our markets.
We must remember that the same price signals that are so critical for balancing energy money supply and demand in the short run also signal profit opportunities for long-term supply expansion. Moreover, they stimulate the research and development that will unlock new approaches to energy money production and use that we can now only barely envision."
Chairman Alan Greenspan
Energy Money
Before the Economic Club of New York, New York, New York
May 20, 2005
The Case for Abolishing the FED, and any other Central Bank, by the same token:
I have proved in my Tract:"Plea for a New World Economic Order." That the root cause of economic depressions is the existence of credit. Central banks can only do one think: emit money with credit. The only plausible alternative solution is the emission of a credit free currency. That is beyond the central banks and their madmen in authority. It is necessary to abolish the central banks, which will necessarily happen after the Crash and the start of the Great Depression II.
"Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society?
Are the interests which they will thwart stronger and more obvious than those which they will serve? I do not attempt an answer in this place. It would need a volume of a different character from this one to indicate even in outline the practical measures in which they might be gradually clothed. But if the ideas are correct—an hypothesis on which the author himself must necessarily base what he writes—
it would be a mistake, I predict, to dispute their potency over a period of time.
At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.
But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.
Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest.
But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
John Maynard Keynes, 1st Baron Keynes of Tilton
June 5th,1883 – April 21th, 1946
The General Theory of Employment, Interest, and Money.
Chapter 24: Concluding Notes on the Social Philosophy Toward Which the General Theory Might Lead, Chapter V.
December 13tn1935
All of This Stays True Until the Poor Becomes Richer Relatively to the Rich.
Extreme Economic Conditions Call for Radical Solutions.
The Controversial Innovation Since John Maynard Keynes and Milton Friedman.
It is of the Uttermost Importance That, When the Crash Comes, we Restore as Fast as Possible the Economy by Implementing our Plausible Alternative Solution as to Minimalize the Economic Sufferings of the People. To That Order I am Building Redundant Social Networks. Please Grow the Networks!
I stand ready to give some sort of exclusivity for my future articles in exchange for substantial coverage. Otherwise read the Publisher Agreement.
The Tract will be ready to go to a publisher on August 1st, 2009. I am looking for an editor.
Themes: Ron Paul, Bernannke, FED, Federal Reserve System, Central Bank
Ron Paul vs. Bernanke.
"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure.
This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgement.
In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour-costs of production plus an allowance for risk and the costs of skill and supervision.
Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital.
Interest to-day rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.
An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant."
John Maynard Keynes, 1st Baron Keynes of Tilton
June 5th,1883 – April 21th, 1946
The General Theory of Employment, Interest, and Money.
Chapter 24: Concluding Notes on the Social Philosophy
Toward Which the General Theory Might Lead, Paragraph II.
13 December 1935
Abstract:
I am going to side with Ron Paul against Bernanke. I have been the devil's advocate for Friedrich August von Hayek [confer: Chapter III, Paragraph 3: Liquidation and Creative Destruction.] against John Maynard Keynes. It will be easier to be against Bernanke who has no credible economic theory apart from the imperious necessity to protect vested interests.
Arguments:
The Case for Auditing the FED:
Conflict of Interest:
Although we were rather confident about the make up of the FED balance sheet till Bernanke came in. We already know that its make up is, at less unconventional.
I suspect that it contains now illegal assets bought in an arbitrarily manner, at arbitrary prices.
I smell stocks and AAA corporate bonds bought at a deep discount.
The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act (signed by Woodrow Wilson), it is a quasi-public and quasi-private (government entity with private components) banking system[1] that comprises (1) the presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the United States Department of the Treasury, each with its own nine-member board of directors; (4) numerous other private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils. Since February 2006, Ben Bernanke has served as the Chairman of the Board of Governors of the Federal Reserve System. Donald Kohn is the current Vice Chairman (Term: June 2006–June 2010).
Who are these mysterious private stock holders? What justifies their existence? Just curious.
What is the Market price of the shares of the Federal Reserve Bank of New York? I want some, that would solve the Bill Zucker problem: I would get some TARP!
Why the FED didn't they take those shares against their bailout? Foreclosure is the privilege of the poor?
Don't these private stoch holder have a vested interest in the scarcity of capital?
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
Adam Smith
5 June 1723 – 17 July 1790
An Inquiry into the Nature and Causes of the Wealth of Nations.
Book I, Chapter X, Of Wages and Profit in the Different Employments of Labour and Stock, Paragraph 86.
March 9th, 1776
I have reasons to believe that the private stock holders would naturally be favoured by a Bernanke who call his stock holders systemic [confer my upcoming article: Chapter III, Paragraph 7: Systemic Risk.].
Why did they bail out these stock holders and not other borrowers that defaulted. For example the owners of the mortgages?
By bailing them out they gave them a negative incentive to renegotiate on a large scales the defaulting mortgages, which would, then, be in their best interests:
"...and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."
Adam Smith
5 June 1723 – 17 July 1790
An Inquiry into the Nature and Causes of the Wealth of Nations.
Book IV, Chapter II: Of Restraints Upon the Importation from Foreign Countries of Such Goods as can be Produced at Home, Paragraph 1.
March 9th, 1776
Numerous events have been bothering me:
Why did The Bear Stearns Companies Inc., Merrill Lynch and Lehman Brothers allowed to collapse or be bought (Sometimes at a discount confer Bears Stearns.) when Goldman Sachs and Morgan Stanley beneficed from a fast track admission as bank holding companies? How is decided who goes bankrupt, who get bought and at what price and who does makes the decision?
Why were undue pressures exerted on Bank of America?
Once you admit the fact of buying below Market price you condone any arbitrary behaviour. At what premia? Does that premium depends on the access to Bernanke? Who gets the biggest premium? I make the wild bet that Goldman, who never accepted deposits although it is a bank holding company with all the privileges attached to that status!
If the congress wanted to prevent those illegal behaviours they could have just read the papers Professor Bernanke has written, that would have prevented them from confirming him. He overtly condoned the use of illegal behaviours by central banks:
"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.
However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."
Prof. Benjamin Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For presentation at the ASSA meetings, Boston MA,
January 9, 2000.
"Those who don't read have no advantage over those who can't"
These out of the Market transactions distort or stifle the meaningful functioning of our markets.
"To be sure, energy money issues present policy-makers and citizens with difficult trade-off to consider and decisions to make outside the market process. The concentration of oil reserves capital in politically volatile areas of the world is an ongoing concern.
But that concern and others, one hopes, will be addressed in a manner that, to the greatest extent possible, does not distort or stifle the meaningful functioning of our markets.
We must remember that the same price signals that are so critical for balancing energy money supply and demand in the short run also signal profit opportunities for long-term supply expansion. Moreover, they stimulate the research and development that will unlock new approaches to energy money production and use that we can now only barely envision."
Chairman Alan Greenspan
Energy Money
Before the Economic Club of New York, New York, New York
May 20, 2005
The Case for Abolishing the FED, and any other Central Bank, by the same token:
I have proved in my Tract:"Plea for a New World Economic Order." That the root cause of economic depressions is the existence of credit. Central banks can only do one think: emit money with credit. The only plausible alternative solution is the emission of a credit free currency. That is beyond the central banks and their madmen in authority. It is necessary to abolish the central banks, which will necessarily happen after the Crash and the start of the Great Depression II.
"Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society?
Are the interests which they will thwart stronger and more obvious than those which they will serve? I do not attempt an answer in this place. It would need a volume of a different character from this one to indicate even in outline the practical measures in which they might be gradually clothed. But if the ideas are correct—an hypothesis on which the author himself must necessarily base what he writes—
it would be a mistake, I predict, to dispute their potency over a period of time.
At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.
But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.
Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest.
But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
John Maynard Keynes, 1st Baron Keynes of Tilton
June 5th,1883 – April 21th, 1946
The General Theory of Employment, Interest, and Money.
Chapter 24: Concluding Notes on the Social Philosophy Toward Which the General Theory Might Lead, Chapter V.
December 13tn1935
All of This Stays True Until the Poor Becomes Richer Relatively to the Rich.
Extreme Economic Conditions Call for Radical Solutions.
The Controversial Innovation Since John Maynard Keynes and Milton Friedman.
It is of the Uttermost Importance That, When the Crash Comes, we Restore as Fast as Possible the Economy by Implementing our Plausible Alternative Solution as to Minimalize the Economic Sufferings of the People. To That Order I am Building Redundant Social Networks. Please Grow the Networks!
I stand ready to give some sort of exclusivity for my future articles in exchange for substantial coverage. Otherwise read the Publisher Agreement.
The Tract will be ready to go to a publisher on August 1st, 2009. I am looking for an editor.
Themes: Ron Paul, Bernannke, FED, Federal Reserve System, Central Bank