Who owns the FED?

[Lord Xar]

I am under the impression that the FED is a privately owned banking system and is no more "federal" than Federal Express..

So, I came across this article. Please discuss the validity of it.

http://www.sharelynx.com/papers/FederalReserve.php

[Malakai0]

Nobody knows. The names of the original investors of the Federal Reserve were never released. They put up the original money for the 'reserve' the fed uses, who earn interest on the many times that amount that was loaned out, ie fractional reserve banking. I think they used that initial money to buy up government bonds, then loan 10-100 (or more till the number doesn't matter) times that much to business and the government and reap the interest.
There is a lot of evidence (check out the moneymasters on google video) that many if not most or all of them were the elite British bankers. This small group including the Rothschild's owned much of the worlds wealth for a long time (probably still do today).
They likely have most or all of the gold that was in Fort Knox (whoever 'they' are sense they don't tell anybody), remember this gold was collected from America it was our gold. Many believe it's gone now, control of it was given to the fed and no one ever checked on it afterwards (no audit for 50ish years I shit you not).

It's not even specifically known which banks the fed works for/answers too. The whole thing is shrouded in massive secrecy and total media blackout. Ron has been challenging the fed for over 20 years, but according to the media it's a completely natural and necessary part of every country (the central bank).


It's on the news everyday (presented in a good light as being beneficial for the people I might add) that foreign companies are buying up massive amounts of US businesses and property, even whole markets. Many of the elite US companies are moving to Dubai ala Haliburton.

Draw your own conclusions.


EDIT: I finished your linked article. The articles he references could never be proved, nor the authors rosy account of who owns them, since they have never told anybody in a way that could be verified. Just remember every time they say "we are lending more to help the market" they mean "we are creating money from nothing and reaping huge interest profits, essentially absorbing the wealth from the monetary system, to help the market".

[Malakai0]

A quick addition since it's on topic. Many worry that the gold standard isn't enough, it's estimated that the IMF, a division of the global central bank, possesses well over half the worlds gold.

Still beats the hell out of private controlled paper we have now. I wouldn't mind seeing colonial script type government notes either, IF we fired everyone holding public office who has ever voted to violate the Constitution (or done so) and started with fresh people. This would never happen hence Ron wanting gold IMO ^^

Back when learned patriots like Jefferson were running things it would have worked great.

[FrankRep]

Private shareholders. (I also want to get more information about this)

[Bradley in DC]

The Federal Reserve System is a hybrid that is both private and public. As the link you provided explains in part, the reserve banks are private. The Federal Reserve Board here in DC is the public part of it. The Fed member banks are public; the principle shareholders are the money center banks--the owners of the money center banks are the shareholders of those institutions (which are probably mostly mutual funds). There is no mystery or secrecy here.

[johngr]

There is no mystery or secrecy here.

Show me the audit of the Fed's open market operations. It's kind of like a manufacturing company saying "we have nothing to hide; we're audited every year" and failing to mention that the audits excluded anything related to the company's inventory valuation.

[Bradley in DC]

Show me the audit of the Fed's open market operations. It's kind of like a manufacturing company saying "we have nothing to hide; we're audited every year" and failing to mention that the audits excluded anything related to the company's inventory valuation.

Oh, the open market operations is another story! They are purposefully obtuse there, no question. But that is a different issue than we were addressing here.

[johngr]

Oh, the open market operations is another story! They are purposefully obtuse there, no question. But that is a different issue than we were addressing here.

I'd go further than "purposefully obtuse". But how does that square with "no mystery or secrecy"?

[Bradley in DC]

I'd go further than "purposefully obtuse". But how does that square with "no mystery or secrecy"?

This thread is on the ownership of the Fed, not it's operations.;)

[johngr]

The Fed member banks are public; the principle shareholders are the money center banks--the owners of the money center banks are the shareholders of those institutions (which are probably mostly mutual funds).

The New York Fed Bank makes all the operational decisions about money/debt, runs the open-market operations, runs all international currency exchange/manipulation functions and runs the domestic "lender of last resort" functions. It thus is the source of almost all monetary data that the other regional Feds and the Board of Governors use to make interest rate decisions.

Which New York-based banks own shares in the NY Federal Reserve member bank? What are the percentages of share ownership of these banks? Which bank or banks own or owns a combined 51% or greater per cent share of the NY fed? Who sits on and chairs the boards of each of the corporations or trusts that own a controlling share of those majority owner bank or banks?

[Corydoras]

http://www.newsday.com/news/nationworld/world/ny-wochar214226829apr21,0,6705480.story

The Bush-Vatican connection.

[sorianofan]

Since the 40s the Federal Reserve takes the vast majority of money it receives in interest and refunds it to the treasury, walking away with a few hundred million dollars. Of course, having advances market knowledge plus a few hundred million is nefarious in its own right, but it is not as ridiculously horrible as some make it out to be. The same is true of the CFRs (Comprehension Financial Reports.)

[Brutus]

Who owns the Fed is really a red-herring. It wouldn't be any better if Congress owned the Federal Reserve than if Satan owned it. Central banks always have been a mechanism for governments to tax (take the product of the private economy) from the people without having to show an actual tax (writing checks to the government). Because it is an indirect form of taxation the government can blame others for the reduced value of their savings and long term contracts. The resultant finger pointing distracts everyone. I'm not sure why people think the Federal reserve would be any better if it were a part of the government, like the Department of Education, for instance.

[johngr]

Who owns the Fed is really a red-herring. It wouldn't be any better if Congress owned the Federal Reserve than if Satan owned it. Central banks always have been a mechanism for governments to tax (take the product of the private economy) from the people without having to show an actual tax (writing checks to the government). Because it is an indirect form of taxation the government can blame others for the reduced value of their savings and long term contracts. The resultant finger pointing distracts everyone. I'm not sure why people think the Federal reserve would be any better if it were a part of the government, like the Department of Education, for instance.

One of the first steps in consciousness raising about the Fed (in the specific system we have) is to remove its status as a quasi-metaphysical entity by asking who owns/controls it. If Congress owned it at least we'd have someone to complain to and to hold accountable for their actions, fhough I agree, we'd be better off with non-monopoly banking.

[Bradley in DC]

One of the first steps in consciousness raising about the Fed (in the specific system we have) is to remove its status as a quasi-metaphysical entity by asking who owns/controls it. If Congress owned it at least we'd have someone to complain to and to hold accountable for their actions, fhough I agree, we'd be better off with non-monopoly banking.

That's one approach. I've found it more useful in debates on the "necessity" of the Fed to challenge them to list all of the functions of the Fed and tell me which ones couldn't be handled better by the private market, Treasury or Congress. Once that conversation starts, the dynamic changes completely. :)

[PatriotG]

I think we are for the most part in agrrement on one simple fact.

The current structure no longer works?
For this discussion lets cast aside " who owns it", and "what are they Hiding" etc...

Ill ask this question again:

How much are we in debt to the Fed at this point in history?
Does anyone really know?

And why are we in debt to them at all?
Why do we have a currency based on the goverment's ability to tax the people?

Am I the only one here who finds this to be economically moronic?

I have my own answers for these questions but lets hear from everyone

Would someone here like to elaborate on this from a Constitutional standpoint?
And economic standpoint?

I apologize for beating this into the ground.
PatriotG

[BrianH]

This is a repeat of a link posted here recently:

http://financialsense.com/fsu/editor...2007/1020.html

AMERICA'S FORGOTTEN WAR AGAINST THE CENTRAL BANKS
by Dollardaze
aka Mike Hewitt, dollardaze.org
October 20, 2007
"Let me issue and control a nation's money supply, and I care not who makes its laws."
(Mayer Amschel Rothschild, Founder of Rothschild Banking Dynasty)

This is a recent essay and good introduction to the main issues.

[garrettwombat]

Who owns the FED?

RON PAUL DOES!!!:)

jeez....

[Malakai0]

Despite the little bit of info we know, I still think shrouded in secrecy is an accurate description of the Fed as a whole.

[paulitics]

Despite the little bit of info we know, I still think shrouded in secrecy is an accurate description of the Fed as a whole.

I agree. And evil takes place in the dark, good deeds in the light.

[Kregener]

http://www.save-a-patriot.org/files/view/whofed.html

[cjhowe]

Despite the little bit of info we know, I still think shrouded in secrecy is an accurate description of the Fed as a whole.

What secret are you trying to find the answer? Obsessing over the cloak and dagger argument will not teach you any more about economic theory or the benefits and short comings of Austrian economics versus Keynesian. The vast majority of the posters on this board's personal finances and their ability to consume products available in the market at this moment benefit by the policies of a central bank. However, your freedom suffers. Understanding the effects of the policy add more value to the ether.

[Malakai0]

What secret are you trying to find the answer? Obsessing over the cloak and dagger argument will not teach you any more about economic theory or the benefits and short comings of Austrian economics versus Keynesian. The vast majority of the posters on this board's personal finances and their ability to consume products available in the market at this moment benefit by the policies of a central bank. However, your freedom suffers. Understanding the effects of the policy add more value to the ether.


Managed economies are best for those doing the managing. Just like a big spending government is best for the people handing out and receiving that money.

You can make it as complicated as you want and it doesn't change that base fact.

[johngr]

What secret are you trying to find the answer? Obsessing over the cloak and dagger argument will not teach you any more about economic theory or the benefits and short comings of Austrian economics versus Keynesian.

Nice ad hominem argument.

Here are two things I would want:

1) An independent and public audit of all open market transactions -- in detail -- from the start in 1913. For the fed to publish all the details and summaries of such transactions on the web for amateur forensic investigators to have a field day with.

2) The names of all the banks that own stock in each fed branch. The percentages of stock each bank owns. The entire labyrinthine chart of all the legal/corporate entities that own each of the banks and all the legal/corporate entities that own each of the corporate entities. Tax returns (if US corporations), financial details and lists of board members with personal details including tax returns (if US citizens), financial details and country or countries of citizenship of each of the banks and each of the corporate entities that own the banks.

(not that you'd find any shady dealings or conflicts of interest or anything)

[johngr]

The Federal Reserve System is a hybrid that is both private and public.

I should be able to file and have answered freedom of information request to get information on stock ownership and open market transactions right?

Has the issue come before the Supreme Court? What was their holding?

Is "public/private" obfuscating disinfo bullshit to cover the fact that there are significant facts about their operations and ownership that the pubic is not privy to?

[fsk]

Cjhowe is one of this forum's resident trolls. Don't let him rattle you from believing:

- The Federal Reserve is an evil institution.

- Income taxes convert everyone into slaves.

- Debt based money is inherently unsound. For more information, read about The Compound Interest Paradox on my blog.

- Keynesian economics is a bunch of lies used to justify fiat debt-based money and business cycles created by the Federal Reserve. Austrian economics is much closer to the truth.

[cjhowe]

Cjhowe is one of this forum's resident trolls. Don't let him rattle you from believing:

- The Federal Reserve is an evil institution.

- Income taxes convert everyone into slaves.

- Debt based money is inherently unsound. For more information, read about The Compound Interest Paradox on my blog.

- Keynesian economics is a bunch of lies used to justify fiat debt-based money and business cycles created by the Federal Reserve. Austrian economics is much closer to the truth.

1) If evil, why do you continue to participate?
2) The cloak and dagger people want to link income taxes to the fed. They are separate issues. In the time and day of the creation of the Fed, the bimetallists were the proponents of the income tax.
3) You can continue to bring up your "paradox", but it is untrue. You neglect that the entity earning the compound interest purchases goods and services. As far as unsound, no one disputes that. Fiat money is not used because of its soundness, rather it's utility.
4) I don't see how a theory that attempts to explain a phenomenon can be "lies". There are situations where Keynesian principles break down. There are also situations where Austrian principles breakdown. There is no "goal" with either theory, rather they are explanations for various phenomenon in economics. Your attempt to proclaim a justness in voluntary exchange misses the entire point of what is discussed.

[fsk]

I have no choice but to use Federal Reserve Notes as money as long as I live in the USA. The government demands I pay taxes in Federal Reserve Notes. If I attempt to use gold as money, the capital gains treatment makes it untenable.

The Federal Reserve and the income tax are completely linked. The income tax creates an artificial demand for Federal Reserve Notes. The income tax prevents me from boycotting Federal Reserve Notes.

I cannot move to another country, because their monetary systems and taxation systems are based on the same corrupt principles as the USA.

If you don't understand the Compound Interest Paradox, or are too stubborn to seriously evaluate it, then I can't help you. I only object when cjhowe spreads misinformation and other people believe him. I'm not going to repeat my explanation here.

Austrian economics breaks down much less often than Keynesian economics. The problem is that there is no economy in the world today that uses a gold standard. Governments have regulated and taxed the gold standard out of existence. Third world countries, as a condition of IMF aid and WTO membership, must have fiat debt-based money instead of a gold standard.

As I stated many other times, how can someone on a Ron Paul forum be defending the Federal Reserve as aggressively as cjhowe does? Either cjhowe is truly a stubborn fool, or he is someone planted on this discussion forum to disrupt debate. Ron Paul has clearly stated that he is opposed to the Federal Reserve.

[cjhowe]

I have no choice but to use Federal Reserve Notes as money as long as I live in the USA. The government demands I pay taxes in Federal Reserve Notes. If I attempt to use gold as money, the capital gains treatment makes it untenable.

The Federal Reserve and the income tax are completely linked. The income tax creates an artificial demand for Federal Reserve Notes. The income tax prevents me from boycotting Federal Reserve Notes.

I cannot move to another country, because their monetary systems and taxation systems are based on the same corrupt principles as the USA.

If you don't understand the Compound Interest Paradox, or are too stubborn to seriously evaluate it, then I can't help you. I only object when cjhowe spreads misinformation and other people believe him. I'm not going to repeat my explanation here.

Austrian economics breaks down much less often than Keynesian economics. The problem is that there is no economy in the world today that uses a gold standard. Governments have regulated and taxed the gold standard out of existence. Third world countries, as a condition of IMF aid and WTO membership, must have fiat debt-based money instead of a gold standard.

As I stated many other times, how can someone on a Ron Paul forum be defending the Federal Reserve as aggressively as cjhowe does? Either cjhowe is truly a stubborn fool, or he is someone planted on this discussion forum to disrupt debate. Ron Paul has clearly stated that he is opposed to the Federal Reserve.


1) You always have choice. Always. What does knowing the evil of a system and choosing to take part in an evil system say about your morality?

2) I understand what you claim to be the "Compound Interest Paradox". The simple fact though is that it is untrue because it fails to take into account that the bank spends the proceeds of interest consuming goods and services from the market. This argument closely parallels one who denies evolution based on the 2nd Law of Thermodynamics because they fail to take into account the energy of the Sun.

3)It is very easy to claim that a theory breaks down less often when it is not the basis for which people utilize to make decisions. I reject that one can assert empirical evidence for a theory that claims to have never been put into true practice. This doesn't make the theory invalid or less conclusive than theories that have empirical evidence to go on, simply that the assertion has no support. You mistake my position when defending the Fed. There are certainly reasons to end the Federal Reserve System. Freedom is one. Preferring the market fulfil needs over the sustainment of goods already in the market is another. Personal responsibility is another. Restraint of easy credit to Congress is another and there are many more. Simply because there are logical reasons to end the Fed does not give one carte blanche to put forth fallacious arguments that appeal to emotion.

[johngr]

I have no choice but to use Federal Reserve Notes as money as long as I live in the USA. The government demands I pay taxes in Federal Reserve Notes. If I attempt to use gold as money, the capital gains treatment makes it untenable.

The Federal Reserve and the income tax are completely linked. The income tax creates an artificial demand for Federal Reserve Notes. The income tax prevents me from boycotting Federal Reserve Notes.

I cannot move to another country, because their monetary systems and taxation systems are based on the same corrupt principles as the USA.

If you don't understand the Compound Interest Paradox, or are too stubborn to seriously evaluate it, then I can't help you. I only object when cjhowe spreads misinformation and other people believe him. I'm not going to repeat my explanation here.

Austrian economics breaks down much less often than Keynesian economics. The problem is that there is no economy in the world today that uses a gold standard. Governments have regulated and taxed the gold standard out of existence. Third world countries, as a condition of IMF aid and WTO membership, must have fiat debt-based money instead of a gold standard.

As I stated many other times, how can someone on a Ron Paul forum be defending the Federal Reserve as aggressively as cjhowe does? Either cjhowe is truly a stubborn fool, or he is someone planted on this discussion forum to disrupt debate. Ron Paul has clearly stated that he is opposed to the Federal Reserve.

I would love for you to explain in detail (since you seem to know such things) what the Fed has done to decimate mom and pop businesses in the nearly 100 years since its founding.

[johngr]

1) You always have choice.

A man with a gun to his head has a choice whether to give the robber the wallet. To be able to eat and have have a roof over ones head, in the US, the way the system is set up, the only reasonable choice is to use FRNs. If it were any other way, their value as tinder would far exceed their "monetary" value.

[Green Mountain Boy]

2) I understand what you claim to be the "Compound Interest Paradox". The simple fact though is that it is untrue because it fails to take into account that the bank spends the proceeds of interest consuming goods and services from the market. This argument closely parallels one who denies evolution based on the 2nd Law of Thermodynamics because they fail to take into account the energy of the Sun.

The "Compounding Interest Paradox" isn't really a paradox - it would be more correct to call it a vicious cycle. Compounding interest coupled with the fractional-reserve banking system is a deadly combination because it dramatically increases the rate of inflation. Debt-money that is created out of thin air requires then an even greater amount to be payed back to the bank. Consequentially - more money ends up being borrowed to help pay the interest on previous debt. But you can't really pay a debt with a debt so it is a losing battle.

[johngr]

1) You always have choice. Always. What does knowing the evil of a system and choosing to take part in an evil system say about your morality?

2) I understand what you claim to be the "Compound Interest Paradox". The simple fact though is that it is untrue because it fails to take into account that the bank spends the proceeds of interest consuming goods and services from the market.

The banks spending money is irrelevant to the fact that the money to pay all the interest for all the loans was never created and doesn't exist.

[PatriotG]

A very sound argument for ending the FED is the U.S. Constitution. Only Congress can regulate the value of the currency, and that was done at the outset. The value of a dollar is that of 1 ounce of silver, or an ounce of gold is $20. There is no provision in the Constitution to abdicate that power, or assign it to any agency, or private institution. I don't recall any amendment to the Constitution by which the people have reassigned that responsibility. Arguments for the FED are based solely on years of indoctrination and a limited mind set.

An analysis of money is simply meant to be used as a tool of measure. Why do you think we need an expanded money supply? Where is the logic? If you make $30 a month and your bills are $5 a month how does that differ from expanding the number so that you make $2900 a month, your bills are $485. In reality as the money supply expands, and the income tax exploits, the point of diminishing returns sets in. You must now pay part of that $2900 in taxes, which is then extrapolated across the spectrum of the cost of living so that instead of $485 you need to spend approximately $1885 for the same goods and services. These are supposed government numbers so please don't come back with where did you get that from. Just do the math based on what the government feeds you each month in the form of average income, inflation and other fictitious numbers they promote.

In the 50's you could rent a nice apartment in NY for $50 a month. The utility of that apartment has not changed, but the reality of the monetary system has exploited the price; taxes, upon taxes, upon taxes.

Beardsley Ruml, the man who promoted withholding, best explained what was happening when he stated that the need for the income tax had become obsolete. We are redistributing wealth, and not down by the way, and controlling the populace. You fill the people with a bunch of nonsense, and they buy into it without thinking for themselves. Machiavelli wrote the program for propaganda 500 years ago and the majority still is caught up in the fact that they will not learn, just simply follow.

[cjhowe]

PatriotG, you just tapped on one of the short comings of Austrian economics. There is a psychological phenomenon that occurs with deflationary prices. Actors withdraw from the market as a whole in the presence of deflationary prices that no economic model accounts for. The reason why this is a short coming in Austrian economics is that the Austrians claim that it doesn't matter. The fact is that it does matter as the overall desire in understanding economics is to raise the standard of living. Meaning to bring more goods and services to the market. The argument for the Keynesian model is that if we don't understand this precipitously negative phenomenon, we should go to great lengths in avoiding it, this is what an ever expanding fiat policy allows. The argument being, "better the devil you know"

[DianeDL]

I have no choice but to use Federal Reserve Notes as money as long as I live in the USA.
Ron Paul has clearly stated that he is opposed to the Federal Reserve.

BINGO!
And you get to go to the front of the line!

We have NO Choice in our trade. We are slaves to the use of Federal Reserve Notes!

And I would like to see the expanded list of names of those who own and "skim the cream of the top" of the Federal Reserve.

[johngr]

PatriotG, you just tapped on one of the short comings of Austrian economics. There is a psychological phenomenon that occurs with deflationary prices. Actors withdraw from the market as a whole in the presence of deflationary prices that no economic model accounts for.

Temporary and self-correcting. Fewer goods at the same demand level = higher prices causing the "actors" to return to the market.

[cjhowe]

Temporary and self-correcting. Fewer goods at the same demand level = higher prices causing the "actors" to return to the market.

Go back and study history. This is what both Keynesian and Austrian models predict, but it is not what occurs. There's a psychological component that is further depressed in deflationary periods whose elasticity does not match the models.

[Electric Church]

the bank spends the proceeds of interest consuming goods and services from the market

What the hell does that mean?

"Interest consuming goods and services..."

"Proceeds". You mean profits? What the hell is this gibberish? The bank spends proceeds of interest consuming goods?

What is "interest consuming goods and services?" I have some goods....but I don't know if they consume interest. I use services from the market, but are they interest consuming?

All you're doing is spouting out confusing words.

So you mean that the bank spends proceeds (profits) that it obtains from fleecing the public so therefore they're not all that bad. So the mob spends their extortion money on goods and services so they're not all that bad.

I find you one of the most difficult posters to understand

[eleganz]

like the many things presidents are allowed to de-classify. Would RP be able to de-classify the Fed if he became president? or is it too "private"?

[fsk]

If you respond to cjhowe, you're just feeding the trolls.

If anyone (who isn't a troll) is seriously interested in the Compound Interest Paradox, you should read my blog. If you still have questions, I'll answer them.

After careful analysis, the only sane conclusion is that debt-based money is fatally flawed and the Federal Reserve, combined with income taxes and government regulations, are responsible for the economic enslavement of every American.

Someone earlier in this thread asked me how the Federal Reserve destroys small businesses. I'll answer that later.

[johngr]

Go back and study history. This is what both Keynesian and Austrian models predict, but it is not what occurs.

When you say, that is not what occurs, do you mean there has never been any time in history when a deflationary period didn't continue unabated indefinitely without recovery or do you mean that such happens during some deflationary periods and not others? What is the longest deflationary period on record? How did people survive it? Do deflationary periods under gold standards without central banks tend to be worse or not so bad as those with fiat money central banking systems (or worse than the one that occurred from 1929 to 1933)?

[fsk]

Deflation only happens under a gold standard when banks collude. Even under a gold standard, banks can expand and contract the money supply by issuing more or fewer loans. The problem is that the large banks act as a cartel.

There is a famous example around 1890 when all the large banks colluded to stop issuing loans. The money supply shrank. Small farmers were unable to repay their mortgages lost their farms to the banks.

After the creation of the Federal Reserve, boom/bust cycles now have the full force of law. Before, there were some small regional banks that didn't want to collude. Under the Federal Reserve, small banks must follow the cartel-set interest rate.

[cjhowe]

Deflation only happens under a gold standard when banks collude. Even under a gold standard, banks can expand and contract the money supply by issuing more or fewer loans. The problem is that the large banks act as a cartel.

There is a famous example around 1890 when all the large banks colluded to stop issuing loans. The money supply shrank. Small farmers were unable to repay their mortgages lost their farms to the banks.

After the creation of the Federal Reserve, boom/bust cycles now have the full force of law. Before, there were some small regional banks that didn't want to collude. Under the Federal Reserve, small banks must follow the cartel-set interest rate.

Deflation ONLY happens under a gold standard when banks collude? I would ask the fsk to withdraw that comment and tell us he didn't really mean that. You cannot be serious.

[fsk]

I ask cjhowe to stop trolling this forum.

Ron Paul is a strong critic of the Federal Reserve. Ron Paul has clearly stated that he favors a gold standard. Ron Paul has clearly stated that he wants to lift all the taxes and regulations that prevent people from using gold and silver as money.

An ounce of gold represents a certain amount of real, tangible wealth. Under a market free from government coercion, the value of an ounce of gold would remain mostly stable.

Under a pure gold standard, prices do naturally decline slowly over time, as the economy becomes more efficient. That is a desirable characteristic, not an undesirable characterstic of a gold standard.

Abrupt contractions of the money supply *ONLY* happen when banks collude to offer more loans, and then collude to stop offering loans. Government regulations encourage such collusive behavior by banks.

There has never been, not even in 1776, a market completely free from government coercion. You can't say that a gold standard fails in a free market, because there's never been a free market.

Remember: The gold standard was abandoned in 1913, NOT 1933 or 1971. The USA was technically not on a gold standard during the Great Depression.

I'm not writing because I expect to convince cjhowe the troll. I'm writing for other people who might read this thread and be confused by cjhowe.

[cjhowe]

Ponder this statement: Gold has NO intrinsic value.

[fsk]

Ponder this statement: Gold has NO intrinsic value.

You're such a good troll. That statement is obviously utterly false.

Of course, if you're dying of thirst in a desert, gold won't be as useful as water. Let's assume normal economic conditions.

Gold has some industrial applications, as does every metal. Gold has stood the test of time as a measure of value. Gold coins are relatively hard to counterfeit.

Actually, silver is currently more fairly priced than gold. I'd prefer to use silver as a monetary unit than gold, but gold also works. Bimetallic standards work if the government doesn't impose a fixed exchange rate between the metals (Gresham's law).

Gold is what the free market selected as money, before governments started interfering. Gold worked well as money, before the banking industry started colluding with government to manipulate money.

A gold coin represents a certain amount of scarcity value. A gold coin represents the labor required to mine the gold, plus the labor required to mint the coin.

A gold coin does have a certain tangible value.

However, I cannot go into a store with a gold coin and buy something. Do you know the reason why not? It's government regulations. All attempts to use gold as money are taxed and regulated into nonexistence. If the government stopped taxing and regulating gold, it would be used as money.

Have you heard of eGold? Did you know that eBay, for awhile, allowed auctions to be conducted in gold, until the IRS cracked down?

[cjhowe]

As much gold lust as you may have, it has no value. I won't exchange my labor for it. I won't exchange my home for it. It has no value. But we digress. The issue is not gold vs. fiat, it is whether the cloak and dagger has any effect on you as a participant in the economy.

[fsk]

I don't have "gold lust". I have "free market lust". As an extremely skilled worker, I wish I could sell my labor in a free market instead of a communist dictatorship like the USA. Unfortunately, fair and sound money is a prerequisite for a free market.

It's completely pointless to discuss economics when the basic unit of value, money, is completely and totally corrupt. It's like doing Mathematics where there's a huge division by zero error everywhere.

Someone already asked me:



I would love for you to explain in detail (since you seem to know such things) what the Fed has done to decimate mom and pop businesses in the nearly 100 years since its founding.


This question deserves its own separate post. I will give an even more detailed answer on my blog: look for it to be posted in the next week or two. (I assume that if you appreciate my insights, you are a regular reader of my blog.)

I'll start with a quote from Thomas Jefferson. This is frequently citied on anti-Federal Reserve websites.


If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.


This is, of course, exactly what has happened. All US citizens are, technically, homeless slaves. Nobody owns their land. Due to property taxes, they merely have a perpetual transferable lease from the government. The income tax converts everyone into slaves.

Business cycles are 100% created by the Federal Reserve. Some other factor always gets the blame in the media. The Federal Reserve and The Compound Interest Paradox are 100% responsible for boom/bust cycles.

Let's consider a hypothetical industry. Let's call it widget manufacturing. Widgets can be manufactured just as efficiently on a small local scale as in a large factory. If you seriously analyzed most consumer goods, you would actually find that small local business are actually more efficient than large centralized factories. Massive government subsidies are required to make large corporations profitable, in the form of government regulations and Federal Reserve sponsored negative interest rates. Even though I refer to "widgets" in this article, you could substitute any consumer good.

Suppose that widget manufacturing is dominated by small businesses. Let's illustrate how the Federal Reserve destroys the "mom and pop" widget industry.

Suppose that each small widget manufacturer can make 10 widgets per day, and the average person can afford 1 widget per year.

First, consider the effect of a boom/bust cycle.

The Federal Reserve expands the money supply by cutting interest rates to 1%. Suppose the money supply doubles. With more money in circulation, and prices haven't risen to compensate yet, the average person can now afford 2 widgets per year. The widget manufacturers all borrow to increase their manufacturing. The widget manufacturers who don't borrow to expand can't meet their rising payroll costs and other expenses. Besides, interest rates are cheap! Who wouldn't borrow at 1%? Free money! Who would refuse? The widget industry was thriving, so all this widget debt is rated AAA investment grade.

In other words, the expansion of the money supply, the small businesses are forced to borrow to expand to keep up with boom cycle.

Now, the Federal Reserve says "we are concerned about inflation". They jack up interest rates to 10%, and the money supply crashes to half of what it was before. Now, the average person doesn't buy 2 widgets per year; the average person can only afford 0.5 widgets per year. However, the widget manufacturers have geared up their production expecting to sell 2 widgets per year. The price of a widget crashes.

The price of a widget has to crash to compensate for the reduction in the money supply. But the widget manufacturers have all this outstanding debt! They can't cut prices, because then they won't be able to repay their loans. They can't leave prices where they are, because then their competitors (who are just as desperate) will offer lower prices.

Almost all the widget manufacturers will be forced into bankruptcy. All the widget debt is slashed from AAA to junk quality. The banking industry forecloses on all the small widget manufactures. The banking industry takes possession of the means of production.

Now, the banking industry has a problem. It is in foreclosure of the widget industry. However, the bank is stuck with all this junk quality debt. Fortunately, the banks don't have to mark their debt to market; otherwise, they would also be insolvent. Besides, there is no market in the subprime widget industry debt. The banks don't need to sell the loans, when they can still carry them on their books at face amount.

The Federal Reserve says "We are concerned about the credit crunch and rising unemployment among widget manufacturers. It is time to cut interest rates." Interest rates are slashed to 1% again. The money supply grows to even more than it was before. The banks are still in foreclosure on the widget industry, but due to the money supply expansion, the confiscated widget manufacturers rise in value. The banks have been "saved" by the Federal Reserve. The banks sell off the widget industry in pieces to a handful of megacorporations. The loans can be priced at 4%; the banks know they will get repaid because the widget industry is now a handful of oligopolies. Even in the next recession, the widget industry won't cut prices that much, because the widget corporation cartel will keep prices at a comfortable level.

If some individual says to a bank "Can I borrow to buy my widget factory back?", the bank will charge 8% interest. The bank will say that small widget manufacturers are unworthy creditors. They have to be charged 8% when the megacorporation only was charged 4%, because a large diversified corporation is always going to repay its debts.

In case this scenario sounds like a fantasy, this is EXACTLY what happened to small farmers during the Great Depression. It happens to a different segment of the economy in each business cycle. Currently, it's the subprime mortgage debtors who are getting the shaft.

This is just one part. Government regulations also play a role in squeezing out small businesses. Check in my blog post for a more detailed answer.

[Electric Church]

I'm not writing because I expect to convince cjhowe the troll. I'm writing for other people who might read this thread and be confused by cjhowe.


Very much appreciated

[PatriotG]

Ponder this statement: Gold has NO intrinsic value.

What does then?

[fsk]

What does then?


Guns have intrinsic value.

Even though the Federal Reserve Notes are intrinsically worthless, government violence demands that I use them as payment for taxes. Whenever I work, I must give Federal Reserve Notes to the IRS in exchange for permission to work. Government violence demands that other sound forms of money are not used.

I prefer a monetary system that's backed by something tangible. I prefer a monetary system that's backed by something other than violence.

I would boycott Federal Reserve Notes completely, if only I could find other people willing to trade with me using fair money and trading "off the books".

[cjhowe]

What does then?

As fsk mentioned, guns do. Cigarettes do. Fresh water does. The point of pondering the statement "gold has no intrinsic value" is supposed to get you to realize that all currency is fiat regardless of what it is made out of. Having a currency coined instead of printed does not remove the fact that it is only money because of a decree by government. The only difference is who controls the supply of it.

[fsk]

There is one advantage of a gold/silver standard over unbacked paper. There is a naturally limited supply of gold and silver.

The Federal Reserve only needs a printing press to create more Federal Reserve Notes. New money can be created electronically without even printing more money.

New gold and silver are mined at a rate of only a couple % per year.

Under the current system, there's nothing that prevents the President from ordering a bunch of Federal Reserve Notes to be printed, ship them off to Iraq where they disappear into the hands of a bunch of military contractors. Under a gold standard, the President would have to come up with physical gold if he wants deficit spending.

A gold/silver standard is a check against inflation. If money is backed by something tangible, that's a restraint against inflation.

A gold/silver standard is a check against irresponsible government spending.

[Electric Church]

Having a currency coined instead of printed does not remove the fact that it is only money because of a decree by government

I do not believe that government decrees the value of gold. Also, as long as the interest rates are controlled by the fed, the government does not decree the value of the currency

[fsk]

Also, as long as the interest rates are controlled by the fed, the government does not decree the value of the currency


It is government force that backs up the Fed's decisions. If you decide to boycott FRNs, it is the IRS that cracks down on you, not the Federal Reserve.

The government has unconstitutionally delegated its money printing authority to a private corporation. It is government violence that makes that money have non-zero value. It is government violence that prevents competing monetary systems from emerging.

Also, gold coins from the Roman empire are still worth their metal value (plus a numismatic value). Roman coins were still used as money after the Roman empire fell. Metal coins keep their purchasing power after the issuing empire falls; paper money is worthless after the issuing empire falls. For example, US quarters have a metal value equal to 22% of the face amount.

[johngr]

As fsk mentioned, guns do. Cigarettes do. Fresh water does. The point of pondering the statement "gold has no intrinsic value" is supposed to get you to realize that all currency is fiat regardless of what it is made out of. Having a currency coined instead of printed does not remove the fact that it is only money because of a decree by government. The only difference is who controls the supply of it.

Bernake's helicopter won't fly weighted down with gold.

[johngr]

It is government force that backs up the Fed's decisions. If you decide to boycott FRNs, it is the IRS that cracks down on you, not the Federal Reserve.

The government has unconstitutionally delegated its money printing authority to a private corporation. It is government violence that makes that money have non-zero value. It is government violence that prevents competing monetary systems from emerging.

Also, gold coins from the Roman empire are still worth their metal value (plus a numismatic value). Roman coins were still used as money after the Roman empire fell. Metal coins keep their purchasing power after the issuing empire falls; paper money is worthless after the issuing empire falls. For example, US quarters have a metal value equal to 22% of the face amount.

Actually, 5,2 grams of copper and ,47 grams of nickel are worth only about 2% of what 5,625 grams of silver are worth.

It's no accident that the income tax came along at the same time as the federal reserve. The scam wouldn't work without it. Plus, it has the extra added bonus of easy and not so immediately recognizably hardship causing financing of world wars on the backs of the citizens.

I have thought alot about it and come to the conclusion that the ultimate reason FRNs have value is that people are willing to work for them. I'll leave it to y'all to ponder the implications of that.

[jon_perez]

Ponder this statement: Gold has NO intrinsic value.Gold has some intrinsic value. Even paper has intrinsic value, although much much less than gold.

[jon_perez]

Under a pure gold standard, prices do naturally decline slowly over timeOr to put it in another way, gold, the more or less arbitrary standard, slowly increases in its abstract value (intrinsic value remains the same unless new applications that use gold suddenly turn up) if the supply of production and services increase at rate faster than the supply of gold does.

In a hypothetical gold-as-money based economy with housing as its only commodity, if the rate of house-building grows faster than the rate of gold mining, then, accdg. to monetarist theory, the same amount of gold will tend to be able to buy more houses. This provides an incentive to save (hoard) gold.

[jon_perez]

Also, gold coins from the Roman empire are still worth their metal value (plus a numismatic value). Roman coins were still used as money after the Roman empire fell. Metal coins keep their purchasing power after the issuing empire falls; paper money is worthless after the issuing empire falls. For example, US quarters have a metal value equal to 22% of the face amount.Sure.

It would be interesting to compare the price level of food stuff vis-a-vis an ounce of gold.

How many bushels of wheat does an ounce of gold buy today? What about 100 years ago? What about 500, 1000 years ago? I'm sure it fluctuates but I'm if the production of wheat has improved in efficiency much faster than the efficiency in mining of gold, an ounce of gold is likely able to buy many more bushels of wheat than it did 1000 years ago.

Metals, used as currency, will tend to produce deflation as the rate of their production/mining lags behind that of the increase in goods and services in a high-tech civilization. Unbacked paper money is so easy to create, thus, its general tendency cannot help but to inflate.

Deflation is biased towards savers (hoarders).
Inflation is biased towards the risk takers (e.g. pirates of industry), since they depend on an easy money supply.

The savings mode and risk-taking mode each have their own pros and cons. Clearly, Americans have not been in savings mode for a long long time and thus we see the momentum looking to swing back to this mode.

Both hoarders and pirates are out to enrich themselves (e.g. they are not socialists). If you are a free market believer (like I am) self-interest is but the natural state of things and trying to inculcate artificial morality (socialism) will just not work.

I think today's central bank doctrine that price stability is of paramount importance has a LOT of going for it. This has been the lesson learned from the [eventual] failure of Keynesianism. Thus, central banks today realize and outwardly say that their #1 goal is price stability. That is to say, monetarist-wise, they aim to match the rate of increase in the money supply to the rate of increase in goods and services.

Whether central banks sincerely work towards that goal or let political expediency and greed color their policies is the real question. Moving towards non-centralized banking and so-called free market money is certainly a means to remove all such questions. The later will, of course, also entail a lot of difficult adjustment and restructuring because centralized banking has pros which won't be around anymore.

[jon_perez]

Guns have intrinsic value.

Even though the Federal Reserve Notes are intrinsically worthless, government violence demands that I use them as payment for taxes. Whenever I work, I must give Federal Reserve Notes to the IRS in exchange for permission to work. Government violence demands that other sound forms of money are not used.That's certainly one way of putting it, and which serves as Libertarian propaganda (which I happen to subscribe to more or less... :) )

But a Devil's advocate for the socialist point of view would say: Government is a social contract between the State and the governed. The State provides communal services to the population in exchange for the right to set and enforce laws. As part of that Social Contract, it accepts for taxes the same fiat currency that it issues. Another important part of that contract is that it is committed to maintaining the value of that fiat currency by not abusing its power to create it.

One could well muse that it is the people under a socialist regime (Americans for the last 30 years?) who do not understand this dynamic and social contract that are responsible for the failure of such a regime. The lazy think that a welfare state will endlessly provide them benefits, but do not understand that you can't get something for nothing and the only thing such a freeloading attitude will lead to is that more and more people will choose to become lazy and unproductive and bring down the society as a whole.

Both good government and bad government depend on the attitude of the governed. Less government only means that you lessen the ability of bad government to do harm. But less government will not automatically lead to a better society if the [lightly] governed populace act like jerks. The more mature the citizenry is, the less restriction of freedom there needs to be. The more chaotic and barbaric a citizenry is, the more laws and enforcement people will clamor for.

[jon_perez]

As much gold lust as you may have, it has no value. I won't exchange my labor for it. I won't exchange my home for it. It has no value.But you would exchange them for paper and electronic digits?

[cjhowe]

But you would exchange them for paper and electronic digits?

Yes, because it has as much intrinsic value (read none) but others accept it for exchange.

[jon_perez]

Yes, because [gold] has as much intrinsic value [as paper and electronic digits] (read none) but others accept it for exchange.I'm quite sure just about everyone out there will also happily accept gold as a medium of exchange in lieu of paper money...

[Electric Church]

It is government force that backs up the Fed's decisions. If you decide to boycott FRNs, it is the IRS that cracks down on you, not the Federal Reserve.

The government has unconstitutionally delegated its money printing authority to a private corporation. It is government violence that makes that money have non-zero value. It is government violence that prevents competing monetary systems from emerging.

Also, gold coins from the Roman empire are still worth their metal value (plus a numismatic value). Roman coins were still used as money after the Roman empire fell. Metal coins keep their purchasing power after the issuing empire falls; paper money is worthless after the issuing empire falls. For example, US quarters have a metal value equal to 22% of the face amount.

So when the government backs up the Fed they abandon their constitutional powers and become subservient to the Fed and use violence (through the IRS) to get its citizens to comply with the Fed’s decisions. So the Fed determines the value of FRNs enforced by the government (their enforcement arm) who have abandoned the constitution. So as long as the government is subservient to the Fed and has abandoned the constitution the government is the Fed.

Therefore it would seem to me that in reality the government does not decree the value of the currency because through subordination to the Fed and their abandonment of the constitution they no longer exist as the people’s government but in reality are the Fed.

[Bossobass]

Ponder this statement: Gold has NO intrinsic value.

Confederate dollars have no intrinsic value.

Gold most certainly always has and always will have intrinsic value.

1. It's rare. one ten millionth of the Earth's crust.
2. It's the most maleable substance on Earth. One ounce can be formed into a wire that stretches 50 miles. One ounce can be worked into a single sheet of filligree that covers 100 square feet, or plate a thread of copper wire over 1,000 miles long.
3. It is biocompatable, and therefore used in medical applications.
4. It's used in dentistry.
5. It has a high resistance to bacterial colonization.
6. It's used in jewelry.
7. It's an excellent catalyst in environmental applications.
8. It's used in anti-cancer drugs.
9. It does not corrode or tarnish.
10. It's used in airbags and most other critcal elctronic components.
11. IT'S USED TO MAKE COINS.

Comparing it to fiat paper is bullshit.

Bosso

[johngr]

Confederate dollars have no intrinsic value.

Gold most certainly always has and always will have intrinsic value.

1. It's rare. one ten millionth of the Earth's crust.
2. It's the most maleable substance on Earth. One ounce can be formed into a wire that stretches 50 miles. One ounce can be worked into a single sheet of filligree that covers 100 square feet, or plate a thread of copper wire over 1,000 miles long.
3. It is biocompatable, and therefore used in medical applications.
4. It's used in dentistry.
5. It has a high resistance to bacterial colonization.
6. It's used in jewelry.
7. It's an excellent catalyst in environmental applications.
8. It's used in anti-cancer drugs.
9. It does not corrode or tarnish.
10. It's used in airbags and most other critcal elctronic components.
11. IT'S USED TO MAKE COINS.

Comparing it to fiat paper is bullshit.

Bosso

All that's true but have you ever tried wiping your ass with gold? I think FRNs are much more useful for that purpose (and it might be more economical to do just that than to spend them coming up here shortly).

[Electric Church]

Confederate dollars have no intrinsic value.

Gold most certainly always has and always will have intrinsic value.

1. It's rare. one ten millionth of the Earth's crust.
2. It's the most maleable substance on Earth. One ounce can be formed into a wire that stretches 50 miles. One ounce can be worked into a single sheet of filligree that covers 100 square feet, or plate a thread of copper wire over 1,000 miles long.
3. It is biocompatable, and therefore used in medical applications.
4. It's used in dentistry.
5. It has a high resistance to bacterial colonization.
6. It's used in jewelry.
7. It's an excellent catalyst in environmental applications.
8. It's used in anti-cancer drugs.
9. It does not corrode or tarnish.
10. It's used in airbags and most other critcal elctronic components.
11. IT'S USED TO MAKE COINS.

Comparing it to fiat paper is bullshit.

Bosso


Right on

[cjhowe]

Confederate dollars have no intrinsic value.

Gold most certainly always has and always will have intrinsic value.

1. It's rare. one ten millionth of the Earth's crust.
2. It's the most maleable substance on Earth. One ounce can be formed into a wire that stretches 50 miles. One ounce can be worked into a single sheet of filligree that covers 100 square feet, or plate a thread of copper wire over 1,000 miles long.
3. It is biocompatable, and therefore used in medical applications.
4. It's used in dentistry.
5. It has a high resistance to bacterial colonization.
6. It's used in jewelry.
7. It's an excellent catalyst in environmental applications.
8. It's used in anti-cancer drugs.
9. It does not corrode or tarnish.
10. It's used in airbags and most other critcal elctronic components.
11. IT'S USED TO MAKE COINS.

Comparing it to fiat paper is bullshit.

Bosso

1. scarcity does not create value inherit of itself
2. all value described here is dependent on use and not on itself
3. all value described here is dependent on relativeness to replacement items
4. all value described here is dependent on relativeness to replacement items
5. all value described here is dependent on relativeness to replacement items
6. all value described here is dependent on perception and not on itself
7. all value described here is dependent on relativeness to replacement items
8. all value described here is dependent on relativeness to replacement items
9. all value described here is dependent on use and not on itself
10.all value described here is dependent on relativeness to replacement items
11.all value described here is dependent on perception and not on itself

Try again

[Bossobass]

1. scarcity does not create value inherit of itself
2. all value described here is dependent on use and not on itself
3. all value described here is dependent on relativeness to replacement items
4. all value described here is dependent on relativeness to replacement items
5. all value described here is dependent on relativeness to replacement items
6. all value described here is dependent on perception and not on itself
7. all value described here is dependent on relativeness to replacement items
8. all value described here is dependent on relativeness to replacement items
9. all value described here is dependent on use and not on itself
10.all value described here is dependent on relativeness to replacement items
11.all value described here is dependent on perception and not on itself

Try again

More bullshit. Try Webster's.

Bosso

[fsk]

In case anybody has forgotten, cjhowe is a troll who's intentionally trying to disrupt debate on this forum. His position on the Federal Reserve, the gold standard, and the IRS is the exact opposite of Ron Paul's position.

If anyone (that isn't a troll) has a question that they need answered about the Federal Reserve, the IRS, or the gold standard, you can post a question on my blog, PM me, or E-Mail me. This thread is getting out of hand.

I'm not really interested in posting in this thread anymore, because cjhowe has in fact successfully disrupted the discussion.

[Electric Church]

A few months ago he would copy and paste all these IRS tax codes. That was pretty rough. Kind of like walking into a Jewish wedding and throwing a roasted hog on the table.

[cjhowe]

In case anybody has forgotten, cjhowe is a troll who's intentionally trying to disrupt debate on this forum. His position on the Federal Reserve, the gold standard, and the IRS is the exact opposite of Ron Paul's position.

If anyone (that isn't a troll) has a question that they need answered about the Federal Reserve, the IRS, or the gold standard, you can post a question on my blog, PM me, or E-Mail me. This thread is getting out of hand.

I'm not really interested in posting in this thread anymore, because cjhowe has in fact successfully disrupted the discussion.

Disrupt debate? With the exception of D.C. Bradley's temperance replies, mine are the only contrarian viewpoints that have been offered. How do you hold a debate with a single viewpoint?

As far as the central banking, I agree philosophically and in conclusion with Ron Paul on this issue. However, academically I do not feel there is sufficient evidence brought by the Austrians (or any economic theory for that matter) that their model appropriately accounts for the psychological effect of deflation on the macroeconomic scale. In my conclusion of the issue though, I reject that the academic argument, and thereby the direct goal of prosperity, should be held superior to the philosophical argument of freedom.

As far as the IRS, I agree that we should eliminate the income tax and that we should reduce government spending by reconsidering the proper role of government in our lives. However, in the interim, there is indeed a law, it is constitutional and the income tax has absolutely no direct relationship to the founding of the Federal Reserve, despite what fanatical fauxumentaries may claim.

As far as the gold standard. Ron Paul no longer advocates for a gold standard, rather he advocates for allowing gold and silver to compete with federal reserve notes. A gold standard would mean the FRN would need to be backed by gold. While this is an interesting position, much of the world has lost it's 'gold lust' and thereby gold, silver and paper are all still fiat money. Money by the governmental declaration that they are money. Since it is still by decree, you gain little by way of freedom and so an academic evaluation should likely hold more weight in such a debate. A multi currency economy makes for a complicated manner for the government to raise revenues both at a federal level which should be limited to the functions enumerated in the Constitution and by the local government which should only be limited by the protections enumerated in the Constitution and by will of the local people.

You can continue to call me a troll, but you have yet to offer an argument that I can concede to.

[johngr]

So... who owns the Fed. Which banks own stock in each fed branch? What percentages of stock does each bank own? Who sits on the boards of these banks and their holding companies (to the ultimate level)? What are the nationalities of each of these people?