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Thread: Printing Money

  1. #61

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    Quote Originally Posted by WRellim View Post
    I'm wouldn't expect the Gummint to do a damn thing once FRB was made illegal.

    What I would expect would be the simple contractual right for depositors to get random (private) audits -- and the ability to both SUE the managers, and file criminal charges if less than 100% reserves were found.

    But I also know none of that is going to happen as a "reform" -- not until after the next big (worldwide this time) financial crash... or maybe not even until the one after that. (But eventually, if the world is not destroyed in between... it will happen.)
    Maybe you could help me understand how FRB is different from a corporate bond with no specific date but a clear interest paid. The way I see it, if I give Countrywide financial $1000 - as a bond, they 'promise' to pay me back, as per our contract, and also to pay a certain interest rate. Now that money may or may not be there, they, perhaps, lent it out to someone else, maybe even (God forbid) they have lent it out, lost it, and now are in the red on their books (they have only a fraction of what was deposited as assets now). The company may not survive, and I don't get my principle back- I know the rules of buying junk bonds. Life is a bummer...
    Now if I drop off my $1000 instead at their branch, they lend most of it out again, but keep 10% or whatever percent they deem necessary, don't get the money back, or at least don't have it when I want it, I'm still out my money. But since I knew they do FRB, I risked my ass(ets) for the 4% interest, instead of me paying 1% to have Brinks store my gold. Brinks of course could still screw me and take my money and run. If they claim a certain reserve ratio (whether it's 2% or 100%), yes you'd want to have independent auditors, with perhaps some type of criminal charges for fraud.

    I'd gladly take your system over what we have, but you'd still be limiting my freedom if you prevented me from engaging in contracts with someone who was going to do fractional reserve lending. That person/bank/corporation and I enter into a private contract between the two of us- please stay out of it.

    The sun will swallow up the earth in 4.5 billion years, hopefully we will figure it out before then, though I'm not so optimistic. Every crisis leads to more government until the government collapses, then we start over. I think the real problem is humans don't live long enough and most people have no desire to read history, so they don't live and learn - maybe if we lived to be 200 or 300 years old people would wise up. Prior to that I don't see us going from this crisis to a solution, unless RP or some of his ideas really win out. At this point - most everyone would look to the feds to solve the problem, with the lobbyists standing in the background writing the laws.
    Last edited by DrCap; 05-08-2008 at 12:06 AM.
    "Inflation and deflation are about money supply and credit, the latter being more important." Mish Shedlock



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  3. #62

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    This argument is getting a bit boring, so one last comment from me. You all seem to read the parts of my posts where I explain what I believe, but it appears you skip right over the part where I explain why.

    What I said is that I do not think fractional reserves and fiat money are inherently wrong. I did, however, say that it is unethical how the federal government and the Fed manipulate the system for government benefit. If you had read my earlier post, I explained that I think the system could be much better if handled by the free markets, much like many things that the government involves itself in. A free market fiat currency with free market interest rates and a true floating exchange would be the true commodity money. Although it is just paper, it would be backed by the commodities and output of the economy for which it was traded. That is far from "thin air."

    Fractional reserves at a bank are not unethical, because if anyone takes the time to learn, they will know that the bank is doing it. It does not create new money, but only contributes to credit expansion in the short term. If that credit expansion was determined by the free markets, you would have expansion in times of growth, and then higher rates and credit contraction in times of lower output. It is not fractional reserves itself that cause the booms and busts, it is government/Fed manipulation of reserves that do so, along with the massive amounts of government money that cause the system to leverage itself even farther.

    Now, what you missed again with your terrible U-Store-It example is the principle of choice (^^^ looks like DrCap gets it). I did not mean if you don't like dollars don't use them. Obviously we have to use dollars in our exchanges, but where all the anti-fiat arguments lose steam is that they describe how people's "savings" are destroyed. My point in the matter is that you should not keeep long-term savings in dollars. Most people with any kind of decent savings choose to put them in stocks, bonds, gold, or whatever. Many of these vehicles have historically kept pace or surpassed inflation as their values appreciated over time. For those folks who don't have any savings, they are probably in a lot of debt. They also benefit from the system as their debt load loses value over time. If you would check your history, you'd be surprised to find that it was mostly big banks who argued in favor of a gold standard in the late 1800s. They enjoyed the fact that their loan payments increased in value over time.

    In reality, the only ones hurt significantly by a steady growth of inflation are the fixed-income folks. Most of whom are those who did not adequately plan for their own retirement.

    Fractional reserves have been around for centuries, long before governments got involved and started manipulating them. In fact, there haven't been any cases of full reserves in quite a long time, whether the money was fiat or backed by some stupid metal.

    So in closing, no, I do not see these things as a moral issue. I see government involvement in them as a moral issue, the same as I see government involvement in many other things.
    Last edited by scooter; 05-08-2008 at 07:50 AM.

  4. #63

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    Quote Originally Posted by DrCap View Post
    Maybe you could help me understand how FRB is different from a corporate bond with no specific date but a clear interest paid. The way I see it, if I give Countrywide financial $1000 - as a bond, they 'promise' to pay me back, as per our contract, and also to pay a certain interest rate. Now that money may or may not be there, they, perhaps, lent it out to someone else, maybe even (God forbid) they have lent it out, lost it, and now are in the red on their books (they have only a fraction of what was deposited as assets now). The company may not survive, and I don't get my principle back- I know the rules of buying junk bonds. Life is a bummer...

    Now if I drop off my $1000 instead at their branch, they lend most of it out again, but keep 10% or whatever percent they deem necessary, don't get the money back, or at least don't have it when I want it, I'm still out my money. But since I knew they do FRB, I risked my ass(ets) for the 4% interest, instead of me paying 1% to have Brinks store my gold. Brinks of course could still screw me and take my money and run. If they claim a certain reserve ratio (whether it's 2% or 100%), yes you'd want to have independent auditors, with perhaps some type of criminal charges for fraud.

    I'd gladly take your system over what we have, but you'd still be limiting my freedom if you prevented me from engaging in contracts with someone who was going to do fractional reserve lending. That person/bank/corporation and I enter into a private contract between the two of us- please stay out of it.

    The sun will swallow up the earth in 4.5 billion years, hopefully we will figure it out before then, though I'm not so optimistic. Every crisis leads to more government until the government collapses, then we start over. I think the real problem is humans don't live long enough and most people have no desire to read history, so they don't live and learn - maybe if we lived to be 200 or 300 years old people would wise up. Prior to that I don't see us going from this crisis to a solution, unless RP or some of his ideas really win out. At this point - most everyone would look to the feds to solve the problem, with the lobbyists standing in the background writing the laws.
    There are SEVERAL major differences between your "corporate bond" and a "demand deposit account" at a "bank." To wit, the corporate bond is pretty BLATANTLY a "risk/loan" (esp. sans dates) -- whereas the "deposit" is NEVER characterized that way (indeed, the banking industry goes to great lengths to REASSURE people that "deposits" are "safe"--"guaranteed"--even "insured" etc., etc.)

    You've stated that YOU know that FRB is being done at your bank -- but you are probably less than 10% of the population. MOST people are clueless about banking, have no familiarity with the even the phrase "Fractional Reserve Banking" much less what it really IMPLIES, and take the "assurances" from banking system with 100% faith. (These kind of people also probably don't have a clue how their microwave or computer works... they live in a "pragmatic fog" ...things just "work" because, well, they always have! Just like Real Estate ALWAYS goes up in value -- the realtor and mortgage-banker-guy both assured me of that! ...And the Stock Market does too, by 10% a year -- my 401K Mutual Fund sales guy said so! )

    I guess what I am saying is that CURRENTLY -- the delusional "fog of safety" that most people believe in concerning banks -- is FRAUD. Worse, it is GOVERNMENT SANCTIONED FRAUD. If banks gave these types of "assurances" -- but WITHOUT the umbrella of the government's "sanction" (and therefore immunity) -- then they could be SUED or charges with fraudulent and deceptive business practices.

    Absent that Fraud/Deception -- and with a solid currency people would be without the "need" for earning interest (which is really "running just to stay in one place" vis-a-vis an inflating fiat currency) -- then ONLY people willing to RISK (and to the extent and amounts they are willing to risk) would such enterprises exist.

    And that people ARE willing to be more "responsible" and "educated" about making such "risky investments" -- I again call as witness the whole PROSPER.COM and similar microfinance systems. (Note: I just LIKE the idea... I have no affiliation with prosper.com -- though I wish I did as I think it's a GREAT business idea!)




    RE: Freedom of Contract

    As to your "freedom" to contract with "someone" doing FRB... well, why is your freedom not currently being "constrained" by your inability to contract with someone doing FRB with say 1% reserves on DDA's ? How about 0% on DDA's? Really, why bother with the reserves at all, they are NOT really needed are they? They are actually just all part of the "cartel/government" deception.

    I think you should be free to contract in whatever INSANITY you and someone else agree to... with ONE important provision: I do NOT believe that you (or the other party) should then be able to use the machinery of a government (society-provided) court, police, and jail system to ENFORCE the provisions of any such contract. NOR can our society accept the contract's parties using private forms of VIOLENCE or other illegitimate means to ENFORCE the terms of the contract (the proverbial "leg breaking" of the loan shark, for example).

    You see, if "society" (via the government and court system) is going to be USED as an ex-officio party to that contract -- in ANY WAY, SHAPE OR FORM -- then society actually IS an "unseen party" to the contract, and is not only allowed but indeed has a responsibility to (as every other "party" of the contract) to set certain LIMITATIONS or PARAMETERS on said contract. (In some senses, people arguing for "Freedom to contract" are making the SAME mistake that the "Broken Window Fallacy" people do -- they are ignoring Bastiat's "unseen/forgotten man" -- although in this instance the forgotten man/men are the rest of society.)

    Now, if you and some resident of a Muslim country want to set-up a contact for work done in that country -- and do so under "sharia-law" (which would allow, say for someone's hand to be cut off if they are late making a payment) -- then if that is "acceptable" to all of those THREE parties... so be it. But don't expect to enforce those provisions on US Territory... our society does NOT subscribe to the tenets of "sharia-law."

    Does that make sense?





    In addition... Corporations are CREATIONS of society/state.

    So many "libertarians/conservatives" make what I believe are absolutely INANE statements concerning their stance that "corporations" should be FREE to do X, Y or Z -- to which I say B.S. !

    And this is not the whole "stakeholder" argument... Instead it is an acknowledgment, a recognition, a REMINDER that a "corporation" is a "fictional creature" that has been created by a particular GOVERNMENT entity. As such, it truly has "existence" only in the confines of the jurisdiction of that particular state (and by "conventions" and inherent "reciprocity" of the state being part of the "union" of states -- other states agree to allow it's existence in their jurisdictions as well). But as the "corporation" is indeed a "fictional being" the local society (the individual State) does have the ability (indeed the responsibility) to set certain limits and parameters on how that "creature" behaves.

    Don't like those restrictions, limits and parameters? Fine... don't be a "corporation" -- just remember that your "limited liability" (which is ALSO a "fictional creation" of the state's judicial system) will disappear as well.

    Tit-for-tat.

    No "corporation" is entitled as some inherent "RIGHT" to "limited liability" as some "special class" of citizen (indeed, corporations are NOT "citizens") who is then immune from taking FULL responsibility and assuming FULL liability for its actions (as EVERY OTHER "real" human being is required to be... even minors under 18 these days). Such "limited liability" is GRANTED by the society/state -- but only in form of a "contract" with that society (state) that agrees to create it, and therefore IS IN FACT subject to the "limiting" provisions OF that contract.

    Why am I getting into that? Because your "bank" AND your "corporation" are both... well "corporations" (or other such "legal entity" with "limited liability").

    Now if you want to AVOID all of that... and instead go ahead and start a "Joe Smith's Bank" as a sole-proprietorship -- and forgo the "limited liability" status -- then I believe THAT should be subject to virtually NO such "special entity" limitations or regulations (provided that is, that Mr. Joe Smith does not IMPLY that he is some other "entity" -- and unless "Joe" makes it quite clear that when you deposit money, well you MAY NOT be able to withdraw it when you want to ...if he promises you can, and then reneges... that is simple fraud/theft/breach of contract). Same would be true for a FULL-PARTNERSHIP (but NOT a "limited-partnership" as the "limitation" again is a legal, society-granted "fiction" -- for which society is entitled to some compensation.) But, and here's the rub -- Mr. Joe Smith would now be PERSONALLY legally liable for any and all actions of his bank (and therefore it's agents and employees, etc). This is almost self-limiting -- get TOO big and his RISK/LIABILITY exposure increases substantially. -- As a result, I guarantee you his "abuses" would be very quickly restrained.

    It's a whole paradigm shift from what we have now... BUT, it is a LOT CLOSER to the business environment that existed in the era of the Founding Fathers.

    The whole pervasiveness of "corporations" and their fictional "personhood" is nearly AS recent an invention as The Federal Reserve. (The founding fathers had "stock corporations" but they looked VERY little like our modern version, despite the similarity of nomenclature.)




    Off Topic (but related) -- Contracts and Paying for the Courts:

    I have often thought that there would be a RELATIVELY simple way to "fund" the whole court system WITHOUT taxes (how nice would that be)...

    Charge a "Registry Fee" for any and all contracts that people want the courts to enforce. Fees could easily be based "word counts" with fees increasing on some type of logarithmic scale -- perhaps logarithmic per party -- which would help avoid those 500..5,000 page long, or the 5 page but microscopic text things.

    "Didn't register your contract? Sorry, can't sue for breach with that state's courts... Next!"

    Contract text (and signatures... a "snapshot" if you will) would also be matter of public record -- much like patents are currently. (Which would serve multiple purposes, among them breaking or reducing the "monopoly" that the bar association currently has.)

    Trust each other implicitly? Cool... save a few bucks and don't bother registering the contract... but you also forgo using the courts (and would thus be free to use arbitration... albeit NOT of a "binding" nature legally unless covered by some other registered meta-contract {and there would/should be substantially HIGHER fees and limitations for registration of such "meta-contracts" to avoid people gaming the system}).

  5. #64

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    Quote Originally Posted by scooter View Post
    This argument is getting a bit boring, so one last comment from me. You all seem to read the parts of my posts where I explain what I believe, but it appears you skip right over the part where I explain why.

    What I said is that I do not think fractional reserves and fiat money are inherently wrong. I did, however, say that it is unethical how the federal government and the Fed manipulate the system for government benefit. If you had read my earlier post, I explained that I think the system could be much better if handled by the free markets, much like many things that the government involves itself in. A free market fiat currency with free market interest rates and a true floating exchange would be the true commodity money. Although it is just paper, it would be backed by the commodities and output of the economy for which it was traded. That is far from "thin air."

    Fractional reserves at a bank are not unethical, because if anyone takes the time to learn, they will know that the bank is doing it. It does not create new money, but only contributes to credit expansion in the short term. If that credit expansion was determined by the free markets, you would have expansion in times of growth, and then higher rates and credit contraction in times of lower output. It is not fractional reserves itself that cause the booms and busts, it is government/Fed manipulation of reserves that do so, along with the massive amounts of government money that cause the system to leverage itself even farther.

    Now, what you missed again with your terrible U-Store-It example is the principle of choice (^^^ looks like DrCap gets it). I did not mean if you don't like dollars don't use them. Obviously we have to use dollars in our exchanges, but where all the anti-fiat arguments lose steam is that they describe how people's "savings" are destroyed. My point in the matter is that you should not keeep long-term savings in dollars. Most people with any kind of decent savings choose to put them in stocks, bonds, gold, or whatever. Many of these vehicles have historically kept pace or surpassed inflation as their values appreciated over time. For those folks who don't have any savings, they are probably in a lot of debt. They also benefit from the system as their debt load loses value over time. If you would check your history, you'd be surprised to find that it was mostly big banks who argued in favor of a gold standard in the late 1800s. They enjoyed the fact that their loan payments increased in value over time.

    In reality, the only ones hurt significantly by a steady growth of inflation are the fixed-income folks. Most of whom are those who did not adequately plan for their own retirement.

    Fractional reserves have been around for centuries, long before governments got involved and started manipulating them. In fact, there haven't been any cases of full reserves in quite a long time, whether the money was fiat or backed by some stupid metal.

    So in closing, no, I do not see these things as a moral issue. I see government involvement in them as a moral issue, the same as I see government involvement in many other things.

    Scooter: I explained that I think the system could be much better if handled by the free markets

    A free market with NO limits on anything... true anarchy. Sounds fine to me. Shaved Coins? No problemo. Broken legs for missing a payment? A-OK.

    Truth is NO SUCH banking system will survive for long without either using the legal system to ENFORCE the terms of the contract, OR via use of extra-legal violence.

    The whole FRB is "sanctioned and created" by the courts allowing the fraud as a "legitimate guise" of business... it is and always has been essentially (at it's root) a mutually-beneficial cartel agreement between governments and bankers.


    Scooter: Although it is just paper, it would be backed by the commodities and output of the economy for which it was traded. That is far from "thin air."

    Well, how is this more than a "semantic" difference from the current fiat dollar, backed by the "full faith and credit" (aka the future taxing ability) of the government. We're only a despot away from being Zimbabwe.


    Scooter: Fractional reserves at a bank are not unethical, because if anyone takes the time to learn, they will know that the bank is doing it.

    Jeez... then just about EVERYTHING is ethical I guess (I mean it's people's own damn fault if they didn't spend the time to learn about... well whatever it is you do)... And there is NOTHING unethical about that loan shark guy breaking your legs if you miss a payment... after all, he even EXPLICITLY WARNED you that that is what he would do... nothing to see here folks, move along!


    Scooter: It [FRB] does not create new money, but only contributes to credit expansion in the short term.

    Ummm sure... 30 year loans are NOT long term, got it. "Credit" from nowhere is NOT "money" in terms of liquidity... and the moon is made of green cheese too!


    Scooter: It is not fractional reserves itself that cause the booms and busts,

    Um, actually... for most (non-agriculture-related) booms & busts it IS. FRB creates various loose or tight credit, which then fuels and collapses speculation, which means tulips and Florida Land Booms, etc. Wrote extensively on this other places in the forums. But, hey, I get it... you LURVE FRB... and probably make money from the carry trade... why are you on an RP forum again? (Oh, that's right... you hate ALL forms of Government.)



    Scooter: I did not mean if you don't like dollars don't use them. Obviously we have to use dollars in our exchanges

    Actually it is NOT "obvious" -- I would like to do contracts in ounces of gold -- but alas, Scooter's wonderful government has made that ILLEGAL.

    Scooter: but where all the anti-fiat arguments lose steam is that they describe how people's "savings" are destroyed. My point in the matter is that you should not keeep long-term savings in dollars. Most people with any kind of decent savings choose to put them in stocks, bonds, gold, or whatever.

    Says the man with the trust fund.

    Scooter: Many of these vehicles have historically kept pace or surpassed inflation as their values appreciated over time.

    But they are NOT "safe" stores of value at all... you've bought the whole BS sales pitch from the 401K salespeople... in times of demographic downturns (aging populations, decreasing population, recession & depression, etc.) they do NOT necessarily appreciate.

    What scooter illustrates is the classic "cognitive dissonance" -- he thinks only of certain things at certain times -- and ignores the remaining 90% of reality. (For example... in the above, since scooter obviously does not {and probably never has} worked for an hourly wage in his life -- he fails to realize that people's salaries and wages are designated in dollars... and that inflation eats away at those wages in the same way that a pay-cut would...

    But, wait a minute... why bother writing ANY of this at all to scooter... what he is arguing for is essentially the system AS IT CURRENTLY EXISTS. He just want all GOVERNMENT oversight to be gone. (In other words, the Fed Chairman should NOT have to sit in front of Ron Paul several times per year and endure that tongue lashing... instead he should just be able to refude to testify ala Harriet Miers).

    Scooter: Like Fractional Reserve Banking because it works so wonderfully well (and always has) -- also he likes FIAT money and wants to be able to print his own (backed of course by some imaginary commodity... but for which he doesn't want to be restricted to any actual "defined" reserve amount...)

    In short, maybe the BEST commodity for the "Scooter Bank Money" would be the paper that it is printed on? In other words... Zimbabwe!


  6. #65

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    Quote Originally Posted by scooter View Post
    Fractional reserves at a bank are not unethical, because if anyone takes the time to learn, they will know that the bank is doing it. It does not create new money, but only contributes to credit expansion in the short term.
    If a bank loans money out of time deposits such as CDs, it is only "contributing to credit expansion in the short term." But if it loans out more money than it has in payable-on-demand deposits, it is in fact creating new money and this is inflationary.

    In reality, the only ones hurt significantly by a steady growth of inflation are the fixed-income folks. Most of whom are those who did not adequately plan for their own retirement.
    When new money is created, the parties who receive and spend the money first, before it filters through the system and raises prices, receive a windfall. This fraudulent purchasing power is in effect stolen from savers and "fixed income folks." Whether they planned adequately for retirement or not, they have been deprived of value which is rightfully theirs.

  7. #66

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    I guess you'll just have to live in your world and I'll live in mine. I much prefer the view without tinfoil on my head.

    By the way, I make a great living doing what I do. But of course, by your definition I haven't worked a single day in my life. I have been paid in those "out of air" dollars you talk about, so my production was only worth a couple of entries in a computer, right?

    The point is, if you don't like dollar, go ahead and put all your money in gold if you want. It's the true safe store of value, right? Let's get two guys together who started saving in 1980. One who put all his money in an IRA, the other who put all his money in gold. Wonder who has better purchasing power with those savings 30 years later...
    Last edited by scooter; 05-08-2008 at 08:21 PM.

  8. #67

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    I have $100. I could use that to buy something with it- leading to more demand for that item than if I decide not to buy it. I decide not to and want to keep the money some place. I go to a bank since they promise to keep it safe and pay me a bit of extra money when I take it out in the future. So the bank has $100.

    They need to make money to be able to me the interest on my deposit so they will loan the money out to someone else but charge then a higher rate than what the bank is paying me. That is how they make money and can stay in business.

    This bank has a reserve requirement. It is not allowed to loan out all of their money so that they have some on hand to give to people who would like to make a withdrawl. If the reserve requirement is ten percent, they can loan out up to $90 of the money I put in. I could have spent $100 in the economy, but this person can only spend $90. Say he cannot decide what he wants to spend it on yet and decides to put the money in the bank (could be the same one or another one that does not matter). His deposit is up to $90. Again with the reserve requirement, the bank can again loan out $89 dollars. The $100 I could have spent is now down to $89 in the economy. Repeat this as many times as you want and the amount of my original $100 that is actually in circulation compared to what would have been there if I spent it all myself gets progressively smaller. The supply of money in circulation is smaller than it would have been without the bank.

    (Copied from one of my earlier posts in another thread) http://www.ronpaulforums.com/showthr...=134158&page=5

  9. #68

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    Quote Originally Posted by scooter View Post
    I guess you'll just have to live in your world and I'll live in mine. I much prefer the view without tinfoil on my head.

    By the way, I make a great living doing what I do. But of course, by your definition I haven't worked a single day in my life. I have been paid in those "out of air" dollars you talk about, so my production was only worth a couple of entries in a computer, right?

    The point is, if you don't like dollar, go ahead and put all your money in gold if you want. It's the true safe store of value, right? Let's get two guys together who started saving in 1980. One who put all his money in an IRA, the other who put all his money in gold. Wonder who has better purchasing power with those savings 30 years later...
    Well, I don't wear tinfoil... guess I never really did care much about "shiny" things.

    But I also refuse to wear a "paper" hat and have to sit around in "anxiety" waiting anxiously on the baited statements of whether this globalist "master" (or that one over there) has decided to tank all investments by "fiat" because they've decided to raise a number (or lower it) on this given day or whether they'll do so tomorrow, or perhaps next week?

    If the DOW or the S&P 500 drops by 10% tomorrow, I really couldn't give a the puckered backside of a rat... others (you among them?) however, will probably be freaking (unless they "shorted" in which case they'll be drunk with ecstasy... but then ...conversely, on any other given day if they shorted and the market went UP by 5%, they'll probably be tearing out hair or crying in a highball put on the tab... whatever).

    Or who knows, maybe YOU are one of the "carry-trade" people who make their "money" either way -- of off CONvincing other peoples into either buying, or selling, or shorting, or shrifting, or insuring or hedging... or heck, whatever... but, HEY, have fun with all of that and please, don't EVER let your conscience bother you over losing the "saved" work of other people, or that you may have lied or mislead them... nah, wouldn't want you to lose sleep, you know.

    But either way, no doubt making a great number of FRN entries in computers is TRULY IMPORTANT... without it, the Sun itself would cease to shine!

    There are all kinds of successful parasites in the world (always have been, always will be) -- whether it is bacteria, virii, or other similar forms. I've known people who make great money "aborting fetuses" as well... or peddling one of any number of "snake oil" items... or just being plain thieves, and con-artists in other ways. High numbers in a bank account don't really mean so much as most people think. (But hey, if that is your ONLY indicator of a "successful life" -- well so bet it, and I'm sure on the great "balance sheet" of life the real net worth is somewhere -- hopefully above -- zero, of course that's all dependant on what the "margin" says the "asset" side is worth on a given day.)

    Funny thing will be if the whole thing tanks again as it did in 1929 (or any number of other dates)... something tells me that for quite a while those "skills" at shifting numbers and papers won't be worth much (probably like Mortgage Brokers and Real Estate sales people these days... dime a dozen), and if it gets extremely bad, the windows may just start calling the names of the number-shifters... of course, you can probably just get some job clerking or something... somewhere (maybe).

    Others with more skills and consciences (but less debt, and less vanity) will probably do OK.

    As to the Gold... well, I didn't bother back in the 80's -- to busy investing in my own enterprises -- but started transferring a small amount into Gold back in 2001, a bit more in 2002 and 2003. Compared to some additional monies that were in stocks and MF's THAT has retained its value fairly well (and I believe will do even better in the future, compared to FRN designated assets). FRN's are now worth only about 25-30% of what they were back then (and even *IF* one gained 10% per year it wasn't really enough to maintain it's value, much less truly regain the value lost in the "oops" of the market back 2001).

    So, as far as "purchasing power" goes... yup, I have significantly more now than I did in 2001... but I am also completely debt free. Sure my house isn't some insane "McMansion" in some purportedly "swot" zip code... but than again, the price of heating oil or natural gas or electricity could go through the roof, and I wouldn't be bothered much by it (probably LESS than I've been bothered by the price of gas going from $2 to $4 a gallon). Property taxes may go up, but not anywhere near as much on my home as on the monstrosities of others... and the "neighborhood" won't be filled with foreclosures on 6-bath, 7-bedroom houses (which I always figure will make a nice home for several Hispanic families someday). But hey, Vanity and Ego have their price... I'm sure others think they are worthwhile (but I'm not buying it).

    Instead, I have achieved what most people strive their whole lives for (and often fail to reach) -- I work a bit... other than a few standard "chores" that need to be taken care of everyday pretty much only when I want... and on what I want. I enjoy a variety of hobbies and other interests (many of which can be turned into trade) associate with others on a friendly basis when I want, and pretty much live FREE from anxiety. Right now I'm looking out on the green trees in the woods across the street, and my fruit trees full of blossoms, the garden with the first plants sprouting, and listening to the birds chirping, and contemplating whether to save the additional fresh eggs from this morning or boil them for lunch. Oh, sure, occasionally some things p*ss me off... but really only on a philosophical "existential" level... things like seeing others "suckered" by pols and other parasitic forms of life... but all of that is actually quite external to me, and raises the heart rate only a little, and temporarily at that. Its all pretty irrelevant either way.

    But you're living in a papered over rat-race, a dream world with a house built on a foundation of cards and "shuffled paper" ...I'm sure it is all quite impressive... while it lasts.


    Be sure to have fun with that, Mr. Potter.

  10. #69

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    Quote Originally Posted by Zippyjuan View Post
    I have $100. I could use that to buy something with it- leading to more demand for that item than if I decide not to buy it. I decide not to and want to keep the money some place. I go to a bank since they promise to keep it safe and pay me a bit of extra money when I take it out in the future. So the bank has $100.

    They need to make money to be able to me the interest on my deposit so they will loan the money out to someone else but charge then a higher rate than what the bank is paying me. That is how they make money and can stay in business.

    This bank has a reserve requirement. It is not allowed to loan out all of their money so that they have some on hand to give to people who would like to make a withdrawl. If the reserve requirement is ten percent, they can loan out up to $90 of the money I put in. I could have spent $100 in the economy, but this person can only spend $90. Say he cannot decide what he wants to spend it on yet and decides to put the money in the bank (could be the same one or another one that does not matter). His deposit is up to $90. Again with the reserve requirement, the bank can again loan out $89 dollars. The $100 I could have spent is now down to $89 in the economy. Repeat this as many times as you want and the amount of my original $100 that is actually in circulation compared to what would have been there if I spent it all myself gets progressively smaller. The supply of money in circulation is smaller than it would have been without the bank.

    (Copied from one of my earlier posts in another thread) http://www.ronpaulforums.com/showthr...=134158&page=5
    And since the supply of money WITH the bank is larger... the prices of everything are simply HIGHER. That's all it has REALLY succeeded in doing you know... raising prices.

    But raising prices is NOT the equivalent of generating wealth. May as well just have everyone shift the decimal point over one or two digits... would THAT make you truly feel wealthier? Happier?

    This is such a BASIC misunderstanding it boggles the mind.

    For example, the whole IDIOCY of increased nation-wide "student loans" -- all that has been achieved is to RAISE the cost of schooling. If as of tomorrow, ALL student loans became unavailable -- well certainly on a TEMPORARY basis a lot of kids would have to quit school -- but eventually the COSTS of schooling would be forced back DOWN. (It may take many years -- but mainly because the schooling system is more "bureaucratic" than it is a market -- tenured professors being overpaid via long-term contracts {which will get INCREASES in pay, but NEVER pay cuts} etc. Hence many schools would "close" because they cannot "adjust" to the market... but others would "open" that COULD adjust.)

    The same thing is true anywhere and everywhere... ALL goods and services are essentially sold "at auction" -- yes, even those items with "standard" prices. (Just go look at the "bargain bin" or the "clearance rack" at virtually any store -- the prices on those items will be very low... because no one wanted to buy them at the too-high original "reserve" price.)

    Think of it in this way... suppose 100 people were attending an auction, and at the door, you randomly gave 25 of those people $1,000 coupons that they could spent at (and ONLY at) that auction. What would the result be? Well one result would be that those 25 people would be likely to "buy" a larger portion of the items sold... and the other would be that the total "price" of items sold at that auction would probably be around $25,000 higher (and thus back in the auctioneer's pocket). But the actual VALUE of the goods sold at that auction would not TRULY be any higher (people might THINK it was, but in reality it would not be). In addition, a significant number of OTHER people (the "unseen") attending that auction would walk away WITHOUT have bought something -- the "unseen" sales that didn't happen (but would have w/o the coupons) -- cf Bastiat.

    By YOU giving the money to the bank to loan out in order to "increase the money in circulation"*** -- you've really just made the things you DO buy a bit more expensive. (May as well cut your nose off in order to spite your face.)

    So don't be so certain that ANY means of "increasing" the supply of money actually "improves" things... it just shifts the balance of WHO a little bit.


    ***Note that this does not mean ALL loaned money is "useless" -- only money loaned for people to "consume" more does this. Money loaned for someone to BUILD production (seeds to plant, machinery to manufacture value, etc) DOES in fact create more wealth (the fruits of the plants grown, the finished goods produced by machinery, etc). But such "business loans" are really just a way of proxy-investing, with a middleman taking a significant cut (purportedly for carrying the risk, but in our system of "guaranteed" deposits, the middleman takes virtually no risk whatsoever, instead transferring the risk onto "everyone" including those who have NO potential gain from the transaction at all).

  11. #70

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    Money in a bank is not in circulation and not adding to the demand for products, increasing prices. The same effect occurs if the Fed withdraws money from the system by issuing securities or if people stick it under their matresses. Now if all those people with money in the bank decided to take it out and spend it, then the money in circulation does increase . But if that happens then the banks have no depostits left to lend out so their contribution to the money supply stops.

    You are correcct about the availability of student loans probably contributing to the cost of education rising. That is also true in healthcare. As long as the schools or hospitals can attract enough customers, they can continue to raise their prices. We saw the same effect with looser lending policies allowing people to spend more money to buy a house than they could have otherwise afforded.


    I do not make the claim that higher numbers on things (prices or income) are any measure of wealth. A truer measure is time- not money. How long do you have to work to aquire the things you want and/ or need. By that measure, we are on average better off than we were fifty or one hundred years ago.

    Money only tells us the relative value of things. For example, in 1915 the price of gold was $21 an ounce. Median income was $687 or 32.7 ounces of gold. Using the same source, http://www.infoplease.com/spot/300-m...americans.html (for consistant numbers) they list median income for 2006 as $33,500 (rounded). Gold ended 2006 at $636 an ounce. http://www.finfacts.ie/Private/curen...arketprice.htm Our 2006 worker could have converted his salary (before taxes) into 52.7 ounces . Using the gold standard, the average person has had their real income improve by 61%- despite the reported 90% or whatever decrease in the value of the dollar.

  12. #71

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    In - fricking - inflation.

    The U.S. dollar is tanking.

    The only thing that is keeping it alive right now, is good will, liars, and protocol.

  13. #72

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    Quote Originally Posted by Zippyjuan View Post
    Money in a bank is not in circulation and not adding to the demand for products, increasing prices. The same effect occurs if the Fed withdraws money from the system by issuing securities or if people stick it under their matresses. Now if all those people with money in the bank decided to take it out and spend it, then the money in circulation does increase . But if that happens then the banks have no depostits left to lend out so their contribution to the money supply stops.

    You are correcct about the availability of student loans probably contributing to the cost of education rising. That is also true in healthcare. As long as the schools or hospitals can attract enough customers, they can continue to raise their prices. We saw the same effect with looser lending policies allowing people to spend more money to buy a house than they could have otherwise afforded.


    I do not make the claim that higher numbers on things (prices or income) are any measure of wealth. A truer measure is time- not money. How long do you have to work to aquire the things you want and/ or need. By that measure, we are on average better off than we were fifty or one hundred years ago.

    Money only tells us the relative value of things. For example, in 1915 the price of gold was $21 an ounce. Median income was $687 or 32.7 ounces of gold. Using the same source, http://www.infoplease.com/spot/300-m...americans.html (for consistant numbers) they list median income for 2006 as $33,500 (rounded). Gold ended 2006 at $636 an ounce. http://www.finfacts.ie/Private/curen...arketprice.htm Our 2006 worker could have converted his salary (before taxes) into 52.7 ounces . Using the gold standard, the average person has had their real income improve by 61%- despite the reported 90% or whatever decrease in the value of the dollar.
    Great Zippy! A 61% improvement that I'm sure is due to fiat money and fractional reserve banking! What percentage of people own their own homes compared to 1915? You don't think maybe cheap electricity and oil had anything to do with that, do you?

    Moderators please ban all persons defending fiat money and fractional reserve banking. Or let's add a Paul Platform Plank to allow us all the priviledge of counterfeiting money as a basic God-given right. What's it gonna be?

  14. #73

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    Zippy, your money in the bank is still being paid for by the govt. You think thats right?

    If you have $100,000 in a CD in the bank do you think its fair that the govt has to pay $5,000 EACH YEAR for your money??? But dont worry thats why they get you to pay income tax so you can pay interest on something you shouldnt have to. You dont have that money for your own use now, and therefore you cant buy what you wanted..

  15. #74

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    Quote Originally Posted by sratiug View Post
    Great Zippy! A 61% improvement that I'm sure is due to fiat money and fractional reserve banking! What percentage of people own their own homes compared to 1915? You don't think maybe cheap electricity and oil had anything to do with that, do you?

    Moderators please ban all persons defending fiat money and fractional reserve banking. Or let's add a Paul Platform Plank to allow us all the priviledge of counterfeiting money as a basic God-given right. What's it gonna be?
    The Government is counterteiting the money.

    Those who wish to ignore the obvious, do so at their own peril.

    I suggest that you take advantage of superior intellect and judgement, and channel your resources accordingly.

  16. #75

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    Quote Originally Posted by Mike Mitrosky View Post
    Zippy, your money in the bank is still being paid for by the govt. You think thats right?

    If you have $100,000 in a CD in the bank do you think its fair that the govt has to pay $5,000 EACH YEAR for your money??? But dont worry thats why they get you to pay income tax so you can pay interest on something you shouldnt have to. You dont have that money for your own use now, and therefore you cant buy what you wanted..
    How is the government paying for my deposit? The bank is paying me interest out of the interest that the person who borrows from them is paying to the bank.

    Lending is trading consumption. If I deposit money in a bank, I am forgoing spending that money now and intend to spend it in the future. If someone else borrows that money, they can spend it now but when they pay back the loan in the future, they do not have the money to spend then. I have traded my consumption now for consumption in the future and the borrower is trading future consumption for consuming now.


    The Government is counterteiting the money.
    You may wish to call it counterfit, but it is accepted in places all throughout this great land of ours in exchange for goods and services. I am happy with the things I can get with my "counterfit" money. They bring me food, housing, and pleasure.


    What percentage of people own their own homes compared to 1915?
    Homeownership . . . the American Dream
    Percentage of the nation’s householders who owned the home in which they lived.
    2006: 68.9%
    1967: 63.6%
    1915: 45.9%
    I am sorry to hear that you are intollerant and unwilling to listen to opions which may differ from your own. You may learn something someday.

    My point here is that we are not worse off due to fractional reserve banking or fiat money. There are problems in the economy but they are not due to the structure of the money but due to what people do with it.
    Last edited by Zippyjuan; 05-09-2008 at 02:47 PM.

  17. #76

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    Quote Originally Posted by Zippyjuan View Post
    How is the government paying for my deposit? The bank is paying me interest out of the interest that the person who borrows from them is paying to the bank.



    You may wish to call it counterfit, but it is accepted in places all throughout this great land of ours in exchange for goods and services. I am happy with the things I can get with my "counterfit" money. They bring me food, housing, and pleasure.


    What percentage of people own their own homes compared to 1915?

    I am sorry to hear that you are intollerant and unwilling to listen to opions which may differ from your own. You may learn something someday.

    My point here is that we are not worse off due to fractional reserve banking or fiat money. There are problems in the economy but they are not due to the structure of the money but due to what people do with it.


    BUNNY

  18. #77

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  20. #79

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    Quote Originally Posted by Zippyjuan View Post
    Money in a bank is not in circulation and not adding to the demand for products, increasing prices. The same effect occurs if the Fed withdraws money from the system by issuing securities or if people stick it under their matresses. Now if all those people with money in the bank decided to take it out and spend it, then the money in circulation does increase . But if that happens then the banks have no depostits left to lend out so their contribution to the money supply stops.

    You are correcct about the availability of student loans probably contributing to the cost of education rising. That is also true in healthcare. As long as the schools or hospitals can attract enough customers, they can continue to raise their prices. We saw the same effect with looser lending policies allowing people to spend more money to buy a house than they could have otherwise afforded.

    I do not make the claim that higher numbers on things (prices or income) are any measure of wealth. A truer measure is time- not money. How long do you have to work to aquire the things you want and/ or need. By that measure, we are on average better off than we were fifty or one hundred years ago.

    Money only tells us the relative value of things. For example, in 1915 the price of gold was $21 an ounce. Median income was $687 or 32.7 ounces of gold. Using the same source, http://www.infoplease.com/spot/300-m...americans.html (for consistant numbers) they list median income for 2006 as $33,500 (rounded). Gold ended 2006 at $636 an ounce. http://www.finfacts.ie/Private/curen...arketprice.htm Our 2006 worker could have converted his salary (before taxes) into 52.7 ounces . Using the gold standard, the average person has had their real income improve by 61%- despite the reported 90% or whatever decrease in the value of the dollar.
    Certainly we ARE better off than we were 100 years ago, and most probably (at least in certain areas) we are better off than we were 50 years ago.

    But to what is that attributable? In other words who gets the PRAISE for it?

    Is it BECAUSE of the "Federal Reserve" inflating the money supply? Or Government spending boatloads of cash on it's weird centrally planned contracts?

    Do those things somehow "magically" CAUSE or create the many "innovations" in farming, manufacturing, invention -- according to some "grand master plan" of our elites?

    Do men FLY in airplanes because of the government's multi-year tax-funded "investments" in Langley's disastrous "Aerodrome"? Or do we fly because the profits from a small bicycle shop in Ohio were used by two completely unknown brothers to fund their "hobby" and do it the Wright-way?

    50 years ago ...every engineering company had entire ROOMS filled with drafting tables, with draftsmen altering drawings and making new "blueprint" copies for distribution, etc.

    Now, because of innovations in both microchip design, computer logic, in invention of several layers of higher and higher programming languages, the internet, etc -- we have 3D CAD workstations... and now I, *alone* -- sitting at my laptop on a kitchen table -- can in less than a day create the equivalent amount of "component" drawings that would have taken a dozen (or more) draftsmen at least a full day to do in 1950 -- and at the click of a mouse, I can send those drawings via email out to suppliers (anywhere in the world) almost instantaneously (this last not even possible in 1950... but to even come close would have taken many days of labor and/or shipping to make and mail the large number of "blueprint copies").

    Now certainly all of those things could NOT have happened without "investment" of capital -- but said investment is ACTUALLY the "feeding, clothing, & housing" of the people DOING the work of creating those innovations, it is NOT merely making certain there is boatloads of "money" flying around.

    And much (most) of that innovation probably WOULD have occurred (albeit in a slightly different form -- perhaps a superior form) even had the Fed not "inflated" one single extra dollar.

    So the question is, how much of the POTENTIAL innovations were "misdirected" into fruitless efforts, consumerism, speculations, etc -- how many "parasites" were "fed, clothed and housed" during that same time-span. How many people were occupied in a variety of NON-wealth-creating, NON-innovative occupations during that time?

    Again... Bastiat's "Forgotten Man" --- or in this case "unrealized potential innovation".


    And conversely, how much of the money the Fed "created" was used to "siphon" creative effort, was used to finance a government's ability to unaccountably "manufacture" millions of bullets and countless thousands of bombs that would only be used to later DESTROY both real wealth and real people (whose creative energies have thus been lost -- whether it was merely a lost factory worker, programmer, rice-patty farmer {as a soldier OR a peasant} -- or is there the possibility that it was an infant "Ramanujan" or even a budding "Edison" killed in some village of Vietnam or Cambodia by the carpet bombing during the late 1960's??? Alas, we will never know.)

    Or in the "arts" fields... how many poets, writers, painters have been lost -- in part because governments (via fiat dollars) are able to "disconnect" their immediate actions and wars from the "anger" of taxpayers. We know, for example that J.R.R. Tolkien served and survived in WWI, but that two of his four closest friends did NOT survive... what "companion" books to the great "Lord of The Rings" have we lost? Would Kipling's son Jack have been able to write anything at all? Did we lose a great writer there? Or merely someone who would have wasted his father's fortune?

    Despite the fact that your (seriously warped) government "indoctrination" has made you think of history MAINLY, indeed almost SOLELY in terms of Wars, elections, budgets, legislation... they are NOT the things that drive PROGRESS forward.

    Were the most important men in the 19th century Jackson, Lincoln, Grant, and Lee?

    Or were the efforts of John Deere, J.I. Case, Cyrus McCormick and others?

    The former group mainly engaged in killing and destruction, ...or in ordering others to kill and destroy.

    The latter group -- with their innovations in farming and machinery -- helped to FEED the entire world.


    Seriously, who has done MORE to make your current life better than people's lives 50 years ago?

    Lyndon Baines Johnson and Richard Nixon
    with the Vietnam War & the ending of the gold standard...

    Paul Volker and Alan Greenspan
    -- mouthpieces of the banking elite? (And who, despite their prominence in the "news" media, were probably little more than "clerks" easily replaceable by one of any dozen other individuals).

    Or was it perhaps Robert Metcalf and David Boggs (the co-inventors of that little thing called "Ethernet" whose names your children will probably never hear, but whom w/o which I guarantee YOU would not be reading this online, and w/o whom your children's entire lives would be much different.) Or how about that guy in a cubicle with a single NeXT computer... Tim Berners-Lee, who invented HTML and that "World-Wide-Web" thingee.

    And I haven't even gone to the CURRENT era of digital innovation...

    What did the world REALLY gain from the whole Wall-Street & Fed-Boom funded "dot-com era"? What MAJOR websites did we gain... Pets.com? ByYourConcreteOnline.com?

    Conversely, in the years after the BUST of the dot-coms, we have gained Google (two college kids), FaceBook (another college kid), YouTube (couple of 20 somethings), Craigslist (couple of "lusers" -- at least that's what Wall-Street and iBanks would say)... most of those things were innovations whose KEY phases were self-funded, emphatically NOT driven by the banking systems.


    Face it, innovation and progress does NOT come from playing games with currencies, at best that is an aid to "spreading" an innovation already in existence, at worst it is a hindrance to or destroyer of creative people.

    Please, UNWARP your view of the world -- other than as destroyers and thieves, politicians and bureaucrats are NOT anywhere near as important as they may think (despite what the history books say).

  21. #80

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    Those are issues of government policy- not due to the structure of the money supply. It certainly did not prevent people from living better lives or improvements being made in productivity. Many of those actually occured BECAUSE of fractional reserve banking (as compared to a full reserve banking system) which allowed people and companies to borrow money and invest it in new ideas and in expanding existing production. Yes, money was also borrowed and spend on bad ideas too. And yes, some people borrow more than they should. The government included. But the overall result has been improvenemt in our economy.

  22. #81

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    Quote Originally Posted by Zippyjuan View Post
    Huh?
    Two percent interest rates = ?

    You guess smarty pants.

  23. #82

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    Quote Originally Posted by Zippyjuan View Post
    Those are issues of government policy- not due to the structure of the money supply. It certainly did not prevent people from living better lives or improvements being made in productivity. Many of those actually occured BECAUSE of fractional reserve banking (as compared to a full reserve banking system) which allowed people and companies to borrow money and invest it in new ideas and in expanding existing production. Yes, money was also borrowed and spend on bad ideas too. And yes, some people borrow more than they should. The government included. But the overall result has been improvenemt in our economy.
    HUH? Total non-sequitor here.

  24. #83

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    Quote Originally Posted by Zippyjuan View Post
    Those are issues of government policy- not due to the structure of the money supply. It certainly did not prevent people from living better lives or improvements being made in productivity. Many of those actually occured BECAUSE of fractional reserve banking (as compared to a full reserve banking system) which allowed people and companies to borrow money and invest it in new ideas and in expanding existing production. Yes, money was also borrowed and spend on bad ideas too. And yes, some people borrow more than they should. The government included. But the overall result has been improvenemt in our economy.
    Zippy,

    You're ideas sound logical but they're based on many false assumptions. Ron Paul supporters generally follow the Austrian school and Ludwig Von Mises, who extensively explains why your assumptions are incorrect. His entire "Theory of Money and Credit" is online for free. Google it and take a look.
    "Ron Paul Goes to the Zoo 2012" Ver. 3.0 Now Posted in Forum!
    http://www.youtube.com/watch?v=xgsMZPdDEZY



  25. #84

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    Quote Originally Posted by Danke View Post
    From the Chicago Federal Reserve:

    A Money Creation Function

    Debt does more than simply transfer idle funds to where they can be put to use -- merely reshuffling existing funds in the form of credit. It also provides a means of creating entirely new funds -- funds needed to finance the greater volume of new projects and spending that contribute to economic growth.

    Again, checkable deposits in commercial banks and savings institutions are debts -- liabilities of these depository institutions to their depositors.

    But checkable deposits are also the money used for most expenditures.

    How do these deposit liabilities arise?

    For an individual institution, they arise typically when a depositor brings in currency or checks drawn on other institutions. The depositor's balance rises, but the currency he or she holds or the deposits someone else holds are reduced a corresponding amount. The public's total money supply is not changed. But a depositor's balance also rises when the depository institution extends credit -- either by granting a loan to or buying securities from the depositor. In exchange for the note or security, the lending or investing institution credits the depositor's account or gives a check that can be deposited at yet another depository institution. In this case, no one else
    loses a deposit. The total of currency and checkable deposits -- the money supply -- is increased. New money has been brought into existence by expansion of depository institution credit. Such newly created funds are in addition to funds that all financial institutions provide in their operations as intermediaries between savers and users of savings.

    But individual depository institutions cannot expand credit and create deposits without limit. Furthermore, most of the deposits they create are soon transferred to other institutions. A deposit created through lending is a debt that has to be paid on demand of the depositor, just the same as the debt arising from a customer's deposit of checks or currency in a bank. By writing checks, the borrower can spend the deposit acquired by borrowing.
    The recipients of these checks deposit them in their depository institutions. In turn, these checks are presented for payment to the institution on which
    they are drawn. As a result, the newly created deposit can be shifted out of the originating institution, but it remains part of the money supply until the
    debt is repaid.

    No effort is made here to give a detailed explanation of the creation of money through the expansion of deposits and depository institution credit.
    For present purposes, it is enough to point out that these institutions can make additional loans and investments, and thereby increase checkable deposit money, to the extent that they have the required amount of reserves against the increased deposits. The amount of reserves, in turn, is controlled by the Federal Reserve System -- the central bank of the United
    States.

    . . . a stimulus to growth

    The chart: Debt and Economic Activity in the U.S. shows the general relationship between long-term trends in total debt and the value of the nation's production of goods and services, as measured by gross domestic
    product. These measures generally have moved upward since the turn of the century, but neither has grown steadily. Both debt and production have made major upswings in wartime, but the only period in which there was significant liquidation of debt was in the depressed 1930s.

    People are generally more willing to incur debt -- to buy houses and other big-ticket consumer goods -- when incomes and employment are rising.



    The principal danger of overall growth in debt is that new money created through the expansion of depository institution credit will touch off price inflation by stimulating too much spending. Over time, a moderately rising money supply is usually consistent with a rising level of economic activity and full employment for a growing population. Some expansion in debt and money is necessary for the full use of resources and satisfactory
    economic growth. But when the economy is already working at capacity, or near that, additional money injected into the spending stream may simply drive prices up, setting the stage for subsequent recession and
    unemployment. The Federal Reserve System is responsible for providing enough reserves to support reasonable credit needs, but to avoid expansion
    at a rate that would cause price inflation and the subsequent economic problems.

    Cyclical variations in private expenditures and private debt are offset to some extent by concurrent changes in public debt -- especially federal debt. In recessions, when the growth of private debt slows or declines,U.S. government debt usually rises, due partly to increased expenditures connected with programs to combat the recession and partly to reduced tax collections. Under such circumstances, increased public debt is not usually
    an inflationary threat, but rather a reflection of the weakness of demand in the private sector. However, when the U.S. government is already borrowing to finance large deficits, any additional borrowing can raise
    interest rates and further restrain economic recovery.
    In periods of prosperity, private debt tends to grow more rapidly. At such times, higher incomes can be expected to bring tax receipts more in line with government spending, thus reducing the rate of growth of government debt or reducing the need for further borrowing completely.When personal and business credit demands are especially strong, with private debt increasing rapidly and prices tending to rise, the government should operate with a surplus and reduce federal debt.
    Potential inflation then, not insolvency, is the principal danger associated with public debt. Given its extensive powers to tax and create money, the federal government can always meet its interest obligations, refinance
    maturing securities, and even, when consistent with overall economic objectives as well as social and political choices, reduce its level of total indebtedness.

    The Burden of Debt

    The burden of debt has been given a lot of attention through the years. Yet the nature of the debt burden is still not clear. People can think of their indebtedness as a twofold burden -- the debt must be paid at maturity and
    interest charges must be paid on schedule. Repayment may turn out to be burdensome either because income falls short of expectations or because the product or service purchased with the borrowed funds is less rewarding than expected (which, of course, could be equally true of cash purchases). The uncertainty of whether the benefits will eventually outweigh the costs contributes heavily to the idea that debt involves a burden.

    What about the burden of the federal debt? As the economy grows, the total amount of public debt will probably continue to increase. Existing debt will be refinanced over and over again, and it will always be owned by those who want to hold government securities among their financial assets. The problem, therefore, centers largely on interest payments. But again, burden is hard to define.
    Also, "Two Faces of Debt" from the Chicago Fed. They removed it from their website.
    Quote Originally Posted by TheCount View Post
    Drudge is a traitor to the Leader and the Revolution.



    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  26. #85

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    This video has been around for a while, and posted several times in its own threads.



    ---

    This thread sure brings back a lot of memories from old forum posters that have moved on to other places...
    1776 > 1984

    The FAILURE of the United States Government to operate and maintian an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    You are Ron Paul's Media!

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  27. #86

    Default

    Quote Originally Posted by DamianTV View Post

    ---

    This thread sure brings back a lot of memories from old forum posters that have moved on to other places...
    ACPTulsa alluded to this. It is a shame. Zippy knows better and the FNG is too lazy to research old threads.
    Quote Originally Posted by TheCount View Post
    Drudge is a traitor to the Leader and the Revolution.



    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  28. #87

    Default

    How is printing unbacked bills not just forgery ?

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