Clearly, you have no clue that the interest on debt owned by Fed goes right back to Treasury. This nonsense conspiracy-theory has been debunked many times on these forums. Do your research or keep smoking the conspiracy-dope!Originally Posted by Travlyr
I really can't debate when someone is so ignorant of such basic things.
There is enormous inertia a tyranny of the status quo in private and especially governmental arrangements. Only a crisis actual or perceived produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
Do you know who Paul Warburg was? He is the architect of the Federal Reserve System. He was chief counterfeiter in charge for many years. They called him "Daddy Warbucks" because he became the richest man in America on a scant salary. He described himself as an international banker. He was born in Germany and came to America to turn us into Amerika. Bankers control governments not the other way around.
There are two systems of money.
One, the one you support, allows special privileges of creating currency with the force of law. "legal counterfeiting." Along with legal counterfeiting comes managed society socialism, tyranny, wars, and poverty.
The other is honest sound money where no one is allowed the privilege of creating money. Money must be mined, grown, or sewn. Counterfeiting is a crime. That is the system I support because that promotes free trade, liberty, peace, and prosperity.
Last edited by Travlyr; 10-18-2012 at 05:46 AM.
For the record, and for the sake of precision, and clarity of understanding, I avoid the unqualified use of the word 'inflation' wherever possible as it applies to economics.
Price Inflation, or 'inflation' as commonly understood when used by itself, refers only to a general increase in price levels. Thus, it is a description of an effect, without regard to its many possible causes. So it is no wonder that this definition is the much preferred default by statists, monetarists and Keynesian-spawned schools of thought, because the term is so nebulous and imprecise as to be forever moot, as it lends itself to myriad reality-obfuscating interpretations.
Monetary Inflation, on the other hand refers only to an increase in the aggregate currency supply--by any amount, regardless how, when or where it circulates. If you counterfeit and circulate a single dime you have caused monetary inflation to that extent. This definition is an extremely precise, indisputably positive description of a specific cause, without regard to its many effects. How that might lead to 'price inflation' is another story altogether. Follow the money--the cause, and not its much-debated effects, or whether or not they are discernible, or can be attributed to monetary inflation.
Each loan under the currency creation/destruction process you described above has a monetary inflation/deflation curve of its own. Considering the case of only a single loan in the creation/destruction process, monetary inflation occurs the very moment that new currency comes into existence as a result of that loan, with monetary deflation occurring as that loan is repaid and the principle is destroyed. The only thing that ultimately happens, once the loan is repaid, is that wealth was transferred in the form of interest as it was channeled into/through the bank. Monetary inflation occurs, however, so long as any counterfeited currency in that creation/destruction process still exists. Thus, loan payments only deflate the bubble originally created in the supply--not the original supply.
You say that "...banks have to pay back the loans with interest & when they do, the money gets destroyed...", which implies 1) there was no net effect on the exchange value of the currency in the interim, and 2) there is no net new money in the system when all is said and done.
Two problems with that:
1) there is always an interim effect, and
2) nothing is ever "all said and done"
In reality, there is always monetary inflation which leads inexorably to price inflation) in this process. That is because there is always a new and ever-expanding crop of loans to replace all the principle that is being destroyed from prior loans long before they are repaid. You say that principle is destroyed as banks pay back loans with interest, but the aggregate debt pool always expands at a faster rate than the loans that are being repaid. That is an absolute mathematical requirement for the survival of the entire FRB system, which cannot survive otherwise (under any regime), making it little more than a Ponzi scheme. The Federal Reserve is there to facilitate and provide cover and efficiency to that scheme, and to disguise its inherent insolvency.
This is where increase-consumption-at-all-costs ("grow the economy") comes into play, and goes to the heart of why I believe mainstream economists (Krugman et al) do not include private debt as factors in macroeconomic models, and yet will argue out of the other side of their mouths that spending, consumption, and private debt in the aggregate must expand to keep the economy 'stimulated'.
Last edited by Steven Douglas; 10-18-2012 at 11:11 AM.
Last year they gave back $77 billion to the US Treasury. Not just interest on the Treasuries they own but the profits they earn from other actions and investments as well (minus their expenses).
http://www.nytimes.com/2012/01/11/bu...sury.html?_r=0
Fed Turns Over $77 Billion in Profits to the Treasury
By BINYAMIN APPELBAUM
Published: January 10, 2012
WASHINGTON — The Federal Reserve said on Tuesday that it contributed $76.9 billion in profits to the Treasury Department last year, slightly less than its record 2010 transfer but much more than in any other previous year.
The Fed is required by law to turn over its profits to the Treasury each year, a highly lucrative byproduct of the central bank’s continuing campaign to stimulate economic growth.
Almost 97 percent of the Fed’s income was generated by interest payments on its investment portfolio, including $2.5 trillion in Treasury securities and mortgage-backed securities, which it has amassed in an effort to decrease borrowing costs for businesses and consumers by reducing long-term interest rates.
Through those purchases, the central bank has become the largest single investor in federal debt and securities issued by the government-owned mortgage finance companies Fannie Mae and Freddie Mac. As a consequence, most of the money flowing into the Fed’s coffers comes from taxpayers.
But Fed officials note that this cycle — payments flowing from Treasury to the Fed and then back to the Treasury — still saves money for taxpayers because those interest payments otherwise would be made to other investors.
“It’s interest that the Treasury didn’t have to pay to the Chinese,” the Fed’s chairman, Ben S. Bernanke, half-jokingly told Congress last year.
The scale of the transfers grew rapidly after the financial crisis.
Freedom is a state of mind. Nobody can take that from you unless you let them.
The bankers control the government. FEC records alone prove this. There's a reason why pro-Fed candidates are more successful in politics. Political donations and PAC's are just an "operating cost" for the bankers. Goldman Sachs for example has its own PAC. I wonder what causes they support?
This claim that, it's not their fault, because the government is doing it, not them, is part of the scam. If I were to hire a hitman to pull the trigger, I'd be just as responsible for the murder. But somehow, if I were to hire the government to do the same thing, it's not my fault, because it's the government that is coercive? I don't buy that for a second.
Making profits off the Fed is one thing. But when you profit enormously off this counterfeit money, AND lie through your teeth about it AND pay the coercive institution known as government to maintain it, that's fraud. Plain and simple.
Last edited by bxm042; 10-18-2012 at 11:40 AM.
The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.
I didn't imply 1) although I didn't clarify on that point because I didn't want to elongate the posts even more; on the other hand, I've already talked about 2), pointing out that most of this NET new money continues to exist as money created to finance the Treasury by almost perpetual NET purchases of Treasuries.
Of course, it could be said that there's a temporary inflationary effect in the interim but that depends on how long the money remained in the system; nonetheless, however much its effect on the people at large, so long as you are paying its cost, you can hardly be accused of theft.
In fact, such an effect occurs in various markets, for example, the more oil you buy, the more it may temporarily push up demand & prices & it could be argued that you have reduced, at least temporarily, other people's purchasing-power to buy oil compared to a scenario where you didn't buy oil at all or bought less than you actually did but the answer to that contention is that you paid the cost for it on the market.
Similarly, banks pay the cost of borrowing, banks either borrow from savers/depositors or from Fed, Fed charges much higher rate which makes it less profitable to borrow from Fed so they borrow from Fed only when it's absolutely necessary.
If there was no Fed, then banks would be paying this cost of borrowing only to savers/depositors but since there's Fed with power to create money (steal & lend others' purchasing-power), the interest-cost that banks would have otherwise paid to savers/depositors ends up being paid to Fed, & of course, by effect it ends up in Treasury's pocket as Fed hands over its profits to Treasury. This could essentially be construed to be the value absorbed from people during that temporary inflation.
Again, it's not always very profitable to borrow from Fed because of higher interest charged so banks don't like continuously rolling over their loans, Treasury doesn't mind it because they don't have to pay any interest-cost to Fed because whatever Treasury "pays" to Fed comes right back to Treasury but that's not how it works for banks, they have to go out there, provide voluntary services, make profits while balancing the risk of borrower-defaults, & no, Fed doesn't help all the banks all the time, many banks fail without recourse so the notion that Fed exists purely to support banking-industry as a whole is rather facetious, whatever loaning/bailing Fed does occurs according to their belief that banking-collapse, especially collapse of bigger banks, will lead to more problems & public-outrage due to recessions.
Further, as I've said, you can look at the NET monetary-inflation that Fed has created over the years until the recent crisis, most of the increase is due to continuous NET increase in Fed's stock of Treasuries.
There is enormous inertia a tyranny of the status quo in private and especially governmental arrangements. Only a crisis actual or perceived produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
Ok, let's use your reasoning then. Ok, let's presume all of your speculative accusations to be true & incriminate all the PDs, banks or whoever for bribing government to indirectly steal, defraud & whatever & put'em all into prison.
What next? You know there's a big chunk of the population which bribes government through votes as well as money to steal money from some people & give it to them or others, well, we must then put'em all in prison for indirect theft.
What next? You know there's another chunk of the population which bribes government through votes as well as money to go to wars & kill so we must also put them into prison for indirect murder.
Well, going by that reasoning, most of the population would be in prison for none of them has committed any direct coercion against anyone!
Liberty emphasizes a lot on people being INDIVIDUALS & that would presume that people can only be held accountable for their OWN coercive actions.
Do you think each of the welfarist would go around stealing people's money if the government had no coercive powers? Do you think war-mongers would go to foreign countries to kill people if government had no coercive powers? Do you think Fed would even be there if it wasn't for a coercive government? It's the government's "legal" coercive powers that enable all of this. Instead of recognizing this, if you attack people for following what they perceive to be in their self-interest without direct coercion, which is how a market naturally works, then you are in effect dissing the market itself & pushing people away from the free market & towards coercive government.
Such thinking leads to ultra-liberal thinking of absurd proportions where one starts believing that "if we could just stop people from trying to use government for their self-interest then government would be great", overlooking the root of the problem itself - coercive government.
Case in point :
Again, people & markets are driven by self-interest & profit, you can never stop this market-process & hence, so long as the government has coercive powers, people will continue to try to use it to their advantage, expecting them to not to do that is like expecting markets not to work - it's not going to happen! So the focus must at all times be on getting rid of government's "legal" coercive powers.
There is enormous inertia a tyranny of the status quo in private and especially governmental arrangements. Only a crisis actual or perceived produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
Count me out of your libertarian Utopia.
I subscribe to the classical liberal philosophy. I want to keep my rights to own a home and have a monopoly of force in my home. I want the support of state law to back me up if I have to eliminate thieves or intruders from my home.
So you don't believe in equality? You believe that people in government should have the "legal" power to coerce others while not everyone else can do the same?
Well, if one believes in equality of rights for all people then one must believe that nobody should be able to coerce anyone else.
There is enormous inertia a tyranny of the status quo in private and especially governmental arrangements. Only a crisis actual or perceived produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
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