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Thread: Why the modest inflation?

  1. #151
    Quote Originally Posted by bxm042 View Post
    It's theft... but it's ok, because a) he doesn't know its theft and b) everybody is doing it. Great argument!

    If you think these bankers don't center their portfolios around the profits they get from the Fed... think again. They know exactly what they are doing.
    It's not theft because PDs don't create money, they don't exert coercion on anyone, they are providing a VOLUNTARY service & whatever they earn is for the SERVICE they are providing.
    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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  3. #152
    Quote Originally Posted by Paul Or Nothing II View Post
    There's always demand for money & credit......please don't go Bernanke on me , who says that stuff like "there's low demand", no, there's always demand, the question is whether the supply is high enough to offer low enough prices so that buyers can buy more!
    Actually, I wouldn't argue with Bernanke, because he reasons everything strictly from a Keynesian macro-economics framework. That $#@!ing idiot doesn't account for the fact that demand, on a micro-economics level, is based on willingness AND ABILITY.

    There is a TON of "demand" for money, if we only look at willingness to borrow. But that is not the economics definition of demand. That's a $#@! in one hand, want in the other scenario. Without the ability to borrow, there is no "demand", regardless how much "desire" or "need" (often mistaken for "demand") there is in the economy, and without regard to how many Wimpies would gladly pay you Tuesday for a hamburger today.

    Where it gets even more complicated is WHO is responsible for determining the ability to borrow (even in a free and sound money market economy). All of that so-called demand is ultimately affected and determined on the supply side. Lenders are not like stores, where anybody with the ability and willingness to pay gets served without discrimination. You might decide your willingness, but it is the banks that will ultimately decide your ability, since all you are promising is future payments. So right from the git-go we have a supply and demand component that is very different from other goods and services, since banks are the ONLY "supply" of money outside the government in our current regime, and they have a direct affect on what we count as "demand".

    Accordingly, as the supply of credit would be quite limited if there was a free market in money, price of credit (real interest) would naturally be pretty high & that would provide more incentive for the savers to deposit with banks.
    Sure, but once again you didn't address the dynamic of a truly free market in money; namely, how do banks and ordinary people behave in the complete absence of a counterfeiter of first resort. And as long as fractional reserve lending is practiced in the way that it has in the past, credit cycles are going to continue, as banks are going to continue to operate as inherently insolvent, with the riskier behaving banks going belly-up (and savings of lender/savers/depositors gone with them). We would still have bank runs, as we did in the past, and therefore all the incentive in the world for many (certainly not all) savers to bypass banks altogether, and avoid them wherever possible. That IS how it happened in the past. They may not be earning money by lending it out to others, but most importantly, neither are they risking any, or risking losing wealth in the process, as they really do have a "store" of wealth that is not LOSING, and really does buy them time to accumulate more.

    The only thing Keynes caused to be absolutely cemented in place was a deliberate guarantee (not risk), of exponential loss to currency holders, as economic rents are charged to the currency itself by the banking system, as a direct consequence of artificially inflating its supply.

    You somehow seem to assume that people invest because we live in an inflationary system, when in fact, people invest because they want a return on their capital & people will always prefer to earn a return on their capital whether they live in inflationary system or a deflationary one.
    I assume nothing except that currency holdings are like sand in an hourglass in an inflationary system. You own the top part of the glass only, while the counterfeiter owns the bottom part of the hourglass. And it NEVER flows upward. Your so-called money is leaking out through an invisible hole over time, at all times regardless where your currency is physically.

    Labor, because its quantity and value tend to be finite, seeks, on the whole, to simply survive inflation. Capital seeks, and is more poised, to thrive in it. But all currency holders, laborers and capitalists, pay the price of having the value of their holdings siphoned/taxed in the process. The fact that you can earn wages or profits that might outstrip inflation is wholly beside that one salient point, which applies to everyone involved.

    The thing is that an inflationary system benefits borrowers...
    The largest benefit to borrowers (outside looser credit and malinvestment opportunities during booms, when risks are socialized), is the TIME advantage given to borrowers, literally at the expense of currency holders. The monetary exchange value advantage is eaten up by interest to the banks, leaving the borrowers only with the advantage of TIME to make up the difference.

    In other words, save all you want, the banks are lending out its ever-eroding exchange value anyway.

    The thing is that an inflationary system benefits...spenders...
    That is where I disagree in the absolute, unless you are making a narrow reference to "spenders" as meaning only those borrowers who are spending. Actual savers (not lenders or their borrowing spenders), are the spender's best friend in a free market economy with sound money, because their savings increases the relative scarcity of the money that the actual spenders are spending. The 'borrowing spenders' in an inflationary regime, on the other hand, are the proverbial turds in the punchbowl, as they are in direct competition with other spenders, as they drive up/bid up the prices of goods and services.

    ...so [an inflationary system] doesn't incentivize savings at all (whether under the mattress or in the banks)
    Worse than that. Not only does an inflationary fiat system not 'incentivize' savings, it actually punishes it. Taxes it away invisibly. It's not an otherwise neutral proposition. That really is an economic treadmill that all who are dependent on wages and currency holdings face.

    ...while a deflationary system benefits savers & lenders so of course, there's a higher incentive (higher real interest) to save & lend.
    A deflationary system is only on its way to defying Keynesian-spawned logic as it becomes simply A Stable And Sustainable System in the long run. One that is self-stimulated, and requires no extra centrally-manipulated jolt. That is a case where you might have a lot of people willing, and even able to lend, but not always through the banks. And the risks of lending, which are no longer socialized, are much, much greater.

    As for the risks of bank-failures go, in a truly free market, most of the banks would naturally be very sound because unsound ones would go out of business pretty quickly...
    Failures would be in a domino-effect, if fractional reserve lending was still involved, due to the risk-pooling nature of the system itself. Thus, the boom-bust cycles would continue, with people freely lending to banks whilst they forget the lessons of the past, only to have it all end in periodic bank runs, as everyone develops, once again, a healthy distrust for all lending institutions.

    ...& of course, most people would definitely find it palatable to earn a high real interest on their capital (savings leftover after considering their regular expenditure) by depositting with a sound bank than stashing it under a mattress.
    I think that's a circular argument, one that is put into a larger perspective of the business/credit cycle. The people in the roaring 20's had a decidedly different view of what was palatable with regard to banks (including what a "sound bank" means) than those very same people a mere decade later.
    Last edited by Steven Douglas; 10-03-2012 at 01:57 AM.



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  5. #153
    Quote Originally Posted by Steven Douglas View Post

    Where it gets even more complicated is WHO is responsible for determining the ability to borrow (even in a free and sound money market economy). All of that so-called demand is ultimately affected and determined on the supply side. Lenders are not like stores, where anybody with the ability and willingness to pay gets served without discrimination. You might decide your willingness, but it is the banks that will ultimately decide your ability, since all you are promising is future payments. So right from the git-go we have a supply and demand component that is very different from other goods and services, since banks are the ONLY "supply" of money outside the government in our current regime, and they have a direct affect on what we count as "demand".
    Of course, banks are going to "discriminate" as to whom they lend because they are accepting the risk of default & thereby ensure principal + interest to the depositors; it offers an additional layer of safety for the depositors, as opposed to depositors going around looking for borrowers & directly taking on the risk of default.
    Not to mention, even if depositors were to lend directly to borrowers, they'll still be "discriminatory" in their practices as to whom they lend, they are not going to lend to every Tom, Dick & Harry that wants a loan! When depositors deposit with banks, this "screening process" for eligible borrowers is simply "outsourced" to the banks because they are the ones taking the direct risk in that case.

    Anyways, the reason I pointed out that "there's always demand for money" is to point out that therefore, it's the supply that dictates the returns & incentives for saving/lending.
    So, in an inflationary environment, where there's greater supply of credit & lower or negative REAL interest, it disincentivizes savers/depositors from depositting with banks (& look for non-bank investments) while a deflationary environment, where there's limited supply of credit & higher REAL interest, it incentivizes more savers/depositors to deposit more with banks.

    Quote Originally Posted by Steven Douglas View Post
    Sure, but once again you didn't address the dynamic of a truly free market in money; namely, how do banks and ordinary people behave in the complete absence of a counterfeiter of first resort. And as long as fractional reserve lending is practiced in the way that it has in the past, credit cycles are going to continue, as banks are going to continue to operate as inherently insolvent, with the riskier behaving banks going belly-up (and savings of lender/savers/depositors gone with them). We would still have bank runs, as we did in the past, and therefore all the incentive in the world for many (certainly not all) savers to bypass banks altogether, and avoid them wherever possible. That IS how it happened in the past. They may not be earning money by lending it out to others, but most importantly, neither are they risking any, or risking losing wealth in the process, as they really do have a "store" of wealth that is not LOSING, and really does buy them time to accumulate more.
    Sorry but the premise is false because the system that existed in the past was NOT a free market so one can't make conclusions about free-market-banking by citing a system which wasn't a free market at all.

    There's a big difference between FRB under the system that existed in the past & FRB under a free market.

    FRB as it existed/exists, PRETENDS that banks can redeem all the demand-deposits at any given time even though they can't while FRB under a free market would openly tell its demand-depositors that the bank mayn't be able to redeem demand-deposits at times & that it would be "subject to availability of funds", may be banks will offer "penalty-interest" or anything else to compensate for the fact that they weren't able to redeem the deposits on demand, free-banking Austrians have talked about this already with historical examples.

    Secondly, under a free market, there's no "corporate veil", which means that owners of the bank are PERSONALLY liable for all the obligations of the banks, which means that if a bank fails then even the PERSONAL ASSETS of its owners will be seized to pay off the debtors & depositors. This will mean that banks will be more careful & minimize risks because excessive risk could easily throw its owners out onto the streets.

    Given these conditions, a free market will produce a very strong banking system, where there will be numerous sound banks where depositors would prefer to put their moneys rather than under a mattress!
    Less sound banks may have to offer higher interest to entice depositors so it will be upto each depositor & his/her risk-appetite as to which way he/she wants to go but the point is that just because people are living in a deflationary environment does NOT mean that they will stop seeking a return on their capital.

    Quote Originally Posted by Steven Douglas View Post
    Worse than that. Not only does an inflationary fiat system not 'incentivize' savings, it actually punishes it. Taxes it away invisibly. It's not an otherwise neutral proposition. That really is an economic treadmill that all who are dependent on wages and currency holdings face.
    Exactly!

    That's why I'm contending the belief that the current inflationary system somehow encourages people to save/invest with banks........it does NOT! In fact, an inflationary, high-credit, lower/negative-interest environment gets savers to look for other investment options with better returns on their capital (stock-market, commodities, etc) while a deflationary, limited-credit, high-interest environment gets savers to invest/deposit more with banks.

    Most people neither understand nor react directly to macro-economic factors, they neither interested nor capable of understanding them, so they merely react to prices & profits. Hence, more of them will look to invest in stock-market, commodities & such in an inflationary environment because their prices rise with inflation while bank-interest is often driven below par due to excess credit introduced by central-banks, but in a deflationary environment, stock-market, commodities & such won't rise as fast as there's less monetary inflation but (real) bank-interest will be pretty high because money/credit is limited & therefore that will incentivize more savers to invest/deposit with banks.
    Last edited by Paul Or Nothing II; 10-14-2012 at 09:40 AM.
    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

  6. #154
    Quote Originally Posted by Paul Or Nothing II View Post
    It's not theft because PDs don't create money, they don't exert coercion on anyone, they are providing a VOLUNTARY service & whatever they earn is for the SERVICE they are providing.
    Spending the Fed's printed money is a service? Give me a $#@!ing break
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Crenshaw 2024!!!!

    My pronouns are he/him/his

  7. #155
    Quote Originally Posted by bxm042 View Post
    Spending the Fed's printed money is a service? Give me a $#@!ing break
    PDs buy Treasuries from US Treasury by PAYING them so of course, they must be PAID for it when Fed buys the same from PDs. There's nothing evil about PDs getting paid for selling an asset, which they'd previously bought with their money.

    The more you post, the more you seem like a typical liberal - "oh, they are making lots of money & I can't seem to understand why, so it must be evil!"

    You don't seem to grasp that voluntary action & coercion are the issues at the heart of libertarianism, & accordingly, anybody who is offering a voluntary service & is NOT exerting coercion upon anyone else isn't in any way violating libertarian ethics.
    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

  8. #156
    Quote Originally Posted by sevin View Post
    If all this money-printing had occurred while the economy was already doing well, it would have caused a lot more inflation, maybe hyperinflation. But the deflationary forces are so powerful that there's a tug-of-war between inflation and deflation. Inflation is winning, however, and will definitely win in the end now that we have open-ended QE.

    That's way overly-simplistic, but I think it's about right.
    Agreed that the deflationary forces are more powerful, however inflation may not win in the end. Why? Because the government might return to a gold standard at some point - which would end up being a cheat because they would not allow the true full value of gold to be realized. They could default on the national debt at the same time. Both those moves would be highly deflationary. So that's something to watch out for. Still better to own gold/silver/platinum in that situation as well because the value of just about everything else would plummet - stocks/bonds/real estate/etc.

    We are in a massive bubble which will either end in a deflationary collapse, if there is a return to some sort of precious metals standard, or a hyperinflationary collapse.

    The government cannot raise interest rates to save the dollar this time as they did in the late seventies/early eighties. Why? Because at rates high enough to do that, the interest payments alone would absorb 100% of all tax revenue. We are in the end game.
    “How fortunate for leaders that men do not think.” - Adolf Hitler

    "We should never forget that everything Adolf Hilter did in Germany was 'legal'" - Martin Luther King Jr.,
    from a Birmingham jail, April 16, 1963.

  9. #157
    Quote Originally Posted by Paul Or Nothing II View Post
    PDs buy Treasuries from US Treasury by PAYING them so of course, they must be PAID for it when Fed buys the same from PDs. There's nothing evil about PDs getting paid for selling an asset, which they'd previously bought with their money.

    The more you post, the more you seem like a typical liberal - "oh, they are making lots of money & I can't seem to understand why, so it must be evil!"

    You don't seem to grasp that voluntary action & coercion are the issues at the heart of libertarianism, & accordingly, anybody who is offering a voluntary service & is NOT exerting coercion upon anyone else isn't in any way violating libertarian ethics.
    You can throw that "voluntary and non-coercion" bull$#@! out the door, banker apologist. These bankers created the Fed, and pay big bucks to maintain the Fed, through the vehicle of politics which is by definition violent and coercive.

    And I know exactly how they are making lots of money. I've already proven to you through basic economic logic that simply by doing business with the Fed they will make more money than they would otherwise. And it just so happens that the Fed has a counterfeit printing press that deals in the trillions... so I wonder how much of a "service" it is to make profits by selling your $#@! that noone else wants to buy to the Fed.

    That's a great $#@!ing "service", there, Paul or Nothing II. You continue to prove yourself as a banker apologist who either grossly misunderstands the issues and theft at hand, or are lying to cover it up.
    Last edited by TheTexan; 10-14-2012 at 02:29 PM.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Crenshaw 2024!!!!

    My pronouns are he/him/his

  10. #158
    Quote Originally Posted by bxm042 View Post
    You can throw that "voluntary and non-coercion" bull$#@! out the door
    That is all one needs to say to show that they don't really believe in principles of liberty & voluntaryism, enough said......
    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

  11. #159
    Quote Originally Posted by Paul Or Nothing II View Post
    That is all one needs to say to show that they don't really believe in principles of liberty & voluntaryism, enough said......
    Heh you clearly don't know me very well
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Crenshaw 2024!!!!

    My pronouns are he/him/his

  12. #160
    Quote Originally Posted by Paul Or Nothing II View Post
    Of course, banks are going to "discriminate" as to whom they lend because they are accepting the risk of default & thereby ensure principal + interest to the depositors; it offers an additional layer of safety for the depositors, as opposed to depositors going around looking for borrowers & directly taking on the risk of default.

    Not to mention, even if depositors were to lend directly to borrowers, they'll still be "discriminatory" in their practices as to whom they lend, they are not going to lend to every Tom, Dick & Harry that wants a loan! When depositors deposit with banks, this "screening process" for eligible borrowers is simply "outsourced" to the banks because they are the ones taking the direct risk in that case.
    Note the part I put in bold. I am not attacking the discrimination process for credit, in itself , wherein "they are the ones taking the direct risk. Under a truly free market:

    a) no funding would be provided via a compulsory tax on all savers and other currency holders
    b) risks would not be collectivized and shared, with everyone jointly, severally and ultimately liable for future failures
    c) rewards would only go to parties that took risks that succeeded in generating profits

    What I am illustrating, not attacking, is how that discriminatory process works in the context of the theft, collectivization and en masse dilution of the currency itself, which fuels the system as it is now artificially constructed, and which should never have taken place.

    KEYNES' PROBLEM: Savers aren't spending enough fast enough, or are not putting their own funds to productive use.
    KEYNES-SPAWNED SOLUTION (in effect): Perpetually and continuously seize an exponentially increasing portion of funds from all savers. Put those funds into a collectivized pool that is to made available to commercial lending institutions, which can then use their discretion as to who are the most productive (credit-worthy) to which to lend these stolen funds.

    Macroeconomics considers everything that occurs after the fact, skipping over the fact that the entire system is founded on outright theft from all currency holders from its inception -- and all to solve a temporary theoretical phenomenon that is labeled "a problem in need of a statist solution".

    The only time the discrimination process is governed and undistorted by free market principles is when it happens on their own behalf, or on behalf of those who knowingly and willingly put their own money at risk. As it stands now, credit discrimination by banks is only the process by which prospective winners and losers are chosen in the Redistribution of Stolen Funds, from which the banks alone can earn profits from something that neither they nor their depositors created or produced.

    The solution is not to take away the credit discrimination process -- the mere thought of which would be moronic, and would only exacerbate problems. I only bring the process up to show that wealth is being outright stolen indiscriminately from savers, but then redistributed with extreme prejudice to only the most credit worthy. Losers: savers - Winners: banks by default for the profits, and anyone-with-great-credit in terms of first whacks at new currency before it loses further value as a result of being brought into existence.

    This is not only a Stolen Wealth Redistribution process, where funds are seized (by force, and without permission) from one sector of the economy, and loaned out to another. Because the process is deliberately inflationary (price inflation, with upward pressure on general price levels), it in turn creates an artificial need (not demand) for more currency for everyone. I say need, and not demand, because the need for more currency on everyone's part occurs without regard to the ABILITY to acquire more, whereas demand, in the economic sense, assumes both the willingness and ability to acquire more. And since that need on the parts of those who are not credit worthy can never be fulfilled with new money -- this brings us full circle to the discriminatory mechanism in place, at lending institutions -- the spigots and distribution channels for all new money, where all distortions begin to play out.

    Can you imagine a legislative proposal that reads, in essence:

    All savers and other currency holders will be taxed perpetually, at an exponential rate, for the purpose of ensuring that:

    a) a steady flow of funds are made available for commercial banks to lend, and that
    b) the solvency of commercial lending institutions (of substantial enough size to affect the public interest) is assured, and
    c) to ensure a steady flow of funds to the state which borrows on its own "good faith and credit"

    If you proposed it like this, without describing the mechanism by which the tax would be collected, what do you think everyone's response would be? And yet that is precisely what we have in place now.

    All currency holders, worldwide, are taxed, without being considered parties of interest, for the privilege of subsidizing lending institutions. That's the lending, or supply side spigots and channels, of newly counterfeited currency. On the borrowing, or demand side, these are divided into public/state (warfare and welfare) siphons, as well as private commercial interest siphons, all of which have privileged access to all the newly counterfeited currency.

    The state created a Fed system that steals from savers and redistributes their wealth to only the most credit-worthy. The state has extreme incentive to have such a system in place, because the state itself is always first in line in terms of its own credit-worthiness. The Fed it created would never say no. This is a counterfeit source of funds from which the state itself may also now borrow, through an hidden tax that occurs automatically, deliberately and exponentially, and requires no political representation. Out of all the currency holders taxed to supply new currency, however, only American taxpayers are taxed, once again (this time directly), to pay TWICE for the state's participation in the counterfeit borrowing (deficit spending) process; first their currency is taxed when it is diluted, and then they are taxed directly to service loans created from stolen funds as principle and/or interest payments become due.

    Anyways, the reason I pointed out that "there's always demand for money" is to point out that therefore, it's the supply that dictates the returns & incentives for saving/lending.

    So, in an inflationary environment, where there's greater supply of credit & lower or negative REAL interest, it disincentivizes savers/depositors from depositting with banks (& look for non-bank investments) while a deflationary environment, where there's limited supply of credit & higher REAL interest, it incentivizes more savers/depositors to deposit more with banks.
    I'll be creating a separate thread that deals with FRB illusions, as I think I have it pretty much distilled down to where it really zigs and zags, and why, specifically, it is fraudulent for reasons that should be glaringly apparent, but are rarely considered. There is a de facto legal tender-like aspect to commercial lending institutions that I will go into, and my arguments will include reasons why NO so-called "reserves" should even be required of any lending institution under a truly free market in currency. But that's for another thread.
    Last edited by Steven Douglas; 10-15-2012 at 12:38 AM.



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  14. #161
    Quote Originally Posted by Steven Douglas View Post

    The only time the discrimination process is governed and undistorted by free market principles is when it happens on their own behalf, or on behalf of those who knowingly and willingly put their own money at risk. As it stands now, credit discrimination by banks is only the process by which prospective winners and losers are chosen in the Redistribution of Stolen Funds, from which the banks alone can earn profits from something that neither they nor their depositors created or produced.
    Whatever profits banks earn by lending are by lending either their own capital they have acquired or that acquired from their depositors so I don't think there's anything "undeserved" that they are getting in terms of profits
    Banks may take loans from Fed but they have to repay with interest so there are no freebies as such.
    The point is that the money that banks lend comes primarily from depositors, though it seems you & many others seem to believe it comes in the form of "free money from Fed".

    As has been pointed out already, PDs are a separate department from banking & PDs use their OWN money to buy Treasuries from Treasury Department then Fed buys it from PDs with new money, with which PDs buy Treasuries again.

    If we look at this process more closely, it's like Treasury <> PDs <> Fed, now, let's get rid of PDs for a moment & you are left with Treasury <> Fed, it's essentially, the money-creating arm of the government (Fed) feeding the money-spending arm of the government (Treasury).

    Sure, PDs make a little profit for their market-making services but what it truly is a system where government creates money to finance itself INDIRECTLY & as the Treasury spends this new money received from PDs (which PDs received from Fed for selling Treasuries to Fed), they push up demand & prices of goods/services/labor & such economic resources that they buy causing inflation, essentially stealing purchasing-power from everyone & as prices of things rise, incomes rise subsequently, which means people pay more in taxes as well.
    On the other hand, continuous issuance of debt would lower its value & interest on debt would go up BUT because Fed buys it indirectly from Treasury, it pushes up demand for Treasuries which enables Treasury to rake in more money on their debt & simultaneously, it reduces interest to be paid on debt, which means less money going out of Treasury.

    Then there's the seigniorage, that is, profit made by Treasury on producing notes & coins = face value of notes & coins produced - cost of production

    The point is that this fallacious notion that Fed's money-creation somehow always directly benefits banks when in fact it's the government reaping enormous benefits from it, it's just that the process is so convoluted that it's difficult to realize it immediately. In fact, the process is so convoluted that it's very difficult to even quantify the monetary benefits that government receives because of Fed, it may be several 100s of billions at the least, may be trillions!

    Quote Originally Posted by Steven Douglas View Post
    I'll be creating a separate thread that deals with FRB illusions, as I think I have it pretty much distilled down to where it really zigs and zags, and why, specifically, it is fraudulent for reasons that should be glaringly apparent, but are rarely considered. There is a de facto legal tender-like aspect to commercial lending institutions that I will go into, and my arguments will include reasons why NO so-called "reserves" should even be required of any lending institution under a truly free market in currency. But that's for another thread.
    Well, there have been numerous threads on RPF claiming FRB to be anti-liberty or anti-free market or being fraudulent in some way but none of them were able to substantiate themselves; the problem is that there are just too many misconceptions out there with regards to FRB & banking in general.
    The fact is that the biggest opponent of FRB, Murray Rothbard, even he had to concede that there's nothing wrong with FRB so long as both parties voluntarily engage in it.
    Banning FRB is like trying to ban drugs, prostitution, etc. Sure, you may think it's bad & risky or whatever but principles of liberty say that any activity that people engage in, voluntarily, is consistent with liberty & nobody else should be able to impinge on the liberties of the concerned individuals.
    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

  15. #162
    Quote Originally Posted by bxm042 View Post
    Heh you clearly don't know me very well
    Quote Originally Posted by bxm042 View Post
    You can throw that "voluntary and non-coercion" bull$#@! out the door
    The statement above says more than enough about you & your attitude towards liberty.

    You're like those "libertarians" that will talk the talk of liberty, freedom & all that but where rubber meets the road, you act like wannabe-commie-dictators, who support & oppose things based on what SEEMS palatable to YOU rather than standing by the principles of liberty at all times.
    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

  16. #163
    Quote Originally Posted by Paul Or Nothing II View Post
    Banks may take loans from Fed but they have to repay with interest so there are no freebies as such.
    The point is that the money that banks lend comes primarily from depositors, though it seems you & many others seem to believe it comes in the form of "free money from Fed".
    Wow. Where on Earth do you think the vast majority of currency in existence today, including the banks' own capital and currency from depositors, came from anyway?

    If I buy something and pay for it in good faith, and I sell it to you, and you turn around and sell it to someone else, it is not a 'freebie' to any of us. Each of us that bought and sold the item paid for it in good faith. If we all later learn that the item was originally a stolen good, the fact that each of us paid for and then sold it in good faith along the way will not make it any less of an originally stolen good -- not stolen by us -- WE didn't steal it, and we are not the thieves. But someone else did. Furthermore, there is no amount of buying and selling on anyone's part that will make that originally stolen good any less of an originally stolen good.

    Now make that item a few billion fake silver coins, and let's say that I am the original counterfeiter. Let's further say that these are such good fakes that nobody detects them. Thus, only I know that they are counterfeit. What I initially received for the coins is only part of the theft, part of the damage, which will ultimately be absorbed as a loss by whomever is holding them once they are finally detected as fakes -- which could be a long way down the road, as the creepy hot potato gets passed around. Meanwhile, the issuance and circulation of these fakes has stolen value from all other coins in circulation, and continues to do so as long as they do remain undetected, as these billions are still being bought and sold in daily exchange. All in good faith. The fact that people are paying for them won't make them any less so.

    Over just the past forty years alone, all of the new currency (in all forms) created out of thin air by the Fed is orders of magnitude greater in quantity than all of the currency that existed just forty short years ago, let alone from the Fed's inception. That includes the vast majority in circulation, including that which is loaned to banks by their depositors. None of that currency is clean. All of it is polluted. Every bit of it has been, and continues to be, diluted/debased/debauched by counterfeits. And neither the fact that anyone pays for it, or repays it with interest, nor the fact that it continues to be bought and sold in exchange many times over again, will make it any less so.

    There is NOTHING that a bank borrows from the Fed that wasn't stolen by the Fed from all currency holders, with value that is siphoned right out of the collectivized/privatized legal tender currency pool. We know that counterfeit currency is 'legally' (using that term VERY loosely) created out of thin air. Its value, however, is not created out of thin air. That value comes from all other currency in existence as every single part of it is diluted in that very process. The fact that this currency is borrowed from banks (or its borrowers by extension) and must be repaid with interest by anyone along the way does not make it less of a counterfeit, nor its value any less than stolen from all other currency holders. That makes the fact that anyone must repay it, let alone with interest, IRRELEVANT.
    Last edited by Steven Douglas; 10-15-2012 at 03:17 PM.

  17. #164
    Quote Originally Posted by eugenekop View Post
    Why inflation is so modest with zero interest rates and after Q1 and Q2?

    My own explanation (which might be bogus) is that government bonds are interchangeable with money, and when Bernanke printed money to buy bonds, he didn't in fact change the money supply, because bonds are part of the money supply. So banks now have one type of money (cash) instead of another type of money (bonds). So theoretically this shouldn't change much.

    What do you think?
    Possible, but unlikely IMO. Bonds print money out of thin air because they must yield interest. If the bond holders sold their bonds to the Fed at the purchase price, then your supposition holds. But if they redeemed them at even a discounted yield, the money supply grew.
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  18. #165
    Quote Originally Posted by eugenekop View Post
    I'm not talking about CPI, but about the real inflation, which I think is quite modest, especially when compared with the huge amount of money printed.

    What do you think about my explanation for this?
    One possibility: http://www.ronpaulforums.com/showthr...=1#post4683690
    freedomisobvious.blogspot.com

    There is only one correct way: freedom. All other solutions are non-solutions.

    It appears that artificial intelligence is at least slightly superior to natural stupidity.

    Our words make us the ghosts that we are.

    Convincing the world he didn't exist was the Devil's second greatest trick; the first was convincing us that God didn't exist.

  19. #166
    Bonds and FRN's are often erroneously referred to as debt instruments, and are often conflated as both being part of the "money supply". The comparison falls apart when you look at the nature of what each actually represents. Bonds are exchangeable, not 'interchangeable' or in any way fungible, with FRN's. They are UNLIKE THINGS. Likewise, stocks, gambling chips, celery and panty hose; they are also exchangeable with FRN's, but are not considered part of the money supply.

    In reality, bonds are debt instruments only--promises to pay later--which are sold in direct exchange for FRN's (promises to pay nothing) on the open market. The bond may be considered an asset to the buyer, and a liability to the issuer; they can even be traded and exchanged as assets, but they are not 'circulated as' currency, so much as 'exchanged for' currency.

    The FRN's used to pay for bonds, on the other hand, are assets insofar as people will accept them in exchange. But they are not liabilities, nor are they promises to pay, to or by anyone. FRN's always originate at some point as thin air currency that is loaned into existence and distributed through commercial lending institutions. Once created, they are dead ends, and a means of floating, transient value in and of themselves.

    Some will say, "Well, bonds are also created out of thin air, so what's the difference?"

    Where confusion comes in is the fact that FRN's are also often referred to as "debt instruments". But that is a gross misnomer, and really $#@!ed up, mutated contortionist twist on definitions that once had different meaning entirely.

    A "note" is, by definition, an "instrument of debt" and "evidence of debt". Once upon a time, that only meant that the issuer of the note "owed" the bearer something tangible in exchange for the note. The note was not considered "payment" in and of itself, but only a promise to pay in something other than itself, which could then be circulated as such.

    In reality, FRN's are technically a "note" (albeit of a different kind), and they are also (again, technically) "evidence of debt". But that is only because of the mechanism by which FRN's happen to be ::: POOFED ::: into existence by being loaned into circulation. Thus, it is "evidence" that a debt probably occurred somewhere along the way. They are NOT, however, an "instrument of debt". Not any more.

    When you hold a FRN, you are not in possession of a debt; not to yourself or anyone else. The fact that it may be traced to some original debt, or any subsequent debts, is incidental. You are definitely, most likely in possession of something that was brought into existence through a debt, but the fiat paper note you hold in your hand is not a debt - not to the holder or the original borrower or anyone in between. A laborer receiving FRN's as payment for wages incurs no debt, and likewise is not in possession of a debt to anyone. FRN's, interchangeable and fungible only with themselves, are free of ALL promises to be paid in anything else.

    Only an actual loan agreement is a debt instrument. That takes on different forms, depending on the borrower and lender, but the basic principle is the same in all cases. In the case of the government bond, only the bond itself the debt instrument.

    The irony is that a bond, paid for with FRN's, is nothing but a promise to pay the bearer in future FRN's, all of which have no further promise attached. That 'buck', along with whatever value in exchange it incidentally manages to hold onto, always stops with the holder.

    The mechanism by which QEn show up as price inflation are a different matter. Bonds with pathetic yields that don't keep pace with inflation, drive everyone (except the Fed) out of the bond market, and into turnip-squeezing malinvestment in a freshly re-inflated stock market. The stock market is a flukey kind of debt instrument, akin to place markers on a roulette wheel or a crap table. There is no set promise pay - only a chance to gain or lose. As long as stock holders are keeping their currency busily betting against each other on those tables, that currency is not competing for, nor is it bidding up the prices on, real tangible assets. But that's already coming to an end. As more people realize there are no gains to be had in stocks OR bonds, all of them will sold to compete for anything of any real value relative to the fiat no-promise-to-pay-anyone currency.
    Last edited by Steven Douglas; 10-15-2012 at 05:00 PM.

  20. #167
    Quote Originally Posted by Steven Douglas View Post
    Wow. Where on Earth do you think the vast majority of currency in existence today, including the banks' own capital and currency from depositors, came from anyway?
    I'm not arguing where it came from but who the beneficiary is.

    Just because money ends up with banks somewhere down the line through their depositors, doesn't mean they are necessarily the beneficiaries; if that were true then it could be said that you, I & everyone else is also somehow the "beneficiary" of all that money-creation since that money ends up in our pockets somewhere down the line too.

    Quote Originally Posted by Steven Douglas View Post
    If I buy something and pay for it in good faith, and I sell it to you, and you turn around and sell it to someone else, it is not a 'freebie' to any of us. Each of us that bought and sold the item paid for it in good faith. If we all later learn that the item was originally a stolen good, the fact that each of us paid for and then sold it in good faith along the way will not make it any less of an originally stolen good -- not stolen by us -- WE didn't steal it, and we are not the thieves. But someone else did. Furthermore, there is no amount of buying and selling on anyone's part that will make that originally stolen good any less of an originally stolen good.
    The point is that that none of us (including banks) can be accused of thievery except the thief himself (Fed/government) because he took something without paying for it while rest of us paid to buy it.

    Quote Originally Posted by Steven Douglas View Post
    There is NOTHING that a bank borrows from the Fed that wasn't stolen by the Fed from all currency holders,
    Let's get a few things straight:
    1) When Fed buys something, new money is created & when Fed sells something, money is destroyed.
    2) When Fed lends, new money is created & when loan is repaid, principal is destroyed & profit is eventually credited to Treasury.
    3) Most of the money that permanently remains in the economy (nearly all until recent MBS purchases) is created through purchase of Treasuries & this permanent increase is basis of inflation in the long-run.

    It has been repeatedly pointed out in this thread that banks DON'T usually borrow from Fed because Fed charges much higher interest than the market-rate & there's a stigma attached with borrowing from Fed as banks which can't borrow from the market are seen as unhealthy.
    Banks may borrow short-term (usually overnight) which doesn't have inflationary implications because money is lent/created & repaid/destroyed very quickly while longer loans are given occasionally, usually during a crisis & such but again, this money doesn't remain in the economy as it's destroyed upon repayment.

    So it is usually the money lent to the Treasury (Treasuries bought by Fed) that forever remain unpaid (net borrowing) & grow, which is what counts for long-term inflation.
    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

  21. #168
    Quote Originally Posted by Travlyr View Post
    I am pretty sure Paul Or Nothing II a disinformation agent or a banker. I had a great conversation with him a year or so ago and he understands sound money as well as anyone. He even argued that Bitcoins were not good money because they are not tangible, and I agree with that. If you can't hold it in your hand, then it is not really yours.

    If you read his stuff, he knows exactly what he is doing. He tries to portray you as something you are not.

    I've read your stuff. You & I disagree on a few things, yet I know you are a sincere defender of liberty.
    If the Fed & the current system is so beneficial to banks then why would a banker or a disinformation agent be against Fed & for free market in money?

    Clearly, critical thinking is not the norm here! Just label anyone whatever you want & act as if that's the truth, that's how it goes I guess........
    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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  23. #169
    Quote Originally Posted by Paul Or Nothing II View Post
    If the Fed & the current system is so beneficial to banks then why would a banker or a disinformation agent be against Fed & for free market in money?

    Clearly, critical thinking is not the norm here! Just label anyone whatever you want & act as if that's the truth, that's how it goes I guess........
    I call it like I see it. You are a banker apologist. If you want to be taken seriously as a freedom fighter then stop pretending that fractional reserve banking is a free market idea. Stop pretending that bankers should have special privileges in life. Stop promoting the idea that modern banking is anything other than what it is... outright theft.

  24. #170
    Quote Originally Posted by Paul Or Nothing II View Post
    Banks aren't coercing anyone to deposit or to borrow, they aren't printing money nor coercing anyone to take it.
    It's the government that creates money & it coerces people in all sorts of ways. If you can't grasp such basic things then I don't see any point in responding to you anymore.
    Fraud is absolutely coercive behavior. They created the system. They pay big bucks to keep the fraud going. They are not innocent in this. Not by a damned long shot.

    Keep apologizing for them, apologist
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  25. #171
    Quote Originally Posted by Paul Or Nothing II View Post
    Banks may borrow short-term (usually overnight) which doesn't have inflationary implications because money is lent/created & repaid/destroyed very quickly while longer loans are given occasionally, usually during a crisis & such but again, this money doesn't remain in the economy as it's destroyed upon repayment.

    So it is usually the money lent to the Treasury (Treasuries bought by Fed) that forever remain unpaid (net borrowing) & grow, which is what counts for long-term inflation.
    It appears that you are trying to make the point that it is not the commercial banks, but the Treasury through its deficit financing, that bears the greatest responsibility for monetary inflation. I don't let the Treasury off the hook for its role in monetary inflation, but neither do I believe that there would be no inflation without deficit spending by the Treasury. What you are ignoring, or seem to be forgetting, is that the Treasury does not borrow directly from the Fed--not since 1935, when that authority was repealed. There are middlemen involved in all that "borrowing", who are the first recipients and beneficiaries of trading in those counterfeited funds.

    You are also ignoring quantitative easing, and the effect on the money base that this has had on the counterfeit currency supply, with the new rule in place since 2008 that corporate bonds and mortgage-backed securities can now be purchased directly by the Fed from commercial banks. The Treasury has a role in that, but the Fed is not "loaning" that currency to the banks. They are making outright purchases of toxic debts, in exchange for a direct infusion of newly counterfeited currency which is not destroyed, to banks. And the only mechanism that keeps that currency from flooding directly into the economy is the fact that the Fed is also doing something else unprecedented, and that is paying the banks (YET AGAIN), to park those funds with the Fed.

    Quote Originally Posted by Paul Or Nothing II View Post
    It has been repeatedly pointed out in this thread that banks DON'T usually borrow from Fed...
    This completely glosses over the fact that most of the currency in existence, including that which banks "DON'T usually borrow from Fed" did not come into existence any other way. Every bit of it is the result of dilution and debasement of the currency.

    Quote Originally Posted by Paul Or Nothing II View Post
    The point is that that none of us (including banks) can be accused of thievery except the thief himself (Fed/government) because he took something without paying for it while rest of us paid to buy it.
    I already stipulated that we are not the thieves, but that point, once again, completely ignores the fact that everyone is circulating an ever-widening pool of counterfeit/stolen goods, and no amount of buying or selling will lend any legitimacy to any of it, or wash any of it clean.

    ...there's a stigma attached with borrowing from Fed as banks which can't borrow from the market are seen as unhealthy.
    Oh yeah? I don't think that Wells Fargo, BofA, JPMorgan Chase & Co., et al, are ultimately too concerned about stigmas where it counts most to them. They're all $#@!ing "unhealthy", and on so many levels.

    Quote Originally Posted by Paul Or Nothing II View Post
    Let's get a few things straight:
    1) When Fed buys something, new money is created & when Fed sells something, money is destroyed.
    2) When Fed lends, new money is created & when loan is repaid, principal is destroyed & profit is eventually credited to Treasury.
    3) Most of the money that permanently remains in the economy (nearly all until recent MBS purchases) is created through purchase of Treasuries & this permanent increase is basis of inflation in the long-run.
    We're arguing around each other, because there is a lot we agree on, but also a lot that is being ignored along the way.

    The amount of currency the Fed creates or destroys is irrelevant, because on net there is always more currency created than is destroyed over time; exponentially more, without or without Treasury involvement or deficit financing by government. This exponential expansion is an absolute requirement, not of the Fed, or the Treasury, which could in theory finance government through direct taxation alone, but of the entire banking system, as there must always be enough interest in the economy to be repaid to banks so that they can retain the illusion of solvency. And that is ONLY because while prices decrease in nominal value in a deflationary environment, the debts issued by banks, including the interest required to repay them, do not.

    Banks are The Children of The Fed, and state is their Godfather. The Fed by itself is the least beneficiary of its thefts, as it placates one to benefit the others. The Fed was created to facilitate and protect the interests of commercial banks. The fact that government has the ultimate mechanism for taxation without representation, along with the fact that each member must pay something for the privilege of being part of a currency cartel is IRRELEVANT to the fact that the Fed exists primarily for their benefit, their ability to thrive during booms and survive during busts, and ultimately behaves in ways that defends and protects their interests - their illusion of solvency.

  26. #172
    Quote Originally Posted by Steven Douglas View Post
    It appears that you are trying to make the point that it is not the commercial banks, but the Treasury through its deficit financing, that bears the greatest responsibility for monetary inflation.
    Yes, if you borrow, essentially from everyone as the new money essentially robs purchasing-power from everyone, & then don't pay back then that's the free-ride on the backs of everyone.
    Banks that borrow have to pledge assets so they can't get away so easily while Treasury takes the new money (thru PDs) & never pays back - free-ride

    Quote Originally Posted by Steven Douglas View Post
    I don't let the Treasury off the hook for its role in monetary inflation, but neither do I believe that there would be no inflation without deficit spending by the Treasury.
    Central-banks are primarily created to finance governments, it mayn't be their directly stated role but they are supposed to keep the interest on debt low (to prevent government bankruptcy) by stepping in & buying debt as much as necessary to keep interest on debt low.

    In other words, central-banks exist to facilitate deficit-spending, Ron Paul has pointed this out a number of times.

    Quote Originally Posted by Steven Douglas View Post
    What you are ignoring, or seem to be forgetting, is that the Treasury does not borrow directly from the Fed--not since 1935, when that authority was repealed. There are middlemen involved in all that "borrowing", who are the first recipients and beneficiaries of trading in those counterfeited funds.
    It's irrelevant whether Treasury borrows directly from Fed or not because the end-results are pretty much the same.

    1) If Fed directly bought Treasuries from Treasury then it would drive up its demand & price raking in more money for Treasuy while driving down interest on debt.
    2) PDs buy Treasuries with their OWN money, Fed buys Treasuries from PDs with new money, PDs go & buy more Treasuries from Treasury to refill their stock - which drives up demand & price of Treasuries raking in more money for Treasury & reducing its costs by driving down interest on debt.

    Quote Originally Posted by Steven Douglas View Post
    You are also ignoring quantitative easing, and the effect on the money base that this has had on the counterfeit currency supply, with the new rule in place since 2008 that corporate bonds and mortgage-backed securities can now be purchased directly by the Fed from commercial banks. The Treasury has a role in that, but the Fed is not "loaning" that currency to the banks. They are making outright purchases of toxic debts, in exchange for a direct infusion of newly counterfeited currency which is not destroyed, to banks. And the only mechanism that keeps that currency from flooding directly into the economy is the fact that the Fed is also doing something else unprecedented, and that is paying the banks (YET AGAIN), to park those funds with the Fed.
    MBS are a recent phenomena & I've already explained the problems it will create but using that as an example of "Fed grossly benefitting banking" wouldn't suffice because one must realize that since 1913 until the recent crash, Fed had hardly ever created money & given it to banks without them having to pay back with interest & of course, repayment destroyes money.

    Again, continuous inflationary implications are only there if newly created money remains in the system but if it's paid back then it gets destroyed & you can't claim that they have stolen anything from the economy (unlike Treasury which never pays back on the NET)

    Quote Originally Posted by Steven Douglas View Post
    This completely glosses over the fact that most of the currency in existence, including that which banks "DON'T usually borrow from Fed" did not come into existence any other way. Every bit of it is the result of dilution and debasement of the currency.
    Again, the POINT is that it's the government/Treasury that benefitted from that dilution/debasement, not the banking in general as is popularly assumed.

    Quote Originally Posted by Steven Douglas View Post
    I already stipulated that we are not the thieves, but that point, once again, completely ignores the fact that everyone is circulating an ever-widening pool of counterfeit/stolen goods, and no amount of buying or selling will lend any legitimacy to any of it, or wash any of it clean.
    I'm not ascribing any "legitimacy" to the system, I'm merely trying to point out that it's mostly the government that benefits through the loss of purchasing-power that occurs due to inflation created by Fed's money-creation, not the banking in general.

    Quote Originally Posted by Steven Douglas View Post
    Oh yeah? I don't think that Wells Fargo, BofA, JPMorgan Chase & Co., et al, are ultimately too concerned about stigmas where it counts most to them. They're all $#@!ing "unhealthy", and on so many levels.
    Well, I did mention the exception of crises.

    Besides, as can be seen, bailouts are NOT "free money", banks have to pay it back with interest & when they do, the money created to loan them gets destroyed, if they aren't able to pay back then their pledged assets are sold & money gets destroyed; so usually there are no permanent inflationary implications as there are with Treasuries.

    Quote Originally Posted by Steven Douglas View Post
    The amount of currency the Fed creates or destroys is irrelevant, because on net there is always more currency created than is destroyed over time; exponentially more, without or without Treasury involvement or deficit financing by government.
    Again, look at what Fed usually buys to create NET new money......after repeal of gold-standard until the crash, it was mostly Treasuries.....the Fed's stock of Treasuries always seems go up perpetually so that's where the stolen purchasing-power has been going.

    Quote Originally Posted by Steven Douglas View Post
    their illusion of solvency.
    While it is true that central-banks do help commercial-banks sustain the "illusion of solvency", it usually doesn't lead to inflation & siphoning of the purchasing-power in the long-run because as I've said, banks have to pay back the loans with interest & when they do, the money gets destroyed (well, it's destroyed even if they don't as Fed will simply sell banks' pledged assets)
    Last edited by Paul Or Nothing II; 10-18-2012 at 08:47 AM.
    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

  27. #173
    Quote Originally Posted by Travlyr View Post
    I call it like I see it. You are a banker apologist.
    Well, I'd rather defend a private market rather than defending coercive governments like you do.

    Quote Originally Posted by Travlyr View Post
    If you want to be taken seriously as a freedom fighter then stop pretending that fractional reserve banking is a free market idea.
    Liberty means people being free to engage in voluntary transactions so whether you like it or not, if other people wish to engage in FRB then that's a perfectly legitimate free market idea.

    Quote Originally Posted by Travlyr View Post
    Stop pretending that bankers should have special privileges in life. Stop promoting the idea that modern banking is anything other than what it is... outright theft.
    Well, you can't separate central-banking & commercial-banking, can you? It's the central-banks/government that print money, not banks in general.
    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

  28. #174
    Quote Originally Posted by Paul Or Nothing II View Post
    Central-banks are primarily created to finance governments,
    No they are not. Central banks are created to enrich the central banker.

    Central banks do finance governments because they know that government has the power to tax the people to pay them back. It is much less risky to loan to a government than it is to loan to individuals. Central bankers have the ability to create "money out of nothing" and get paid back with interest. It is a total rip off scam.

  29. #175
    Quote Originally Posted by Paul Or Nothing II View Post
    Well, I'd rather defend a private market rather than defending coercive governments like you do.



    Liberty means people being free to engage in voluntary transactions so whether you like it or not, if other people wish to engage in FRB then that's a perfectly legitimate free market idea.



    Well, you can't separate central-banking & commercial-banking, can you? It's the central-banks/government that print money, not banks in general.
    You can't end the state. You can end central banking. You can even throw banker thieves in jail if they don't stop stealing. You can't end the state. The state is here to stay. And that is a good thing because a state is required if homeownership is desired. You can make the state benign. Our forefathers nearly did.

  30. #176
    Quote Originally Posted by bxm042 View Post
    Fraud is absolutely coercive behavior. They created the system. They pay big bucks to keep the fraud going. They are not innocent in this. Not by a damned long shot.

    Keep apologizing for them, apologist
    I don't know what "fraud" you are talking about but if that's an inference to money-creation then that's the problem caused by government, not banking in general.

    And you are just offering speculative accusations like most conspiracy-theorists, & that too only because you don't seem to grasp the magnitude of benefit that the current system offers to the GOVERNMENT. What PDs make is peanuts compared to what government makes under the system. And again, PDs engage in a voluntary service, there's no fraud or coercion involved on their part; it's the government that uses coercion.

    And even IF we assume your speculative accusations to be true, one must realize that markets run on self-interest & profits so if there's an institution with coercive powers then market-participants will try to use it for their own self-interest & profits, in such a scenario, you can either keep pointing fingers at every market-participant that uses the system or you can point finger at the root of the problem - the existence of coercive institution itself.
    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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  32. #177
    Quote Originally Posted by Paul Or Nothing II View Post
    Well, I'd rather defend a private market rather than defending coercive governments like you do.
    You are not defending private markets. If banking was a private market then anyone could start one. Modern day banking requires permission. That is not a free market.

    Quote Originally Posted by Paul Or Nothing II View Post
    Liberty means people being free to engage in voluntary transactions so whether you like it or not, if other people wish to engage in FRB then that's a perfectly legitimate free market idea.
    FRB is fine if anybody and everybody could do it. Then nobody would do it. In a free market it makes no sense to put money in a FRB. Why risk losing money to a thief when you can start your own bank? It makes no sense.

    Quote Originally Posted by Paul Or Nothing II View Post
    Well, you can't separate central-banking & commercial-banking, can you? It's the central-banks/government that print money, not banks in general.
    Money can't be printed. Money is mined, grown, or sewn. Currency can be printed and if that currency is 100% redeemable for something of value, then it is as good as gold. If it is not 100% redeemable then somebody is getting paid or ripping somebody off.

  33. #178
    Quote Originally Posted by Travlyr View Post
    No they are not. Central banks are created to enrich the central banker.

    Central banks do finance governments because they know that government has the power to tax the people to pay them back. It is much less risky to loan to a government than it is to loan to individuals. Central bankers have the ability to create "money out of nothing" and get paid back with interest. It is a total rip off scam.
    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!

    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

  34. #179
    Quote Originally Posted by Paul Or Nothing II View Post
    I don't know what "fraud" you are talking about but if that's an inference to money-creation then that's the problem caused by government, not banking in general.

    And you are just offering speculative accusations like most conspiracy-theorists, & that too only because you don't seem to grasp the magnitude of benefit that the current system offers to the GOVERNMENT. What PDs make is peanuts compared to what government makes under the system. And again, PDs engage in a voluntary service, there's no fraud or coercion involved on their part; it's the government that uses coercion.

    And even IF we assume your speculative accusations to be true, one must realize that markets run on self-interest & profits so if there's an institution with coercive powers then market-participants will try to use it for their own self-interest & profits, in such a scenario, you can either keep pointing fingers at every market-participant that uses the system or you can point finger at the root of the problem - the existence of coercive institution itself.
    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.

  35. #180
    Quote Originally Posted by Paul Or Nothing II View Post
    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!

    I really can't debate when someone is so ignorant of such basic things.
    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.

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