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Thread: Why the modest inflation?

  1. #121
    Quote Originally Posted by Paul Or Nothing II View Post
    Well, at the most fundamental level through taxes & debt........

    I'm not sure but I'm assuming you want to know how Fed enables the system & helps out the government.....
    Thanks for the information. A lot of good stuff in there. Yeah, questions about the Fed would would be an extension of the question about how the government finances itself.

    Quote Originally Posted by Paul Or Nothing II View Post
    There are too many perhaps but a couple would be that "banks get money for free" or that "Fed is private"; it's alright to agitate people with such statements to get them to want to know what Fed & government is doing but that's all should be its utility because as has already been pointed out, neither do banks get "free money" (since they have to repay their loans with interest) nor is Fed run like a truly "private" company (since it's just another arm of the government & hands over its profits to Treasury).
    Interesting. I thought perhaps you guys were talking about the "Fed (or government) running the printing presses" being inaccurate, from a semantics standpoint.

    I always look at the Fed banks like (Gas and Electric) Utilities, and the Federal Reserve Board like the PUC. I don't believe that the operations of the banks in the Federal Reserve system are paid for by the Federal government (correct me if I'm wrong), so they must have revenue from some source. So would it suffice to say that they are taking some kind of cut to cover operating expenses (including salaries)?

    A related issue is the issuing of public debt through the Treasury. Some small number of people may use Treasury Direct services, but a whole lot of the debt (marketable securities) is issued via primary dealers and market makers. As a middleman taking a cut, they profit just like a brokerage would profit on trades, transactions and M&A. Perhaps that is what you mean by "incidental" in your post below. I would agree that it is a relatively small cut that they take, but I would love to get a small cut of trillions of dollars in transactions.

    Quote Originally Posted by Paul Or Nothing II View Post
    Government created & sustains the system because government itself is its biggest beneficiaries, although there may be other INCIDENTAL beneficiaries, all the wealth that government rakes in with the prevelant system isn't going to them, it certainly does NOT hand it over to the banks but rather government uses all that wealth on ITSELF!
    Agree, with the caveat that incidental profits are nice when the transactions are in the trillions.
    Last edited by Brian4Liberty; 09-26-2012 at 10:15 AM.
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.



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  3. #122
    Quote Originally Posted by Paul Or Nothing II View Post
    Are you in the habit of getting off-track?

    The original point of contention was - who's the BIGGEST beneficiary of the system?
    You'd said it was the banks & I'd contended that government is the biggest beneficiary of the system & I still stand by that.
    That's never even been in contention, that the government spends a huge chunk of the new money. The wealth transfer from this arrangement however, is going towards the banks, not towards the government.

    The banks hoard and invest their new money, whereas the government spends it on useless worthless consumption $#@! which does not add to their or our wealth whatsoever. Furthermore, aside from power centers such as the military industrial complex, the smaller companies and people who receive the "benefits" of government spending, their benefits are diluted through government waste and inflation.

    A libertarian attacks the Fed & the government while a liberal would attack the whole banking industry & anyone that seems to be making a lot of money!
    I attack the Fed and its massive role in government expansion as much as the next guy. The difference between you and me, however, is that you're seemingly trying to convince people that the Banker's profits in all of this is a mere afterthought, and their profits are merely incidental, unintentional, exaggerated, and overall insignificant.

    Which is quite frankly, one of the most absurd apologies for the banking industry I've ever heard, and I've heard some very absurd apologies for the banking industry.



    I don't think I could ever convince anyone who relies on conspiracy theories so I don't even try but I just choose to post for those few who might be interested in facts!
    Which is exactly what a banker apologist would say.
    Last edited by TheTexan; 09-26-2012 at 10:22 AM.
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  4. #123
    Quote Originally Posted by Brian4Liberty View Post
    I always look at the Fed banks like (Gas and Electric) Utilities, and the Federal Reserve Board like the PUC. I don't believe that the operations of the banks in the Federal Reserve system are paid for by the Federal government (correct me if I'm wrong), so they must have revenue from some source. So would it suffice to say that they are taking some kind of cut to cover operating expenses (including salaries)?
    Now the additional question I have not answered is "what other business are the member banks of the Federal Reserve System involved in"? I don't have the answer off the top of my head. Do these banks solely exist to perform Federal Reserve functions, or is that a side business for them?
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  5. #124
    Quote Originally Posted by Brian4Liberty View Post

    I always look at the Fed banks like (Gas and Electric) Utilities, and the Federal Reserve Board like the PUC. I don't believe that the operations of the banks in the Federal Reserve system are paid for by the Federal government (correct me if I'm wrong), so they must have revenue from some source. So would it suffice to say that they are taking some kind of cut to cover operating expenses (including salaries)?
    As I've said, Fed's "profits" come from interest on Treasuries, interest on loans given to banks & so on. They deduct operating expenses from it & a statutory dividend to member-banks who have capital invested in Fed-system; these expenses usually very tiny & rest of it is transferred to Treasury, you can check the record both on Treasury's website as well as that of Fed's.

    Quote Originally Posted by Brian4Liberty View Post
    A related issue is the issuing of public debt through the Treasury. Some small number of people may use Treasury Direct services, but a whole lot of the debt (marketable securities) is issued via primary dealers and market makers. As a middleman taking a cut, they profit just like a brokerage would profit on trades, transactions and M&A. Perhaps that is what you mean by "incidental" in your post below. I would agree that it is a relatively small cut that they take, but I would love to get a small cut of trillions of dollars in transactions.

    Agree, with the caveat that incidental profits are nice when the transactions are in the trillions.
    PDs are market-makers in Treasuries (google market-maker); without them, market for Treasuries would be illiquid & spreads would be massive & fewer individuals/institutions would be interested in buying government-debt in quantities that they do because it simply wouldn't be that economically viable. Market-makers in any market are there to continuously keep buying/selling that instrument, which helps to keep the market liquid, keep spreads low & thereby entice more participants to enter the market.
    The amounts that they deal in are big but profits are certainly NOT in "trillions". Just for example, if you buy an oil-contract with 1000 barrels worth about $100,000 & immediately sell it for one tick's profit, you'd have "dealt in" about $200,000 but your profit would be measly $10, this is how market-making works in Treasuries too, PDs buy in huge amounts but profits are nowhere near trillions.
    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. #125
    Quote Originally Posted by bxm042 View Post
    That's never even been in contention, that the government spends a huge chunk of the new money. The wealth transfer from this arrangement however, is going towards the banks, not towards the government.

    The banks hoard and invest their new money, whereas the government spends it on useless worthless consumption $#@! which does not add to their or our wealth whatsoever. Furthermore, aside from power centers such as the military industrial complex, the smaller companies and people who receive the "benefits" of government spending, their benefits are diluted through government waste and inflation.
    Again, government created the system because government is its biggest beneficiary, they wouldn't be able to borrow so much debt without Fed there. And no, banks get what they get for their services, they don't force anyone to buy anything, it's all voluntary.

    You seem simply unable to grasp the fact that banking is by nature a very profitable industry since it's so crucial to capital structure in an economy & therefore they are going to make a lot of money irrespective of the system.

    Quote Originally Posted by bxm042 View Post
    I attack the Fed and its massive role in government expansion as much as the next guy. The difference between you and me, however, is that you're seemingly trying to convince people that the Banker's profits in all of this is a mere afterthought, and their profits are merely incidental, unintentional, exaggerated, and overall insignificant.

    Which is quite frankly, one of the most absurd apologies for the banking industry I've ever heard, and I've heard some very absurd apologies for the banking industry.
    The profits are earned for the services they provide, which are completely voluntary.

    Quote Originally Posted by bxm042 View Post
    Which is exactly what a banker apologist would say.
    I'd rather be a banker-apologist for defending a perfectly legitimate & necessary market-industry than being a liberal OWSer who hates anyone that makes a lot of money!

    And I'd recommend getting informed on banking & Housing Bubble, 100s of banks across the country failed & nobody bailed them out, some even survived the collapse on their own, while the Fed was trying to re-inflate the economy with low-interest & government pretty much forced banks to make bad loans to poor people of certain races, which turned bad as expected & banks started failing & you think bankers did this to themselves? Clearly, you don't know what you are talking about.

    I see no point in prolonging the discussion with you since you're not going to be giving up on your conspiracy theories.
    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

  7. #126
    Quote Originally Posted by Paul Or Nothing II View Post
    As I've said, Fed's "profits" come from interest on Treasuries, interest on loans given to banks & so on. They deduct operating expenses from it & a statutory dividend to member-banks who have capital invested in Fed-system; these expenses usually very tiny & rest of it is transferred to Treasury, you can check the record both on Treasury's website as well as that of Fed's.
    Thanks, that answers the question. They take out operating expenses and a dividend before giving the profits back to the Federal Government.

    Quote Originally Posted by Paul Or Nothing II View Post
    PDs are market-makers in Treasuries (google market-maker); without them, market for Treasuries would be illiquid & spreads would be massive & fewer individuals/institutions would be interested in buying government-debt in quantities that they do because it simply wouldn't be that economically viable. Market-makers in any market are there to continuously keep buying/selling that instrument, which helps to keep the market liquid, keep spreads low & thereby entice more participants to enter the market.
    The amounts that they deal in are big but profits are certainly NOT in "trillions". Just for example, if you buy an oil-contract with 1000 barrels worth about $100,000 & immediately sell it for one tick's profit, you'd have "dealt in" about $200,000 but your profit would be measly $10, this is how market-making works in Treasuries too, PDs buy in huge amounts but profits are nowhere near trillions.
    Yep, in your example the brokerage would make more than me on that transaction.

    No one said that the profits were in the trillions. It's the government debt that is in the trillions. 1% of a trillion is $10 billion. I'd take that. How many cuts (transaction and management fees) are taken from a Treasury by the time it is reduced to a STRIP? There are profits to made, especially when dealing with very large numbers.

    Edit: I see we are in agreement -

    Quote Originally Posted by Paul Or Nothing II View Post
    ... banking is by nature a very profitable industry since it's so crucial to capital structure in an economy & therefore they are going to make a lot of money irrespective of the system...
    Last edited by Brian4Liberty; 09-26-2012 at 01:29 PM.
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  8. #127
    Quote Originally Posted by Brian4Liberty View Post
    Thanks, that answers the question. They take out operating expenses and a dividend before giving the profits back to the Federal Government.



    Yep, in your example the brokerage would make more than me on that transaction.

    No one said that the profits were in the trillions. It's the government debt that is in the trillions. 1% of a trillion is $10 billion. I'd take that. How many cuts (transaction and management fees) are taken from a Treasury by the time it is reduced to a STRIP? There are profits to made, especially when dealing with very large numbers.

    Edit: I see we are in agreement -
    Market-makers in any market don't make 1% per transaction, nowhere close to that.

    And if market-makers didn't exist then Treasury-markets would be so illiquid & spreads would be so high that Treasury would get peanuts for issuing debt, compared to the deal they are getting now.

    And yes, there are profits to be made but nowhere near as much as is portrayed & not without its associated risks but I don't see how making profits for providing a service is wrong The point is that system exists to support the government-borrowing & we live in majority-rule system so if the majority could change things if they want to but they clearly don't want to or we'd probably see Ron Paul in charge.
    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

  9. #128
    Quote Originally Posted by Paul Or Nothing II View Post
    Again, government created the system because government is its biggest beneficiary, they wouldn't be able to borrow so much debt without Fed there. And no, banks get what they get for their services, they don't force anyone to buy anything, it's all voluntary.
    Government did not create the system. International bankers created the system.

    Paul Warburg's Crusade to Establish a Central Bank in the United States

    Quote Originally Posted by Paul Or Nothing II View Post
    You seem simply unable to grasp the fact that banking is by nature a very profitable industry since it's so crucial to capital structure in an economy & therefore they are going to make a lot of money irrespective of the system.
    What do they produce?


    Quote Originally Posted by Paul Or Nothing II View Post
    The profits are earned for the services they provide, which are completely voluntary.
    Legal tender laws are protected by agents with guns who will hunt people down if they don't pay. How is that voluntary?

    Quote Originally Posted by Paul Or Nothing II View Post

    I'd rather be a banker-apologist for defending a perfectly legitimate & necessary market-industry than being a liberal OWSer who hates anyone that makes a lot of money!
    They are thieves. You are an apologist for theft. Fractional reserve banking is stealing plain and simple.



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  11. #129
    Quote Originally Posted by Paul Or Nothing II View Post
    I see no point in prolonging the discussion with you since you're not going to be giving up on your conspiracy theories.
    Will you prolong the discussion if we don't give up on conspiracy facts?

    Even The Federal Reserve Bank of Minneapolis admit, on their own website, it was formed by a conspiracy of international bankers.

    The Jekyll Island Expedition
    One evening in early November 1910, Warburg and a small party of men from New York quietly boarded Sen. Aldrich's private railway car, ostensibly for a trip south to an exclusive hunting club on an island off the coast of Georgia.

    In addition to Warburg and Aldrich, the others, all highly regarded in the New York banking community, were: Frank Vanderlip, president of National City Bank; Harry P. Davison, a J.P. Morgan partner; Benjamin Strong, vice president of Banker's Trust Co.; and A. Piatt Andrew, former secretary of the National Monetary Commission and now assistant secretary of the Treasury. The real purpose of this historic "duck hunt" was to formulate a plan for US banking and currency reform that Aldrich could present to Congress.

    Even Warburg at first questioned the motives of this gathering, not knowing if he was included because the group knew what he preached and was interested in what he had to offer, or if he was to be involved as a conspirator in order to be muzzled. He soon saw that the Jekyll Island conference was pulled together because, as Warburg later wrote, Aldrich was "bewildered at all that he had absorbed abroad and he was faced with the difficult task of writing a highly technical bill while being harassed by the daily grind of his parliamentary duties."
    Last edited by Travlyr; 09-26-2012 at 04:06 PM.

  12. #130
    Quote Originally Posted by Paul Or Nothing II View Post
    You seem simply unable to grasp the fact that banking is by nature a very profitable industry since it's so crucial to capital structure in an economy & therefore they are going to make a lot of money irrespective of the system.
    Banking is even more (a lot more) profitable when you have a best friend with a printing press who's singular purpose in life is to buy your $#@!. Tends to make things easier.

    The Federal Reserve buys things. Based on $#@!ING BASIC economic principles, that means they bought the product at a price that noone else was able and willing to pay at that time. It follows then, this also means that they gave the person they bought the product from more money than that person would have received otherwise. Again, this is economic FACT. Very $#@!ing basic fact, at that.

    Additionally, they buy these products from a select group of people; namely BANKERS. In VAST quantities.

    This is 100% proof that the bankers do profit from this arrangement. How much is the only question, and there is no way to measure this. You can speculate based on available evidence (such as the correlation between money printed and profits), but the actual quantity cannot be mathematically proved.

    I see no point in prolonging the discussion with you
    Same. Not sure if you've noticed, but the more money they print, the more of a "very profitable industry" banking becomes. Considering the basic economic principles outlined above, and the very strong correlation between (money printed) and (banks profit), as far as I'm concerned the onus is on you to show this is just a "coincidence."

    Unless you can dispute the laws of supply and demand... then take your bank apologies elsewhere please
    Last edited by TheTexan; 09-26-2012 at 04:44 PM.
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  13. #131
    Quote Originally Posted by Paul Or Nothing II View Post
    ...banking is by nature a very profitable industry since it's so crucial to capital structure in an economy & therefore they are going to make a lot of money irrespective of the system.
    More to the point, I think: Capital is crucial to a capital structure. Banks are only one possible source of capital. They only become crucial (and therefore more profitable) when they become the only viable source.

    In reality, banking would be only a fraction as profitable as it has been over the past hundred years if the other source of capital, banking's primary natural competition called privately accumulated capital (or savings, the other capital white meat), had not been perpetually eroded - taxed out of existence for the very purpose of providing so-called 'elasticity' of supply, and 'liquidity' to banks.

    Keynes saw people sitting on money -- which really was theirs to sit on, and a natural and necessary component in a free market -- and just couldn't take it. Short term demand for liquidity trumps all. So Keynes advocated A Clever Mechanism, by which wealth in the form of wages and currency holdings could be siphoned away and put into circulation anyway. $#@! the savers - vilify them as hoarders - they be bad anyway, because what were they "contributing". What value did they serve? (forget Adam Smith's invisible hand when it comes to the self-interested act of savings). There was nothing whatsoever voluntary about Keynes' Mechanism from the perspective of wage earners and currency holders who were being robbed in the aggregate by invisible thieves with a state-granted Aggregate Thievery Charter.

    As a saver, I have Privately Accumulated Capital to spend, and also to lend if I choose. I would invariably opt to take different risks than the banks; to spend or lend that capital at different times, to different channels, under different terms and conditions. But I can't even take the time to accumulate that capital, because by the time I do accumulate some, its scarcity and rental value will have already been thoroughly distorted by dilution - siphoned away by the ever-expanding banking system.

    What Keynes was not so clever about: He never could devise a means by which those whose wealth was 'temporarily' stolen (borrowed temporarily in an ever-expanding debt cycle, during each transaction for a lender-borrower joyride) could be specifically repaid to those nameless, faceless millions of wage earners and currency holders who actually did foot the bill. So the value of their capital was stolen and redistributed, not borrowed, because it could never be directly repaid.

  14. #132
    Quote Originally Posted by Paul Or Nothing II View Post
    And if market-makers didn't exist then Treasury-markets would be so illiquid & spreads would be so high that Treasury would get peanuts for issuing debt, compared to the deal they are getting now.
    ...
    The point is that system exists to support the government-borrowing & we live in majority-rule system so if the majority could change things if they want to but they clearly don't want to or we'd probably see Ron Paul in charge.
    Yep, it exists to facilitate government debt and to profit from that. There is no way in the world that the bought politicians and brainwashed masses would ever change that.

    As far as the market in Treasuries, I have been a buyer via Treasury Direct in the past. I am no longer a buyer because there is no free, open and competitive market in them anymore. The "market" is manipulated, and the crony banksters are doing their part to distort and destroy that market. They have essentially flooded the market with purchases of the Treasury debt. They are a middle-man in the process when there doesn't need to be a middle-man. And what kind of shenanigans are going on right now to keep that game going and expanding? With QE3, the Fed buys junk debt from Wall St (at what prices, inflated or market?). Is there a back room agreement that they will turn around and put that into Treasuries and enable further debt?

    Quote Originally Posted by Steven Douglas View Post
    More to the point, I think: Capital is crucial to a capital structure. Banks are only one possible source of capital. They only become crucial (and therefore more profitable) when they become the only viable source.

    In reality, banking would be only a fraction as profitable as it has been over the past hundred years if the other source of capital, banking's primary natural competition called privately accumulated capital (or savings, the other capital white meat), had not been perpetually eroded - taxed out of existence for the very purpose of providing so-called 'elasticity' of supply, and 'liquidity' to banks.

    Keynes saw people sitting on money -- which really was theirs to sit on, and a natural and necessary component in a free market -- and just couldn't take it. Short term demand for liquidity trumps all. So Keynes advocated A Clever Mechanism, by which wealth in the form of wages and currency holdings could be siphoned away and put into circulation anyway. $#@! the savers - vilify them as hoarders - they be bad anyway, because what were they "contributing". What value did they serve? (forget Adam Smith's invisible hand when it comes to the self-interested act of savings). There was nothing whatsoever voluntary about Keynes' Mechanism from the perspective of wage earners and currency holders who were being robbed in the aggregate by invisible thieves with a state-granted Aggregate Thievery Charter.

    As a saver, I have Privately Accumulated Capital to spend, and also to lend if I choose. I would invariably opt to take different risks than the banks; to spend or lend that capital at different times, to different channels, under different terms and conditions. But I can't even take the time to accumulate that capital, because by the time I do accumulate some, its scarcity and rental value will have already been thoroughly distorted by dilution - siphoned away by the ever-expanding banking system.

    What Keynes was not so clever about: He never could devise a means by which those whose wealth was 'temporarily' stolen (borrowed temporarily in an ever-expanding debt cycle, during each transaction for a lender-borrower joyride) could be specifically repaid to those nameless, faceless millions of wage earners and currency holders who actually did foot the bill. So the value of their capital was stolen and redistributed, not borrowed, because it could never be directly repaid.
    And gone are the days when we "savers" could do our part and directly lend that money to the government. Now we have middlemen taking a cut, and an artificially bloated number of buyers of that debt, driving interest rates down to nothing. The savers, the investors, and the retired people on fixed income suffer, and the banksters and government deficit spenders prosper. Ron Paul would be the first to point that out.
    Last edited by Brian4Liberty; 09-26-2012 at 05:57 PM.
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  15. #133
    Quote Originally Posted by Brian4Liberty View Post
    Yep, it exists to facilitate government debt and to profit from that. There is no way in the world that the bought politicians and brainwashed masses would ever change that.

    As far as the market in Treasuries, I have been a buyer via Treasury Direct in the past. I am no longer a buyer because there is no free, open and competitive market in them anymore. The "market" is manipulated, and the crony banksters are doing their part to distort and destroy that market. They have essentially flooded the market with purchases of the Treasury debt. They are a middle-man in the process when there doesn't need to be a middle-man. And what kind of shenanigans are going on right now to keep that game going and expanding? With QE3, the Fed buys junk debt from Wall St (at what prices, inflated or market?). Is there a back room agreement that they will turn around and put that into Treasuries and enable further debt?
    Clearly, you have no grasp of what market-making is or the benefits it confers on the given market by continuously keeping it liquid.............

    You must realize that Treasury is far more concerned than you with respect to raking in as much money as they can on debt-issues so they prefer the system of PDs precisely because PDs enable Treasury to maximize its earnings through debt-issues because Treasury knows that it would be raking in much smaller sums if PDs weren't there to continuously buy/sell Treasuries to keep the instruments liquid.

    Quote Originally Posted by Steven Douglas View Post
    More to the point, I think: Capital is crucial to a capital structure. Banks are only one possible source of capital. They only become crucial (and therefore more profitable) when they become the only viable source.

    In reality, banking would be only a fraction as profitable as it has been over the past hundred years if the other source of capital, banking's primary natural competition called privately accumulated capital (or savings, the other capital white meat), had not been perpetually eroded - taxed out of existence for the very purpose of providing so-called 'elasticity' of supply, and 'liquidity' to banks.
    "Privately accumulated capital" requires a market-place where buyers & sellers of capital (depositors & borrowers) could come to, banks provide this marketplace so that every depositor that has something to lend doesn't need to go on a search for borrower(s) or every borrower going on a search for a lender(s). Banks aggregate the capital from the depositors & thereby offer averaged out better rates to both depositors as well as borrowers in the process than they would otherwise have gotten.

    It's like saying, why buy from local retail shops when we can buy food directly from farmers, of course you can try that but it could be much more costly & time-consuming for most people to do that so they get a better deal by buying from shops who act as intermediaries between producers & consumers whereby both groups get a better deal compared to what they'd have gotten if every producer had to go out looking for consumers & vice versa; banks play a similar role between depositors & borrowers.

    One can circumvent banks if one wishes to, but in that case, if one happens to have capital to lend or one wishes to borrow then one's best chance would be to go in the middle of a crowded square & scream whether anybody wishes to lend/borrow! But somehow, I believe going to the bank for the same purpose would be much more cost-efficient than that in many ways & that's why people tend to do that.
    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. #134
    Quote Originally Posted by Paul Or Nothing II View Post
    Stealing less doesn't make it justifiable, one can't justify stealing someone's pen any more than stealing someone's truck; theft is theft, it can't be justified
    Agreed 100%. You should really apply this line of reasoning more consistently, you may come off as less of a bank apologist, just a tip
    Last edited by TheTexan; 09-27-2012 at 12:02 AM.
    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

  17. #135
    Quote Originally Posted by Paul Or Nothing II View Post
    "Privately accumulated capital" requires a market-place where buyers & sellers of capital (depositors & borrowers) could come to, banks provide this marketplace so that every depositor that has something to lend doesn't need to go on a search for borrower(s) or every borrower going on a search for a lender(s). Banks aggregate the capital from the depositors & thereby offer averaged out better rates to both depositors as well as borrowers in the process than they would otherwise have gotten.

    It's like saying, why buy from local retail shops when we can buy food directly from farmers, of course you can try that but it could be much more costly & time-consuming for most people to do that so they get a better deal by buying from shops who act as intermediaries between producers & consumers whereby both groups get a better deal compared to what they'd have gotten if every producer had to go out looking for consumers & vice versa; banks play a similar role between depositors & borrowers.

    One can circumvent banks if one wishes to, but in that case, if one happens to have capital to lend or one wishes to borrow then one's best chance would be to go in the middle of a crowded square & scream whether anybody wishes to lend/borrow! But somehow, I believe going to the bank for the same purpose would be much more cost-efficient than that in many ways & that's why people tend to do that.
    I think you're missing my point. I am not anti-banks, anti-lending or anything else of the sort. I am not arguing against the importance of banks (assuming they are solvent, of course). I am, however, anti-legal tender laws, and anti-counterfeiting, and anti-monopoly where currency "issuance" is concerned.

    With sound currency, and sound monetary policy, especially in the absence of legal tender laws, people really could, and would in many cases, circumvent the banks. Private capital accumulation in most cases would NOT be for the purpose of renting that money out to others. That's not what "compete with the banks" in most cases would mean at all. A sound currency, especially in a growing economy, would naturally decrease the price of credit, and even the demand for it, as the value of the money itself increased. If banks had no publicly backed "counterfeiter of last resort" it would also decrease the available supply of credit. A Very Good Thing, because malinvestment would all but disappear.

    Saving in a sound currency in a truly free market economy would facilitate a different kind of circumvention of banks most people, as people saved up for their own purchases -- because the time to do so wasn't artificially stolen from them. You really could take your time, work hard, and keep your money in a coffee can or under a mattress; which, incidentally, would be an incidental boon to spenders, because that would affect prices. It would not affect sellers who were not under artificial credit time constraints, because despite falling prices, the actual value of their goods and services would be virtually unaffected.

    Savers would not automatically be considered "depositors", or lenders, and not everyone would feel a need to even be a lender, or otherwise have to "put their money to work", and all because some elite group of aggregate manipulating pinheads somewhere got together and decided to give currency an artificial shelf life. The old adage, "work hard and save" could actually mean something again, and would indeed be sound advice. Not in today's monstrosity of a lie.

    I'm not anti-banks, per se. They have a proper place, and should compete. In their proper place, in a truly free market, as they assume full responsibility for all their own risks, with nothing but sound currencies circulating.

  18. #136
    Quote Originally Posted by bxm042 View Post
    ........
    I expect you to remove that fake quote out of common courtesy. I'm appalled that any Ron-Paul-supporter would resort to such deplorable, not to mention childish means to assert oneself!
    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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  20. #137
    Quote Originally Posted by Steven Douglas View Post
    I think you're missing my point. I am not anti-banks, anti-lending or anything else of the sort. I am not arguing against the importance of banks (assuming they are solvent, of course). I am, however, anti-legal tender laws, and anti-counterfeiting, and anti-monopoly where currency "issuance" is concerned.

    With sound currency, and sound monetary policy, especially in the absence of legal tender laws, people really could, and would in many cases, circumvent the banks. Private capital accumulation in most cases would NOT be for the purpose of renting that money out to others. That's not what "compete with the banks" in most cases would mean at all. A sound currency, especially in a growing economy, would naturally decrease the price of credit, and even the demand for it, as the value of the money itself increased. If banks had no publicly backed "counterfeiter of last resort" it would also decrease the available supply of credit. A Very Good Thing, because malinvestment would all but disappear.

    Saving in a sound currency in a truly free market economy would facilitate a different kind of circumvention of banks most people, as people saved up for their own purchases -- because the time to do so wasn't artificially stolen from them. You really could take your time, work hard, and keep your money in a coffee can or under a mattress; which, incidentally, would be an incidental boon to spenders, because that would affect prices. It would not affect sellers who were not under artificial credit time constraints, because despite falling prices, the actual value of their goods and services would be virtually unaffected.

    Savers would not automatically be considered "depositors", or lenders, and not everyone would feel a need to even be a lender, or otherwise have to "put their money to work", and all because some elite group of aggregate manipulating pinheads somewhere got together and decided to give currency an artificial shelf life. The old adage, "work hard and save" could actually mean something again, and would indeed be sound advice. Not in today's monstrosity of a lie.

    I'm not anti-banks, per se. They have a proper place, and should compete. In their proper place, in a truly free market, as they assume full responsibility for all their own risks, with nothing but sound currencies circulating.
    You expect people to save their money under the mattress under an open standard in money but I sense that irrespective of the standard, people will always try to maximize their earnings so if people have the opportunity to deposit & earn interest then they'll surely deposit with banks, not to mention they'll have security-concerns in mind too as banks will provide better security than keeping it under the mattress............but there's no point in arguing about that at this stage as facts will play themselves out eventually, as & when currencies are allowed to be freely chosen.

    I'd just like to point out that falling price & falling demand is a fictional Keynesian paradigm, with which they presume "deflationary spiral" & thereby promote inflation; in the real world though, falling prices increase demand & increasing prices decrease demand & therefore, limited supply of credit would mean higher REAL (as opposed to "nominal") interest-rates.
    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. #138
    Quote Originally Posted by Paul Or Nothing II View Post
    I expect you to remove that fake quote out of common courtesy. I'm appalled that any Ron-Paul-supporter would resort to such deplorable, not to mention childish means to assert oneself!
    That's a direct quote of yours. Click on the arrow. YOU SAID THAT.
    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

  22. #139
    Quote Originally Posted by Paul Or Nothing II View Post
    You expect people to save their money under the mattress under an open standard in money...
    Under an ostensibly sound currency (no central control or manipulation), in a regime where banks and lending institutions are held accountable, and are not subject to public backing or bailouts, there is always a concern about bank solvency, as there rightly was in the past, given the real risks involved. It's not that I expect most would store their money in mattresses, coffee cans, or home safes; only that they could, and that many would (as many did in the past), secure in the knowledge that the value isn't being centrally manipulated and deliberately eroded.

    Quote Originally Posted by Paul Or Nothing II View Post
    I'd just like to point out that falling price & falling demand is a fictional Keynesian paradigm, with which they presume "deflationary spiral" & thereby promote inflation; in the real world though, falling prices increase demand & increasing prices decrease demand & therefore, limited supply of credit would mean higher REAL (as opposed to "nominal") interest-rates.
    I agree, on all points. Even Keynes himself knew that under the worst case scenario the market would equilibrate long term. With inflation, on the other hand, there is no ceiling, and a hyper-inflationary spiral is no myth, as we have too many real world examples of that nightmare scenario playing out.

  23. #140
    Quote Originally Posted by Paul Or Nothing II View Post
    Clearly, you have no grasp of what market-making is or the benefits it confers on the given market by continuously keeping it liquid.............

    You must realize that Treasury is far more concerned than you with respect to raking in as much money as they can on debt-issues so they prefer the system of PDs precisely because PDs enable Treasury to maximize its earnings through debt-issues because Treasury knows that it would be raking in much smaller sums if PDs weren't there to continuously buy/sell Treasuries to keep the instruments liquid.
    Market-making is a separate subject. (And I would not go as far as to call it "doing God's work", like Lloyd Blankfein might).

    Granted, it is nice to have a place to sell a Treasury that I have purchased before maturity. An exchange or market maker works nicely for that. In the case where a person buys direct from the government, and holds to maturity, there is no need for a market maker or an exchange. That is how a lot of government debt worked when ordinary people bought US Savings bonds (and we infamously "owed it to ourselves"). And if they wanted to sell them early, they could turn them in at a value less than full maturity value.

    I have a problem with the fact that there is no longer competition in the Treasury auction process. No buyers? The interest rate must go up (price comes down). But no, instead the government will buy it all! It would be nice to run a business like that. "This widget costs $10,000. Too expensive and nobody wants to buy? Gee, I'll buy it from myself. Let me do the appropriate journal entries and wow, look at the money I just made!"
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  24. #141
    Quote Originally Posted by Paul Or Nothing II View Post
    Market-makers in any market don't make 1% per transaction, nowhere close to that.

    And if market-makers didn't exist then Treasury-markets would be so illiquid & spreads would be so high that Treasury would get peanuts for issuing debt, compared to the deal they are getting now.

    And yes, there are profits to be made but nowhere near as much as is portrayed & not without its associated risks but I don't see how making profits for providing a service is wrong The point is that system exists to support the government-borrowing & we live in majority-rule system so if the majority could change things if they want to but they clearly don't want to or we'd probably see Ron Paul in charge.
    And in today's news, we see that Goldman Sachs certainly believes that there is real money to be made. So much money in fact, that they will risk bribing politicians to get the business:

    Goldman to pay $12 million to settle "pay-to-play" probe

    A former vice president in Goldman's Boston office, Neil Morrison, worked on the campaign of Timothy Cahill around the same time that he was also soliciting underwriting business from the Massachusetts treasurer's office, the Securities and Exchange Commission said.

    http://news.yahoo.com/goldman-pay-12...9--sector.html
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  25. #142
    Quote Originally Posted by bxm042 View Post
    That's a direct quote of yours. Click on the arrow. YOU SAID THAT.
    It's a misleading quote because it's totally irrelevant to the conversation at hand & it was said in a completely different context - it was said with respect to the fact that any tax is theft - BUT PDs don't have power to tax, they don't steal from anyone, they don't create money, Fed/government creates money & Fed/government would be doing so whether PDs existed or not. PDs simply get what they get as an income for their services, & the last time I checked, earning something for providing a service in VOLUNTARY way is NOT considered stealing!
    Besides, PDs DON'T always make profits, they make losses too & there are real risk to being a PD as well & if you do some research then you'll find that some PDs made losses & went out of business because there are no guaranteed profits as some of you seem to assume; most of them end up in profits because they are really good at trading.
    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

  26. #143
    Quote Originally Posted by Steven Douglas View Post
    Under an ostensibly sound currency (no central control or manipulation), in a regime where banks and lending institutions are held accountable, and are not subject to public backing or bailouts, there is always a concern about bank solvency, as there rightly was in the past, given the real risks involved. It's not that I expect most would store their money in mattresses, coffee cans, or home safes; only that they could, and that many would (as many did in the past), secure in the knowledge that the value isn't being centrally manipulated and deliberately eroded.

    I agree, on all points. Even Keynes himself knew that under the worst case scenario the market would equilibrate long term. With inflation, on the other hand, there is no ceiling, and a hyper-inflationary spiral is no myth, as we have too many real world examples of that nightmare scenario playing out.
    Yes, people "could" save under the mattress but most wouldn't because it would be less rewarding. Of course, people will always hold some cash on hand irrespective of the system, just to meet their immediate expenditure BUT as I've said, supply of money/credit would be quite limited if there was a free market in money, & as we know - lower supply = higher prices - meaning, the price of borrowing money/credit [aka (real) interest] would be higher, meaning there would be greater incentive for people to save & deposit/lend, so if anything, banks would be in business a lot more.
    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. #144
    Quote Originally Posted by Brian4Liberty View Post
    Market-making is a separate subject. (And I would not go as far as to call it "doing God's work", like Lloyd Blankfein might).

    Granted, it is nice to have a place to sell a Treasury that I have purchased before maturity. An exchange or market maker works nicely for that. In the case where a person buys direct from the government, and holds to maturity, there is no need for a market maker or an exchange. That is how a lot of government debt worked when ordinary people bought US Savings bonds (and we infamously "owed it to ourselves"). And if they wanted to sell them early, they could turn them in at a value less than full maturity value.

    I have a problem with the fact that there is no longer competition in the Treasury auction process. No buyers? The interest rate must go up (price comes down). But no, instead the government will buy it all! It would be nice to run a business like that. "This widget costs $10,000. Too expensive and nobody wants to buy? Gee, I'll buy it from myself. Let me do the appropriate journal entries and wow, look at the money I just made!"
    It's not that there's no competition, there are dozens of PDs & each one dealing in its own self-interest & buying/selling accordingly so of course, there's competition. Now, I understand that you want the process to be open to everyone, the fact is that the system of PDs enables Treasury to rake in more money through every debt-issue & that's why it exists.

    Just like market-makers on exchanges usually have agreements to be ready to buy/sell certain amounts of the given instrument(s), PDs would also have agreements with the government to buy/sell certain amounts of Treasuries, as deemed necessary by the government to keep the market liquid & spreads low & for this benefit government receives, the government is willing to let PDs have the privilege to be the first ones to bid on newer issues.

    As I've said, the assumption that PDs are automatically profitable is fallacious as some PDs did end up making losses & going out of business, it's like any other business, yes, there are profits to be made (no guarantees though) but there are risks as well since they have to fulfill agreements whether they are making profits or losses.
    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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  29. #145
    Quote Originally Posted by Paul Or Nothing II View Post
    Yes, people "could" save under the mattress but most wouldn't because it would be less rewarding.
    Less rewarding as opposed to more punishing and destructive, as we have now with the Keynesian theft nightmare regime we're all forced to live under.

    Of course, people will always hold some cash on hand irrespective of the system, just to meet their immediate expenditure...
    Having "cash on hand" is not the only reason people would hold "cash", any more than I hold PM's, as for many others it would have nothing whatsoever to do with 'immediate' expenditures, and everything to do with accumulation of capital over time that is not stolen from them.

    As of now, the value currency holdings, regardless where they are held, is so much sand in an artificial hourglass. If there was a free market in money (no legal tender laws, and banks not propped up and protected in their inherent insolvency by a Mommy counterfeiter), you would see banks exposed to much more risk, with many actually failing. That would result, as it has so many times in the past, in A Very Healthy Distrust for banks that would return to the market. That is A Very Good Thing Indeed, because ordinary individuals, and not just "the people", would realize that they are also exposed to the very real risks that go along with the possibilities of those greater rewards you mentioned of being a depositor/lender to lending institutions.

    BUT as I've said, supply of money/credit would be quite limited if there was a free market in money...
    The supply of debt/money from banks, yes.

    ..., & as we know - lower supply = higher prices...
    Lower supply equates to higher prices only if demand (the willingness and ability to buy at a given price) remains constant. Both supply and demand are contingent on both the ability and willingness on the parts of buyers and sellers at a given price.

    Right now, even with negative interest rates, actual economic supply is very low for money from banks to average individuals and firms, despite high demand on the side of those buyers who are both willing and able. That same supply, however, is very high to select entities in the market.

    Banks are able to supply but not willing to lend to anyone without a superior credit rating or superior equity in collateral as a guarantee. Large non-financial firms that have those superior credit ratings (Microsoft, Apple, Cisco, etc.,) are taking advantage of this by taking on massive amounts of low interest debt with cash balances that are hoarded without investing. They can and do hoard cash because it gives them greater solvency - greater staying power - while feeling that they are in little danger of losing value in the process at those interest rates.

    - meaning, the price of borrowing money/credit [aka (real) interest] would be higher, meaning there would be greater incentive for people to save & deposit/lend, so if anything, banks would be in business a lot more.
    You are saying, in essence, that banks will be willing to lend less (lower supply) at a greater price. Lower supply at a greater price, however can be a zero sum game. You made no mention of actual demand -- the other necessary component for a market price to even be established, which is never constant.

    In a free currency market, interest rates are established dynamically by both supply and demand. Your assumption is that most people would lend their currency holdings (the ONLY supply) to banks. However, interest rates in a free currency market cannot rise without increased demand. If those interest rates, which are nothing but asking prices on the parts of various lenders, are set too high, demand (willingness and ability to borrow at those rates) will fall, and along with that, the price of debt from banks.

    It sounds like you think I am claiming that banks would somehow dry up and blow away under a sound currency in a free market in currency. That is not my claim, nor is it the point I am making at all. My point is that lending institutions would be forced to actually compete for money to lend from its only real sources, and not just to satisfy an arbitrary reserve balance sheet requirement set by some central controller. I don't care how much less or more economic activity banks would have, or how many people would prefer to engage in lending to them, or what the price of debt would be from them.

    My only point is that the practice of stashing money into safes, mattresses and coffee cans would increase, because there is no risk of losing value in the process (no forced investments on the absolute knowledge that the perpetually debased currency will LOSE value), while the incentive to lend to lending institutions would involve real risks of losses that a portion of the population would not be willing to take. THAT is what would cause the supply of money available from lending institutions to decrease. But that does NOT mean that supply of money to the economy dries up in the aggregate, because capital is still being accumulated privately. That capital is spent over time, given that there is no reason whatsoever to hoard money indefinitely, as that would serve no purpose.
    Last edited by Steven Douglas; 09-29-2012 at 12:53 PM.

  30. #146
    Quote Originally Posted by Paul Or Nothing II View Post
    It's a misleading quote because it's totally irrelevant to the conversation at hand & it was said in a completely different context - it was said with respect to the fact that any tax is theft - BUT PDs don't have power to tax, they don't steal from anyone, they don't create money, Fed/government creates money & Fed/government would be doing so whether PDs existed or not. PDs simply get what they get as an income for their services, & the last time I checked, earning something for providing a service in VOLUNTARY way is NOT considered stealing!
    Besides, PDs DON'T always make profits, they make losses too & there are real risk to being a PD as well & if you do some research then you'll find that some PDs made losses & went out of business because there are no guaranteed profits as some of you seem to assume; most of them end up in profits because they are really good at trading.
    If you accept that the Federal Reserve is stealing from the American People and this is a crime against all of us (and if you don't agree with that you're in the wrong forum), then, yes, the PD's are dealing in stolen money and are thus criminals:

    Quote Originally Posted by Wikipedia
    A fence is an individual who knowingly buys stolen property for later resale, sometimes in a legitimate market. The fence thus acts as a middleman between thieves and the eventual buyers of stolen goods who may not be aware that the goods are stolen. As a verb, the word describes the behavior of the thief in the transaction: The burglar fenced the stolen radio. This sense of the term came from thieves' slang, first attested c. 1700, from notion of such transactions taking place under defence of secrecy.[1]
    The fence is able to make a profit with stolen merchandise because he is able to pay thieves a very low price for stolen goods. The fence then disguises the stolen nature of the goods, if possible, so that he or she can sell them closer to the usual wholesale price.
    Fencing is illegal in the US
    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

  31. #147
    Quote Originally Posted by bxm042 View Post
    If you accept that the Federal Reserve is stealing from the American People and this is a crime against all of us (and if you don't agree with that you're in the wrong forum), then, yes, the PD's are dealing in stolen money and are thus criminals:
    Yeah but if that's the case then everybody working for the government is dealing with stolen goods. Every road construction company, every public teacher, every cleaning worker and janitor at public buildings, everybody collecting Social Security and even Ron Paul.

    And you might even argue that technically this is indeed the case. However I believe the system is too screwed up at this point to single out some groups and argue from a moral point of view. I'd be fine with every PD who is not advocating for the FED's existence and who does not try to justify what he does as being the only way to go.

    A trader is looking for profits in the market place, be it because of arbitrage or better estimation of future values. That's his job and that's what he does. He doesn't differentiate between "good money" and "bad money". In a truly free market, his service would always be valuable to society or he would go out of business. And besides government bonds or without government in general, financial speculation does provide many benefits, like lower price volatility, lower transaction costs, risk-hedging, etc.

    The individual trader usually doesn't care where the money comes from. It's not his job to think about that. His job is to find possible trade profits, which is - again - beneficial in a free market. And most likely he has never in his whole life thought about the Federal Reserve System as the root of all evil, or of new bonds as stealing from the public, just like most people in economics departments don't. It's not reasonable to assume that traders think entirely different about the issue than the economic mainstream. Just like the average teacher doesn't view his paycheck as financed with stolen goods.

    The casual root of this problem is the government, coercively facilitating this scheme around the Fed. The solution is to let the people know why central banking has negative effects on their lifes. Not to blame PDs. That won't do any good. Get rid of the Fed and PDs go with it.

  32. #148
    Quote Originally Posted by Danan View Post
    Yeah but if that's the case then everybody working for the government is dealing with stolen goods. Every road construction company, every public teacher, every cleaning worker and janitor at public buildings, everybody collecting Social Security and even Ron Paul.

    And you might even argue that technically this is indeed the case. However I believe the system is too screwed up at this point to single out some groups and argue from a moral point of view. I'd be fine with every PD who is not advocating for the FED's existence and who does not try to justify what he does as being the only way to go.

    A trader is looking for profits in the market place, be it because of arbitrage or better estimation of future values. That's his job and that's what he does. He doesn't differentiate between "good money" and "bad money". In a truly free market, his service would always be valuable to society or he would go out of business. And besides government bonds or without government in general, financial speculation does provide many benefits, like lower price volatility, lower transaction costs, risk-hedging, etc.

    The individual trader usually doesn't care where the money comes from. It's not his job to think about that. His job is to find possible trade profits, which is - again - beneficial in a free market. And most likely he has never in his whole life thought about the Federal Reserve System as the root of all evil, or of new bonds as stealing from the public, just like most people in economics departments don't. It's not reasonable to assume that traders think entirely different about the issue than the economic mainstream. Just like the average teacher doesn't view his paycheck as financed with stolen goods.

    The casual root of this problem is the government, coercively facilitating this scheme around the Fed. The solution is to let the people know why central banking has negative effects on their lifes. Not to blame PDs. That won't do any good. Get rid of the Fed and PDs go with it.
    +1

    Great post!

    Hit all the right points!
    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

  33. #149
    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.
    Last edited by TheTexan; 10-03-2012 at 12:10 AM.
    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

  34. #150
    Quote Originally Posted by Steven Douglas View Post
    However, interest rates in a free currency market cannot rise without increased demand.
    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!
    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.

    Quote Originally Posted by Steven Douglas View Post
    My only point is that the practice of stashing money into safes, mattresses and coffee cans would increase, because there is no risk of losing value in the process (no forced investments on the absolute knowledge that the perpetually debased currency will LOSE value), while the incentive to lend to lending institutions would involve real risks of losses that a portion of the population would not be willing to take. THAT is what would cause the supply of money available from lending institutions to decrease. But that does NOT mean that supply of money to the economy dries up in the aggregate, because capital is still being accumulated privately. That capital is spent over time, given that there is no reason whatsoever to hoard money indefinitely, as that would serve no purpose.
    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.

    The thing is that an inflationary system benefits borrowers & spenders so it doesn't incentivize savings much at all (whether under the mattress or in the banks), while a deflationary system benefits savers & lenders so of course, there's a higher incentive (higher real interest) to save & lend.

    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 & 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.
    Last edited by Paul Or Nothing II; 10-03-2012 at 12:55 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

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