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Thread: The Debt Ceiling Deadline Approaches

  1. #31
    Chester Copperpot
    Member

    Quote Originally Posted by Zippyjuan View Post
    I see. You have no idea what they should be yet are certain that they are wrong. They could be too high, they could be too low, they could be just right.

    Yes, you did not suggest a rate but Chester Copperpot did and he is who I responded to.
    The market will get to decide what the rates should be.. It is my estimate that they would initlally go up somewhere between 20%-25% as they are being kept artificially low...



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  3. #32
    Quote Originally Posted by Chester Copperpot View Post
    The market will get to decide what the rates should be.. It is my estimate that they would initlally go up somewhere between 20%-25% as they are being kept artificially low...
    Markets do set interest rates. The Fed only sets very short term (overnight) rates at which banks can borrow money from the Fed. Things like mortgage rates are tied to longer term US Treasuries (usually 15 years) and car loans tend to follow shorter term Treasuries (five years). The rates for US Treasuries are determined by the market via auctions where buyers make offers on what the are willing to pay to buy them for- supply and demand. When the demand for Treasuries is high, the price tends to be high and the interest rate the pay lower. The Fed did try to target such rates when they were purchasing US Treasuries but stopped that in 2014.

    How did you arrive at a 20%- 25% figure (and what interest rates are you talking about- short term, long term, mortgages, savings accounts)? There is a wide spectrum of interest rates. Thank you for your input.
    Last edited by Zippyjuan; 08-22-2017 at 07:13 PM.



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  5. #33
    Quote Originally Posted by Zippyjuan View Post
    Markets do set interest rates. The Fed only sets very short term (overnight) rates at which banks can borrow money from the Fed. Things like mortgage rates are tied to longer term US Treasuries (usually 15 years) and car loans tend to follow shorter term Treasuries (five years). The rates for US Treasuries are determined by the market via auctions where buyers make offers on what the are willing to pay to buy them for- supply and demand. When the demand for Treasuries is high, the price tends to be high and the interest rate the pay lower. The Fed did try to target such rates when they were purchasing US Treasuries but stopped that in 2014.
    And banks don't borrow money from the Fed to buy T-Bills/Private Bonds?
    The Fed doesn't buy T-Bills/Private Bonds?
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  6. #34
    Quote Originally Posted by Swordsmyth View Post
    And banks don't borrow money from the Fed to buy T-Bills/Private Bonds?
    The Fed doesn't buy T-Bills/Private Bonds?
    No, banks don't borrow money from the Fed to buy T-bills or any other investments. Banks look weak when they have to borrow money from the Fed so they don't unless they have to (Fed loans are only supposed to be over-night anyways). Current outstanding loans from the Fed to member banks stands at $166 million (not $billion). They do sometimes borrow to cover cash flows when they have to balance their reserve requirements (if loans get too large relative to their deposits) https://fred.stlouisfed.org/series/BORROW


  7. #35
    Quote Originally Posted by Zippyjuan View Post
    No, banks don't borrow money from the Fed to buy T-bills or any other investments. Banks look weak when they have to borrow money from the Fed so they don't unless they have to (Fed loans are only supposed to be over-night anyways). Current outstanding loans from the Fed to member banks stands at $166 million (not $billion). They do sometimes borrow to cover cash flows when they have to balance their reserve requirements (if loans get too large relative to their deposits) https://fred.stlouisfed.org/series/BORROW

    Yeah I believe you The Fed doesn't affect the economy

    Get lost.
    You are not worth debating.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  8. #36
    Quote Originally Posted by TheTexan View Post
    You Sir might want to consider the impact on roads before you embarrass yourself again.

  9. #37
    Quote Originally Posted by Chester Copperpot View Post
    without a federal reserve interest rates would be 25% right now.. that will stop the spending and encourage savings.
    The size of the money supply wasn't fixed before the federal reserve. The treasury could take over the job of affecting interest rates if the fed vanished tomorrow.
    Quote Originally Posted by Swordsmyth View Post
    Pinochet is the model
    Quote Originally Posted by Swordsmyth View Post
    Liberty preserving authoritarianism.
    Quote Originally Posted by Swordsmyth View Post
    Enforced internal open borders was one of the worst elements of the Constitution.

  10. #38
    Quote Originally Posted by Swordsmyth View Post
    Yeah I believe you The Fed doesn't affect the economy

    Get lost.
    You are not worth debating.
    Got a bit touchy when he proved you wrong about banks using the fed's overnight loans, huh.
    Quote Originally Posted by Swordsmyth View Post
    Pinochet is the model
    Quote Originally Posted by Swordsmyth View Post
    Liberty preserving authoritarianism.
    Quote Originally Posted by Swordsmyth View Post
    Enforced internal open borders was one of the worst elements of the Constitution.

  11. #39
    Quote Originally Posted by TheCount View Post
    Got a bit touchy when he proved you wrong about banks using the fed's overnight loans, huh.
    No, I just don't feel like letting a Pro-Fed Troll waste my time.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  12. #40
    Quote Originally Posted by TheCount View Post
    Got a bit touchy when he proved you wrong about banks using the fed's overnight loans, huh.
    Come on, you know that Zippyjuan(tm) uses very particularly chosen words to create distinctions without differences. Sure, the Fed itself doesn't loan money generally (except for trillions to overseas banks and corporations that aren't divulged without legislation, that pesky FOMC secrecy thing). The member banks that make up the Federal Reserve System do, however, "loan" money.
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book



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  14. #41
    Quote Originally Posted by devil21 View Post
    Come on, you know that Zippyjuan(tm) uses very particularly chosen words to create distinctions without differences. Sure, the Fed itself doesn't loan money generally (except for trillions to overseas banks and corporations that aren't divulged without legislation, that pesky FOMC secrecy thing). The member banks that make up the Federal Reserve System do, however, "loan" money.
    I can't speak for Zippy and how he approaches the issue of central banking, but from my point of view I think that it's important to understand how the system works. There's entirely too much misinformation and flat out myth out there regarding how the fed and the American banking system as a whole operates. In my opinion, this is counterproductive, as it tends to distract from the real argument regarding fiscal policy, just like what happened in this thread.

    As I'm sure you know, the member banks do loan using money that is produced by the fed, but that money is not loaned to them, it's produced when the fed purchases assets from them.
    Quote Originally Posted by Swordsmyth View Post
    Pinochet is the model
    Quote Originally Posted by Swordsmyth View Post
    Liberty preserving authoritarianism.
    Quote Originally Posted by Swordsmyth View Post
    Enforced internal open borders was one of the worst elements of the Constitution.

  15. #42
    Speaking of debt ceiling, Trump said earlier that he will shut down the government over the Wall issue.
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  16. #43
    Quote Originally Posted by TheCount View Post
    As I'm sure you know, the member banks do loan using money that is produced by the fed, but that money is not loaned to them, it's produced when the fed purchases assets from them.
    You're right. The money is not loaned to them by the Fed it's GIVEN to them. The Fed massively overpays for the assets it buys (that's the whole point).

  17. #44
    Quote Originally Posted by TheCount View Post
    The size of the money supply wasn't fixed before the federal reserve. The treasury could take over the job of affecting interest rates if the fed vanished tomorrow.
    The money supply was relatively fixed when we were on a gold standard. I think we were basically on a true gold standard from the late 1800s until 1913. That's when we had the industrial revolution and I'm pretty sure we had falling prices.

  18. #45
    They'll quarrel and debate and say 'mean' things to each other until the very last second when a deal has been met, as always. These folks don't have the stones to let the government shut down again.

  19. #46
    Quote Originally Posted by devil21 View Post
    Speaking of debt ceiling, Trump said earlier that he will shut down the government over the Wall issue.
    Yea, one of the more under-reported stories of the day.

    Shows clearly where his priorities lie, and it's not with fiscal conservatism.

  20. #47
    Quote Originally Posted by Madison320 View Post
    You're right. The money is not loaned to them by the Fed it's GIVEN to them. The Fed massively overpays for the assets it buys (that's the whole point).
    Because they're creating money at the moment of purchase, it doesn't matter how much they pay. It still increases the money supply.
    Quote Originally Posted by Swordsmyth View Post
    Pinochet is the model
    Quote Originally Posted by Swordsmyth View Post
    Liberty preserving authoritarianism.
    Quote Originally Posted by Swordsmyth View Post
    Enforced internal open borders was one of the worst elements of the Constitution.

  21. #48
    Quote Originally Posted by TheCount View Post
    Because they're creating money at the moment of purchase, it doesn't matter how much they pay. It still increases the money supply.
    I agree, I thought you were defending Zippy who keeps telling me that QE is not the money supply.



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  23. #49
    Quote Originally Posted by Zippyjuan View Post
    Markets do set interest rates.
    Buying trillions of dollars of an asset doesn't affect its price? Amazing!

    Is that magic generally applicable, or just when the Fed's the buyer?

    Quote Originally Posted by Zippyjuan View Post
    Not having a central bank doesn't prevent them from spending more money then they have. As long as the are able to borrow money from someplace.....
    Having a central bank allows them to borrow more cheaply, and hence encourages more borrowing than there'd otherwise be.

    Quote Originally Posted by Zippyjuan View Post
    I see. You have no idea what they should be yet are certain that they are wrong. They could be too high, they could be too low, they could be just right.
    It's impossible to know what the price of anything (including money) should be, which is precisely why markets are superior to central planning. It's certain that interest rates would be higher absent the Fed's activities, since the only effect of those activities is to suppress interest rates. Nothing they do encourages interest rates to be higher than they otherwise would be. How much higher rates would be absent the Fed is impossible to say. In the same way, if the state were buying millions of tons of corn every year, we could say that corn prices are higher than they ought to be, though we don't know exactly what they ought to be.

    Quote Originally Posted by Zippyjuan View Post
    Do we need more savings? Is there a shortage of money for companies to borrow?
    Money =/= savings

    Savings = deferred consumption

    By not building that house, and saving that money instead (whether one puts it in a bank, buys an equity share in a company, puts in under the mattress, or sets it on fire) the resources which otherwise would have been consumed building the house are now available for other purposes, such as investment in capital goods, which will ultimately increase total output and raise standards of living. Economic growth requires deferred consumption (savings); a society which consumes everything it produces will regress, as it consumes capital, until it hits subsistence. Money creation discourages savings via lower interest rates, and thus retards capital accumulation and economic growth.

    Now, on the other hand, money creation is sometimes called "forced savings," in the sense that it redistributes resources (via Cantillon effects) to the earlier recipients of the new money (usually large corporations), from the later recipients (everyone else). In other words, the later recipients of the new money are forced to defer consumption, so that the resources which they otherwise would have consumed can be redirected toward the early recipients of the new money. It's true that this is investment: this can increase the supply of capital goods, etc. But economic growth isn't just a matter of taking savings and investing them in anything. It's not enough that people defer consumption; the resources thus freed must be invested in productive enterprises (if the labor, wood, etc, saved from not building the house go into digging ditches and filling them in, nothing is gained). And so the problem with "forced saving" via money creation is that it distributes savings in a relatively inefficient manner,; the market distributes savings to enterprises in proportion to their productivity; money creation causes savings to be distributed to enterprises in proportion to their proximity to the money-tap, which, in practice, usually means their political connections. Imagine the government directly taxing people and then handing the proceeds to politically connected companies: more or less the same thing.

    What would happen if people stopped spending? How would that impact business? Would they increase borrowing (which would cost them much, much more money) to expand output capacity? If people stopped buying, demand for their goods would plummet and they would be cutting- not expanding- production. They would be laying off workers causing high unemployment (those 20% interest rates in 1980 were quickly followed by 10% unemployment).
    If there is a decline in the production of consumer goods, because people are choosing to consume less, the prices of labor, land, and other resources drop until they reach a point at which it would be profitable for the producers of capital goods to employ them. In money term, interest rates fall and companies borrow more, to expand future production. Again, saving isn't the cause of depression; it's the reason there's any growth at all.
    Last edited by r3volution 3.0; 08-23-2017 at 01:54 PM.

  24. #50
    Quote Originally Posted by r3volution 3.0 View Post
    Yea, one of the more under-reported stories of the day.

    Shows clearly where his priorities lie, and it's not with fiscal conservatism.
    I've been warning about an imminent shutdown for a while on RPF.

    I still 99% think the shutdown will happen but because of the bigger economic reset/reordering under way, petrodollar death. The Trump Wall $#@! is just a smoke screen for bigger banker agendas. The important part will be to pay attention to what Congress does during the uproar and confusion since history shows they change things when no one is looking (see Federal Reserve Act passage). Gonna get interestin' very, very soon methinks. A whole lotta crap rolling down hill at once...
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  25. #51
    Quote Originally Posted by Madison320 View Post
    The money supply was relatively fixed when we were on a gold standard. I think we were basically on a true gold standard from the late 1800s until 1913. That's when we had the industrial revolution and I'm pretty sure we had falling prices.

  26. #52
    Quote Originally Posted by devil21 View Post
    Speaking of debt ceiling, Trump said earlier that he will shut down the government over the Wall issue.
    Doubt he would follow though on that. Not a big enough issue to shut everything down over. Just a promise made at a political rally to get the crowd going.

  27. #53
    Chester Copperpot
    Member

    Quote Originally Posted by Zippyjuan View Post
    Markets do set interest rates. The Fed only sets very short term (overnight) rates at which banks can borrow money from the Fed. Things like mortgage rates are tied to longer term US Treasuries (usually 15 years) and car loans tend to follow shorter term Treasuries (five years). The rates for US Treasuries are determined by the market via auctions where buyers make offers on what the are willing to pay to buy them for- supply and demand. When the demand for Treasuries is high, the price tends to be high and the interest rate the pay lower. The Fed did try to target such rates when they were purchasing US Treasuries but stopped that in 2014.

    How did you arrive at a 20%- 25% figure (and what interest rates are you talking about- short term, long term, mortgages, savings accounts)? There is a wide spectrum of interest rates. Thank you for your input.
    zip, cmon man. who pays you do spread all the fud? its been 10 years.. just tell us already. the fed shouldnt even exist. dont act like the fed doesnt do anything.. ron paul supporters might as well be called anti-federal reserve supporters..

  28. #54
    Chester Copperpot
    Member

    Quote Originally Posted by TheCount View Post
    The size of the money supply wasn't fixed before the federal reserve. The treasury could take over the job of affecting interest rates if the fed vanished tomorrow.
    govt has no power to control interest rates.. all its supposed to do is coin money. its not allowed to emit bills of credit but id rather take a govt-issued bill of credit than a privately funded fed-issues bill backed with debt.

  29. #55
    Quote Originally Posted by Chester Copperpot View Post
    zip, cmon man. who pays you do spread all the fud?

    Soros' Open Society Foundation Projects.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  30. #56
    Quote Originally Posted by TheCount View Post
    I can't speak for Zippy and how he approaches the issue of central banking, but from my point of view I think that it's important to understand how the system works. There's entirely too much misinformation and flat out myth out there regarding how the fed and the American banking system as a whole operates.

    Really? What is the basis of your claim?

    Zip studied political science in college. You appear to be even less qualified and informed than Zip. Why would someone listen to you?
    Last edited by NorthCarolinaLiberty; 08-23-2017 at 05:34 PM.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members



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  32. #57
    Quote Originally Posted by Chester Copperpot View Post
    govt has no power to control interest rates.. all its supposed to do is coin money. its not allowed to emit bills of credit but id rather take a govt-issued bill of credit than a privately funded fed-issues bill backed with debt.
    The power to create money is also the power to affect interest rates, as the interest rate is just a reflection of the supply and demand for money.

    Also, generally speaking, independent central banks create less inflation than those that are directly part of the government. If it were part of the Treasury department or whatever, it would need to be completely insulated from politics and politicians, or else the "fix" might be worse than the current situation.
    Quote Originally Posted by Swordsmyth View Post
    Pinochet is the model
    Quote Originally Posted by Swordsmyth View Post
    Liberty preserving authoritarianism.
    Quote Originally Posted by Swordsmyth View Post
    Enforced internal open borders was one of the worst elements of the Constitution.

  33. #58
    Quote Originally Posted by TheCount View Post
    If it were part of the Treasury department or whatever, it would need to be completely insulated from politics and politicians, or else the "fix" might be worse than the current situation.
    Nothing in this world is insulated from politics. Getting two people together means politics. You like all these "whatever" departments because you like big government and favor centralization.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  34. #59
    Chester Copperpot
    Member

    Quote Originally Posted by TheCount View Post
    The power to create money is also the power to affect interest rates, as the interest rate is just a reflection of the supply and demand for money.

    Also, generally speaking, independent central banks create less inflation than those that are directly part of the government. If it were part of the Treasury department or whatever, it would need to be completely insulated from politics and politicians, or else the "fix" might be worse than the current situation.
    if you work your butt off and literally strike gold and want to get it coined by the govt then you deserve it for all your hard work.

    but the govt cant print money it can only print currency and it has no power to do that constitutionally.

  35. #60
    Quote Originally Posted by Chester Copperpot View Post
    but the govt cant print money it can only print currency and it has no power to do that constitutionally.
    I disagree on that. However, even with regards to gold, the government would have the power to decide how much to purchase in order to mint currency. That would affect interest rates for dollar-denominated accounts.
    Quote Originally Posted by Swordsmyth View Post
    Pinochet is the model
    Quote Originally Posted by Swordsmyth View Post
    Liberty preserving authoritarianism.
    Quote Originally Posted by Swordsmyth View Post
    Enforced internal open borders was one of the worst elements of the Constitution.

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