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Federal reserve debunkers I need alittle help

proxywar said:
Grenme excellent site. I plan to study hard and help you guys out in anyway I can in the near future. There are alot of talented and smarter people on this site than myself I can learn a lot from.
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Honestly, I've only just begun to build that site, so there is very little actual content there. I just figured what I had so far on that content would be useful to you in pointing out to people that the Fed didn't come into existence over the course of only a few years with any specific group being the only persons responsible for its creation. If conspiracy theoriests want to accuse some clandestine group of bringing the Fed into existence, then ironically a lot of those founding fathers they love to quote would be just as culpable in its creation.
 
All money is just worthless paper!

Please send all your worthless paper money to me and I will dispose of it for you.

No need to thank me now. Happy to do it.

DDWW
 
DDWW said:
All money is just worthless paper!

Please send all your worthless paper money to me and I will dispose of it for you.

No need to thank me now. Happy to do it.
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Oh please. I tried that one back when TruthSeeker1234 was still posting here. Never did get him to send me anything.
 
Max Photon said:
The stock-to-flow ratio of gold is far higher than that of any other commodity - by almost two orders of magnitude. This makes gold the most impervious of all commodities to supply shocks.
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Not true. In fact, those of you who had invested in gold back in the 1980's should know from experience how it isn't impervious, since the price on gold commodities has fluctuated-- yes, it's remained strong, but my point is that calling it impervious is completely false. Besides, if we're picking shiny commodities why not go for platinum or diamonds?

Max Photon said:
The addition of more gold would only ADD to the above ground stock, amplifying further gold's positions as the stable basis for an economic unit.
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And lowering its value. :)

Max Photon said:
You must remember, gold and silver are monetary metals, and do not follow supply/demand dynamics.
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You obviously don't follow commodities on the market if you believe that.
 
A gold-backed currency, unless we accept fractional reserve, is ALWAYS going to be subject to nearly continuous deflation as markets expand simply because the amount of gold is finite.

And this will proceed to the point where, because gold must back the increasingly scarce money, the use of gold as an industrial metal and a metal in jewelry will nearly end.

And this is not because gold itself is so valuable, but because it is so scarce and artificially tied to a fixed amount of currency.

And this will murder people in long fixed-rate loans, like, say, HOMEOWNERS!

And it will hurt employers were people have contracts because the dollars paid to employees will become amazingly dear over the life of any fixed salary contract.

Deflation at that level makes money almost useless, and you wind up in barter and using company scrip.

And that is a disaster.

And yes, Max, I studied some economics when I was at University of Chicago, not just physics, so I do have some degree of informed knowledge of this subject.
 
JonnyFive said:
I hate to be pedantic, but technically the function of the Federal Reserve specifically are six:

1. Full employment.
2. Economic growth.
3. Price stability.
4. Interest rate stability.
5. Stability of the financial system.
6. Stability of foreign exchange markets.
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Oh no, you are not being pedantic. I should have said, a that a Central Bank main objective should be price stability (see "Recent Central-Bank Reforms and the Role of Price Stability as the Sole Objective of Monetary Policy" by Carl E. Walsh). Sometimes, unfortunately, CBs deviate from this goal and crisis rear its ugly head.

I don't agree with many of those functions for a CB,

Economic growth

Managing economic growth through monetary policy can leave to all sorts of woes. For example, if the CB decides to boost investment through low interest rates, the first thing that would happen is a reduction on the savings level due to the shift from savings to consumption. Less savings with an increasing consumption will force the interest rates to go upwards, but the CB commitment to its policy would force it to expand the money supply to keep the interest rates at its desired level. The economy might overheat and prices will surely go up. In the end, this is not a sustainable policy.

In this respect the CB should adopt a more reactionary attitude, and limit its action to respond to shocks that might affect economic growth.

5. Stability of the financial system.

In a developed economy, I don't see a reason why the CB should directly intervene in financial markets.
 
AlanGreenspan said:
Oh no, you are not being pedantic. I should have said, a that a Central Bank main objective should be price stability (see "Recent Central-Bank Reforms and the Role of Price Stability as the Sole Objective of Monetary Policy" by Carl E. Walsh). Sometimes, unfortunately, CBs deviate from this goal and crisis rear its ugly head.
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True enough. To be fair, I think Max was talking only about the Fed, which is currently chartered with a broader function (which also includes elements of banking regulation, but that's not what we're talking about), rather than central banks in general.

I don't agree with many of those functions for a CB,

Economic growth

Managing economic growth through monetary policy can leave to all sorts of woes. For example, if the CB decides to boost investment through low interest rates, the first thing that would happen is a reduction on the savings level due to the shift from savings to consumption. Less savings with an increasing consumption will force the interest rates to go upwards, but the CB commitment to its policy would force it to expand the money supply to keep the interest rates at its desired level. The economy might overheat and prices will surely go up. In the end, this is not a sustainable policy.

In this respect the CB should adopt a more reactionary attitude, and limit its action to respond to shocks that might affect economic growth.
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I think the central bank needs to be flexible in its operations and try to maximize economic gain through its operations. A CB has a unique ability to influence the economy, and that ability should be tempered with a rational study of what appears to work best for the economy as a whole. If more active intervention (not necessarily involving a commitment to remain at a certain level of interest rates) can be used to boost production and overall quality of life, then I see no reason to prohibit that.

There are certainly plenty of times when a reactionary central bank is the best thing for the economy (particularly if the economy is growing well without intervention). You're right that slavish commitment to policy can seriously impact the economy and is unsustainable.

Probably the most important factor is to try to make the central bank as apolitical as humanly possible and to try to base decisions on economic indicators and solid science rather than political agendas and whatnot.

5. Stability of the financial system.

In a developed economy, I don't see a reason why the CB should directly intervene in financial markets.
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I think the reasoning is that in situations of crisis, the intervention to prevent the collapse or serious decline of the financial system will be more beneficial than allowing it to continue. I believe this is an appropriate function to allow a central bank to take.

I don't think they should be trying to micro-manage the financial markets, but allowing them to intervene in extreme situations appears to be a rational policy to prevent broader economic harm.
 
Quick question here to the gold standard guy et al...

Have we calculated just how much gold would be necessary to sustain our current GDP let alone growth of it?
 
Also, interesting to note here... Bush's current incentive plan of tax cuts could easily bust up in his face. The idea behind tax cuts is that, hopefully, people will spend the money they get and boost the economy. The criticism is that, like his last tax cuts and especially in a downturn economy, people/companies DON'T spend, they save.

That won't help the New World Order's desire to over inflate the money supply if people ain't spending it.
 
One more thing here for the Wharton guy... if you've taken international econ (not necessary for an MBA, by the way), you'll know how limiting it is for a country to peg their currency to another. You need huge amounts of foreign reserves and are limited in domestic policy. The same thing happens under the gold standard.
 
Abby! You're back!

BTW, I remember someone doing the calculations for metals and found we came up about 50% short if we used all precious metals to back the currency. (Screwing industry and other uses).

It stuns me that people think in this old economy manner. It must be the lack of exposure to bank panics. It reminds me of how anti-vaccine liars try to tell us that Polio was no big deal when they never encountered the consequences.
 
BenBurch said:
Wow, what a heaping load of steaming brown custard this fed criticism is. And, ultimately, I believe it has its roots deeply in anti-Semitism.
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I've always thought it was bitterness over the fact that these critics have no money, while people who have jobs and are productive members of society do. Clearly, it must be a conspiracy to keep them poor!
 
twinstead said:
I would imagine that even if we went immediately to the gold standard again, wouldn't this new 'backup' for the dollar be only as good as the government's willingness to stick with the standard?

If a government can go on, it can go off, right?
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I don't believe a gold standard is a viable solution. It's been done before, and it's failed. William Jennings Bryan's "Cross of Gold" speech to the DNC was more about a silver standard, but the true goal that should be aspired to is to allow the free market to determine what money is, at any given time.

A gold standard does nothing to address the problem of Fractional Reserve Banking, which is inherently inflationary and unstable, and the cause of the business cycle, and incidentally, a big reason why the "gold standard" failed. Simply put, financial intermediaries should not be allowed to loan out money they have simultaneously promised to depositors on demand.

As far as whether the government would "stick with" a gold standard, that would largely depend on both its monetary policy, and the physical amount of gold that it had to redeem its own currency.
 
JonnyFive said:
Did he really say that, or are you just making it up? Got a source for that quote?
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A simple google search for the quote would have revealed that no, he wasn't just making that up. It came from Alan Greenspan's own essay, "Gold and Economic Freedom" which obviously you haven't read yet. Would you apologize to him for accusing him of making up quotes? Because I really do get sick and tired of so-called debunkers wanting all quotes that ridicule their position be sourced, while simultaneously spewing the lies and propaganda that flow through the media and our educational system unchecked, unquestioned, and accepted as the absolute truth.

Here's a thought, before you accuse someone of making up quotes, you actually take the time to copy and paste the quote into a search engine. I realize this may rival the total effort that you've put into learning about this subject as a whole, but it can help avoid you looking like an ass in the future.
 
GreNME said:
Honestly, I've only just begun to build that site, so there is very little actual content there. I just figured what I had so far on that content would be useful to you in pointing out to people that the Fed didn't come into existence over the course of only a few years with any specific group being the only persons responsible for its creation. If conspiracy theoriests want to accuse some clandestine group of bringing the Fed into existence, then ironically a lot of those founding fathers they love to quote would be just as culpable in its creation.
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Since the founders wrote the Declaration of Independence in 1776, and the Federal Reserve Act was passed in 1913, I don't see how the founding fathers would be culpable for the Federal Reserve System. This of course unless you're maintaining that the founding documents were negligent with regard to the crucial issue of monetary policy, with which I might agree.
 
DDWW said:
All money is just worthless paper!

Please send all your worthless paper money to me and I will dispose of it for you.

No need to thank me now. Happy to do it.

DDWW
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I might send you some money if you would agree to buy a clue with it, namely the distinction between the idea of paper money being worthless (which it obviously isn't), and the idea that due to its nature, and human nature, it will be constantly made to be worth less over time.

Then again, I probably won't.
 
Abbyas said:
Quick question here to the gold standard guy et al...

Have we calculated just how much gold would be necessary to sustain our current GDP let alone growth of it?
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The question is irrelevant in light of the fact that gold would simply be revalued to reflect nominal GDP. The idea that there just isn't enough gold to sustain our "massive" economy is... ridiculous.
 
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