Federal reserve debunkers I need alittle help

[Tippit]

Hold up... the Fed doesn't just print money... Who would determine the discount rate to banks or set the reserve ratio?

Nobody, because there is no need for central banks. Instead, banks would loan paid-in capital to each other, at privately agreed-upon rates. The reserve requirement ratio for demand deposits would be set in law at 100%. After all, it's a logical contradiction for money to exist in two places at once, both in the form of a bank loan, and a demand deposit, right? This is of course the real reason for all of the bank failures and panics that occurred throughout history prior to the Federal Reserve System, and after, not to mention the business cycle.

Would you have the market determine how much banks need to hold? Would you be willing to let banks loan out all of your savings account?

No. I would have the law enforce a 100% reserve requirement ratio for demand deposits. I would be willing to let banks loan 100% of time deposits, and require them to keep 100% of any demand deposits on reserve.

Do you mean, you'd prefer the market determine the inflation rate? It already does. The fed just tries to slow it down in times of high inflation or raise it indirectly when it tries to alleviate unemployment.

No it doesn't. Since inflation is a monetary phenomenon governed by monetary supply and demand, and since the Federal Reserve System controls the supply of money, then it should be apparent that the Federal Reserve is the cause of the inflation problem, not the solution.

inflation

in·fla·tion (n-flshn)
n.
1. The act of inflating or the state of being inflated.
2. A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

To get an idea of what the Fed has openly done to our currency, we can view the Adjusted Monetary Base. Keep in mind that since this is the base, the money supply has increased roughly an order of magnitude more than this.

Do you mean you'd like to have the market determine what money "is"? It already does. Go to your local store and try to pay in gold. Or do you mean you'd like the US to tax citizens and accept only gold? Then people wouldn't use dollars at all.

No, the market doesn't determine what money is, legal tender law and the Revenue Act of 1913 do. The Income Tax and legal tender laws create a demand for fiat money that would otherwise not exist - through the full coercive power of the US Government. I'm not as concerned about what government expects you to remit your taxes in, as long as it's not the endlessly created fiat dollar generated by the Federal Reserve System, an institution which also coincidentally had its birth in 1913. If you want some clues as to what the founding fathers wanted our money to be, try the US Constitution.

Thank you for asking some intelligent, relevant, and specific questions.

 

[twinstead]

No it doesn't. Since inflation is a monetary phenomenon governed by monetary supply and demand, and since the Federal Reserve System controls the supply of money, then it should be apparent that the Federal Reserve is the cause of the inflation problem, not the solution.

Again, is this a position held by most economists, or are you in the minorty?

This is where you lose me. Answers like this are interesting, but they appear to be your opinion peppered with 'it should be apparent' to make it sound like an obvious truth.

 

[Tippit]

No, I will not apologize for asking him to source his quotes. I did not accuse him of making it up, I asked him if he made it up.

At last, your dishonesty becomes clearly evident. Asking someone if they "made up" an attributed quote is an insulting accusation with the implicit idea that the person is a liar, because only liars make up quotes and attribute them falsely.

It doesn't help much that he quoted a fourty year old paper written by a man who no longer takes the position he did in the paper.

What could the fourty-year age of the paper possibly have to do with the value of its content? You're a "skeptic", I'm sure you can find some sort of fallacy there. I suppose the Declaration of Independence and the US Bill of Rights are substantially less helpful, since they're older still.

How do you know Alan Greenspan renounced his position taken in Gold and Economic Freedom? Did you just make that up that seemingly blatant lie? I'm not accusing you of lying, just asking for a source.

Here's a thought: before you assume someone is making a accusation rather than asking for a source citation, maybe you should actually read what they wrote.

Apparently your need to repeatedly resort to personal attacks and insults has not abated since our last discussion.

I read what you wrote. If you asked me whether I "made something up" I would have taken offense to it. Why don't you look it up yourself, and be a little less obnoxious next time?

 

[Tippit]

Again, is this a position held by most economists, or are you in the minorty?

This is where you lose me. Answers like this are interesting, but they appear to be your opinion peppered with 'it should be apparent' to make it sound like an obvious truth.

To be quite honest, I neither know nor care what positions "most economists" hold. I haven't polled them, and I haven't read any such polls. If your reality is defined by a consensus, then I as one person probably don't have much to offer you.

Obviously the people who wrote the dictionary entry for inflation that I sourced hold this position, or at least they should, implicitly, since it is the Federal Reserve who causes "increases in available currency". You see, as the Fed creates more monetary units, the ones you have in your wallet and your bank account are worth proportionally less. I'm not sure many truths can be more obvious than this one. If you don't see it, and you require the services of an expert to grasp it, then you probably never will, and we can probably save a lot of keystrokes by just agreeing to disagree.

 

[AlanGreenspan]

Tippit are you posting actual data anytime soon? Or perhaps you prefer to limit your posts to making unsubstantiated claims?

The reserve requirement ratio for demand deposits would be set in law at 100%.

Wow Tippit, do you even know what you are saying? If banks are required to keep 100% of their deposits as reserves ... where are they going to get the money to lend it to the market?

Let's try to view this from your perspective. Let's assume I deposit an ounce of gold in the bank. Since the bank has to keep my whole deposit in its reserves, when JohnnyFive goes to ask for a loan (an ounce for example) ... what is the bank supposed to do? Go out and mine an ounce of gold out of the ground?

Under such scenario, why would the bank want to pay you interest for your deposits? Seems like it would be you who would have to pay the bank for the service of keeping your money safe in their vaults. Having money in the bank not only has a service cost, but it also offers no protection against inflation since you are not earning interests. Great idea Tippit!!

Monetary theory in Tippitland is quite amusing ...

 

[AlanGreenspan]

About "Gold and Economic Freedom", if you ever get to read it (it is quite obvious that you have not) you will see that Greenspan is advocating for fiscal constraint. He managed to implement this constraint without a gold standard while he was chairman of The Fed, so he demonstrated you can achieve said constraint without a gold standard.

 

[BenBurch]

Tippit does not seem to have a clue about how the money supply will ever be able to grow with his full and fixed reserve currency.

Or how the government would ever acquire that much gold without confiscation!

And he cannot tolerate any criticism of his arguments because he knows they stand or fall as a monad.

In other words, he's a brittle ideologue and a fool.

 

[jezcoe]

I would have the law enforce a 100% reserve requirement ratio for demand deposits. I would be willing to let banks loan 100% of time deposits, and require them to keep 100% of any demand deposits on reserve.

I am just a dude with no formal economic education and even I am stunned by this. I think that you should reread what you wrote and try to realize how it would be unworkable.

In the meantime I am going to push for the Whuffie as our future currency.
http://en.wikipedia.org/wiki/Wuffie

 

[GreNME]

I'm not as concerned about what government expects you to remit your taxes in, as long as it's not the endlessly created fiat dollar generated by the Federal Reserve System, an institution which also coincidentally had its birth in 1913.

That is a lie and a falsehood. The beginnings of what became the modern Federal Reserve System started with the National Banking Acts back in 1863. Just because you keep repeating a falsehood doesn't magically cause it to cease being false.

 

[twinstead]

To be quite honest, I neither know nor care what positions "most economists" hold. I haven't polled them, and I haven't read any such polls. If your reality is defined by a consensus, then I as one person probably don't have much to offer you.

Tippit, by consensus I mean the same as when I go to another doctor for a second opinion for a medical condition, or why 4 out of 5 dentists recommend sugarless gum.

The reason you don't have much to offer is the fact that no matter how much you protest, you might just be wrong on this issue. Looking at what other experts believe is just 'getting a second opinion' for me.

Do you have a problem with that?

 

[Gazpacho]

No, the market doesn't determine what money is, legal tender law and the Revenue Act of 1913 do. The Income Tax and legal tender laws create a demand for fiat money that would otherwise not exist - through the full coercive power of the US Government. I'm not as concerned about what government expects you to remit your taxes in, as long as it's not the endlessly created fiat dollar generated by the Federal Reserve System, an institution which also coincidentally had its birth in 1913.

1913 was also the first year of a presidential administration and congress that were elected on promises to enact both. Triple coincidence!

 

[BenBurch]

1913 was also the first year of a presidential administration and congress that were elected on promises to enact both. Triple coincidence!

Wow!

Representative Democracy in action!

Can't have that now, can we?

 

[Brainache]

So if the banks are required by law to hold 100% of all funds deposited in demand accounts, what happens if someone robs the bank?

 

[Abbyas]

Nobody, because there is no need for central banks. Instead, banks would loan paid-in capital to each other, at privately agreed-upon rates. The reserve requirement ratio for demand deposits would be set in law at 100%.

What? So there would be no loans, no credit cards from these banks? Do you know what the cost of a loan would be then? You think people can't hold on to their houses now? No one, except the very very rich, would have one. And no one but the very rich would have college educations or businesses. Your system would lead to a system of elite-rule one hundred times than the one we have now. Edited to add: Also, how would you propose banks make money off of checking and savings accounts? Not only would loan costs rise, savings rates would plummet. In fact, banks wouldn't accept savings accounts at all. Why would they?

No it doesn't. Since inflation is a monetary phenomenon governed by monetary supply and demand, and since the Federal Reserve System controls the supply of money, then it should be apparent that the Federal Reserve is the cause of the inflation problem, not the solution.

You are completely ignoring the velocity of money. If the supply of money were fixed, inflation would be rampant. It would have to be. Inflation is also resultant of how are GDP grows in relation to the natural GDP given our resources. With a fixed money supply, inflation would grow with absolutely each increase in GDP. AD/AS curve mean anything to you?

No, the market doesn't determine what money is, legal tender law and the Revenue Act of 1913 do. The Income Tax and legal tender laws create a demand for fiat money that would otherwise not exist - through the full coercive power of the US Government.

How would you have the market determine what money is? Would you be comfortable returning to a barter system? Also, the idea that you don't care what the govt accepts in taxes (sales tax, too?) is very telling. What tends to happen in societies is that the form of money that the govt accepts becomes the form that businesses and individuals will accept.

 

[Abbyas]

To be quite honest, I neither know nor care what positions "most economists" hold. I haven't polled them, and I haven't read any such polls. If your reality is defined by a consensus, then I as one person probably don't have much to offer you.

Let me ask you this.. how much economic training do you have? If you are the one with an MBA... get specific. Accounting, marketing and even managerial econ are a very different subjects than macroecon or international economics.

 

[Abbyas]

So if the banks are required by law to hold 100% of all funds deposited in demand accounts, what happens if someone robs the bank?

And without a Fed Bank, there are no ways for the banks to get cheap loans to return money to account holders.

 

[twinstead]

Crap. And I thought the structural engineering, physics, and demolition science behind 911 was confusing; economics is brutal

 

[Texas]

No, that notion *is* ridiculous, so let me ridicule it.

If you have a fixed amount of gold assigned to each and every dollar in circulation, and had somehow the ownership of ALL THE GOLD IN THE WORLD it would be a really miniscule weight of gold. Not EVEN 1/1000th of an ounce where it is currently priced, but around 1/1800th of an ounce. Around 1.5% of a gram.

You'd have a hard time finding that if you dropped it.

And that is all the gold. You'd have to pry out people's crowns and fillings and take their wedding rings.

And that is JUST for the US Dollar.

And how, pray tell, are you going to acquire ownership of all that gold except by confiscation? Because the government sure as hell hasn't got the money to do it, and likely never will.

And assuming you looted the planet for all of its gold, (Ahoy, Matie!) and pegged your dollar each to its own grain of gold, how the heck do you deal with the need for growth of the money supply to allow population to grow or the economy to grow?

You can't.

Because its a fixed amount.

So the price of everything starts going down.

Whoopie! I can get a Big Mac for three cents.

But my house is worth $800.

And the amount of money in available inexorably falls to such a level as to suppress commerce because it is spread too thinly.

And commerce stops except where it is carried out in barter, company scrip, or the currency of some other nation.

And we are really screwed if that happens.

So, there is your daily dose of ridicule.

Enjoy.

Damn we are light years apart in politics but that was one hell of a post. KUDOS

 

[twinstead]

So. What is worse: an $800 big mac, or an $800 house?

 

[Texas]

So. What is worse: an $800 big mac, or an $800 house?

If I had to pay $800 bucks for Big Mac the heartburn would kill me.