Audit the Fed? What would that accomplish?

[se7ensnakes]

Dr Kittens Idea to remedy the inflation problem is to invest money. That sounds simple except Dr Kitten apparently dont know what tulipmania means.

 

[se7ensnakes]

Skeptic you are taking extremes. We are not talking about every conspiracy...we are talking specifically about the banking families. Just because you dont read, does not mean they dont exist.

Psst psst the meetings are secret...you are not invited.

The Media avoids explaining how fractional reserve banking works, it also avoids any consistent mention of the mechanics of the t-bond - fed note interchange and the effect of its deposit in private banks

 

[timhau]

Dr Kittens Idea to remedy the inflation problem is to invest money. That sounds simple except Dr Kitten apparently dont know what tulipmania means.

... and all investing is like tulip mania.

 

[drkitten]

... and all investing is like tulip mania.

It is to the Gold Bugs. That's why people like 7 and Tippit are so terrified of inflation,... because they can't tell the difference between Warren Buffett and Charles Ponzi, or between buying shares in a profitable company or useless objects that they hope to sell to a still greater fool.

See post #89. ("If you're too dumb to know how to invest your money to stay ahead of inflation, then inflation robs you of purchasing power.")

In fact, their inability to distinguish between equity investments and commodities like gold (that don't pay dividends) is one of the reasons they like gold so much.

 

[Michael Redman]

Problem:

What makes Tippit's stance doubly hilarious is that there's a major economic crisis happening in Greece that persists in part because they can't inflate their currency.

Hypothesis:

When you're wrong in theory, you can always argue that the theory is incomplete and that actual practice bears you out.

When you're wrong in practice, you can always argue that someone has tampered with the system, keeping it from operating as theory says that it should.

But when you're wrong in both theory and in practice,.... you might a Gold Bug.

Observation:

Or, their crisis has to do with the fact that the government's budget deficit alone is 12.7% of the country's GDP, and their debt/GDP is 113%. The crisis is due to the malinvestment which has been the result of persistent euro-inflation for the past decade, combined with the fact that they can't service their enormous debt.

That was a little too slick. I smell a conspiracy . . .

 

[GreyArea]

When the Fed was set up, it was deliberately set up to be outside of Congress' direct supervision (and of the President's, for that matter) so that we wouldn't see things like a deliberate easing of monetary policy to produce a temporary stock market boost just before the election,.... which of course would cause inflation after the election.

I'm trying to figure out why the pre-Fed system would have such a populist base. A short-term stock market boost itself wouldn't mean much to the little guys who support Ron Paul and Lyndon Larouche. Is there some other economic/financial benefit these supporters perceive?

If there's inflation going on, then the value of the debt is contracting and Greece's position is getting better, not worse. (That's why inflation is good for borrowers and bad for lenders.)

In the late 19th century, indebted farmers would like inflation, right? I remember reading about the people who wanted an increase in the monetary supply through silver, but I don't remember the details. Today, would indebted suburbanites like inflation (or think they would)? Maybe that is part of the reason for anti-Fed attitudes.

I'll also echo the point that a lot of these attitudes about banks are laundered anti-Semitic conspiracy theories. That could explain a cultural reason for favoring anti-Fed ideas irrespective of their economic sense or consequences. Some people are willing to forgo material improvement for everyone (including themselves) if they can still stick it to their cultural enemies.

 

[69dodge]

That's why people like 7 and Tippit are so terrified of inflation,... because they can't tell the difference between Warren Buffett and Charles Ponzi, or between buying shares in a profitable company or useless objects that they hope to sell to a still greater fool.

Not all companies pay dividends. Buffet's Berkshire Hathaway doesn't. If I own a share, all I can do with it is sell it to someone else, at a price that I hope is higher than what I bought it at. I guess you'd say that neither I nor the buyer are fools in that case. But why not?

 

[Travis]

Dr Kittens Goldbugs Idea to remedy the inflation problem is to invest (in) money gold. That sounds simple except Dr Kitten Goldbugs apparently dont [sic] know what tulipmania means.

 

[drkitten]

Not all companies pay dividends. Buffet's Berkshire Hathaway doesn't. If I own a share, all I can do with it is sell it to someone else, at a price that I hope is higher than what I bought it at. I guess you'd say that neither I nor the buyer are fools in that case. But why not?

Because gold doesn't generate wealth the way an ongoing commercial concern does.

 

[drkitten]

I'm trying to figure out why the pre-Fed system would have such a populist base. A short-term stock market boost itself wouldn't mean much to the little guys who support Ron Paul and Lyndon Larouche. Is there some other economic/financial benefit these supporters perceive?

I think it's simple populist vengeance.

In the late 19th century, indebted farmers would like inflation, right? I remember reading about the people who wanted an increase in the monetary supply through silver, but I don't remember the details.

Yup, the 'free silver' movement.

Today, would indebted suburbanites like inflation (or think they would)?

That's,.... complicated.

Contrary to the gibberish that Tippit spouts, regular and predictable inflation is not a problem. (Getting this wrong is one of the major reasons that he qualifies as a lunatic.) It's not a problem for either the lender or the borrower, because the lender simply sets interest rates at the level of expected interest plus a reasonable risk premium. What becomes a problem is a sudden and unexpected change in interest rates.

E.g. if I have money to lend, and I expect inflation to be at 2%, I can charge 4% interest and earn a 2% real return. If inflation jumps to 10%, then I'm earning a net negative 6% return,... but similarly, if inflation disappears altogether, then I'm earning 4% real return.

On the other hand, since wages track inflation, if I'm paying a debt, and inflation jumps to 10%, I will probably see a 10% raise, but still be paying the same dollar amount on my debts. So high inflation is good for the borrower but bad for the lender.

The situation is a little different now, because most people are carrying debt with an adjustable rate, either through an ARM or credit card (neither of which existed in the late 19th century). Now an increase in inflation will simply mean that my bank raises the rates. So the suburbanite who is carrying a traditional fixed-rate mortgage, a fixed-rate car loan, and no credit card debt would benefit --- but how many people does that describe?

The other problem is that sometimes -- relatively rarely, but sometimes -- wages don't track inflation. A good example of this is the 'stagflation' of the 1970s. If you're a person caught in stagflation, then you're likely to see your earning power actually decrease.

But of course, 1975 was thirty-five years ago. I know there's a saying about generals always being ready to re-fight the last war, but if you're that concerned about 70's-style stagflation, that's like a modern general trying to re-fight the Battle of Hastings.....

I'll also echo the point that a lot of these attitudes about banks are laundered anti-Semitic conspiracy theories. That could explain a cultural reason for favoring anti-Fed ideas irrespective of their economic sense or consequences.

Yup. I think this is the best answer to your first paragraph above.

 

[The Central Scrutinizer]

I'm trying to figure out why the pre-Fed system would have such a populist base. A short-term stock market boost itself wouldn't mean much to the little guys who support Ron Paul and Lyndon Larouche. Is there some other economic/financial benefit these supporters perceive?

For some people, life didn't turn out exactly the way they had hoped. As they sit in their trailers, drinking can after can of beer, they just know that someone (not them) is to blame. They watch their Glen Beck program on TV, and see those rich bankers (aka Jews), in their fancy $1000 suits, getting bailed out by a black president, and figure it's all their fault.

 

[69dodge]

Because gold doesn't generate wealth the way an ongoing commercial concern does.

I don't understand why that matters.

What wealth are you talking about? The products of the company? I'm not interested in buying them; I'm interested in making money by investing in the company. The profits of the company? They don't help me, because the company doesn't give them to me as dividends.

All that remains for me to do is to sell my share in the company to someone else, the same as I can sell my gold to someone else. So, the relevant question is, will anyone else want to buy the share or the gold for a higher price than what I bought it for? I don't see why potential buyers would prefer one to the other; all they can do with either is to sell it in turn to yet someone else for a price that is yet higher.

It all seems quite circular.

 

[The Central Scrutinizer]

I don't understand why that matters.

What wealth are you talking about? The products of the company? I'm not interested in buying them; I'm interested in making money by investing in the company. The profits of the company? They don't help me, because the company doesn't give them to me as dividends.

All that remains for me to do is to sell my share in the company to someone else, the same as I can sell my gold to someone else. So, the relevant question is, will anyone else want to buy the share or the gold for a higher price than what I bought it for? I don't see why potential buyers would prefer one to the other; all they can do with either is to sell it in turn to yet someone else for a price that is yet higher.

It all seems quite circular.

If you buy 10% of XYZ Inc today, and over the next 20 years, XYZ grows to be 3 times as big, you own 10% of something which is 3 times bigger than it was when you bought it (and somewhere along the way, they may decide to start paying dividends).

If you buy an ounce of gold today, in 20 years you will still have an ounce of gold (you are guaranteed no dividends along the way).

Yes, in both cases your goal is to sell it to someone else for more than you paid for it.

 

[drkitten]

I don't understand why that matters.

What wealth are you talking about? The products of the company? The profits of the company?

All of the above.

All that remains for me to do is to sell my share in the company to someone else, the same as I can sell my gold to someone else. So, the relevant question is, will anyone else want to buy the share or the gold for a higher price than what I bought it for?

Because the company is larger. The money that they're not putting into dividends, they're investing into corporate growth (almost by definition, unless management is really bad), which in turn means future profits.

Even if you're simply valuing the corporation for its liquidation value, a bigger company will liquidate for more.

 

[thesyntaxera]

For some people, life didn't turn out exactly the way they had hoped. As they sit in their trailers, drinking can after can of beer, they just know that someone (not them) is to blame. They watch their Glen Beck program on TV, and see those rich bankers (aka Jews), in their fancy $1000 suits, getting bailed out by a black president, and figure it's all their fault.

To be fair...aren't most of organized tax/fed protestors wealthy white folks? Didn't the NYTimes have some demographic poll published recently?
http://www.nytimes.com/2010/04/15/us/politics/15poll.html

Though, there are plenty of rednecks who have no idea how to take responsibility for themselves...

 

[Travis]

To be fair...aren't most of organized tax/fed protestors wealthy white folks? Didn't the NYTimes have some demographic poll published recently?
http://www.nytimes.com/2010/04/15/us/politics/15poll.html

Though, there are plenty of rednecks who have no idea how to take responsibility for themselves...

Yes, those are known as "Greedy Douchebags." They are annoying. They represent everything wrong with America. But they are not the ones that buy into these conspiracy theories....though they may help perpetuate them to serve their own narrow interests.

 

[thesyntaxera]

Yes, those are known as "Greedy Douchebags." They are annoying. They represent everything wrong with America. But they are not the ones that buy into these conspiracy theories....though they may help perpetuate them to serve their own narrow interests.

I don't know that I would go that far, but they do seem misguided. They are the old guard in it's dying gasp. Time to kick and scream and write poorly executed protest signs I guess. I get the frustration, but how do you explain to a huge demographic that they are just the programming by-product of faulty societal memes that have spiraled out of control and floated to the surface of all the post-relevance-angst on a suicide mission to not make any sense?

 

[Travis]

I don't know that I would go that far, but they do seem misguided. They are the old guard in it's dying gasp. Time to kick and scream and write poorly executed protest signs I guess. I get the frustration, but how do you explain to a huge demographic that they are just the programming by-product of faulty societal memes that have spiraled out of control and floated to the surface of all the post-relevance-angst on a suicide mission to not make any sense?

By writing a big sign that says: "you are just a huge demographic that is just the programming by-product of faulty societal memes that have spiraled out of control and floated to the surface of all the post-relevance-angst on a suicide mission to 'not make any sense' wackjob protest movements!"

It might hurt their feelings but I couldn't care less.

 

[se7ensnakes]

Why it is very important for the fed to end:
Fed System:
1) Fractional Reserve banking which allows private corporations to expand and contract the money in circulation, and therefore have the ability to forecast economic conditions and invest accordingly.
2) Liquidity is managed by private corporations for profit, regardless of such concerns as bankruptcies, high unemployment, and foreclosures.
3) Only a select few have inside information as to coming economic conditions. Congress is prohibited from knowing everything in an FOMC meeting.
4) Billion of dollars paid in interest on money that is created by the fractional reserve system (another words, money that was created by a bookkeeping entry).
5) Debt based money system - Every dollar that was entered into circulation by the t-bond - federal reserve note interchange represents debt.
6) Money, otherwise entered into the system, causes inflation, which is promptly removed by a “bust”. (i.e. high unemployment, bankruptcies , and foreclosures.
7) Imbalance in the monetary system causes high inflation, which essentially translate to working for less money, which is no different than an additional tax.
8) Private corporations have t he ability to control politics by the effect of calculated financial panics.
Post-Fed System:
1) 100% reserve banking assures that banks are able to take care of their own business without resulting to insurance, fed bail-outs, or affecting other industries.
2) Monetary Balance attained by a well publicized practice in the house.
3) If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.
4) Improve education so that when you ask most people “what is the subject of the income tax” they will know and they will also know its significant. Teach high school students the mechanics and effects of fractional reserve banking, and of the national debt.

Without doubt if there chance of success, the bankers (as they have done so many times before) will attempt to collapse the economy. If you set up a congressional committee to investigate economic terrorism, most in the committee might get controlled by pay-offs, blackmail, etc…

 

[drkitten]

Why it is very important for the fed to end:
Fed System:
1) Fractional Reserve banking which allows private corporations to expand and contract the money in circulation, and therefore have the ability to forecast economic conditions and invest accordingly.
2) Liquidity is managed by private corporations for profit, regardless of such concerns as bankruptcies, high unemployment, and foreclosures.

Yeah, the only problem with this "theory" is that these EEVIL private korperations that make up the Fed can't actually make any profit from their activities. It gets turned over to the Treasury.

More epic fail in a badly chosen font. Why don't you go for the trifecta of crazy-stupid and write in angry fruit salad colors as well?