The Biggest Scam in History

[Michael Redman]

They won the World Cup.

It's all coming together. . .

 

[The Central Scrutinizer]

Yes, the Fed is “independent”, but it is independent within government (the Fed being a government agency), and does not represent the private interest of member banks. The reason the Fed is independent within government is to ensure that the institution is not politicised and can conduct monetary policy without interference from politicians.

"Quasi-government" is the term normally used. Fed employees are not government employees.

 

[Tippit]

How did a nearly unlimited source of gold work out for Spain?

That depends on who you ask. I'm sure it worked out quite well for the conquistadors who spent the gold from the New World.

Are you arguing in favor of a fiat currency by implying the spanish gold inflation was a bad thing?

 

[Sceptic-PK]

Yeah, quasi-government is a better description.

 

[Foolmewunz]

Well, several years ago I read in some reasonably reputable publication (the identity of which I don't currently remember) <snip>

Ah, that would be the prestigious JOPPNSWA - The Journal of Opinion Pieces for Persons in Need of Support for Weak Arguments, I take it.

Yes, I got some of my better debate material from them when I used to make up crap in arguments. I always found it better to simply say, "It has been estimated/reported..." Then if someone takes you out behind the woodshed as Hans and Stilicho so neatly did, you can always respond,....

"No, it has been so reported. I just did so! So I'm not just making s up. Nyah!"

 

[Skeptic]

That depends on who you ask. I'm sure it worked out quite well for the conquistadors who spent the gold from the New World.

Not really. Spain's economy went down the tubes. But then again, facts aren't your strong side.

 

[Skeptic]

If Fed employees were government employees, the conspiracy theorists would claim it's proof how the evil government has no independent control over its actions and can just print anything it wants.

Now that they are not, the conspiracy theorists claim it's proof the Fed is a mass conspiracy by private interests of the bankers (shouldn't that be "Jewish Bankers"? It usually is in CT-think).

You can't win with some people.

But anyway, let's have it their way. Suppose the Fed is just a private company taking care of private banks. Well, according to the extreme anti-government position of most CTers, what's the problem? It's successful business being successful! you wouldn't want the evil freedom-destroying government to mess with THAT, would you?

 

[Tippit]

Not really. Spain's economy went down the tubes. But then again, facts aren't your strong side.

Wow, really? I never denied the Spanish inflation, or the economic results. The point is, someone got to spend the gold before the price revolution started. Someone always benefits when weath is transferred, as it is during monetary inflation. Yet, you defend a status quo which is capable of generating far more inflation with a mere computer keystroke. This, at the same time using an analogy that required the physical expropriation of an entire civilization by the Spanish in order to generate similar results. Your dishonesty is only paralleled by your abject ignorance. Not much of a skeptic, you.

 

[Thunderhead19]

Actually, all central banks work in the same fashion (more or less) as the US Federal Reserve (except perhaps for countries like Zimbabwe!). The differences relate more to things like regulatory mandate (ie how much of the financial system the central bank has regulatory authority over) but the structure and the conduct of monetary policy, is more or less identical.

Yes, the Fed is “independent”, but it is independent within government (the Fed being a government agency), and does not represent the private interest of member banks. The reason the Fed is independent within government is to ensure that the institution is not politicised and can conduct monetary policy without interference from politicians.

Compare the actual mechanics of the Fed to the Bank of England or the Bank of Canada, and you'll see a marked difference in intent and process. When the Fed was created it was with the very "American" concept that the Government should be at arms length from commerce. This differs from the more socialist policies of say europe, scaninavia, central america, russia, the far east, the near east, canada, mexico....etc...
Also, look at the board members of the Fed. They're all former presidents and senior vice presidents of major banks. Many of them came to work for the Fed DAYS after leaving their posts at the major banks.

 

[Startz]

Also, look at the board members of the Fed. They're all former presidents and senior vice presidents of major banks. Many of them came to work for the Fed DAYS after leaving their posts at the major banks.

There are five members of the Federal Reserve Board of Governors at the moment.

Elizabeth Duke came directly from a career in banking.

Kevin Warsh came from a job in the White House, but had previously worked for an investment bank.

Daniel Tarullo was a law professor with extensive previous government experience.

Donald Kohn has spent his career inside the Federal Reserve System as an economist.

Ben Bernanke, the chair, is a prominent academic economist.

In other words, the majority of governors are not from banking.

There are also three nominations for new governors pending.

Peter Diamond, also a prominent academic.
Janet Yellen, another prominent academic (currently president of the San Francisco Fed).
Sarah Raskin, bank regulator from Maryland (who at some point did work for a private financial company).

For anyone interested in the facts of the career paths of central bankers and the evidence on how it affects their decisions, I recommend a Harvard PhD dissertation by Christopher Adolph, ‘The Dilemma of Discretion: Career Ambitions and the Politics of Central Banking,’ 2005.

 

[Sceptic-PK]

Compare the actual mechanics of the Fed to the Bank of England or the Bank of Canada, and you'll see a marked difference in intent and process.

Please, could you provide examples of what you mean?

Also, look at the board members of the Fed. They're all former presidents and senior vice presidents of major banks. Many of them came to work for the Fed DAYS after leaving their posts at the major banks.

Are you saying it is unusual to have banking experts sit on the board of a bank? I see Startz has already shot down your assertion anyway, but what does a person’s previous employment have to do with how the Fed works or what it does?

 

[marplots]

Are you saying it is unusual to have banking experts sit on the board of a bank? I see Startz has already shot down your assertion anyway, but what does a person’s previous employment have to do with how the Fed works or what it does?

I think we are supposed to get a "guilt by association" feeling.

 

[Startz]

...what does a person’s previous employment have to do with how the Fed works or what it does?

There is statistical evidence that a person's former employment does have some effect on the decisions they make as a central banker. (See citation above.) That's not to say that other factors aren't more important. In any event I think the most common single background for members of the Board of Governors and other members of the open market committee is research economist, although I haven't done a count.

 

[Roadtoad]

What a waste of bandwidth...

 

[se7ensnakes]

A while back I scanned Ebay for a late model R1 motorcycle and saw one for $4000. Wow here was my dream motorbike for $6000 less than everyone else was selling! Every scam works this way. You are lure by easy money. Easy credit is the cheese in the trap. For the sake of easy credit my paycheck is going to be worth less because it is going to buy less. This is very frustrating. Why should your business of borrowing $40,000 for a new car interfere with my paycheck? Why should the price of food stuff and basic necessities go up in price because someone wants easy credit? If I choose to save money I also will be penalize simply because of fractional reserve banking. All of a sudden your business becomes my business. What more, the Fractional Reserve Banking model is a tool for a few men at the top to control the ups and downs in the economy. My advice to anyone that own a business: be very careful about borrowing because you can loose everything. So what point is there in growing an economy that is strung out on credit and where bankers can intentionally pull the plug? This is why Monetary reform is the most important issue in politics today. But how can you truly have monetary reform when you have lobbyist interfering with the political process. How can you have monetary reform when the general public knows basically nothing about the relationship between the money supply and credit? How much representation does the worker have when the banking industry is contributing $300 million in campaign contributions to members of a special congressional committee who is suppose to oversee them?

 

[se7ensnakes]

The success of Fractional Reserve Banking lies in people's inability to comprehend it fully. If it was easy to see, like J.P. Morgan printing millions of his own currency and using it to buy things, it would not have had centuries of success. Here let me review some of the problems with fractional reserve banking:
1) Makes a very unstable economy.
2) Big Bankers can control the economy, and invest accordingly.
3) Big Banks do not just earn money, they create money. Banks are money factories, yet they are private entities. Just as what is happening today, big banks make credit easy, expanding the money supply and when they eventually limit credit it causes an economic collapse.
4) A contractor spends months building a house, but a big bank can own the home with a simple book keeping entry.
5) When these private companies magically create money out of thin air, they rely on the working public to pay for it.
6) They earn interest on the money they create out of thin air, but their actions are not irrespective of the working public because it causes their paycheck to be worth less and less and less...
7) The unemployment, bankrupsies and foreclosures that follow causes the money used to buy houses, and the assets to go from the public to bankers.

There are only two things that Big bankers want you to know about money:
I) You have to work to get money.
II) You can use it to buy things.

This is happening to Americans over and over again, like a bicycle with a broken wheel. The rider falls, he gets stitches, gets back on the bicycle, falls again, gets stitches...

 

[se7ensnakes]

Skeptic:
Money, the creation of money, monetary reform, should be public and as transparent as possible. The idea that a money manager needs independence, i.e. secrecy, stops short as soon as you suggest that their own personal wealth should be managed in secrecy by an outsider.

 

[Sceptic-PK]

There is statistical evidence that a person's former employment does have some effect on the decisions they make as a central banker. (See citation above.) That's not to say that other factors aren't more important. In any event I think the most common single background for members of the Board of Governors and other members of the open market committee is research economist, although I haven't done a count.

But that’s a far cry from insinuating that because a member of the board is a former bank CEO that the central bank is run in the interest(s) of bankers. The institutions that are mandated to purchase stock in the Fed receive 6% on their stock regardless of the decisions of the bank or the nature of the economy (and this 6% is paid also because the reserve requirements to be part of the Fed receive no interest).

And then there’s the further implicit assumption, that somehow the dozens of banks that make up the Fed all have exactly the same needs and wants, as if they’re a monolithic entity, rather than competing businesses.

The Fed, or any independent central bank, is run in the interest of the economy; full employment, low inflation, stable currency, stable prices etc. For some reason that’s something to be feared and misunderstood though.

Skeptic:
Money, the creation of money, monetary reform, should be public and as transparent as possible.

Yes, and it is. The only people who don’t understand this are armchair economists and/or conspiracy theorists. This is why you never see economists calling for the abolition of the Fed, the removal of fractional lending, or supporting HR1207 (well, asides from fools in the Austrian school perhaps, but nobody pays attention to those nutters anyway).

 

[Startz]

There is statistical evidence that a person's former employment does have some effect on the decisions they make as a central banker. (See citation above.) That's not to say that other factors aren't more important. In any event I think the most common single background for members of the Board of Governors and other members of the open market committee is research economist, although I haven't done a count.

But that’s a far cry from insinuating that because a member of the board is a former bank CEO that the central bank is run in the interest(s) of bankers. The institutions that are mandated to purchase stock in the Fed receive 6% on their stock regardless of the decisions of the bank or the nature of the economy (and this 6% is paid also because the reserve requirements to be part of the Fed receive no interest).

And then there’s the further implicit assumption, that somehow the dozens of banks that make up the Fed all have exactly the same needs and wants, as if they’re a monolithic entity, rather than competing businesses.

The Fed, or any independent central bank, is run in the interest of the economy; full employment, low inflation, stable currency, stable prices etc. For some reason that’s something to be feared and misunderstood though.

Just for the record, I am quite confident that the current leadership of the Federal Reserve intends to do their best to run in the interest of the economy.

One of the problems with some of the responses to the Fed-is-evil screwballs is that various misstatements of fact occur. For example, the Fed currently pays 0.25 percent interest on reserves. Not that it's very important in this context.

 

[Sceptic-PK]

Thanks for the correction, whatever it was I was reading last week was obviously incorrect.