Audit the Fed? What would that accomplish?

[The Central Scrutinizer]

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…

Wow. Really?

 

[Dunstan]

Fed System:
...
5) Debt based money system - Every dollar that was entered into circulation by the t-bond - federal reserve note interchange represents debt.

Ah, so you think fiat money is bad because it represents "debt." Ok, got it. Printing money = bad.

Post-Fed System:
...
If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.

But you want the government to "retire the debt" by printing money, because printing money = lower taxes = good.

Could you at least be internally consistent?

 

[se7ensnakes]

No it is not the printing of the money that is bad…it is the fact that private corporations can expand and contract the money supply by limiting or extending credit. Where there are boom followed by bust, it is evidently calculated and therefore give advance knowledge when to invest and when to pull out.
Yes the government should print its own money, and fiscal balance should be public, not secret in some board meeting. No one should be privy to information regarding the expansion or contraction of the money supply. The money supply should be balance publicly, and the rise and fall of politicians should rest on this performance.
“The Treasury bond – federal reserve note interchange is clearly a scam. If your government can print a treasury bond it can just as readily print a United States Dollar, good for all debts. When the Federal Reserve creates money out of thin air expressly to purchase bonds in the open market, the book keeping entry (which is money) expands by a factor of ten in private corporations called bank. This money expansion affords privilege information…information that is used to invest accordingly. That way wealth flows from the masses to those with that special knowledge.

 

[drkitten]

No it is not the printing of the money that is bad…it is the fact that private corporations can expand and contract the money supply by limiting or extending credit.

You'd prefer that a government agency had that authority?

We've done that experiment; it tends to lead to political manipulations with the currency supply and a banana-republic type of economy. So that's out, too.

Of course, if it's not a government agency, then by definition it would have to be a private company (those are the only choices). But perhaps what we could do is use a private company (so it's independent of political control), but one that returns all of its profits directly to the Treasury, so there's little incentive or opportunity to profit from currency manipulations, and to keep the deliberations absolutely secret so there are no opportunities for insider trading.

Congratulations! You've just re-invented the modern Fed.

 

[lomiller]

So much woo so little time.

If the government can print t-bonds it can also print money…retire the debt with printed money. This will lower taxes.

This has proven to be a recipe for economic collapse for countries that have attempted it.

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.

With 100% reserve requirement there would be no such thing as a bank.

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.

That would indeed be a good idea, though not for the reasons you believe.

it is the fact that private corporations can expand and contract the money supply by limiting or extending credit.

The only way a bank could do this would be to stop doing business sit on their cash. This is not a viable way of making money and outside of a deflationary economy it’s the very last thing they would ever want to do. Even if they tried, they would be betting against the Fed, who can create as much money as they want to bet with.

Yes the government should print its own money,

Economies where the government directly controls money supply are inevitably poor and third world. Every large rich nation uses an arms length agency to control it’s money supply. The lesson here should be obvious.

When the Federal Reserve creates money out of thin air expressly to purchase bonds in the open market, the book keeping entry (which is money) expands by a factor of ten in private corporations called bank.

If your government can print a treasury bond it can just as readily print a United States Dollar, good for all debts.

The treasury does print all US dollars. It then sells them to the Fed which in turn sells them to banks.

Correct.

This money expansion affords privilege information…information that is used to invest accordingly. That way wealth flows from the masses to those with that special knowledge.

No. Money used to purchases federal securities offer no inside knowledge or advantage. Even target inflation rates are well know. The Fed targets 2% inflation. The only reason they would ever put the breaks on the US money supply when inflation is below that would be the danger of overshooting.

 

[The Central Scrutinizer]

No it is not the printing of the money that is bad…it is the fact that private corporations can expand and contract the money supply by limiting or extending credit. Where there are boom followed by bust, it is evidently calculated and therefore give advance knowledge when to invest and when to pull out.
Yes the government should print its own money, and fiscal balance should be public, not secret in some board meeting. No one should be privy to information regarding the expansion or contraction of the money supply. The money supply should be balance publicly, and the rise and fall of politicians should rest on this performance.
“The Treasury bond – federal reserve note interchange is clearly a scam. If your government can print a treasury bond it can just as readily print a United States Dollar, good for all debts. When the Federal Reserve creates money out of thin air expressly to purchase bonds in the open market, the book keeping entry (which is money) expands by a factor of ten in private corporations called bank. This money expansion affords privilege information…information that is used to invest accordingly. That way wealth flows from the masses to those with that special knowledge.

 

[dudalb]

se7ensnakes appears to have flunked economics 1A very,very,badly.

 

[Michael Redman]

se7ensnakes appears to have flunked economics 1A very,very,badly.

Effective communication, as well. That font seems designed to make the reader give up halfway through.

 

[AaronMic22]

Effective communication, as well. That font seems designed to make the reader give up halfway through.

One might argue that his goal was accomplished.

 

[timhau]

With 100% reserve requirement there would be no such thing as a bank.

Yes there would. The problem is that it would be like Scrooge McDuck's Money Bin.

 

[Rockingham AH Deist]

Question: If the Fed was engaged in corruption, would we know?

You'd prefer that a government agency had that authority?

We've done that experiment; it tends to lead to political manipulations with the currency supply and a banana-republic type of economy. So that's out, too.

Of course, if it's not a government agency, then by definition it would have to be a private company (those are the only choices).

This maybe an entirely stupid idea, but why not set it up as a public entity but based upon tightly controlled formula(ie. printing/withdrawing money at a rate equivalent to price inflation+population growth, though I'm no economist so I'm not pinning my reputation on that idea) so that political manipulations are avoided?

The treasury does print all US dollars. It then sells them to the Fed which in turn sells them to banks.

Or another idea... perhaps the last part of that process(private banks) could be cut out? It's not unprecedented, such as system exists in North Dakota and it seems to be working well(damn, I'm not allowed to post URL's. Just search "Bank of North Dakota" into google).

Though the Retardlicans would probably bitch about it being socialism

 

[drkitten]

This maybe an entirely stupid idea, but why not set it up as a public entity but based upon tightly controlled formula(ie. printing/withdrawing money at a rate equivalent to price inflation+population growth, though I'm no economist so I'm not pinning my reputation on that idea) so that political manipulations are avoided?

That would create a runaway feedback cycle as you set it up. If you allow the government to print MORE money in times of inflation (and force it to print LESS in times of deflation), the first time you get inflationary pressure, you'll automatically print even more money, which will produce even more inflation, which will cause even more money to be printed, and we'll end up with hyperinflation.

You might be able to set something up with printing money proportional to population growth minus inflation or something. But the other problem is that the Fed has to be able to respond to predicted inflation, not just inflation that's actually there -- and it needs to be able to respond to more issues than just inflation.

Basically, you're trying to take the human out of the loop entirely, but we still need human judgement in the loop at some point. The easiest way to isolate it from political pressure (but still let it be effective) is to make the judge non-political. Like the Fed.

Or another idea... perhaps the last part of that process(private banks) could be cut out?

Again, that just makes the bankers beholden to the politicians. The point is that the President -- or the Governor of North Dakota -- shouldn't be able to issue orders to the person who runs the currency supply.

 

[drkitten]

Yes there would. The problem is that it would be like Scrooge McDuck's Money Bin.

And how would Scrooge stay in business?

Remember, he's paying 2% interest on every dollar in his Money Bin. But since it's just sitting there in the bin, it's earning zero him nothing. Every year, he loses 2% of his money (and no longer has 100% reserves, unless he pours money in from his own pocket).

 

[lomiller]

This maybe an entirely stupid idea, but why not set it up as a public entity but based upon tightly controlled formula(ie. printing/withdrawing money at a rate equivalent to price inflation+population growth, though I'm no economist so I'm not pinning my reputation on that idea) so that political manipulations are avoided?

The Federal reserve board is a an arms length public entity (as opposed to the Federal reserve banks which are hybrid public/private entities) charged with managing the US money supply and ensuring the stability of the US financial system. “arms length” means that although the Fed chairman is appointed by the President and must make regular reports to Congress they can’t dictate his/her day to day actions.

In it’s role as managing the US money supply it generally tries to keep enough money in circulation to archive maximum economic growth without exceeding a target inflation rate which is generally in the ~2% range. If inflation drops below this, it increases the money supply to encourage economic growth, if inflation seems likely to rise above 2% it will begin to restrict the money supply in order to prevent inflation.

The primary mechanism for managing the money supply is though buying/selling federal government securities. Buying them increases the money supply, selling them decreases it. In extraordinary circumstances it can also loan money directly to banks. This is primarily part of it’s role as lender of last resort that allow it to hold off bank runs, but it can also be used to increase/decrease the money supply. It also has the power to inject money directly into the economy but this is an absolute last resort.

Is this the type of entity you had in mind?

 

[timhau]

And how would Scrooge stay in business?

Remember, he's paying 2% interest on every dollar in his Money Bin.

That's where you went wrong. Scrooge isn't paying a penny to anybody. Remember, the idea here is to create a society where sitting on money is an investment strategy.

 

[The Central Scrutinizer]

That's where you went wrong. Scrooge isn't paying a penny to anybody. Remember, the idea here is to create a society where sitting on money is an investment strategy.

I'm assuming the 2% is inflation.

 

[timhau]

I'm assuming the 2% is inflation.

*cough*gold standard*cough*

The 2% is WHAT?

 

[The Central Scrutinizer]

*cough*gold standard*cough*

The 2% is WHAT?

Inflation.

 

[drkitten]

Inflation.

In a properly designed unrealistic gold-bug-topia, you don't get inflation, because the money supply can't keep up with the magical increases in production.

Of course, the idea that the magical increases in production are generally produced by investment, which vanishes almost completely during times of sustained deflation, is foreign to these unrealistic gold-bug-topiae. Isn't it nice to be able to handwave away basic facts about the universe?

Now I think I'm going to go fly around the city and fight crime, because I can handwave away things like the laws of physics.

 

[Tippit]

Again, that just makes the bankers beholden to the politicians. The point is that the President -- or the Governor of North Dakota -- shouldn't be able to issue orders to the person who runs the currency supply.

And why not? Control of the nation's currency is more important than virtually anything. Amschel Rothschild said, "Let me issue and control a nation's currency, and I care not who writes its laws." Institutional counterfeiting (or, what the Federal Reserve does) is not even close to a neutral transaction, it's a highly regressive tax with clearly defined winners and perhaps no-so-well-defined losers (anyone who holds US dollars, worldwide). If the creation of money can be done for immense private gain, which it has in the case of the Wall Street banker bailouts, why *shouldn't* it be politicized? At least voting for politicians gives us the illusion of accountability, as opposed to the total lack of accountability and transparency we have at the Federal Reserve.