FED Conspiracy theories

[SpringHallConvert]

Oh, yeah. The creation of the Fed in 1913 was directly responsible for the rise of the two-income family in the 1970s.

I didn't say "directly", but it is true, is it not? The Federal Reserve is the fulcrum of all U.S. monetary policy and is the primary determinant of U.S. government fiscal policy.

What does the record show? How has the Federal Reserve performed? How are the finances of the U.S. government and the American people right now? Is our economy stable? Is it getting better? Is the middle class growing? Are poverty numbers declining?

Where has the Fed taken us?

 

[drkitten]

I didn't say "directly", but it is true, is it not? The Federal Reserve is the fulcrum of all U.S. monetary policy and is the primary determinant of U.S. government fiscal policy.

No.

The primary determinant of the U.S. government fiscal policy is the U.S. government.

What does the record show? How has the Federal Reserve performed?

Brilliantly, compared to the appalling mess that the frequent crashes made of the 19th century.

How are the finances of the U.S. government and the American people right now?

Not particularly good, but that's not the Fed's fault. It's primarily the fault of an extremely bad economic policy pushed through by the Republican administration between 2000-2008.

On the other hand, if you'd asked that same question in 1995, the finances of the U.S government and the American people were in excellent shape. This, again, suggests that it's hard to blame the Fed for the current troubles unless you're also willing to give them credit for the tremendous amount of economic growth experienced overall since 1913.

 

[drkitten]

I would like to ask this thread's participants to watch a series of illuminating videos explaining the true nature of the world financial system from the point-of-view of a former Wall Street banker and Harvard graduate.

They're drivel, without a single correct syllable in them.

It's actually rather hard to make individual syllables wrong. Normally you need to utter a full sentence, or at least a full word. But,... well, some wingnuts are talented that way.

 

[SpringHallConvert]

They're drivel, without a single correct syllable in them.

It's actually rather hard to make individual syllables wrong. Normally you need to utter a full sentence, or at least a full word. But,... well, some wingnuts are talented that way.

In other words, you can't argue with them so they are "drivel"?

The head-in-the-sand approach only works so long.

 

[Lyrandar]

What they are after is control. Namely, political control. A manufactured depression may hurt their business in the short run, but if it leads to political events that favor consolidation of the monetary system under singular control, they have gained in the long run. This is why you are seeing increasing calls in the media for a world currency. The World Financial Crisis is an opportunity for them to consolidate power.

I'm sure you already understand the role money plays in American "democracy". Think about how much influence lobbyists have over members of Congress. Think about the corruption, the favors, the unfulfilled campaign promises.

Money rules the world, and those who have the most of it make the most rules. This has been the case all throughout history.

And yet, no matter how much money you have, it's not a sure thing with our system. This is also why various rules and regulations exist preventing those who have more from doing as they like with those who have less.

So these people are going to spend decades of time and effort for a chance to make things go as they want? And what happens if some moralistic Congressman they didn't buy off manages to build enough of a coalition to shoot down any attempts at control? Seems like a very risky plan for all the time and effort they're putting in.

In short, I actually trust Congress to at least have something resembling a conscience, hard as that may be to believe.

Because in our monetary system, money is essentially printed and loaned into existence without any backing other than government and consumer debt. There's no gold behind it or any other asset. It's simply paper, and the Federal Reserve has the power to print up as much of it as it likes.

When you go to a bank for a loan, the bank doesn't take the money out of somebody else's account. It merely loans it into existence through exponential fractional reserve banking. It creates loan money on the spot. You sign on the dotted line and the bank writes you a check or deposits digital credit into your account. You then have to repay the loan plus interest with the exchange of your labor at a job.

Stop and think about that. You have to work and exchange your labor for money that a bank has the privilege to print into existence. On a $10,000 dollar loan at a fixed 10% interest rate, you pay the bank $1,000 (money which you had to work for) on a loan that was created out of thin air! If you fail to pay the money back, the bank takes your collateral (let's say a car).

Most people don't understand the implications of this system, but in essence, the bank has the power to manufacture money, loan it out, and then collect the interest on something that was printed up.

So... you're saying it's unfair for them to charge interest on something which is so easily made?

Yet wouldn't inflation rocket out of control if there was no reason not to have the bank print money for you?

 

[drkitten]

In other words, you can't argue with them so they are "drivel"?

Exactly reversed.

I can't argue with them because they are drivel. When someone starts a geography lecture by claiming that the capital of Montana is Paris and concludes that Lindsay Lohan is a Nobel laureate in bikini-wearing, it's hard to argue with them. And pointless.

But they're still more accurate than your "economics" guru.

 

[drkitten]

When you go to a bank for a loan, the bank doesn't take the money out of somebody else's account. It merely loans it into existence through exponential fractional reserve banking. It creates loan money on the spot. You sign on the dotted line and the bank writes you a check or deposits digital credit into your account. You then have to repay the loan plus interest with the exchange of your labor at a job.

Stop and think about that. You have to work and exchange your labor for money that a bank has the privilege to print into existence.

No, you don't.

On a $10,000 dollar loan at a fixed 10% interest rate, you pay the bank $1,000 (money which you had to work for) on a loan that was created out of thin air! If you fail to pay the money back, the bank takes your collateral (let's say a car).

So don't buy the car.

You're not paying the interest for the privilege of having the car. You're paying interest for the privilege of having the car a year or so earlier than you could have had it if you had been forced to pay cash for it. You never have to pay a dime of interest to anyone if you don't want to, but you may have to give up the convenience of using something before you've actually earned the money for it.

And most of the interest that you pay is effectively the fee that the bank charges in exchange for assuming the risk that you'll decide not to pay off the loan, precisely because the bank did not conjure the money out of thin air. It's on the hook for the money -- it paid the car dealer real money, and it also needs to make the depositor whose money it lent out whole in the event that you total the car and walk away from the payments.

That's how this whole financial crisis got started, in case you weren't paying attention. The banks and other groups that had been lending money out to mortgage customers suddenly realized that they weren't getting paid back, and that they were out real money for the principal of the loans.

 

[SpringHallConvert]

No.

The primary determinant of the U.S. government fiscal policy is the U.S. government.

Completely wrong. The U.S. government must borrow from the Federal Reserve to pay it's bills. The hand that gives is above the hand that takes.

Brilliantly, compared to the appalling mess that the frequent crashes made of the 19th century.

Yet, we had a stable dollar and immense growth.

Not particularly good, but that's not the Fed's fault. It's primarily the fault of an extremely bad economic policy pushed through by the Republican administration between 2000-2008.

The Republicans didn't get control of the executive branch until 2001, and Democrats had control of Congress starting in 2007. If you'll remember, the U.S. economy was going into recession just as Bill Clinton left office, so obviously the problems that the Republicans inherited weren't fully of their creation.

You have partisan blinders on.

On the other hand, if you'd asked that same question in 1995, the finances of the U.S government and the American people were in excellent shape. This, again, suggests that it's hard to blame the Fed for the current troubles unless you're also willing to give them credit for the tremendous amount of economic growth experienced overall since 1913.

This is false. The U.S. national debt increased by nearly 50% during the Clinton administration, private debts shot through the roof, out-sourcing accelerated, and the economy was one big bubble after another.

The economy of the United States wasn't prosperous because of the Federal Reserve, it was prosperous in spite of the Federal Reserve.

 

[SpringHallConvert]

And yet, no matter how much money you have, it's not a sure thing with our system. This is also why various rules and regulations exist preventing those who have more from doing as they like with those who have less.

If anything, the recent financial crisis should have proven to you that powerful people can and do circumvent the rules, regulations, and laws of this country on a regular basis. Who was it that had to pay for the bailouts? Us. The taxpayers. We've always been made responsible when our corporations are financially reckless.

So these people are going to spend decades of time and effort for a chance to make things go as they want? And what happens if some moralistic Congressman they didn't buy off manages to build enough of a coalition to shoot down any attempts at control? Seems like a very risky plan for all the time and effort they're putting in.

We already have a moralistic congressman trying to build a coalition against the Fed and all of his efforts have been defeated. His name is Ron Paul. And he certainly wasn't the first.

In short, I actually trust Congress to at least have something resembling a conscience, hard as that may be to believe.

I don't know why, frankly. Greedy, power-seeking people gravitate toward government. Always have always will.

So... you're saying it's unfair for them to charge interest on something which is so easily made?

Why should the American people be forced to use a monopoly monetary system where they must convert their labor to pay the interest on money created out of thin air?

Yet wouldn't inflation rocket out of control if there was no reason not to have the bank print money for you?

No, it wouldn't. Again, look at the history of U.S. money in a more free banking system prior to the Federal Reserve. Inflation was the exception, not the rule. Since then, inflation has become the rule.

 

[drkitten]

Completely wrong. The U.S. government must borrow from the Federal Reserve to pay it's bills. The hand that gives is above the hand that takes.

That's right. Silly me -- I forgot that the US government has no authority to set tax rates or to decide what and how much to spend.

What was I thinking?

 

[SpringHallConvert]

You're not paying the interest for the privilege of having the car. You're paying interest for the privilege of having the car a year or so earlier than you could have had it if you had been forced to pay cash for it. You never have to pay a dime of interest to anyone if you don't want to, but you may have to give up the convenience of using something before you've actually earned the money for it.

And most of the interest that you pay is effectively the fee that the bank charges in exchange for assuming the risk that you'll decide not to pay off the loan, precisely because the bank did not conjure the money out of thin air. It's on the hook for the money -- it paid the car dealer real money, and it also needs to make the depositor whose money it lent out whole in the event that you total the car and walk away from the payments.

That's how this whole financial crisis got started, in case you weren't paying attention. The banks and other groups that had been lending money out to mortgage customers suddenly realized that they weren't getting paid back, and that they were out real money for the principal of the loans.

None of the three above paragraphs are based in reality. Seriously. You haven't the faintest clue how the financial system works and are speaking out of unabashed ignorance.

Ralph Hawtrey, Secretary of the British Treasury, put it most succinctly:

Banks lend by creating credit. They create the means of payment out of nothing.

Every single Federal Reserve Note in circulation has an embedded debt attached to it, all Americans who exchanged goods and services in our economy are responsible for the debt through government taxation and inflation. Even if one were to never borrow a single dollar from a commercial lender, he would still indirectly be paying interest to a private banker somewhere just for using our monetary system.

That's the real truth. You can dance around it and make stuff up, but the truth is still there staring you in the face.

 

[SpringHallConvert]

That's right. Silly me -- I forgot that the US government has no authority to set tax rates or to decide what and how much to spend.

What was I thinking?

Of course they do, but revenues usually fall well under expenditures. If governments had to tax the citizenry enough for all spending, tax rates would be so high that nobody could get elected. There's almost always a massive deficit, and when that happens, the government is forced to borrow and push the cost of that borrowing off into the future.

Who does the government go to first? That's right. The Federal Reserve. The government is dependent on the Federal Reserve to remain solvent.

 

[drkitten]

None of the three above paragraphs are based in reality.

I could make the same statement about every paragraph you've written in this thread. Seriously.

Are you really suggesting that I can't avoid paying interest on a loan I don't take out?

 

[Lyrandar]

If anything, the recent financial crisis should have proven to you that powerful people can and do circumvent the rules, regulations, and laws of this country on a regular basis. Who was it that had to pay for the bailouts? Us. The taxpayers. We've always been made responsible when our corporations are financially reckless.

And if those companies completely died, then the US economy could well be in a lot more trouble than it is now, and all of us would be worse off. I'm not trying to say that the bailouts are a good thing, but they are not solely intended to screw us over to save a few rich people either.

We already have a moralistic congressman trying to build a coalition against the Fed and all of his efforts have been defeated. His name is Ron Paul. And he certainly wasn't the first.

Doesn't really address my point about the risk involved in the plan here.

I don't know why, frankly. Greedy, power-seeking people gravitate toward government. Always have always will.

I don't know. I've heard plenty of stories about people going into politics because they want to have a positive impact on the country. I've met my representative as part of a group of two or three dozen people; the impression I got from him at that time and from another politician I met on a different occasion was that they do care about us, even if only because it benefits them.

No, it wouldn't. Again, look at the history of U.S. money in a more free banking system prior to the Federal Reserve. Inflation was the exception, not the rule. Since then, inflation has become the rule.

Even assuming this was true, you'd have to account for all the other factors affecting the economy before you could blame the whole thing on the Fed.

 

[SpringHallConvert]

I could make the same statement about every paragraph you've written in this thread. Seriously.

Are you really suggesting that I can't avoid paying interest on a loan I don't take out?

No, I am saying you can't avoid paying interest for the use of our monetary system because every single dollar in existence carries a burden of interest that the American people are made responsible for through either taxation and inflation or repayment of the loan principle plus interest. Whether the money is borrowed into existence at the Federal level directly from the Federal Reserve or at the commercial level through a Federal Reserve member bank, interest must be paid for the creation of all new money.

A relatively small amount of this interest is paid back to the U.S. Treasury, but most of it is siphoned off by whoever it is that owns share of the Federal Reserve System. The end result is this:

300 million Americans are paying through the nose a private, secretive banking cartel to use intrinsically worthless paper money when the Constitution of the United States has explicitly delegated this power to Congress and nobody else.

You've posed not one argument to refute this most basic of facts.

 

[drkitten]

Of course they do, but revenues usually fall well under expenditures. If governments had to tax the citizenry enough for all spending, tax rates would be so high that nobody could get elected.

Which makes this a conscious political decision on the part of the US government.

Who does the government go to first? That's right. The Federal Reserve. The government is dependent on the Federal Reserve to remain solvent.

Again, you have no idea what you're talking about. The governments raises money by selling securities on the open market to anyone who wants to lend money to it. (And the organization that sells the securities is the Treasury department, not the Fed.) It's only in the past year or so that the Fed has been buying and selling securities in the market as part of the stimulus plan,.... which given that this corresponds almost exactly with the period you already noted as near deflationary makes your suggestion that the Fed is manipulating US government debt to cause inflation even more ludicrous.

 

[Sledge]

Instead of responding to this kind of stuff directly, I'll defer to Arthur Schopenhauer and one of my all-time favorite quotes:

I'll defer to Carl Sagan:

They laughed at Galileo. They laughed at Newton. But they also laughed at Bozo the Clown.

Provide some evidence and we'll look at it. Make wild assertions and we'll ridicule them.

 

[drkitten]

No, I am saying you can't avoid paying interest for the use of our monetary system because every single dollar in existence carries a burden of interest that the American people are made responsible for through either taxation and inflation or repayment of the loan principle plus interest.

Good. I'm glad you said that, because now it's clear that you are wrong.

A relatively small amount of this interest is paid back to the U.S. Treasury, but most of it is siphoned off by whoever it is that owns share of the Federal Reserve System.

Um.... that would be the U.S. Treasury.

Seriously. All Fed profits are returned to the Treasury. By law.

TITLE 12 > CHAPTER 3 > SUBCHAPTER VI > § 290
Use of earnings transferred to Treasury

"The net earnings derived by the ... Federal reserve banks shall, in the discretion of the Secretary, be used to supplement the gold reserve held against outstanding United States notes, or shall be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury..."

You can look up title 12, chapter 3 yourself if you like.

The end result is this:

The end result is : you're wrong.

 

[SpringHallConvert]

And if those companies completely died, then the US economy could well be in a lot more trouble than it is now, and all of us would be worse off. I'm not trying to say that the bailouts are a good thing, but they are not solely intended to screw us over to save a few rich people either.

I'm not sure what you are arguing here.

Doesn't really address my point about the risk involved in the plan here.

What risk are you talking about? What's risky about trying to influence politics through monetary "donations", think tanks, tax-exempt foundations, and NGOs?

I don't know. I've heard plenty of stories about people going into politics because they want to have a positive impact on the country. I've met my representative as part of a group of two or three dozen people; the impression I got from him at that time and from another politician I met on a different occasion was that they do care about us, even if only because it benefits them.

I have no doubt that some politicians go into politics with good intentions. The problem is the lobbying money we are talking about here is in the billions. Many politicians become corrupt over time and will do anything to remain in government. Some are given inducements to vote a certain way on a certain bill and some are promised millions to help their re-election campaigns. That's how things work in Washington. Money over morality, for the most part. I wish it wasn't so

Even assuming this was true, you'd have to account for all the other factors affecting the economy before you could blame the whole thing on the Fed.

The Fed, and those behind it, is at the very top of the pyramid. Everything flows down from the Fed. It's difficult to blame other factors because they aren't independent of Fed policy.

Watch those videos I linked and see if some of your questions can't be answered.

 

[SpringHallConvert]

Good. I'm glad you said that, because now it's clear that you are wrong.




Um.... that would be the U.S. Treasury.

Seriously. All Fed profits are returned to the Treasury. By law.



You can look up title 12, chapter 3 yourself if you like.



The end result is : you're wrong.

That only addresses the interest paid on the national debt. You are forgetting of course the thousands of Federal Reserve System member banks making thousands of loans to consumers and businesses every day and all the interest they collect on this counterfeited money. Each dollar created as loan money carries a burden of interest, which is then deposited into another member bank, and then used again as the basis for the creation of even more counterfeit loan money carrying a burden of interest. On average, each bank can loan out up to nine dollars on a single dollar in reserve. So this cycle goes on and on, generating billions of dollars in profit on money created out of thin air.

After that sinks in, take into account that this process is repeating itself all throughout the world in the other central banking systems modeled after the Federal Reserve which are controlled by many of the exact same banking corporations and it doesn't take long to figure out that a veritable ocean of profit is being generated on behalf of the elite who own the shares of these central banks.

So, going back to your original point, what the Fed hands back to the U.S. Treasury (us taxpayers) in one hand is immediately taken back ten-fold with the other.