Monopoly Men

[chipmunk stew]

deleted

 

[JonnyFive]

i have a few questions;

I will try to answer briefly.

1. if inflation is the same rate as the interest rate i earn in my account, my purchasing power does not increase at all correct?

Correct. It is perfectly possible to earn less on your own investments than inflation.

2. what is the advantage to having the central bank be owned entirely by private international bankers?

Not sure exactly what you're asking here. Do you mean ownership of member banks? Control over the decisions made? Ability to print currency? In the US, at least, the functions are split between private and public sector.

Chipmunk stew is correct that this is a purely hypothetical question, at least with regards to the US. Ultimate control over the Fed rests with the government of the United States of America.

3. is the claim correct when it is stated that every dollar i pay for income tax goes merely to pay the interest already owed to the fed?

No, because the US works using a deficit budget system of government. Balancing the budget, ironically, is not always a desireable outcome. If you'd like to know more, I can pull up some reading or give you a bit about what I know through PM.

4. is the claim correct that all gold in fort knox is owned by the federal reserve? or is held as collateral for the government's debt?

It's owned by the government of the United States. I'm not sure if its one of the resources that has been pledged as collateral for the printing of new paper currency, but my guess would be it isn't. As far as I know, the vault near Fort Knox was used to store the gold removed from circulation when the US went off the gold standard. I'm sorry, I don't know much more about this specifically.

5. what problems would be encountered by a fully reserved fiat system?

You mean a system where the government controls the issuance of currency but is required to back it with specified amounts of, say, gold?

Well, as I mentioned a few times, the biggest problem is that control of deflation is more problematic. When you have increases in population, increases in market efficiency, etc. it makes it difficult to expand the currency supply to deal with those expansions. Having a relatively static money supply can worsen deflation-based recessionary trends.

There's really nothing essentially wrong with having a backed currency, it just isn't the magically cure-all a lot of the woos promise. Similarly, there's nothing wrong with having a currency backed only by the strength of the national economy/government and the market's faith in it (as we do now).

I'm sure it's workable, particularly if the government continually finds new resources to "back" the currency with, but that's still the main issue.

6. johnnyfive (btw, i use a big robot battery for some in-car cameras for making track videos!) - curious if you personally own any bullion (silver/gold/etc?)

No, I don't. Currently, my investments are mostly in the stock market through various funds (so the range of companies invested in is diverse), and I don't own any bullion.

7. comments on www dot usagold.com/gildedopinion/greenspan.html ?

It's interesting. It does highlight the advantages of having a backed system, although it doesn't really address the issues with one (I don't think that was the point), and the choice of gold is entirely arbitrary (which Greenspan basically says in the beginning). Given Greenspan's use of the Fed's credit-issuing power to bail out the financial sector after the crash of 1987, I would think he moderated his position on the issue somewhat, or this article didn't represent the whole of his views. The other issue is the changes of the technological economy and increased global economy aren't really addressed in the article, being that it was written in the mid 1960's.

Still, there certainly are advantages to having backed currency. However, to say it will fix all problems is silly. Modern economic systems are highly complex, and have a lot of moving parts. There's really nothing that can make them work perfectly all the time.

Although Greenspan did mention some examples from history where the ability to issue credit caused problems, he doesn't acknowledge (at least in that article) that the ability to restrict credit can also cause problems. An excellent example is that of the reconstruction-era United States. Under President Grant, there was a push, largely backed by bankers and other creditors, to prevent the US from printing additional paper currency. Effectively, the result was that those that owed money couldn't repay it (because their debts were worth more, and they had less money available) and those that were owed money were enriched by the increased value of currency.

 

[sickmint79]

This question is purely hypothetical (at least for the US), since the Fed is not owned entirely by private international bankers.

how do i use the multi quote? on/off it removed my original quote. i did not see anything about bank owners at the link. the board/committee are just employees of the bank/government. aren't the shareholders of the actual banks all by private individuals, 0% government?

 

[sickmint79]

Not sure exactly what you're asking here. Do you mean ownership of member banks? Control over the decisions made? Ability to print currency? In the US, at least, the functions are split between private and public sector.

Chipmunk stew is correct that this is a purely hypothetical question, at least with regards to the US. Ultimate control over the Fed rests with the government of the United States of America.

2. control and ability to print currency. why is any of this given to the private sector? do you think the ultimate government control over the fed should be stronger, or 7 appointed guys by the president is enough?

2a. do you think that we're eventually going to have an amero?
2b. do you have no problems with world bank?

No, because the US works using a deficit budget system of government. Balancing the budget, ironically, is not always a desireable outcome. If you'd like to know more, I can pull up some reading or give you a bit about what I know through PM.

3. any more information on this would be great. i do not understand why a deficit would be desireable, or how the claim that each fed income tax dollar provided goes straight to interest to the fed can be made/refuted.

RE: fort knox gold ownership
It's owned by the government of the United States. I'm not sure if its one of the resources that has been pledged as collateral for the printing of new paper currency, but my guess would be it isn't. As far as I know, the vault near Fort Knox was used to store the gold removed from circulation when the US went off the gold standard. I'm sorry, I don't know much more about this specifically.

4. "When President Reagan took office in 1981, his conservative friends urged him to study the feasibility of returning to a gold standard, as the only way to curb government spending. It sounded like a reasonable alternative, so President Reagan appointed a group of men called “The Dole Commission” to study the situation and report back to the Congress.

What Reagan’s gold commission reported back to Congress in 1982 was the following shocking revelation concerning gold: The U.S. Treasury owned no gold at all. All the gold that was left in Fort Knox was now owned by the Federal Reserve, a group of private bankers as collateral against the national debt. " c/p from some random link, didn't look up the dole commission or associated report myself

You mean a system where the government controls the issuance of currency but is required to back it with specified amounts of, say, gold?

Well, as I mentioned a few times, the biggest problem is that control of deflation is more problematic. When you have increases in population, increases in market efficiency, etc. it makes it difficult to expand the currency supply to deal with those expansions. Having a relatively static money supply can worsen deflation-based recessionary trends.

There's really nothing essentially wrong with having a backed currency, it just isn't the magically cure-all a lot of the woos promise. Similarly, there's nothing wrong with having a currency backed only by the strength of the national economy/government and the market's faith in it (as we do now).

I'm sure it's workable, particularly if the government continually finds new resources to "back" the currency with, but that's still the main issue.

5. actually no, just a fully reserved fiat system, one that is fully reserved and backed by nothing. you presented problems with gold as the standard would then be tied to a quantity of a physical resource, which this would circumvent. (or i suppose the dollar inflates based on what it is backed by, which seems like it would be better controlled inflation than what fractional is able to create today)

No, I don't. Currently, my investments are mostly in the stock market through various funds (so the range of companies invested in is diverse), and I don't own any bullion.

6. just curious. personally buying some bullion at the moment. there seems to be a general feeling among these guys that the international central banks are trying to suppress/manipulate its value. some thoughts along similar lines with silver too. from a speculative standpoint people appear to think they have much room to grow... from protecting my own wealth (what little can be represented by bullion) it seems to be much more resistant to inflation than the us dollar. besides, i get to have a mighty treasure now. yarrr!

RE: greenspan page
It's interesting. It does highlight the advantages of having a backed system, although it doesn't really address the issues with one (I don't think that was the point), and the choice of gold is entirely arbitrary (which Greenspan basically says in the beginning). Given Greenspan's use of the Fed's credit-issuing power to bail out the financial sector after the crash of 1987, I would think he moderated his position on the issue somewhat, or this article didn't represent the whole of his views. The other issue is the changes of the technological economy and increased global economy aren't really addressed in the article, being that it was written in the mid 1960's.

Still, there certainly are advantages to having backed currency. However, to say it will fix all problems is silly. Modern economic systems are highly complex, and have a lot of moving parts. There's really nothing that can make them work perfectly all the time.

Although Greenspan did mention some examples from history where the ability to issue credit caused problems, he doesn't acknowledge (at least in that article) that the ability to restrict credit can also cause problems. An excellent example is that of the reconstruction-era United States. Under President Grant, there was a push, largely backed by bankers and other creditors, to prevent the US from printing additional paper currency. Effectively, the result was that those that owed money couldn't repay it (because their debts were worth more, and they had less money available) and those that were owed money were enriched by the increased value of currency.

although it is from 1967 and i have seen it before, this is the first time i saw it with the introductory blurb, where it sounds like greenspan does offer up the abolishment of the fed and/or return to a gold standard as options.

 

[chipmunk stew]

how do i use the multi quote? on/off it removed my original quote. i did not see anything about bank owners at the link. the board/committee are just employees of the bank/government. aren't the shareholders of the actual banks all by private individuals, 0% government?

The "shareholders" are people who hold bank notes, loans, bonds, securities, etc. You can't buy direct shares of a Reserve Bank. All earnings in excess of their expenses are returned to the U.S. Treasury, not distributed to shareholders.

Reserve Banks are government institutions, not private businesses.
http://www.federalreserve.gov/pubs/frseries/frseri3.htm

Member banks of each Reserve Bank hold stock in the Reserve Bank, but it's not a free-market arrangement, and the Reserve Banks are not beholden to the member banks and do not distribute their profits to the member banks (aside from a fixed dividend legislated by Congress).
http://www.federalreserve.gov/generalinfo/faq/faqfrbanks.htm#6

 

[JonnyFive]

2. control and ability to print currency. why is any of this given to the private sector? do you think the ultimate government control over the fed should be stronger, or 7 appointed guys by the president is enough?

The actual power to print new currency is completely government controlled. If the Fed wants to issue new physical currency into the system, they're supposed to present something as collateral on it. Granted, the collateral often amounts to the power and stability of the US government (government bonds - a promise to repay the money eventually), but current regulations don't allow private bankers to simply print their own money.

I believe the current system is sufficient, based on past experience. It's not just the board of directors, it's also the Fed branch banks, which are agents of the US government and have their own boards of directors, in addition to the private member banks.

2a. do you think that we're eventually going to have an amero?

I have no idea. Currently, I see no reason why the US would feel the need to join economic forces, currency-wise, with Canada and Mexico (I assume those would be the "amero" countries). I suppose it's always possible, but there's no whisper of it yet.

2b. do you have no problems with world bank?

I don't have any major problems with the world bank as a concept. There is a serious problem of corruption and inefficiency dealing with such a scale, but I see no inherent reason why such the bank as a free market agent can't operate on a global level.

3. any more information on this would be great. i do not understand why a deficit would be desireable, or how the claim that each fed income tax dollar provided goes straight to interest to the fed can be made/refuted.

Well, one major problem is that balancing the budget (actually, I'll assume just a non-deficit budget) requires one of the following:

1) Massive decreases in spending.
2) Massive increases in taxation.
3) Printing more money.

All three of which are generally painful to the populace at large. In a perfect world, perhaps this would work, but the real world sees a lot of governmental budget fluctuation with deficits and surpluses.

Basically, as long as the loans don't get out of hand, and everyone agrees to play, the government is able to leverage more resources to help out its citizens with various programs and resources. National governments, especially strong ones, work on a whole different scale than private individuals.

The other major problem is that the government can use deficit spending to help the national economy and the citizens in times of economic hardship. If you choose to force the government to never go into debt, it loses this ability. That's fine if you want everyone to pretty much be on their own, but there is a certain risk of a lot of people getting royally screwed in severe recessions, or when something truly bad happens.

4. "When President Reagan took office in 1981, his conservative friends urged him to study the feasibility of returning to a gold standard, as the only way to curb government spending. It sounded like a reasonable alternative, so President Reagan appointed a group of men called “The Dole Commission” to study the situation and report back to the Congress.

What Reagan’s gold commission reported back to Congress in 1982 was the following shocking revelation concerning gold: The U.S. Treasury owned no gold at all. All the gold that was left in Fort Knox was now owned by the Federal Reserve, a group of private bankers as collateral against the national debt. " c/p from some random link, didn't look up the dole commission or associated report myself

This belief is based on a misunderstanding of the Federal Reserve as a wholy private entity. It isn't. Only the member banks (not the Fed branches) are private, and they don't "own" Federal Reserve gold.

I'm having a very hard time corroborating that "Dole Commission" line, and I strongly suspect it's made up. I've found a couple "Dole Commissions" mentioned, but only in reference to other issues.

I found this reference to a "Dole Commission" in reference to the WTO, although it's ten years too late for what they said, and has nothing to do with the Fed:
http://www.fordschool.umich.edu/rsie/workingpapers/Papers451-475/r472.pdf

The kicker is right at the end:

While the so-called Dole Commission was never created, the Congressional controversy surrounding the ratification of the Uruguay Round Agreement has led to particular concern with USTR performance at the WTO.

I was able to find the section you found listed on craigslist.org... but without any sources or further information to verify the claim.

5. actually no, just a fully reserved fiat system, one that is fully reserved and backed by nothing. you presented problems with gold as the standard would then be tied to a quantity of a physical resource, which this would circumvent. (or i suppose the dollar inflates based on what it is backed by, which seems like it would be better controlled inflation than what fractional is able to create today)

Oh, you mean getting rid of fractional reserve? I'm sorry, I misunderstood what you meant. My bad.

Well, there really isn't any major issue with fractional reserve, if it's done properly. We talked about it before in this thread. It's really what is allowing banks to make loans and offer interest on deposits. As long as there isn't a major rush on the bank, then there isn't a real reason to hold 100% of deposits in reserve.

As far as fractional reserve causing inflation... well, it does (to a certain extent), but it also allows for economic growth. The money lent out allows businesses and individuals to conduct transactions to strengthen and grow the market by providing additional resources, more efficient ways of using them, etc. etc. Unfortunately, a lot of times economic growth and inflation are tied together with a non-backed currency.

6. just curious. personally buying some bullion at the moment. there seems to be a general feeling among these guys that the international central banks are trying to suppress/manipulate its value. some thoughts along similar lines with silver too. from a speculative standpoint people appear to think they have much room to grow... from protecting my own wealth (what little can be represented by bullion) it seems to be much more resistant to inflation than the us dollar. besides, i get to have a mighty treasure now. yarrr!

Gold, as well as other commodities, does seem to hold well against inflation. Traditionally, it hasn't performed as well as the general stock market, but it's done pretty well. If you're going to invest, there's nothing wrong with investing some of your money in commodities. Just don't put it all there, as the commodities market is not immune to fluctuations and dives (although, like I said, gold has been extremely stable).

although it is from 1967 and i have seen it before, this is the first time i saw it with the introductory blurb, where it sounds like greenspan does offer up the abolishment of the fed and/or return to a gold standard as options.

It is interesting. It's also interesting that Greenspan's position has changed so much over the years. I'd like to know more about it.

 

[CurtC]

i think you are getting too caught up on the word print. i am most certain TS is not arguing that "money physically printed on paper" is the problem, but just that money created (on paper or as a line item) is a problem.

Since it had explained to TS that money is created collectively by the actions of lots of people, I had to take his words at face value, and when he complained that the Fed prints money, I had to assume that he meant print paper currency or minting coinage.

 

[sickmint79]

Since it had explained to TS that money is created collectively by the actions of lots of people, I had to take his words at face value, and when he complained that the Fed prints money, I had to assume that he meant print paper currency or minting coinage.

as a side note, my understanding is that the fed pays for basically the process and materials of actually printing the money, something like 4 cents per dollar bill, 50-70 cents for a 10/20/100, etc. but the coins i think they had to purchase at face value from the treasury. actually maybe a little more than face value for the penny (?)

 

[sickmint79]

The "shareholders" are people who hold bank notes, loans, bonds, securities, etc. You can't buy direct shares of a Reserve Bank. All earnings in excess of their expenses are returned to the U.S. Treasury, not distributed to shareholders.

Reserve Banks are government institutions, not private businesses.
federalreserve.gov/pubs/frseries/frseri3.htm

Member banks of each Reserve Bank hold stock in the Reserve Bank, but it's not a free-market arrangement, and the Reserve Banks are not beholden to the member banks and do not distribute their profits to the member banks (aside from a fixed dividend legislated by Congress).
federalreserve.gov/generalinfo/faq/faqfrbanks.htm#6

technically it still sounds like the member banks own the federal banks to me. but this site is saying that because the various boards represent the people and the congress created the bank, that the ownership is by the people - because the people's representation controls the actions they take, correct?

 

[sickmint79]

please correct this as i'm sure it needs it:

creation of money

step 1. board of governors (7 president appointed members) decides to increase money supply.
step 2. federal open market comittee (board of governors + 5 heads of banks - heads are bank employees not government(true? if gov, how chosen?)) executes the creation of what the board stated.
step 3. fed creates money (federal reserve notes) out of nothing (as line item) and buys us securities - $100
step 4. not sure on this part but let's just say it's given to the ny fed reserve - $100
step 5. ny fed reserve loans out $1,000 to 10 banks @ $100 each
step 6. 10 banks each loan out $1,000 to individuals

so now the $100 bond was purchased, with nothing (aka the strength of the american economy) and has turned into $10,000 in the hands of 10 individuals (who will spend it and have it end up in other banks)

step 7. during whatever time the bond is still owned by the fed, the us government (from federal income tax?) is paying interest to the fed. the fed keeps a portion of this interest to cover operational costs (how is this defined? are the privately owned parts not able to give eachother raises and such?) and the remaining portion (what %?) is given back to the us government, to the treasury.

 

[sickmint79]

I have no idea. Currently, I see no reason why the US would feel the need to join economic forces, currency-wise, with Canada and Mexico (I assume those would be the "amero" countries). I suppose it's always possible, but there's no whisper of it yet.

there is whisper on a "north american union" and amero but it probably requires a whole new (probably conspiracy) thread.


re: dole commission - i have found other references to it called the 'gold commission' - it really seems to have existed but i have not had any luck finding any reports that it had created. references are mostly found on fort knox conspiracy sites. i think it interesting there has been no full audit of that either, should be an easy way to prove all those guys wrong. anyway no wikipedia entry on gold commission and so far i haven't found anything referencing what was supposedly reported in 1982.

Well, there really isn't any major issue with fractional reserve, if it's done properly. We talked about it before in this thread. It's really what is allowing banks to make loans and offer interest on deposits. As long as there isn't a major rush on the bank, then there isn't a real reason to hold 100% of deposits in reserve.

the solution i think was offered earlier in this thread though seemed sound to me; is it what was done in the past? a bank that merely stored your money (and even charge you for the service) and a separate savings and loan, which operated more like a place where you would nail your money down into a 5 year cd and expect 3% back while they lent out that money for 7%.

As far as fractional reserve causing inflation... well, it does (to a certain extent), but it also allows for economic growth. The money lent out allows businesses and individuals to conduct transactions to strengthen and grow the market by providing additional resources, more efficient ways of using them, etc. etc. Unfortunately, a lot of times economic growth and inflation are tied together with a non-backed currency.

so a full reserve system would limit the amount borrowers could attain to create economic growth. that sounds pretty logical to me. however fractional gets into trouble when the amount borrowed doesn't spurn economic growth and create new wealth, does it not?

Gold, as well as other commodities, does seem to hold well against inflation. Traditionally, it hasn't performed as well as the general stock market, but it's done pretty well. If you're going to invest, there's nothing wrong with investing some of your money in commodities. Just don't put it all there, as the commodities market is not immune to fluctuations and dives (although, like I said, gold has been extremely stable).

gold is pricey. price over the last 10 years alone is quite wild! i may pick up an oz but i am getting a few hundred of silver. kinda neat.

It is interesting. It's also interesting that Greenspan's position has changed so much over the years. I'd like to know more about it.

has it? i'm not sure when the pre-article blurb was from but it sounded like he was a fan of the gold standard in both.


i have been learning about this stuff since last week, and was having a tough time finding anywhere with a knowledge base to speak about how this stuff works. is this all typical medium/upper levels of college macroeconomic classes? i was not having any luck finding out where the economists hang out online. but i really appreciate your time and knowledge.

it seems as if much of this comes down to theory, and the various schools of economics agree on some points and disagree on others quite strongly. i have come to like the austrian school of economics from what i have learned so far. although maybe its theories are too simple to model a modern us economy. or maybe the model in place is too complex by their standards?? i will say one thing, i think banking is something that everyone should have an understanding of, and i doubt more than 1% understand how it works today.

out of curiousity, what do you think of ron paul?

 

[chipmunk stew]

technically it still sounds like the member banks own the federal banks to me.

Ownership implies control. The only reason publicly-traded companies are "owned" by the shareholders is because the ownership structure is established that way. The private member banks do have a limited say in who gets elected to some of the Reserve Bank board positions, so I suppose technically you could argue that they are partial owners, but partial owners with no final authority in the structure or mission of the organization and partial owners legally prohibited from attaining any further ownership. It is utterly wrong to suggest that the Fed is owned by private international bankers.

but this site is saying that because the various boards represent the people and the congress created the bank, that the ownership is by the people - because the people's representation controls the actions they take, correct?

Correct. And if you look at who sits on the boards, you'll see that they're mostly not private bankers.

 

[JonnyFive]

please correct this as i'm sure it needs it:

creation of money

step 1. board of governors (7 president appointed members) decides to increase money supply.
step 2. federal open market comittee (board of governors + 5 heads of banks - heads are bank employees not government(true? if gov, how chosen?)) executes the creation of what the board stated.
step 3. fed creates money (federal reserve notes) out of nothing (as line item) and buys us securities - $100
step 4. not sure on this part but let's just say it's given to the ny fed reserve - $100
step 5. ny fed reserve loans out $1,000 to 10 banks @ $100 each
step 6. 10 banks each loan out $1,000 to individuals

so now the $100 bond was purchased, with nothing (aka the strength of the american economy) and has turned into $10,000 in the hands of 10 individuals (who will spend it and have it end up in other banks)

step 7. during whatever time the bond is still owned by the fed, the us government (from federal income tax?) is paying interest to the fed. the fed keeps a portion of this interest to cover operational costs (how is this defined? are the privately owned parts not able to give eachother raises and such?) and the remaining portion (what %?) is given back to the us government, to the treasury.

(All employees of the Federal Reserve branch banks are government employees, I'm not sure of the exact process of appointment for the Presidents of the banks)

The major break is at number 5. The issue is twofold:

1) The loans from the Fed are only short-term, and must be paid back in full with interest.

2) Private banks generally don't use loans from the Fed to lend money, choosing instead to borrow from other private banks or institutions. There have been exceptions to this at times, but generally they seem to avoid it.

This is the reason that the Fed's discount rate has such an indirect effect on inflation. The item that creates far more impact is the reserve ratio, which affects how much banks are actually able to loan out from their deposits.

The other big issue is the last step. The salaries of the Board of Directors are set by Congress. Although the Fed doesn't receive appropriation from Congress, it doesn't get free reign to just do what it wants either. Although the Fed is in many ways independent of control by other branches of the government, it was designed as such to prevent political issues from interfering with sound fiscal policy. The Fed operates within a framework like any other Federal agency, but with some level of independence from the influence of Congress. In this respect you might consider it to have a similar political independence to that enjoyed by the Supreme Court.

Ironically, this very independence from political influence is generally considered a negative by opponents of the Fed.

If you're curious about the salaries: http://www.federalreserve.gov/generalinfo/faq/faqbog.htm#3

The salary is quite nice, although I wouldn't call it extravagant. It seems comparable to the lower end of corporate CEO earnings.

An overview of how the system works, probably better written than how I can explain it: http://www.federalreserve.gov/pf/pf.htm

I suppose it's a possibility that the Fed could "go rogue" and cause harm, but that's a possibility for all branches of government, as well as all major private organizations. The real question is if the Fed has done so, which I don't think it has, or if the Fed has some greater propensity to do so or lacks the framework to discourage it from doing so, which I don't think it does.

 

[JonnyFive]

Ownership implies control. The only reason publicly-traded companies are "owned" by the shareholders is because the ownership structure is established that way. The private member banks do have a limited say in who gets elected to some of the Reserve Bank board positions, so I suppose technically you could argue that they are partial owners, but partial owners with no final authority in the structure or mission of the organization and partial owners legally prohibited from attaining any further ownership. It is utterly wrong to suggest that the Fed is owned by private international bankers.

Plus the stock can't be traded or sold, and can't be used as security for a loan.

Correct. And if you look at who sits on the boards, you'll see that they're mostly not private bankers.

Mostly, the board members appear to be economists or financial analysts of one sort or another. Generally, they appear to be people with experience and education in economics, finance, mathematics/statistics, business analysis, management, and accounting. They are, by and large, not investors. You make a nice living at the Fed, and it's a great job, but you're not going to make Bill Gates money working for the government.

 

[JonnyFive]

there is whisper on a "north american union" and amero but it probably requires a whole new (probably conspiracy) thread.

I'm not familiar with it, sorry.

re: dole commission - i have found other references to it called the 'gold commission' - it really seems to have existed but i have not had any luck finding any reports that it had created. references are mostly found on fort knox conspiracy sites. i think it interesting there has been no full audit of that either, should be an easy way to prove all those guys wrong. anyway no wikipedia entry on gold commission and so far i haven't found anything referencing what was supposedly reported in 1982.

Like I said, it sounds very fishy to me, especially as its based on a lie about the organization of the Fed system. If you find any more, please link me, I'd love to take a look.

the solution i think was offered earlier in this thread though seemed sound to me; is it what was done in the past? a bank that merely stored your money (and even charge you for the service) and a separate savings and loan, which operated more like a place where you would nail your money down into a 5 year cd and expect 3% back while they lent out that money for 7%.

To some extent, this is what we have now. There are places you can simply park your money (if nothing else, you could put it all in cash and get a safety deposit box ), although most places to put your money will either loan or invest it (which is really loaning anyway).

so a full reserve system would limit the amount borrowers could attain to create economic growth. that sounds pretty logical to me. however fractional gets into trouble when the amount borrowed doesn't spurn economic growth and create new wealth, does it not?

Yes, that is precisely the trade-off at hand. The issue is to determine what fraction of reserves can be safely lent out. This is one of the main duties of the Fed, actually. If they feel that banks are lending too much of their reserves for the economic climate, they can increase the reserve ratio and force those banks to call in loans to increase reserves. Similarly, they may decrease the ratio if the economic environment can support it.

gold is pricey. price over the last 10 years alone is quite wild! i may pick up an oz but i am getting a few hundred of silver. kinda neat.

Good luck with the investment. I haven't tracked the metals market very much, but it seems to do decently against inflation.

has it? i'm not sure when the pre-article blurb was from but it sounded like he was a fan of the gold standard in both.

Certainly at the time. However, since then he's been an ardent supporter of the Fed and has used the ability to issue credit to bail out the financial sector, if nothing else.

i have been learning about this stuff since last week, and was having a tough time finding anywhere with a knowledge base to speak about how this stuff works. is this all typical medium/upper levels of college macroeconomic classes?

You'd be introduced to the basics in an introductory econ class, and a decent macro class would teach you the basics of all this stuff (Federal Reserve, banking, etc.). Micro focuses more on individual/firm level decisions, pricing, etc. There are also specific courses on money and banking that go into more detail about technical stuff, but a macro course will give you a functional knowledge of everything involved.

i was not having any luck finding out where the economists hang out online. but i really appreciate your time and knowledge.

Sure. I like talking about this stuff, so I appreciate the opportunity.

i will say one thing, i think banking is something that everyone should have an understanding of, and i doubt more than 1% understand how it works today.

Well, economics in general (along with math) seems to be one of those "eye glaze" subjects for many people . I agree that it is important to have at least a basic understanding of it, as these issues permeate our lives.

out of curiousity, what do you think of ron paul?

To be honest, I know little to nothing about him.

 

[chipmunk stew]

I suppose it's a possibility that the Fed could "go rogue" and cause harm, but that's a possibility for all branches of government, as well as all major private organizations. The real question is if the Fed has done so, which I don't think it has, or if the Fed has some greater propensity to do so or lacks the framework to discourage it from doing so, which I don't think it does.

In fact, it may be the best checked and balanced federal organization in existence.

 

[Kage]

If you really want to avoid the pains of a free floating currency, put all your money into gold, and then sell enough each month to pay your bills. Nothing is stopping you.

 

[JonnyFive]

If you really want to avoid the pains of a free floating currency, put all your money into gold, and then sell enough each month to pay your bills. Nothing is stopping you.

This is certainly true. You could even keep it in a big vault in your basement.

 

[sickmint79]

If you really want to avoid the pains of a free floating currency, put all your money into gold, and then sell enough each month to pay your bills. Nothing is stopping you.

ha! that is quite an interesting option.

 

[sickmint79]

Ownership implies control. The only reason publicly-traded companies are "owned" by the shareholders is because the ownership structure is established that way. The private member banks do have a limited say in who gets elected to some of the Reserve Bank board positions, so I suppose technically you could argue that they are partial owners, but partial owners with no final authority in the structure or mission of the organization and partial owners legally prohibited from attaining any further ownership. It is utterly wrong to suggest that the Fed is owned by private international bankers.

Correct. And if you look at who sits on the boards, you'll see that they're mostly not private bankers.

by ownership i was really thinking more along the lines of who would receive any moneys. but my understanding now is that the banks get a flat rate and the people in control are all government employees; and regardless of how the year goes, they get paid the same either way.