The Biggest Scam in History

[Sceptic-PK]

and worst of all, the necessity of a central bank which introduces the horrors of unending government debt

Congress is responsible for the debt you fool, not the central bank.

 

[marplots]

Tippit,

A couple of things.

How do Muslim countries work it? I understood that collecting interest was against Sharia law. Do they have a functional system that doesn't use fractional reserve?

The other thing is what happens in a situation where there isn't a government controlled money supply and fractional reserves -- does loan sharking arise in response?

I do not understand much about the topic but have been following the discussion here -- a long way of saying I am actually asking these things and don't have an underlying agenda or point to make.

 

[se7ensnakes]

kevinquinnyo

The question is not "should money be created out of thin air or not", but rather who should have the right to do so. Money, after all, should serve as a means to facilitate commerce. Should we let your neighbor legally create money out of thin air? How about McDonalds or Walmart. If they are able to do so, do you run the risk of loosing everything you own?

 

[se7ensnakes]

skeptic-pk The mechanics involved in the national debt is an artificiality. If the government can create a bond it can create debt free money. The only difference is that with securities there is a mediator who makes money.

 

[stilicho]

I would also abolish the central bank, and put a moratorium on government borrowing, if not ban it outright. I'm tired of the government borrowing in my name, and tired of paying foreign central banks interest with my tax dollars.

And this is why you are Mr Rambling-On-The-Interwebs instead of the dictator of the universe. I never tire of loaning your federal government my money. I like to do that especially in times of financial turmoil because it's a safer haven than anything else, including the much-vaunted gold and silver.

I am for the government's involvement in banning it entirely, right after we abolish the Federal Reserve, followed by a return to constitutional money (gold and silver).

I want constitutional money too only I want it denominated in watermelon seeds because I have a lot of them. And I want people to value watermelon seeds for what they are--real money.

 

[Travis]

The question is not "should money be created out of thin air or not", but rather who should have the right to do so. Money, after all, should serve as a means to facilitate commerce. Should we let your neighbor legally create money out of thin air? How about McDonalds or Walmart. If they are able to do so, do you run the risk of loosing everything you own?

Can I redeem my neighbors money anywhere?

 

[Toke]

Can I redeem my neighbors money anywhere?

I don't see why we need any legal changes for your neighbour to print his own IOU's/notes and try to get them accepted as valid currency around town?

 

[Skeptic]

I have man-boobs, want to see them? I'll jiggle them for you for 5 bucks.

You mean, he pays you a fiver if you promise not to do it?

 

[Skeptic]

Hey, se7ensnakes, send all your worthless, created-out-of-thin-air, pieces of fiat money to me! Why have such worthless pieces of paper crowding up your place?

 

[Giggywig]

You mean, he pays you a fiver if you promise not to do it?

I believe the offer is up to $10 now. Make it $20 and I'll put a jacket on.

 

[Tippit]

Hey, se7ensnakes, send all your worthless, created-out-of-thin-air, pieces of fiat money to me! Why have such worthless pieces of paper crowding up your place?

For someone nicknamed "skeptic", you have a serious reading comprehension problem. No one is suggesting that fiat money is worthless. It's worth something precisely because big guys with guns will come and take everything you have if you don't pay your income taxes. You are required to remit your income taxes in Federal Reserve Notes, thereby creating the demand for them.

This doesn't change the fact that the issuer of fiat money can skim off of the top of the economy by using paper/electronic money that he didn't have to exchange his labor for, unlike everyone else, in exchange for scarce goods and services in the real economy.

So your clever plea for "worthless" fiat money belies your total lack of understanding of the issue.

 

[Sceptic-PK]

So your clever plea for "worthless" fiat money belies your total lack of understanding of the issue.

Ooh look, it’s Captain Irony.

 

[stilicho]

This doesn't change the fact that the issuer of fiat money can skim off of the top of the economy by using paper/electronic money that he didn't have to exchange his labor for, unlike everyone else, in exchange for scarce goods and services in the real economy.

In the old days they would just show up at your door with a Quo Warranto writ.

Provide examples of three individuals who "skim off of the top" instead of working. Who are these people who don't work? I'll bet they do work but you're just jealous of their success.

 

[Emperor_Gestahl]

Many of the quotes are completely out of context, and why should I care what some antiquated politician had to say about a system they probably didn't understand anyway?

It's just typical conspiracy theory garbage full of half-truths and distortions (or even completely made up). CTs love to provide quotes rather than more logical argument with deductive reasoning. Quotes are meaningless. What some guy thought about banking 200 years ago is meaningless.

If quotes are fabrications or urban legends that's one thing but "why should I care what X said Y years ago" reeks of hubris and ignorance. I suppose you think modern thinkers are the be-all end-all of intellectual achievement? You know who else thought that? Everyone. Ever. What year do we stop listening to Albert Einstein?

"What the inventive genius of mankind has bestowed upon us in the last hundred years could have made human life care free and happy if the development of the organizing power of man had been able to keep step with his technical advances. As it is, the hardly bought achievements of the machine age in the hands of our generation are as dangerous as a razor in the hands of a 3-year-old child. The possession of wonderful means of production has not brought freedom — only care and hunger." -Einstein

Oh but that was a long time ago, we've probably fixed all that by now eh? Gee to listen to that paranoid old-timey guy talk you'd think he actually opened a history book and thought he could use it to infer important facts about human nature/tendencies. We fancy modern geniuses could bring about heaven on earth if only (insert excuse here) couldn't we? Oh and I've evolved a more flexible arm for improved back-patting.

Many of those quotes, if they're in context and legitimate, bear real discussion. This thread may not be the place to do that but don't act like we should just ignore things written by founders and prominent historical figures.

You can be right about "typical conspiracy theory garbage" and still be a fool yourself.

 

[kevinquinnyo]

So your clever plea for "worthless" fiat money belies your total lack of understanding of the issue.

Ooh look, it’s Captain Irony.

Where's the irony? Did I miss something?

It would be ironic if he argued that paper money was worthless, and ended up on a deserted island with a bag of cash, and used it to start a fire. You know, something fun like that.

 

[Sceptic-PK]

If quotes are fabrications or urban legends that's one thing but "why should I care what X said Y years ago" reeks of hubris and ignorance. I suppose you think modern thinkers are the be-all end-all of intellectual achievement? You know who else thought that? Everyone. Ever. What year do we stop listening to Albert Einstein?

The problem here is I don’t think you quite understand the nature of the “evidence” being discussed. They aren’t evidence of anything regarding finance/banking/economics, they are merely the opinions of the given person at the time. So, if we were researching the history of opinions regarding banking over the last couple hundred years, they would indeed be worth considering (assuming of course that they were accurate and in context, which of course, many of them are not).

Your comparison to Einstein is, quite frankly, absurd. Is Einstein remembered for his one-liners, or his mathematical proofs and scientific theories? The quotes in the OP don’t present any evidence, just conjecture and opinion.

Why would we place any emphasis on the rhetorical gymnastics of say, politicians with regards to banking, when we have a wealth of data/studies on financial or economic issues to better understand the topic? Especially when such data and information is 200 years newer than the supposed quotes themselves? I wasn’t arguing that old information or analysis per se was irrelevant, only with regards to things like finance which have changed dramatically over the last few centuries.

Data & evidence trumps rhetoric and hyperbole any day of the week.

Many of those quotes, if they're in context and legitimate, bear real discussion.

Sure, if you wish to discuss the history of opinions re banking. Otherwise, they’re largely useless, except for conspiracy theorists who are unable to present more current economic data to support their wild and unsubstantiated opinions.

Where's the irony? Did I miss something?

It's ironic because Tippitt understands vritually nothing about economics.

 

[Emperor_Gestahl]

In the intervening time the banks did in fact assume control over the money supply. Has something changed in the capacity of such power to be abused? An opinion on whether a group can be trusted with that particular power isn't outdated so long as the feared possibility isn't ruled out.

If the "information and studies" of the last 200 years have somehow prevented inflation and deflation from being potential tools for siphoning public wealth please explain. If not we can only debate whether or not that power is being / will be / has been abused, and 200-year-old opinions could be entirely relevant.

Einstein was prolific as a philosopher as well as a scientist but I guess that can be lumped in as "old useless opinions"? Just cut him off at relativity huh? After all it's "what he was remembered for".. Keep the history books short and sweet, we'll educate our children that much faster right?

Again I don't think this is a good thread for discussion of past presidents or founding fathers, but don't just throw the relevance of these people's opinions out the window unless you're planning to show what new development has invalidated them.

(Edit: The OP is clearly biased, and some quotes so far have been called on having no source.. Not to mention we've attracted some snark/ad-hom factories. (Ok maybe this is ironic. And maybe this is ironic.) If someone wants to come forth with solid citation and have a real discussion make a new thread and hold the agenda at least long enough to write a neutral-looking OP.)

(Edit 2: se7ensnakes, do you realize that if you made a topic consisting of only a few well-cited quotes, complete with a subject-line that doesn't announce to the world that you have already made up your mind, you could make an OP that is shielded largely from your considerable confirmation bias and presents a topic that is actually discussable by non-ideologues on either side? If it's then derailed back to this same conversation at least that would be somebody's fault (maybe yours or Tippit's again but it's a step in the right direction)).

 

[Sceptic-PK]

In the intervening time the banks did in fact assume control over the money supply. Has something changed in the capacity of such power to be abused?

The money supply is controlled by the central bank, an independent government agency. So yes, I would argue that this has changed in the last few hundred years.

An opinion on whether a group can be trusted with that particular power isn't outdated so long as the feared possibility isn't ruled out.

Well, as long as the “group” is accurately identified (ie NOT private banks) then I would argue that it is necessary to illustrate when/how the central bank is not be trusted. Note that this isn’t the same thing as illustrating central bank mistakes.

If the "information and studies" of the last 200 years have somehow prevented inflation and deflation from being potential tools for siphoning public wealth please explain. If not we can only debate whether or not that power is being / will be / has been abused, and 200-year-old opinions could be entirely relevant.

I would prefer it if you explain how inflation/deflation “siphon” “public” wealth. The increase/decrease of purchasing power isn’t siphoning of anything. Indeed moderate inflation is the natural byproduct of a growing economy, it creates risk and spurs investment. No economic system will ever be perfect and problem free, and I would prefer discussion concerning finance/banking/economics in 2010 limit itself to the facts rather than referencing unsubstantiated opinion from decades/centuries-old people (in bite-sized quotes no less).

Einstein was prolific as a philosopher as well as a scientist but I guess that can be lumped in as "old useless opinions"? Just cut him off at relativity huh? After all it's "what he was remembered for".. Keep the history books short and sweet, we'll educate our children that much faster right?

You’re going off on pointless tangents. We’re not talking about philosophy. We’re talking about economics. If you want to discuss Einstein’s contribution to that school of thought, start a thread in the philosophy section. All I was pointing out is that isolated (out of context) opinions are not to be given nearly the same weight as proper economic analysis (insofar as we’re discussing the “evils” of central banking and fiat money). Again, opinion isn’t evidence of anything other than what that person happens to believe.

If you’re so enamoured with the nonsense in the OP, why don’t you show us why it is accurate and relevant? Why not show why these quotes are notable, with relevant economic examples?

Again I don't think this is a good thread for discussion of past presidents or founding fathers, but don't just throw the relevance of these people's opinions out the window unless you're planning to show what new development has invalidated them.

I am unfamiliar with some of the quotes in the OP, but quotes like this

“The modern banking system manufacturers money out of nothing. The process is perhaps the most astounding piece of sleight hand that was ever invented” Sir Joseph Stamp – Director Bank of England 1928 – 1941 (Reputed to be the 2nd richest man in England at the time)

are just plain stupid. There is nothing inherently wrong with creating money “out of thin air”, despite the number of conspiracy theorists who insist on complaining about it. Since I know this quote to contain nothing but rhetorical nonsense, why should I be concerned with it? What does it tell me about the banking or financial systems, other than Mr Stamp thinks fiat money is a form of magic trick? Please tell me what it means.

 

[Emperor_Gestahl]

The money supply is controlled by the central bank, an independent government agency. So yes, I would argue that this has changed in the last few hundred years.

Um, no. I'll read the rest in a moment, but that is incorrect. The central bank has control over some things but the ability to create money lies with individual banks who may lend, secured or unsecured, and bring dollars into existence. The fed may have a steering wheel but it is NOT the boat nor is it the ocean.

(Edit: Ok now the rest.)

I would prefer it if you explain how inflation/deflation “siphon” “public” wealth. The increase/decrease of purchasing power isn’t siphoning of anything. Indeed moderate inflation is the natural byproduct of a growing economy, it creates risk and spurs investment. No economic system will ever be perfect and problem free, and I would prefer discussion concerning finance/banking/economics in 2010 limit itself to the facts rather than referencing unsubstantiated opinion from decades/centuries-old people (in bite-sized quotes no less).

Moderate inflation does not, you are conflating me with Tippit. As long as the rules are understood no one is getting fleeced. But deflation is not moderate or stable inflation. Deflation is an increase in the purchasing power of the dollar, and it benefits the people who have dollars or can generate them.

The expectation of moderate inflation ill prepares people for deflation. Anyone prepared for deflation can easily gather the assets of those who are not.. The hypothetical use of the money supply as a tool to siphon wealth from the general population I don't think is in real contention. The debate should be if it is happening / will happen or not. Tippit may be wrong in general but you're fighting the wrong fight entirely

 

[Sceptic-PK]

Um, no. I'll read the rest in a moment, but that is incorrect. The central bank has control over some things but the ability to create money lies with individual banks who may lend, secured or unsecured, and bring dollars into existence. The fed may have a steering wheel but it is NOT the boat nor is it the ocean.

No, private banks may lend 90% of their reserves. They don’t create the money, the central banks do (or if we’re getting technical, the mint does if we're talking cash). But in any case, yes private banks have an influence on the money supply, through fractional lending, but they do not control it because they cannot lend what they don’t have, whereas the central bank may simply create more money at the behest of the government. The private banks don’t go “Hey, let’s expand the money supply this week!” they say “Hey, let’s lend $X to Fred because he wants to buy a house”.

So, in theory there’s what, a 9x theoretical maximum for money created by the central bank? I forget, maybe its 10x. but that’s not “control” of the money supply.