How The Monetary System Works - And Why It Seriously Needs to Be Replaced

Going to have to respectfully disagree with this. I think issuing money through debt is pivotal for sustaining economic growth. Interest rates are the little levers that control the monetary system. Keeps the economy moving.

 

You are still presuming the economy can make up for the interest difference even while the people running this take a cut (otherwise why would they do it in the first place). It can't. The economy cannot grow forever. You simply don't want to accept any flaws this system has.

You are ignoring the real reason they did this: it makes the bankers a nice profit and the government gets more power. That's why they do it. And they will crash it in the name of that while everyone is ignorant to what is going on. The fact that you presume they are doing this because it works better and not because it benefits the very people who set it up disproportionately is simply wilful blindness.

 

Lol, you are a conspiracy theorist. They did it this way because it works. Sure bankers get rich, but that doesn't change the fact that it's an effective monetary system that can handle massive problems like we experienced in 2008 with ease. What happened in this past recession will go down as one of the most historic achievements in the history of economics.

I have no clue what your fascination is with interest. It's just another expense like anything else.

 

“Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.” ~ Kenneth E. Boulding

 

Except it gives the bankers and the government a lot of power over the economy - in effect it's them pulling the strings, not us.

So basically you want the government and their banker friends making easy money and running everything because, what, you trust they'll never abuse it? They can't do wrong with it? We are so untrustworthy that we must have big brother manage things for us?

You can call me a conspiracy theorist, but it's people like me that call the government on their bull(*)(*)(*)(*), while people like you justify everything they do even while they rip you off, but you never believe they're ripping you off simply because they have a good bull(*)(*)(*)(*) excuse.

Of course it works, FOR NOW. But it's hardly fair to the rest of us.

 

Is that you Alan Greenspan?

The debt system is the reason the rich just keep getting richer. They are criminals in suits. The Pilgrims The Warmongering Pilgrims.

 

Your argument is purely ideological and has nothing to do with actual effectiveness of this monetary system versus any other. Bankers were filthy rich before the Fed was created. And what they do and why they do it does in fact have to do with the real economy and not some conspiracy to make bankers richer.

 

The debt based system makes a lot of people richer. We have more millionaires and billionaires than the next 9 countries combined with less than a tenth of the population. Our system is geared towards production and investment. I don't get why any capitalist would be against our current system, lol.

 

Because it is theft. It is immoral. Counterfeiting benefits counterfeiters not producers. The debt monetary system is the reason there are billionaires in the world and hungry kids on the street. It is criminal.

 

This monetary system drives growth at the expense of long term viability - the ultimate example of short term gains trumping sustainability.

I really couldn't care less whether it "works" - even if it does 100% work in some non-existent utopian world, it still leaves the government and the bankers in charge of those whole thing. The fact that you don't see a problem with this little cabal of people managing the entire economy shows that you don't believe these people are greedy or power-hungry. Somehow those traits, so common in humans, are absent from the group that runs this system.

You're damn right it's ideological. Even if this system wasn't driving towards a cliff I'd still oppose it - a bunch of bureaucrats and bankers who hold so much power already have no right to tell the rest of us how to run things unless you truly do believe everyone except those few people are utterly incapable of running anything without their help. All that would show is that you have a superiority complex towards everyone, the exact kind of person that seeks to have this kind of authority.

 

It's not theft at all.

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I would say they know what they are doing... and your opinion is not very credible...

 

1) What is terrible about it?
2) What would you propose as an alternative?

 

It most certainly is theft. It is counterfeiting. Counterfeiting is theft. Paul Warburg called it "elastic currency" in order to disguise what it really is ... debasement of currency. The founders thought that the death penalty was the appropriate punishment for debasing the money like the Federal Reserve does.

Congress was charged with determining standards of weights and measures. Keeping standards static is a proper role of government. A mile is 5280 feet. A foot is 12 inches. A gallon is four quarts. A meter is 100 centimeters, etc. In the Coinage Act of 1792 congress determined that the dollar is 371.25 grains of pure silver.

The Federal Reserve Act of 1913 debased the dollar and effectively changed the dollar standard. It is straight up theft and they tell us that. Elastic standards is an oxymoron. Changing standards causes chaos. Imagine if congress passed The Mileage Act of 2013 and set the length of the mile to 4000 feet. Runners could run a 3 minute mile and everyone would get better fuel mileage, but just think of the chaos it would cause in acreages and land deeds. Changing the dollar standard was a criminal act.

 

I don't think we've had 5% inflation since the early 1980s. How is institutionalized at 5%?

 

You are arguing that you know better than the financial experts that crafted this. Sorry, you are destroying your credibility. I actually enjoy your arguments most of the time because they are logical. This one isn't.. you sound like the right-wingers man.

 

Exactly, but that would be done with interest charged to banks. When you want to slow the economy you increase rates, when you need it working harder you ease rates. All you'd need then are controls on banks to be sure lower rates for banks result in lower rates for businesses and individuals when they take out loans. It's much more complicated than that, but I think it could work and eliminate any need for debt instruments. The difference is we've made banks hugely wealthy and equally as powerful under our current system.

 

He made up a number.

Historically it is 3%, the last 5 years it is 2%.

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We are never going back to the gold standard because it is a less effective monetary system. Too much inflation / deflation in waves with economy. Plus, you are pegging it to something that is fixed.

I suggest you learn what fiat currency actually is. The paper is nothing more than an I.O.U. trust document, backed by the "full faith and credit" of X country. It is more effective than the fixed amount of precious metal available.

 

The Govt pays interest for money it borrows. That's the reason.

Where are you going to get the trillions of dollars the Govt borrowed?

The Treasury doesn't create money and doesn't have the money to lend. The Treasury merely collects and distributes.

Banks lend money that does exist in the form of cash or its electronic equivalent, Fed reserves. When the payee of the loan proceeds deposits the money into a bank, new deposits are created.

The ability of banks to fractionally lend deposits, which has been going on for centuries, is a mechanism that provides capital that has allowed tremendous economic expansion. If banks couldn't lend money, the economy would be severely hampered.

Sure, they benefitted so much from the last downturn that the government had to bail them out to prevent and economic catastrophe.

Banks do not control the system, the Fed and the Govt does.

An economy where there is no lending would be crippled. Lending provides the means by which inviduals and businesses can obtain money to invest and consume which creates demand and business opportunity.

That's essentially what we do with the Fed.

US Govt debt is the means by which the Fed increases or decreases the base money supply. There are advantages to that, including the fact that the Fed doesn't have to worry about a default, and the fact that the US Govt debt it purchases result in interest on that debt being remitted back the the US Govt. What alternative distribution system would you propose?

What would surely be better?

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What is the profit bankers get that you are referring to? The dividend on the shares they hold (mandated by law) in the Fed? Their income on that is minimal.

 

Kind of a negative assessment on human ingenuity. We've been growing for at least 5000 years not, albeit with ups and downs.

 

It is true that banks, as a whole, have a lot of influence over the economy in their lending policies. What's the alternative? Ban lending?

What easy money are the bankers making you're referring to? Sure, I want the Govt to have easy money if it doesn't cost the rest of us.

How are they ripping us off?

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How is the debt system the reason there are billionaires in the world and hungry kids on the street?

What is the alternative you propose? No banks, no lending?

 

How so?

Who do you propose makes money policy if that an institution like the Fed?

 

Never say never. Utah has already passed a gold standard into law. Other States are considering legislation. I know exactly what fiat currency is the Continental, the Greenback, the Greyback, the Federal Reserve Note and the Zimbabwe dollar are all perfect examples. The only one still standing is the FRN and it is losing its reserve currency status as we type.

 

What is being counterfeited?

A low level of currency debasement is good for the economy. It encourages the billionaires to invest their money rather than stick it under the mattress. It allows for more rapid increases in income, making debt repayment more stable.

The later determined it differently.

So invest in silver if you think it is a better asset to hold.

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If you are eliminating debt, how could you control the money system with interest rates? Interest on what?

 

You really think it would be better to have our money supply controlled or influenced by gold producers, gold horders, speculators, and the whims of the market?

That was a big problem in the GD. When there is a recession, everyone hordes their money because they are afraid. The money supply contracts, and you have runs on the banks and massive deflation on top of your other problems.

 

The reserve currency status is not in jeopardy at all. Stop listening to fear mongering.