The Creation of the Federal Reserve System

tl;dr
tl;dr

 

Dude, it's built right into the system. The Fed IS a cartel...we're talking about the money trust (Rockefeller, Morgan, Rothschild, Warburg, Kuhn/Loeb) - all competetors, meeting in secret together with government officials and Congressmen to draft a central banking bill designed to break up the money trust. In fact it was the opposite, the Fed is designed to limit competition among the money trust (by deeming certain banks too big to fail, forcing all member banks to adopt the same reserve ratios), enhance its member banks' profits at the expense of taxpayers through inflation, and use taxpayers to bail them out when their lending practices get them into trouble. Governemnt in turn has the benefit of having money created out of thin air infinitely and forever - no taxes necessary, to pay for whatever it wants, which ultimately comes in the form of inflation.

 

That's because it's the biggest problem with our economy. Just a minor detail there.

 

So your whole argument against the Fed is they purposely cause inflation to pay off their cartel homies?? Lol, comedy gold at it's finest!!!

 

Free banking.

That is false. If you're going to say that the government will regulate it, then you have to mathematically describe how it will take place, not the other way around.

Unsurprisingly you didn't read the OP. You just came in here to troll.

Free banking. Sound money. Abolish legal tender laws.

 

Disprove it.

 

You can print it out too.

 

It's impossible to disprove with you, because the catalyst that drives our economy is inflation. We strive to get inflation because of the positive results from having controlled inflation. Until you realize that we will strive for inflation every year for the next thousands of years, then there is no disproving anything with you.

And the funny thing is, the Fed's only control over this is giving banks more reserves to lend more money in to the economy. The money they give each other and the money the Fed makes is a moot point. Every year on average the Fed gives 95% of it's profits back to the Treasury.

 

fraud................

 

Special interest conservative. Don't forget the special interest part, don't kid yourself.

 

So you admit that you're incapable of disproving it. Glad we got that part out of the way.

Look around you...we're in a depression according to Paul Krugman (Keynesian). The results of your "controlled inflation" don't look so good to me. Why do you think that rising prices are a good thing? Prices should be falling if the market is healthy. Why do you think that destruction of savings is a good thing? How is that possibly good for the economy?

You've already admitted in the other thread that fiat currencies do not maintain their purchasing power, and never were intended to. That effectively means that you have admitted that all fiat currencies are ultimately destroyed, whether through hyperinflation or wars, etc. So how are we going to keep inflating our currency for the next "thousands" of years if it's going to hyperinflate long before that?

I'm not talking about the profitability of the Fed itself, I'm talking about the profitability of its member banks. Because the Fed and FDIC are always going to bail out its largest members, those banks can afford to make as many risky loans as they possibly can. That means they can create more money out of thin air to loan, and collect more interest on money created out of thin air. Then, when the loans go sour, they'll get bailed out. But only if they're deemed too big to fail, the small banks can be (*)(*)(*)(*)ed. That's how their competition is limited and how their profits are enhanced.

And you're wrong, it's 94%.

 

No, I'm saying your original premise is incorrect, therefore there is no reason to disprove it. The Fed giving bankers money is not inflationary.

Things have been worse. We are actually just spoiled. No one said to have a destruction of savings. The point is when people save more, the Govt needs to spend more in order to reach their target economic growth. Depressions happen when people stop spending their money. That is basic mathematical fact.

Nope, I have not admitted anything about hyperinflation. Like I have said, when our society fails hyperinflation will ensue. Hyperinflation will not cause our society to fail. Only in your uneducated brain is the quantity of money the determinant of economic prowess.

The Fed bailing out the banking system is not inflationary.

 

How is it incorrect?

Depends on what you mean by "giving bankers money" and "inflationary".

You mean during the Great Depression? Which was also caused by the Fed.

If by spoiled, you mean the Fed inflates the money supply and keeps interest rates too low too long so that people borrow beyond their means, our government is living beyond its means through a hopelessly endless amount of debt to the point where its destroying our credit, the dollar, and runs the risk of default? Then yes, I would agree.

None of this would happen if we had sound money that couldn't be created out of thin air, or a central bank that can manipulate interest rates at will.

Inflation destroys the purchasing power of savings. If you put your money in the bank in 1913, your money would only be worth 4% of what it was back then.

Unsustainable.

What is "target economic growth"?

What causes people to stop spending their money?

What exactly about the "failure of society" would cause hyperinflation? This statement is fiction and not based on mathematical reality.

I see you're resorting to your usual strawman tactics of making things up and putting words in my mouth. The quantity of money is not the only factor which affects prices. It's the quantity of money in relation to the amount of goods and services.

If it creates money at a faster rate than goods and services are being produced (which it historically has), then yes it is.

 

No it doesn't depend on anything. Paying bankers wages is not inflationary. Bailing out banks is not inflationary... banks aren't people.

More false claims

I mean by spoiled in the fact that me and my friends can buy whatever we want and have an incredibly spoiled life while their are people dying from the flu in Africa or working for a $.25 an hour in China. That's what I mean by spoiled. If this is what life is like with the Fed screwing up, I hope they "screw up" more often.

"None of this" is not a valid claim.

Don't put your money in a bank. Inflation rewards investors. Holding on to a medium of exchange should not be profitable in the long run. It's backed by plenty of empirical evidence.

Typically 2-3% growth in GDP per year

Plenty of things, in this case, they have less than they thought

Figure out what would cause hyperinflation then you have your mathematical reality.

Nope, it's the quantity of money * the velocity of money in relation to the amount of goods and services. You guys simply do not ever equate velocity in to any of your ridiculous unproven theories. Embarrassing!! If the Govt gave me $1 trillion, and I stuck it in my backyard, just because the money supply increased, doesn't mean we will have price inflation.

That's what we want. You are arguing as if our monetary policies are some secret. They are very up front in wanting to target a certain level of inflation. It's not some big secret.

 

The invisible hand.

It works for virtually everything else, why wouldn't it work for money?

When was this? Be more specific.

 

Crediting the accounts of how the Fed was created as largely true, it certainly is not the only piece of legislation that was passed based upon input from the private sector. That happens all the time.

The issue is, so what? The Fed was created to control the money supply with some supervisory authority over member banks.

How does that make the Fed a "cartel" any more than the EPA or the Department of Commerce, or indeed, the entire government, a "cartel"?

 

"Any more than"? The US government is one of the most powerful cartels in history.

 

How does the Fed system control competition?

There have been, since the Fed was created, thousands of banks that were created and thousands that have failed.

Nonesense.

The value of everything in the economy did not appreciate in value more than 2x between 1980 and 1983, nor has the value of everything dropped by 3/4 over the past few years.

There are big problems with using gold as money. That is why virtually no one does it. You cannot contract or expand the supply of gold based upon economic needs. Gold is subject to wild value fluctuations, and usually at the worst times. Why would anyone our money supply to be subject to the whim of investors and speculators, gold producers, and foreign governments?

 

It is not the Fed that deregulated the banking laws that allowed banks and financial insitution to expand into non-traditional businesses and get "too big to fail."

That was the Government.

 

I agree if you want to define "cartel" as the government you could say the Fed is a cartel.

But that is not the common meaning of cartel.

 

The creation of a domestic competing currency has been put at a significant disadvantage.

A) Even with a fiat currency those things still have great control over the money supply.

B) Why would anyone want our money supply to be subject to the whim of one institution?

 

Just because we use euphemisms in everyday language doesn't make the comparison any less true.

 

The creation of a domestic competing currency has been put at a significant disadvantage. [/quote]

And so how does that explain how the Fed controls competition between banks?

But not nearly so much. It is much more difficult for speculators to bet against the dollar when the Govt can contract or expand the supply at whim.

Because it is better for the our government to control our money supply than worldwide investors, speculators, gold producers, and foreign governments.

 

If you are only allowed to lend in USD they could never have competitors offering lower interest rates than the Fed. In addition, it decides who gets newly created dollars first; I can't jsut walk up to Helicopter Ben and ask for a loan.

It couldn't contract the supply if its life depended on it. And it very well may!

Why?

 

Inventing new definitions doesn't make it true.