Why Donald Trump must shut down The Federal Reserve

Well, that depends.

You know the market for goods and services isn't zero-sum. If money is created and spent buying goods and services if supply must increase in order to meet the new level of demand, then creating new money does result in new goods and services produced. That can only happen if there are spare resources and labor to meet new higher levels of demand.

I think this comes back to the idea that either growth happens because:

1) Producers produce more stuff and buyers respond by consuming the new level of supply.

or

2) Buyers have the means to consume more stuff and sellers respond by increasing supply.

You seem to believe #1 is true, while I'll go with #2

Austerity is just reducing the means to consume (consumption) by cutting spending, which in turn reduces supply and results in unemployment.

Spending=income

Not spending=reduction in income.

 

Austerity is a reduction in consumption.

The means to consume remain the same.
What is available to consume does not.

A man has ten apples to last him 10 days.
If he consumes at a rate of 2 per day, in five days time, he will experience austerity.

Demand is infinite, supply is not. Just because you demand more apples, doesn't mean I can supply you with more apples. You must wait five years for new apple tree's to grow and even then you must pray to the weather gods for a good harvest.
Assuming of course I can find a new supply of unused fertile land to grow more apples on and that I have more free time available to do so. Plus I will need to hold back on you with an apple or two to plant with and to provide extra calories for my increased labours
If we changed our example to fish, over consumption can be seen to destroy all supply. Equally if we consume our seed crops, we can't replant.
So consumption of capital, over consumption, reduces sustainable supply. It destroys economies.


Spending = the opposite of income.
Outgoings.

Not spending = reduction in outgoings.

 

Or... could it be to get clearer information on.......
or enforce something that the Federal Reserve seems to be advertising that they are doing???

http://www.politicalforum.com/index...ral-reserve-is-doing-an-excellent-job.398648/

I just read powerful evidence that the Federal Reserve is doing an excellent job.

If dad2three is correct...... and if the Federal Reserve is actually doing this.......
then the Federal Reserve should be used to finance a large number of infrastructure projects all across America to fix and improve roads, bridges, schools, hospitals, museums.... and other government buildings.

If dad2three is correct......
the the problems in the USA are very similar to what has been happening in Canada since 1940.... and even more importantly... .since 1974...

 

Reductions in consumption result in a reduction in production. Reductions in production result in a reduction in employment. Reductions in employment result in further reductions in consumption which result in further reductions in unemployment.

All austerity does is destroy real output. A dollars value is based on real output.

No, you are confusing the desire to consume with the means.

Sorry, the real world uses money to acquire apples. At that Austrian crap about "a man and his apples" or a "man that trades his apples for oranges" is crap.

Again, you oversimplify to the point of not being representative of the real world. Yes, there are some goods in which increased demand will result in supply disruption, but there are very few goods that cannot be substituted for. Price of apples rises, more people eat pears, oranges, and plums. So a reduction in apples means increased consumption of other fruits.

The price of apples rises and only the people that can afford apples will buy them. It may take a few years to grow more apples, but the higher price is the incentive to grow more and eventually, the price will fall as supply and demand once again find equilibrium.

The point is, to meet new levels of demand requires more output., More output requires more workers and more workers mean reductions in unemployment and the NEED for increased automation, increases in efficiency and even the desire for increased immigration.

First, demand is not linear. Demand has a rate of diminishing return. I only need or want one clothes washer, maybe two if I had a huge family.

I have no desire to own more than one can opener.

The fact that there are hundreds of people with more than a billion dollars tells me that their demand for money, something that can be created infinitely is greater than the demand for real goods and services and this means that demand isn't simply "infinite". The desire to own "claims on productivity" (money) at some point, becomes greater than the desire to own things of real value, otherwise, there wouldn't be any billionaires.

Can you think of a situation where income can be earned selling goods and services that wasn't the result of someone else's spending?

Thus income cannot happen without spending. It is an economic truisim.

If everyone saved all their money, there would be no one earning incomes as a result of their work. This is because:

Every transaction as two results.

If I buy an "apple" from you for $1 the result is:

Me
+1 apple
-$1

You
-1 apple
+$1

If I don't spend my dollar you lose a dollar in potential income and I don't get an apple.

Can government spending increase real economic output and create value? Of course.

So let's say I got a check from the government for food assistance and I use that check to buy apples from you. No assistance check, I don't buy apples, you lose income that you would have otherwise have made. 100 people near you that buy your apples don't get an assistance check and 100 people that would otherwise buy apples don't, you end up having to reduce your price. Perhaps you layoff your help because at the new level of demand you need less labor. If the reduction in demand lasts long enough, the apple farm realizing the reduction in demand plants fewer trees and lays off next years apple pickers.

And despite the Austrian and Monetarists view that reductions in demand lead to reductions in prices, the reality is, the demand for apples is not infinite. Yes, you might sell more apples at a lower price, but there are two problems with that.

1) The farmer has equipment expenses (debt). A reduction in demand forces him to lower his prices but his bills remain the same. Thus reduces in prices may lead to the farmer to default on his bills (which has extended macroeconomic effects down the supply and banking chain).

2) A reduction in the price of apples (if we are using apples as a stand-in for virtually any product) my just result in a substitution effect. Meaning that while more apples are sold (because reduced demand lead to a lowering of prices), there may end up being a reduction in the sale of oranges...Again, because demand, despite your insistence, is not infinite.
___________________________________________________________

Now if the opposite happens and the government increases assistance by creating money from nothing and 200 people near you now want apples.

You run short of supply and raise your prices.

Now what? Everyone pays more, is that it?

No, because another entrepreneur sees an opportunity to sell apples at the "old price" by finding a farmer/s who has unused land to grow some apples. Enough to supply the new level of demand.

Because economies of scale can lower the cost of production, your competition now supplies apples at the original price AND makes an increased profit because the new supplier/s bought more equipment and were forced to compete on price (lowing margins but increasing volume) and as a result, the seller paid less /#.

It's called economies of scale and competition. It results in lower prices, higher output and greater employment.

Thus the only limitation on money creation is the limitations based on the potential increase in production (real resources and labor).

Now to your point about overfishing or overutilization of any raw material that results in shortages.

First, there is substitution, as I said. Running short of fish means that more people might buy chicken. It might also mean that there is profit in advancing technology in shipping fish in from areas that can produce more.

The problem with your examples is that you oversimplify them to the point of being unrepresentative of the real world.

 

Sure, but no one has put forth any compelling evidence that there is something that the Fed is hiding. The numbers are just that, and they speak for themselves.

Auditing the Fed has nothing to do with auditing the Fed....

Here is a page that debunks a lot of myths about the Fed...

Not exactly. The Fed cannot spend or finance infrastructure projects. It can only lend.

Congress via the Treasury, on the other hand, can instruct the Fed to instruct regional banks to put more money into the local banks for specifically into the accounts of contractors as payment to build more infrastructure. This increases the reserve accounts of those banks. In turn, companies increase real output because the government created money from nothing. As long as there are real resources and labor to build infrastructure, the cost will be the same or lower.

Bond sales happen later and is merely an operation to remove reserves back out of the system. This reduces the inflation potential of its earlier spending. The amount of bond sales today is related to the difference between government spending and revenues collected (this includes taxes). In reality, bond sales should be conducted based on inflation potential.

Not sure specifically of the problem you speak of.

 

My apologies for taking 17 days to think through a reply to your excellent questions Econ4Every1..........

..... I think that I finally have it..............

......... It is my belief that the national debt of the USA.... is more of an asset than a liability..........
because the fact that your national debt is in the range of twenty trillion USA Petro-dollars........

.... has off the scale ARTISTIC VALUE!

I have much more to write on this soon........
but I would like for you to take a look at the campaign of a man who I believe is all set up to shift the USA Conservative Movement.........
generally out of ignorance..........
and into a relatively much more well informed state..........

Mr. Peter Boykin is astonishingly intelligent and I believe that he will both understand.... and respond wisely to much of your writings on this and other forums!

Mr. Peter Boykin is in a position to play a HUGE role in 2018....

 

But... it is obvious that he is a pragmatist..... rather than liberal or conservative .... so there are many reasons why a pragmatist would want to do something like this.

 

Well... for one thing.... should the Federal Reserve give specific figures for the volume of "free money" that is put into the economy in the following manner?

https://www.facebook.com/groups/introductiontommt/
Intro to MMT - Modern Monetary Theory

N..... L.... :

I especially like N. L's idea of linking MMT to saving the environment.

Canadian economist John Hotson Ph. D. dealt with that subject a number of years ago.

How can we now reform our unsustainable financial system?

http://www.mailstar.net/money.html

 

Other than ignorance, stupidity, being mislead by creature feature type vids on the internet ... what?

 

I don't suppose it would help to point out to you that you'd be a lot less confused about thes issues if you didn't put weight into the ramblings of ignorant folks who have no idea what they are blathering about?

 

Am I incorrect in thinking that if Canada, Israel and Australia......
could come up with a method that sets in motion a series of events.......
that assisted the USA Petro Dollar to go through essentially zero
devaluation.............
... .would that not be somewhat like earning the USA federal government ten percent interest on
a 4.3 trillion dollar loan..... (at zero interest)..... in comparison to
allowing George Soros and Warren Buffet and some of the buddies arond the world to devalue the USA dollar by ten percent?

The larger question is.... could Soros and Buffet and their buddies.......
manage to devalue the USA Petro Dollar.... far more than merely ten percent?

Posts #1 - 3 here are a pretty simple summary of what I am proposing:

Should Sorek 2 be in Australia or California?

Buffett’s $55 Billion Gamble is a Bet on U.S. Collapse, Warns CIA Economist

 

CIA economists tend to be people who don't get hired for their ignorance!

https://totalwealthresearch.com/ric...-gamble-bet-u-s-collapse-warns-cia-economist/

 

Just a couple pointers.

You see how your article is not dated? That should raise a red flag. Articles from reliable sources are usually dated on their website.

Second, notice what happens when you click on the "According to a new SEC filing" in the third paragraph. Does it actually take you to a real SEC filing? That should be another clue that your source may be dubious.

Now, do a google search for "Buffett’s $55 Billion Gamble is a Bet on U.S. Collapse, Warns CIA Economist." You find lots of websites where this article has been reposted. But do you see any major news organizations reporting on it? Third red flag.

If you look around while you're googling, you can find copies of this article being posted going back to Sep 2014. Folks have been reposting this article, re-warning of Buffett supposedly pulling $55B out of the market, year after year, over and over. Fourth red flag.

Now, back in Sep 2014, when it looks like this article first appeared on the internet, the Dow was at about 17,000. It is now at 24,000. That is a 40% increase. If Buffet in Sep 2014 had pulled $55 billion out of the market and put it in cash because he was convinced of this supposed imminent crash, it would have been a very, very stupid move. He would have lost about $22.5 billion in profit compared to had he left it in stocks. Warren Buffet is not very, very stupid. He's very smart. Fifth red flag.

According to your article, this "CIA economist" is a guy named "Jim Rickards." You can find his bio here: https://en.wikipedia.org/wiki/James_Rickards. Says he worked on wall street for 35 years. Nothing about working for the CIA as an economist. Sixth red flag.

And if you do a little more research, you'll see he has lots of books and videos telling everyone the world is going to end any day now. There are a number of guys out there who make money doing this. Seventh red flag.

And that's just from a 10 minute research on my part.

Now, you can believe whatever you want. There folks out there who will believe just about anything they find on the internet, which is just about anything. I have fun with a guy who believes the earth is flat. There are actually people who believe donald trump is an honest fellow.

But, I'll reiterate. Maybe if you turn your skepticism dial up another notch or so, and do a little investigation and critical thinking about what source you rely upon, you may end up not being so confused.

 

Senator Rand Paul quotes Jim Rickards in this video.... and he
mentions the same number, 4.3 trillion USA dollars that AboveAlpha mentioned.

I'm impressed!

Is his statement that the global derivatives market is at 710 trillion accurate?


The article and video was done in 2014...... and the video is quite good.

I do believe that they are incorrect...but it takes serious intellectual courage to
warn people about these possibilities. .... or like you suggest.... he knows that he can
sell videos on these topics.




https://pro.moneymappress.com/p/MMR...1525314934-571105120.1525314934&h=true&h=true

FORGET IRAN, IRAQ, UKRAINE
THIS IS WHERE WWIII STARTS...

 

I agree. Instead of giving the concession of US treasury dollars to loan to a cabal of international, trillionairw bank swindlers, why not loan it out ourselves at 2-6%. We could then eliminate the income tax and the IRS which has been chipping away at the US Constitution and the Bill f Rights since it's inception. They have turned bankers from fiduciary agents of the bank customers into informants for the IRS.

 

The problem here is lost in the words we use and the meetings they convey.

If I sold you an IOU for $100 and promised to give you back $110 next week, did I sell you something or did I borrow something?

See how the language is a little confusing?

The Fed creates credits (dollars) and buys the government's IOU's. This has the effect of adding dollars to the economy.

So why doesn't the Treasury just add dollars and skip the Fed?

It certainly could, but the issue is the interests that control the two organizations.

Everyone despises politicians except when it comes to bankers. Apparently, we trust bankers even less because most people want the Treasury (overseen by politicians) to issue money, not the Fed.

I'm no fan of bankers, but at least most have a decent understanding of banking. Instead, you're asking politicians to run the money system and expect a better result?

Again, let's go back to my example. I want you, for this example, to imagine that I am the Federal government and you are the private sector economy.

I create an IOU, I sell it to you for $100 and promise to repay $110. What happened?

You have an IOU. It is really a trade for money now for more money in the future. It is no different than depositing your money in a bank and earning interest. When you buy an IOU from me you are just saving an interest-bearing asset.

Next week comes and I owe you $110.

Where do I get the money?

Since I'm the government I could just create more IOU's and sell them to others and use the proceeds to pay you the amount of the IOU you purchased plus the interest.

So I create the money to repay you the $110 and at some point sell more IOU's.

How do I know more people will want to buy my IOU's? What if no one is willing to buy them?

This explanation is a tiny bit more difficult and I'd be happy to explain, but it has to do with the trade deficit.

Why $18 (now $21) trillion? Because that's the amount of money the private sector wants to do business. How do I know it couldn't be $10 trillion?

Easy, because in order for it to be $10 trillion, the US government would have to increase all of our taxes to repay the outstanding IOU's. When the IOU's are repaid the dolalrs go from the hands of spenders to the hands of savers (remember when you bought an IOU, you were saving). When people save they aren't spending.

So $10 trillion dollars could be removed from the economy, but today that $10 trillion is being used to buy stuff. What do you think would happen if you removed $10 trillion dollars in spending? Spending that ends up as $10 trillion dollars of income.

Imagine 10's of millions of people unable to find work as demand for goods and services plummets.

Ending the Fed will only make things worse. If you want inprovement you need to acctually learn how the system works so you can support intellegent policies.[/QUOTE]

 

yes, but the house of cards is in play, bringing it down helps no one

 

if you got rid if the income tax today, in ten years your life would be the same, just the government would have less money to spend on roads, police and stuff

just like at first two family members working was a huge boon, now it's pretty much required

corporations just raise costs to match

 

This is false. The government doesn't need tax money in order to create new dollars. The problem that would arise if the government kept spending without taxes would be the potential accumulation of new dollars in the economy that could outpace that nations productive sector to put those dollars to use. The result would be inflation.

That is, of course, the entire point of Federal taxes. To maintain the scarcity of dollars and prevent inflation.

 

What's the value of a Superbowl ticket? What about an Amazon gift card? A movie ticket?

They are all intrinsically worthless tokens given extrinsic value because of what can be quired by the holder.

Virtually anything in the world that is up for sale can be purchased with US dollars giving US dollars extrinsic value based on what can be purchased with them.

 

Wow!

Brilliant replies as always my friend and I also just got a fascinating
personal message that relates to all this:

All of this sure helps me to be less worried about the possibility of
more than one million Americans.... losing more than one million dollars each
as has been on my mind these past months????

http://www.politicalforum.com/index...ump-has-a-4-3-trillion-dollar-problem.531929/

P. M. Netanyahu, President Trump has a 4.3 trillion dollar problem....

 

The point is to fund the Federal Government.

 

Thanks for the reply. I hope you open to a conversation so I can show you, that the government does not "fund" itself via tax dollars.

The government can and does create dollars. Logically, people wouldn't have dollars unless the government created and spent them, right? I mean, step back and think about it. How could people have dollars (to pay taxes) before the government created and spent them? How could the government create and spend dollars if it had to get them from the people in the form of taxes?

You might be tempted to say that banks lend the money we have into the economy and the government taxes it way and that is where the government get's the money, but this isn't how it works. Banks have to have reserves before they can create credit (make loans). Thus, the banking system merely serves as a way to magnify the government's money. In this way, the government only has to manipulate a reliable small pool of money in order to conduct monetary policy (e.g. raise or lower interest rates).

Today there are so many dollars circulating that this distinction is hard to see, but if you take it back to the beginning, you'll see that my logic is undeniable.

Of course, the banking system and the credit it creates makes it hard to see what is really happening. Some might claim that banks create all the money we use, which would logically mean that if people stop borrowing that as loans are repaid that all the money in the economy would vanish. But can't banks just create dollars and the government acquires them? No, because as I said, banks have to have dollars (reserves) before they can make loans. So if the government hasn't created dollars, banks could never lend in the first place.

Truth is, ~95% of all the money circulating in our hands would vanish if all bank loans were repaid. All the spreadsheets in all the banks in the world (that deal in US dollars) would eventually sum to zero. What would be left is the government's money. You probably recognize "government money" as "reserves". Reserves are not lent, and they are not spent except when people withdraw cash. Cash is a physical representation of reserves. Banks require reserves in order to create credit.

Have you ever heard a story about how banks don't like it when you take out cash? The reason is, for every $100 you withdraw in cash (cash is money created by the government) the bank loses $1000 in potential credit creation.

Anyway, apologies for the rant, but suffice to say the government is the monopoly issuer of the US dollar. It can create as many as it wants entirely independent of the collection of taxes (though that's not to say it should create as many as it wants). Today, the government imposes a constraint on itself that says that for every dollar it creates it must remove a dollar from circulation (in order to prevent inflation). It does this by ensuring that the issuance of new bonds exceeds the redemption of old bonds.

Here is an example of the daily Treasury statement. If you look at virtually any statement, you'll see that issues exceed redemtions.

https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=a&fname=16093000.txt

THis process you probably recognize as "rollover".

When you (or anyone else) trades dollars (bank credit or the government's dollars) you are simply swapping one government liability (dollars) for another government liability (bonds).

The reason they do this is to remove liquid dollars and turn them into interest-bearing savings (savings is money that does not circulate and cannot cause inflation).

If dollars are a liability of the US government (and they are), find me an example anywhere in the world where it's possible to spend a liability? It may sound like "on paper" stuff, but it matters.

 

Not really. It's both. Looking at accounting in the most basic possible terms (Assets = Liabilities + Equity), the exchange means that one of my asset accounts (probably cash) has gone down and another of my asset accounts (notes/accounts receivable) has gone up. Meanwhile, your assets and liability have both gone up. You have sold me something and you borrowed something. You've sold a debt.

 

Sure, the point was, most people look at it solely as a debt.

If I sell you my services and I ask for the money up front, have I borrowed something or sold it?

Until you receive my services, technically from an accounting standpoint, I have borrowed your money and will satisfy that debt by providing my services in exchange.

Now what's more interesting is that if I sell you an IOU and promise to repay with more IOU's, what has it cost me?

Well, first, no one would take my IOU's. As Minsky pointed out, it's easy to make money, the hard part it getting others to accept it.

But what about the government? It creates IOU's and people do accept them. The government sells its liabilities (bonds) in trade for liabilities it created (dollars) and people accept that.....Why?