InflationFollow

The purpose of the OP was to warn people that inflation would be a result of the banking bailout.

The conversation then evolved into the structural problems with our economy, which includes, but is not limited to by any means, the Federal Reserve.

My concerns about the Federal Reserve are not limited to the summary you posted above, that is simply a summation of issue #7 in my post. But yes, that is one of my problems with the federal reserve.

But lets be clear about the issue because this is a miniscule concern compared to the overarching problems with our economic philosophy. I am advocating a return to sound money number one and I am advocating that Congress coin our own money (like it says in the Constitution) instead of borrowing it from private banks.

I think that if we started doing this then a lot of these other problems that are a result of "floating free markets" would never come up, and the issue about the Federal reserve being a corrupt organization would be a moot point.

The purpose of the OP was to warn people that inflation would be a result of the banking bailout.

It's the STATED INTENT of the bailout. Who are you "warning" exactly?


The conversation then evolved into the structural problems with our economy, which includes, but is not limited to by any means, the Federal Reserve.

My concerns about the Federal Reserve are not limited to the summary you posted above, that is simply a summation of issue #7 in my post. But yes, that is one of my problems with the federal reserve.


I understand. Your other concerns are abjectly wrong and a waste of my time. They are, no offense, laughable, and require a belief in s near lunatic level of conspiracy among central bankers that would be transparently obvious if it were to exist, about 15 minutes after the first decision made because of it.



But lets be clear about the issue because this is a miniscule concern compared to the overarching problems with our economic philosophy. I am advocating a return to sound money number one and I am advocating that Congress coin our own money (like it says in the Constitution) instead of borrowing it from private banks.


They do. I'm not sure what you're advocating here, but Treasury DOES just print more money rather than borrowing it. If this were the only mechanism used to fund government, inflation would be somewhere in the neighborhood of 1500% per month. Can you see why?


I think that if we started doing this then a lot of these other problems that are a result of "floating free markets" would never come up, and the issue about the Federal reserve being a corrupt organization would be a moot point.

It wouldn't be a moot point, because you'd still need a central bank to distribute this money you're now printing 24/7 forever to other banks.

I'm not sure what you're talking about here. The Treasury DOES NOT print money

Of course it does.


, it borrows it from the Federal Reserve. Officially, the public buys government securities and then the fed prints money to buy the securities from the public, but you could just say that the fed buys the securities from the treasury, which means that the Treasury owes the Federal Reserve. This is where most of our national debt comes from.

I'm not sure what the other statement means, and I hope I am misunderstanding you, but it seems like you don't understand how money is created or what our national debt is.

I'm not sure you understand what the word "print" means. Stating that the Treasury doesn't print money is akin to stating DOJ doesn't investigate crimes.

Did you mean "control monetary supply", perhaps?

As to the second part, if you print money without debt, you get massive inflation. Let's use a simple example, as I'm sure any other would fail.

If there is $1 of US currency in the world, and you print $1,000,000 of currency, does the value of that original $1 increase or decrease? If, on the other hand, you take the current value of the existing $1 and issue 1,000,000 bonds in the amount of $1 each plus interest and print the money after those are purchased, now what happens to the value of the original $1?


I'm not sure you understand

Protip: Next time you consider typing these words in response to one of my posts, punch yourself right in the ******* 11 or 12 times. It will never, ever, ever, ever, be the case even if medicine allows us both to live 1,000,000,000,000,000,000 years that I'll understand anything less well than you do.

Set your ego aside, and stop wasting both of our time thinking it might ever be the case. Thanks in advance.

I should have used the word "create" instead of "print" to clarify, I think that is where we misunderstood each other.

If you're arguing about the word print, then you're right, the Treasury technically prints the money with its printing press, but it cannot create the money without going into debt to the Federal Reserve. The Fed also pays all of the expenses incurred to the Treasury when printing the Federal Reserve Note, aka the US Dollar.

Every dollar that is "printed" by the Treasury is owed, with debt, to the Federal Reserve.

As to your simple example, in both cases you are simply creating money which INFLATES the monetary supply, which means the relative value of the dollar has decreased which leads to a lower quality of life.

In the first case, the money is backed by nothing. Obviously no countries would do this (except maybe China) because it would lead to the collapse of the currency.

If you are talking about our current system, the second scenario has many problems.

1. We are going into debt (national deficit) to print the money because our government owes it to international bankers (Federal Reserve). This debt will largely be the burden of future generations.

2. There is no way to ever pay back the debt because of the interest. If you have to create more money to pay back the debt, but the newly created money has debt attached to it in the form of interest, there is no way to ever pay back all debts in full (unless entities file for bankruptcy, which we will see more of in the near future.)

The problems with the Federal Reserve system creating money is not limited to the fact that our government goes into more debt everytime it prints a dollar.

The more serious problem is the fractional reserve system which lets private banks create money on their computer when you take out a loan and which states they can create up to 90% more "fake currency" than they have in actual deposits to backup the loan, which is supposed to disappear when the loan is payed back. The problem occurs when the loan is not payed back and this "fake currency" is packaged and sold on the marketplace because of loosened regulations (e.g the mortgage crisis.) This leads to major economic crisis on top of massive inflation, which we are seeing right now. The bailout is supposed to help by going into debt to the bankers and creating more inflation, which is what got us into this mess and all of the other economic crises in history.

I don't think the government should be in the business of "creating money" in order to function. It can function with taxes that it collects through equitable laws. If we don't have the money to do certain things, then we simply don't have it, there is no reason to sell ourselves into slavery (or future generations) in order to live beyond our means.



I don't think the banking industry should be in the business of creating money out of thin air through the fractional reserve system and I think our system of credit is wildly out of control and part of what led to this current crisis, so they wouldn't be lending even a small fraction of what they do now.

The United States Treasury could print the money without going into debt to the Federal Reserve. The notes could either be redeemable for gold or silver. The printing of the notes could be tied to something like our yearly GDP so we can be sure that the value of the note has a correlative to actual goods and services produced.

Not to put on my tinfoil hat, but John F. Kennedy effectively stripped the Federal Reserve of the power to issue notes to our government with interest with Executive Order 11110. The new United States Notes were being printed by the Treasury when Kennedy was assassinated, and most of them were never circulated.








Edited, Dec 7th 2008 3:01pm by soulshaver

JFK thought it was a good idea.

But I guess you are probably much smarter and more informed than him, eh Smash?

Your ego is as inflated as our economy.

Let's not forget that Soulshaver thinks that the Coinage Act was on of Jackson's finest moments.

If you read my posts you would have understood that I am advocating:

1. A currency redeemable for gold or silver, just like John F. Kennedy tried to do the last 4 months of his life.

2. That the Treasury print our own US Notes, the amount would be tied to something like or GDP so there would be a correlative value to actual goods and services produced, not what the government imagines it wants to spend in any given year and without borrowing it from a private entity.

These two suggestions operate and may be implemented independently of one another.

Just to be clear, I want to make sure everyone understand their own position on this.

If you think I am an idiot for wanting to back our currency with something real and valuable (although no one has argued why thats not a good idea,) then you also think JOHN F KENNEDY is an idiot for doing exactly that.

If you think JOHN F KENNEDY was an idiot, then thats fine, but no one has yet made a case why.

Equating yourself to JFK is laughable, and caps locking a name sure helps to make your point.

Going back onto the gold standard would restrict the ability of the Gov't to respond to economic crises and speculation.

I thought JFK was an idiot already.

So, yeah.

I probably disagree with Gbaji on almost everything, but least he can occasionally describe, explain, or allude to a theory or fact, which is more than I've gotten out of most of the posters here.

If we're lucky he (soulshaver) will get his head blown off, too!