Lessons from John Galt

[MystifyingVol]

Great read: Big Government Blog Archive Lessons from John Galt

Some of the comments below are very enlightening, one specifically caught my eye from JohnK144.

...I agree with some of your thoughts, but the danger in "living off the system" in order to kill it is that we may actually feed into the Cloward-Piven strategy of overwhelming the system in order to bring in the "progressive" state. If we really want to starve the beast, we need to go after its real food supply; the monetary policy control of the Federal Reserve, and the derivatives market of the large investment banks. Withholding our tax dollars and demanding a welfare check will not work. That will only embolden the militant progressives to take advantage of the ensuing "crisis." We need to reimpose a Glass-Steagal standard on the banking system and drag the bogus derivatives market through bankruptcy. There we can write off 10 trillion dollars in phony "debt." Next we crush the fiat monetary system and replace it with a true credit system, based on the real productivity of our human and physical resources and industry, instead of the current system that issues money as debt that is based on nothing.

If we start to do it this way, we restore human productivity and human dignity, and at the same time diminish the "need" for welfare, food stamps, section 8s, and all other poverty programs. This above all else is what will bring down the "progressive" totalitarian takeover.

Spot on in my mind, if we can get rid of the Federal Reserve and return to sound money, it goes a long way towards fixing the majority of the issues in this country.

 

[gsvol]

k:

I posted some on the topic tonight in the 'gsvol compendium' thread, it's on the last page.

 

[shootermcgavin7]

Spot on in my mind, if we can get rid of the Federal Reserve and return to sound money

"Getting rid of a central bank" and "sound money" do not belong in the sentence together.

Our money was relatively sound until Nixon abandoned the gold standard to win re-election. It had nothing to do with the Fed.

 

[gsvol]

"Getting rid of a central bank" and "sound money" do not belong in the sentence together.

Our money was relatively sound until Nixon abandoned the gold standard to win re-election. It had nothing to do with the Fed.

Our money hasn't been sound since the federal reserve act was passed in 1913!!!

It has everything in the world to do with the fed.

 

[shootermcgavin7]

Our money hasn't been sound since the federal reserve act was passed in 1913!!!

It has everything in the world to do with the fed.

See:

Panic of 1907

After reading Bruner & Carr, see the other periods when we did not have a central bank:

Panic of 1893.
Panic of 1890.
Panic of 1884.
Panic of 1873 (maybe the worst).
Panic of 1866.
Panic of 1857.
Panic of 1847.
Panic of 1837.



The Panic of 1819 was largely caused by horrible monetary policy after the War of 1812 (where there was *gasp* no central bank); the 2nd Bank of the US was started in 1816 to try to fix things but they were unable to do so in time.

You might say the same about the post WWI Fed and the Great Depression.



To my knowledge, we have never had a major financial panic when we have had both a backed currency AND a somewhat long-tenured central bank. Please, please correct me if you know otherwise.
The last two I've listed were the closest to meeting the requirements, but the problems started for the 1819 meltdown before the 2nd Bank was chartered, and the Western nations had started the post-WWI deflation long before the Great Depression.

Again, I'm attempting to state facts (and leave opinion and fictional heroes out of the discussion).

 

[shootermcgavin7]

Our money hasn't been sound since the federal reserve act was passed in 1913!!!

It has everything in the world to do with the fed.

Also, on a more immediate note, I was unaware that the August 1971 announcement that the gold standard was being abandoned had anything to do with the Fed. That was a move by the US Treasury (the executive branch), not the Fed.

 

[gsvol]

See:

Panic of 1907

After reading Bruner & Carr, see the other periods when we did not have a central bank:

Panic of 1893.
Panic of 1890.
Panic of 1884.
Panic of 1873 (maybe the worst).
Panic of 1866.
Panic of 1857.
Panic of 1847.
Panic of 1837.



The Panic of 1819 was largely caused by horrible monetary policy after the War of 1812 (where there was *gasp* no central bank); the 2nd Bank of the US was started in 1816 to try to fix things but they were unable to do so in time.

You might say the same about the post WWI Fed and the Great Depression.



To my knowledge, we have never had a major financial panic when we have had both a backed currency AND a somewhat long-tenured central bank. Please, please correct me if you know otherwise.
The last two I've listed were the closest to meeting the requirements, but the problems started for the 1819 meltdown before the 2nd Bank was chartered, and the Western nations had started the post-WWI deflation long before the Great Depression.

Again, I'm attempting to state facts (and leave opinion and fictional heroes out of the discussion).

Andrew Jackson got the central bank out and paid off the US debt in three years.
Two attempts were made on his life btw.

Lincoln avoided huge war deficits by issueing contitutional greenback dollars, probably why he was assassinated.

After the war of northern aggression some large bankers and financial instutions created panics in the hopes of getting another central bank in America.

McKinley was assassinated in 1900 most likely because he oppose the international central banking interests.
His solution was to charter state banks in every state.

The panic of 1907 was another incident created by those who desired another central bank.

Finally in an event eerily similar to this past week's healthcare legislation, Wilson introduced the Federal Reserve Act after many congressmen and senators had departed for home and Christmas celebrations.

Just as in obamacare, the bill was passed without even reading the fine print by most and was misrepresented by Wilson as to it's nature.

The central bankers and other wall street interests financed the bolshevik coup in Russia.

Skipping over the great depression which was worse than any 'panic' in American history and without discussing the mysterious deaths of at least two congressmen who fought the fed tooth and nail, JFK issued US Treasury Silver Certificates as a first step toward going back to a constitutionally approved and sound money policy, less than four months later he was dead and the following week silver certificates were taken out of circulation.

We'll never know what Robert Kennedy would have done, he didn't get the chance.

Federal Reserve notes are backed only by the belief that the American people will continue to work and pay taxes.

Do you dispute the facts of anything in my post??

Also, on a more immediate note, I was unaware that the August 1971 announcement that the gold standard was being abandoned had anything to do with the Fed. That was a move by the US Treasury (the executive branch), not the Fed.

It was done to keep gold in the US Treasury.

Remember the day when Soros made a billion dollars when the British treasury tried to hold down the price of gold??

The US Treasury is the property of the people and subject to the executive branch of our government.

The Federal Reserve is a private banking system.

What do you think of the Federal Reserve Transparency Act of 2009??

The two most important things to know, fiat money and fractional banking benefit a few people almost immeasurably but cost the rest of us tremendously.

 

[shootermcgavin7]

Do you dispute the facts of anything in my post??

this post is a giant mishmash. I did, however, notice that you didn't list any counter-crises to my prior post. It may be worth staring a post with your new monetary history of the US where we can discuss. My point was rather simple: an easy, empirical observation.

It was done to keep gold in the US Treasury.

A simple increase in interest rates would have done that..........like it had for centuries.



Care to guess why abandoning the gold standard was more appealing to Nixon that close to an election?

 

[gsvol]

this post is a giant mishmash. I did, however, notice that you didn't list any counter-crises to my prior post. It may be worth staring a post with your new monetary history of the US where we can discuss. My point was rather simple: an easy, empirical observation.






A simple increase in interest rates would have done that..........like it had for centuries.



Care to guess why abandoning the gold standard was more appealing to Nixon that close to an election?

How can you understand so little??

Raising or lowering interest rates had nothing to do with depleting the treasury gold reserve.

The price of gold in the treasury was set at $35 an oz, on the free market it was bringing around $400, we could sell all the gold we wanted at $35 but it wouldn't have lowered the free maket price but we would have ended up no gold reserve. (I assure you I'm no fan of Richard Nixon either.)

Part of the problem is the fractional reserve policy of central banks. At present various interests own about 5 times as much gold as there is gold that exists on Earth.
(discounting what hasn't been mined yet.)

Let me ask you again, do you understand the term "monetizing the debt??" (also called the mandrake mechanism.)

I don't need to list counter crises, that isn't my point.

You start a thread on the topic, I have already and it was put by the monitors into the gsvol compendium thread.

 

[MystifyingVol]

"Getting rid of a central bank" and "sound money" do not belong in the sentence together.

They do belong in a sentence together, a central bank, by nature, destabilizes a currency. When you take that currency off the gold standard, then you have given absolute control of a nation over to that institution.

Go read The Creature From Jekyll Island: A Second Look At the Federal Reserve by G. Edward Griffin, it does an excellent job of outlining and explaining, not only our central bank, but the history of money and central banks throughout history. Believe what you want, but these institutions are not good for liberty and freedom.

Question for you, who do we owe the national debt to?

 

[shootermcgavin7]

How can you understand so little??

Raising or lowering interest rates had nothing to do with depleting the treasury gold reserve.

Jesus f* Christ man, at least brush up on 5 minutes of how monetary policy works under a gold standard.

After you have done so, you can copy/paste this quote if you still really believe it. (HINT: UNDER THE A GOLD STANDARD, NATIONS ADJUST INTEREST RATES TO ADJUST SPECIE FLOWS. THEY ARE DIRECTLY RELATED).

Come on, man. Slinging insults when you have no clue what you are talking about is just embarrassing. Eeeeeeeeeesh. Seriously, research the gold standard and if you still think interest rates and a fixed-metal reserve are unrelated, repost the exact quote and I'll give you another numerical example (which you seem to misunderstand and/or disregard).

The price of gold in the treasury was set at $35 an oz, on the free market it was bringing around $400

And. That. Tells. You. Something. About. Real. Interest. Rates.

By the way, I hope you aren't confusing real and nominal interest rates.

Let me ask you again, do you understand the term "monetizing the debt??"

Yes. Given your misunderstanding of a fixed-currency demonstrated above, I'd love to hear your interpretation of the concept.

I don't need to list counter crises, that isn't my point.

It was mine.
By claiming you don't have a counterpoint, I assume you agree with my point. Financial crises occur when the currency in unbacked AND the nation does not have a long-tenured central banking system. That is what the data claims.
However, it would be odd if you agreed with it, since you agreed with the opposite view earlier.

 

[shootermcgavin7]

They do belong in a sentence together, a central bank, by nature, destabilizes a currency.

Can you address the list I mentioned earlier? I'd appreciate it.

Question for you, who do we owe the national debt to?

For the most part, ourselves.

 

[gsvol]

They do belong in a sentence together, a central bank, by nature, destabilizes a currency. When you take that currency off the gold standard, then you have given absolute control of a nation over to that institution.

Go read The Creature From Jekyll Island: A Second Look At the Federal Reserve by G. Edward Griffin, it does an excellent job of outlining and explaining, not only our central bank, but the history of money and central banks throughout history. Believe what you want, but these institutions are not good for liberty and freedom.

Question for you, who do we owe the national debt to?

He's clueless, argumentative but still clueless.

Jesus f* Christ man, at least brush up on 5 minutes of how monetary policy works under a gold standard.

After you have done so, you can copy/paste this quote if you still really believe it. (HINT: UNDER THE A GOLD STANDARD, NATIONS ADJUST INTEREST RATES TO ADJUST SPECIE FLOWS. THEY ARE DIRECTLY RELATED).

Come on, man. Slinging insults when you have no clue what you are talking about is just embarrassing. Eeeeeeeeeesh. Seriously, research the gold standard and if you still think interest rates and a fixed-metal reserve are unrelated, repost the exact quote and I'll give you another numerical example (which you seem to misunderstand and/or disregard).




And. That. Tells. You. Something. About. Real. Interest. Rates.

By the way, I hope you aren't confusing real and nominal interest rates.




Yes. Given your misunderstanding of a fixed-currency demonstrated above, I'd love to hear your interpretation of the concept.




It was mine.
By claiming you don't have a counterpoint, I assume you agree with my point. Financial crises occur when the currency in unbacked AND the nation does not have a long-tenured central banking system. That is what the data claims.
However, it would be odd if you agreed with it, since you agreed with the opposite view earlier.

Jeez Louise, is it just me or do you get all bristly like a prickly pear when you can't steer the discussion down the path you desire?

You quote text books but have you ever thought that maybe everything you learned is school was all wrong??

Would you rather Us Treasury gold reserves to belong to us and be in Fort Knox our would you rather they be controled by BIS in their vaults in Switzerland?

If you are worrined about slinging insults about things of which you know little or nothing, then stop doing it.

Can you not understand that fiat money and the way we 'monetize the debt' siphons off the wealth of our nation, whether it is long tenured or not??

Can you address the list I mentioned earlier? I'd appreciate it.




For the most part, ourselves.

You don't understand the process of how we "monetize the debt" do you?? If so then explain how you understand that process.

 

[shootermcgavin7]

Jeez Louise, is it just me or do you get all bristly like a prickly pear when you can't steer the discussion down the path you desire?

I apologize. At the time, I was incredibly stressed out preparing for the annual American Economic Association/American Financial Association meetings in Atlanta just after New Year's. I try to be more even-keeled in my responses but it certainly isn't the first (or last) time where I get impatient.

You quote text books but have you ever thought that maybe everything you learned is school was all wrong??

Textbooks, (at least the advanced ones) are by definition wrong, because we discover new things every day.

I'm not sure how a historical description of the gold standard has anything to do with that "evil book-learnin'". My description of how the gold standard works is not from any textbook, although I'm sure you can find it taught to 18 year olds taking basic Macro.

Would you rather Us Treasury gold reserves to belong to us and be in Fort Knox our would you rather they be controled by BIS in their vaults in Switzerland?

This has nothing to do with how interest rates adjust the supply of gold (or whatever metal you are backing your currency with).

Under a gold standard, raising interest rates increases the demand for your currency - other nations exchange gold for it and it increases the supply of gold in the domestic economy. The mechanism is not complicated and has nothing to do with Fort Knox. Global currency flows are very sensitive to interest rates.

In fact, the existence of a central bank managing interest rates is what keeps gold in one country from zipping away to another. Again, if you would like to discuss the economics of the mechanism instead of shrieking that I'm "clueless", I'd be more than happy to discuss.

If you are worrined about slinging insults about things of which you know little or nothing, then stop doing it.

Can you not understand that fiat money and the way we 'monetize the debt' siphons off the wealth of our nation, whether it is long tenured or not??



You don't understand the process of how we "monetize the debt" do you?? If so then explain how you understand that process.

Of course I do. And the end effect of debt monetization is the same as printing money (the government issues bonds, receives cash for them, and the central bank buys the bonds back). In the end, it leads to inflation. The process is not solved by the "gold standard", because countries can (and historically have) simply re-pegged their currencies when they need monetary easing.

Currently, my guess is that the positive effects of inflation to the median American would outweigh the negatives. It is just a guess though and I have no way to quantify it.

 

[gsvol]

I apologize. At the time, I was incredibly stressed out preparing for the annual American Economic Association/American Financial Association meetings in Atlanta just after New Year's. I try to be more even-keeled in my responses but it certainly isn't the first (or last) time where I get impatient.

No need to apologize.

How did the meetings go??

Textbooks, (at least the advanced ones) are by definition wrong, because we discover new things every day.

I'm not sure how a historical description of the gold standard has anything to do with that "evil book-learnin'". My description of how the gold standard works is not from any textbook, although I'm sure you can find it taught to 18 year olds taking basic Macro.

There can be no correlation between the gold standard and fiat money, that would be like holding your own gun to your own head and giving everything away.

This has nothing to do with how interest rates adjust the supply of gold (or whatever metal you are backing your currency with).

Under a gold standard, raising interest rates increases the demand for your currency - other nations exchange gold for it and it increases the supply of gold in the domestic economy. The mechanism is not complicated and has nothing to do with Fort Knox. Global currency flows are very sensitive to interest rates.

In fact, the existence of a central bank managing interest rates is what keeps gold in one country from zipping away to another. Again, if you would like to discuss the economics of the mechanism instead of shrieking that I'm "clueless", I'd be more than happy to discuss.

I works just the opposite, other people, (central bankers mostly) give you your own money and take your gold.

We just are opposite poles on the function and modus operandi of central banks.

Who do you think owns 'the federal reserve'. (our central bank)

All the founding fathers were vehemently against a central bank except for Alexander Hamilton who was married into the family of wealthy European central bankers.

And remember, It was Roosevelt who made it illegal for American citizens to own gold indivdually.

(and you were the first to start throwing the bon mots about cluelessness, not me.)

Of course I do. And the end effect of debt monetization is the same as printing money (the government issues bonds, receives cash for them, and the central bank buys the bonds back). In the end, it leads to inflation. The process is not solved by the "gold standard", because countries can (and historically have) simply re-pegged their currencies when they need monetary easing.

Where does the money come from to buy the treasury bonds??

You descrition of the process seems rather fuzzy to me.

What about hyperinflation??

There has never been a country that suffered hyperinflation that controlled it's money supply the way our constitution stipulates, unfortunately we don't do it that way anymore.

What about deflation, as in the American 'great depression?' Our central bank ceertainly didn't prevent it.

Currently, my guess is that the positive effects of inflation to the median American would outweigh the negatives. It is just a guess though and I have no way to quantify it.

Comrade Obamao says there is no inflation, hence no raise for those drawing SS in 2010.

Back to the John Galt theory;

Who but the mindless can believe that government run health care will reduce costs and improve care while covering more people?

Who but the mindless can believe that this President is now serious about reducing the deficit after shattering spending records during his first year?

Who but the mindless can take seriously the sham “jobs summit” held by a President whose every policy is a lesson in job destruction?

Who but the mindless can believe Obama’s lie that “Cash for Clunkers” which cost taxpayers $24,000 per car was successful?

Who but the mindless would not be outraged that our government has reneged on its promise pay back the unused TARP fund to taxpayers?

Who but the mindless would not question the morality that the world’s finest health care, which has extended and improved human life in unimaginable ways—conceived and produced by countless unsung heroes in the private sector—should magically be transformed by Harry Reid and Nancy Pelosi into a “human right”, taken over by the state and rationed out as they please?

 

[shootermcgavin7]

I have to split this into two separate posts, because one round of your questions concerns the gold standard (and exchange rates) literally, and the other central banking explicitly.

No need to apologize.

How did the meetings go??

Very well. All of my stuff went well, and the meetings with the "well known" guys were entertaining. They paired people intentionally to create conflict (Schleifer with Gorton, Krugman with Rajan, etc.)

There can be no correlation between the gold standard and fiat money

That is not what I said. Fiat money, by definition, is not a "gold standard". I think I understand what you are saying but "no correlation" is not the same as "negative correlation".

I works just the opposite, other people, (central bankers mostly) give you your own money and take your gold.

Um...........only if interest rates are high enough to entice you to part with it. Remember, I'm speaking of how a normal gold standard works with a central bank. In this system, you can keep your gold as long as you want. Once interest rates cross a threshold, some people will trade in their gold for cash. Higher interest rates boost the value of a paper currency.


Let's do an experiment based on the gold standard. Pretend 1 euro is currently $1. The US boosts interests rates by 2%. Some people who prefer higher interest rates would trade their Euros in for gold and trade the gold for U.S. dollars. This decreases demand for Euros and increases the demand for dollars, and increases the value. This increases the gold supply in the US and also increases the value of the dollar.

A "fiat" system basically works the same way except gold is not the intermediary anymore.

The example I just gave can be found in any simple macroeconomics textbook, including ones authored by evil liberals, along with ones authored by Mankiw (who was the chair of Bush's economic advisors). Currency flows are non-partisan, but continue to argue the opposite if you like.

 

[shootermcgavin7]

We just are opposite poles on the function and modus operandi of central banks.

Who do you think owns 'the federal reserve'. (our central bank)

All the founding fathers were vehemently against a central bank except for Alexander Hamilton who was married into the family of wealthy European central bankers.

And remember, It was Roosevelt who made it illegal for American citizens to own gold indivdually.

None of this has anything to do with how a gold standard operates. Monetary systems based on specie were around long before the United States, and so was Central Banking.

I am describing how the mechanism operates in a completely apolitical manner, not yammering about conspiracy theories from some college sophomore's libertarian website.

The Central Bank is a quasi-public entity, a lot of the shareholders are foreign, a lot are domestic, and the head is nominated by the President. Is that your question?

If you want to debate the history and function of central banking, I have already provided a history of financial crises earlier in this thread.

Where does the money come from to buy the treasury bonds??

Thin air. It really is no different than printing money.

What about hyperinflation??

What about it?

What about deflation, as in the American 'great depression?' Our central bank ceertainly didn't prevent it.

So, here is my question. The most important question of this post. Are we worried about hyperinflation, or deflation? Which can a "gold standard" prevent, and which does it cause?

 

[gsvol]

I have to split this into two separate posts, because one round of your questions concerns the gold standard (and exchange rates) literally, and the other central banking explicitly.

I'll try to focus you in.

You brought up the gold standard, we were discussing central banking explicitly.


Very well. All of my stuff went well, and the meetings with the "well known" guys were entertaining. They paired people intentionally to create conflict (Schleifer with Gorton, Krugman with Rajan, etc.)

Divide and conquer??

You didn't speak??


That is not what I said. Fiat money, by definition, is not a "gold standard". I think I understand what you are saying but "no correlation" is not the same as "negative correlation".

See what you think of this.




Um...........only if interest rates are high enough to entice you to part with it. Remember, I'm speaking of how a normal gold standard works with a central bank. In this system, you can keep your gold as long as you want. Once interest rates cross a threshold, some people will trade in their gold for cash. Higher interest rates boost the value of a paper currency.

When gold on the free market exceeds the reserve gold tied to the gold standard, doesn't demand for gold strip the reserve?? Is that not true?

Another way of putting that question is this; if there is a gold standard based on treasury gold reserves and if central bankers can print unbacked money to buy treasury bonds and this process continues for a realatively long period, doesn't the gold all end up in the vaults of the central banks and the government treasury end up empty and broke??

Are you familiar with the working of BIS (band of international settlements??)

Let's do an experiment based on the gold standard. Pretend 1 euro is currently $1. The US boosts interests rates by 2%. Some people who prefer higher interest rates would trade their Euros in for gold and trade the gold for U.S. dollars. This decreases demand for Euros and increases the demand for dollars, and increases the value. This increases the gold supply in the US and also increases the value of the dollar.

A "fiat" system basically works the same way except gold is not the intermediary anymore.

The example I just gave can be found in any simple macroeconomics textbook, including ones authored by evil liberals, along with ones authored by Mankiw (who was the chair of Bush's economic advisors). Currency flows are non-partisan, but continue to argue the opposite if you like.

There you go back to the academic approach again.

I'm not trying to argue the conservative/liberal, or partisan dumbo/jumbo, I'm trying to resolve what would be the best policy as it concerns the American people.

That the present system is robbing us blind is my contention.


None of this has anything to do with how a gold standard operates. Monetary systems based on specie were around long before the United States, and so was Central Banking.


Check, and most of those who signed the declaration of independence and wrote the constitution warned us of the dangers and downsides of allowing central banking.

Furthermore, what they said is proving true, never more than right now.



I am describing how the mechanism operates in a completely apolitical manner, not yammering about conspiracy theories from some college sophomore's libertarian website.

I declared 'apolitical' in '68, you will never find anyone more apolitical than me. Pardon me if I think you are hung up on the gold standard when we effectively bypassed the gold standard in 1913. There have been over 400 amendments to the federal reserve act, each meant to strengthen central banks. Legislation presently being considered would give them almost total control of all banking in America, which was their original intent from the beginning.

The Central Bank is a quasi-public entity, a lot of the shareholders are foreign, a lot are domestic, and the head is nominated by the President. Is that your question?

Public sales of fed stock were cut off in 1914, it is a private system, the holders of the stock are secret but originally it was about 60% European and 40% America owners. One might describe them all as John Kerry described himself to be an internationalist.

Assets of the Federal Reserve went from $143 million in 1913 to $45 billion in 1949 and that profit went directly to the private stockholders. (The American public own none of that!!!!)

If you want to debate the history and function of central banking, I have already provided a history of financial crises earlier in this thread.

How about the current crisis, we certainly have had a long term central bank (nearly a hundred years) and this is the worst crisis in America history.


The fact that European bankers could create a crisis in American banks is certainly not a slam dunk reason to incorporate central banking in America, on the cotrary it is knee jerk reactionary thinking and based on the false assumption that if we give up control of money flow to a certain few that they will always be benelevent benefactors to the American people rather than the greedy tyrants history has shown them to be.





Thin air. It really is no different than printing money.

It is different, want me to explain why and how???

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance."
— James Madison

"The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class."
— Rothschild Brothers of London, 1863

"The [Federal Reserve Act] as it stands seems to me to open the way to a vast inflation of the currency... I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency."
— Henry Cabot Lodge Sr., 1913

"From now on, depressions will be scientifically created."
— Congressman Charles A. Lindbergh Sr. , 1913

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it".
— Congressman Louis T. McFadden in 1932 (Rep. Pa)

"The Federal Reserve bank buys government bonds without one penny..."
— Congressman Wright Patman, Congressional Record, Sept 30, 1941

"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States"
— Sen. Barry Goldwater (Rep. AR)

"I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected."
— John Danforth (R-Mo)

"When you or I write a check there must be sufficient funds in out account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money."
— Putting it simply, Boston Federal Reserve Bank

"To expose a 15 Trillion dollar rip-off of the American people by the stockholders of the 1000
largest corporations over the last 100 years will be a tall order of business."
— Buckminster Fuller

What about it?

I asked you first.

Here is a yes or no question for you, could hyperinflation be used to colapse the dollar and other currencies to usher in a worldwide currency?









So, here is my question. The most important question of this post. Are we worried about hyperinflation, or deflation? Which can a "gold standard" prevent, and which does it cause?

I'll let you answer your own questions.
(In most cases I find them to be beside the point if not totally obfuscating.)

If I had my choice between hyperinflation or deflation, I would take deflation, a country boy can survive.

There is no damned way to go to a true gold standard with a central banking system. As a mattor of fact, through the device of fractional banking, presently there is at least five times the amount of gold owned as actually exists. (that is that has already been mined)

Can we say that we agree on some things and one of those things are that some changes need to be made??

If so what change or changes do you propose??

FWIW:

A few years ago I was in a sports bar to watch a UT game and a young man came in and sat down next to me at the bar and we started chatting and it turned out he was recently graduated and was into banking.

Not only that he was a third generation banker and was quite displeased with his job because of the mindset of the owners of the bank.

He had been raised in a small town where the customer was a valued asset and was to be treated with utmost respect, no matter how much or how little money he had or owed.

Not so with the people he was working for, the customer was a number and the idea was to increase numbers as much and as fast as possible in order to eventually sell the bank to a bigger organization and reap huge profits for the owners. It was all about marketing rather than meeting the needs of the customer.

We watched the game and then another game and much of the discussion was about banking, various banking devises and an overview of the whole process.

When he got up to leave he paid me quite a compliment, he said; "I think I have learned more about banking from you tonight than I learned from any professor in four years at the university."

 

[shootermcgavin7]

Again, I'll have to reply in two, because I am too stupid to simply work with the bold-in-quote.

I really don't have much to add, because you didn't respond to most of my prior points. I've responded for the hell of it, but future responses like this will be reiterations of prior questions you have not answered.

I suppose I could "answer them" myself as you suggest, but that defeats the purpose.

I'll try to focus you in.

You brought up the gold standard, we were discussing central banking explicitly.

Not at all. The OP did. Unless you don't understand what "sound money" is a code-word for.

When gold on the free market exceeds the reserve gold tied to the gold standard, doesn't demand for gold strip the reserve?? Is that not true?

Another way of putting that question is this; if there is a gold standard based on treasury gold reserves and if central bankers can print unbacked money to buy treasury bonds and this process continues for a realatively long period, doesn't the gold all end up in the vaults of the central banks and the government treasury end up empty and broke??

Are you familiar with the working of BIS (band of international settlements??)

If everyone observes the actions of the central bank and observes the money supply, why would anyone sell gold to the Treasury at the current exchange rate?

I thought you believed that markets work. In a properly functioning financial market, investors would never sell gold at cheap prices to the central bank. In other words, no one would trade gold for unfairly-priced paper money. As long as markets work...........

Check, and most of those who signed the declaration of independence and wrote the constitution warned us of the dangers and downsides of allowing central banking.

The guy who wrote it also hated organized religion. Are you going to trumpet those quotes on the boards as well? We have over 200 years more research than these guys did.

I declared 'apolitical' in '68, you will never find anyone more apolitical than me.

lol - obvious.

Pardon me if I think you are hung up on the gold standard when we effectively bypassed the gold standard in 1913.

Check out Bretton-Woods. Not to beat the point, but I am not "hung up on the gold standard", the OP specifically referred to backed currency. Is sticking to the topic being "hung up"?

Assets of the Federal Reserve went from $143 million in 1913 to $45 billion in 1949 and that profit went directly to the private stockholders. (The American public own none of that!!!!)

Assets are profit? Sweet, what B-school did you fail out of?

How about the current crisis, we certainly have had a long term central bank (nearly a hundred years) and this is the worst crisis in America history.

If you think this is the worst crisis in US history, there really is not much else to discuss. I can suggest a fantastic book about the 1907 panic.

It is different, want me to explain why and how???

I explained the mechanism through bond flotation and repurchase in the earlier post. If you have some magic "trap" to spring on a technicality, go ahead and do so. Printing money and turning public flotations of debt into magic currency are pretty much the same thing. If you have a point, go ahead and make it. Both cause inflation.

I asked you first.

Here is a yes or no question for you, could hyperinflation be used to colapse the dollar and other currencies to usher in a worldwide currency?

COULD it? Sure it could. It could also summon Godzilla and Mothra to a battle of Tokyo.

I'll let you answer your own questions

If I had my choice between hyperinflation or deflation, I would take deflation, a country boy can survive.

Congratulations. You chose the 1930s over the 1970s.

That is all.

There is no damned way to go to a true gold standard with a central banking system.

LOLOLOLOLOLOLOLOLOLOLOLOLOLOL

I'll give you a chance to step back on this if you want to. Do you really, really believe this? There are no cases of a gold standard with a central bank? Seriously, take a step back and make sure you're right before you make statements like this, child.

 

[shootermcgavin7]

FWIW:

A few years ago I was in a sports bar to watch a UT game and a young man came in and sat down next to me at the bar and we started chatting and it turned out he was recently graduated and was into banking.

Not only that he was a third generation banker and was quite displeased with his job because of the mindset of the owners of the bank.

He had been raised in a small town where the customer was a valued asset and was to be treated with utmost respect, no matter how much or how little money he had or owed.

Not so with the people he was working for, the customer was a number and the idea was to increase numbers as much and as fast as possible in order to eventually sell the bank to a bigger organization and reap huge profits for the owners. It was all about marketing rather than meeting the needs of the customer.

We watched the game and then another game and much of the discussion was about banking, various banking devises and an overview of the whole process.

When he got up to leave he paid me quite a compliment, he said; "I think I have learned more about banking from you tonight than I learned from any professor in four years at the university."

So you and banker apparently agree with the way "banking used to be" under heavy regulation, before complete unregulation (started 30 years ago, finished 10 years ago) created universal banks, conflicts of interest, and a host of other problems.

I agree with both of you on this note. Universal banks monitor much worse. Universal banks who underwrite CDOs and MBOs monitor even worse. I was in DC for three weeks in January 2009 discussing this very topic with the House. It seems we agree. But this is an example of a market imperfection, of deregulation.

 

[gsvol]

Again, I'll have to reply in two, because I am too stupid to simply work with the bold-in-quote.

Hint, you can edit the post to which you are replying after you click the reply post.

I really don't have much to add, because you didn't respond to most of my prior points. I've responded for the hell of it, but future responses like this will be reiterations of prior questions you have not answered.

Whooptedoo, you have side stepped most if not all of my petinent questions and what you call points I usually call obfuscation.

I suppose I could "answer them" myself as you suggest, but that defeats the purpose.

And just what would that purpose be?

Not at all. The OP did. Unless you don't understand what "sound money" is a code-word for.

What is "sound money" a code word for.

If everyone observes the actions of the central bank and observes the money supply, why would anyone sell gold to the Treasury at the current exchange rate?

No one would? Why would anyone buy gold from the treasury?? What happens when the treasury has no more gold??

I thought you believed that markets work. In a properly functioning financial market, investors would never sell gold at cheap prices to the central bank. In other words, no one would trade gold for unfairly-priced paper money. As long as markets work...........

Without a money supply markets don't work, ref 1929.

The guy who wrote it also hated organized religion. Are you going to trumpet those quotes on the boards as well? We have over 200 years more research than these guys did.

BTW, I quoted seveal folks, I doubt they all hated organized religion. Some of those quotes are no where near from 200 years ago.

You are wrong to begin with, he had nothing against organized religion, he did have (as anyone should,) organized religion controlling governemt.

200 years or not, the same truths hold true.

lol - obvious.

With the possible exception that I despise collectivest political philosophy as has been overabundtantly manifested as an evil force over and over again in just this last century.

Check out Bretton-Woods. Not to beat the point, but I am not "hung up on the gold standard", the OP specifically referred to backed currency. Is sticking to the topic being "hung up"?

What do you think of the John Forbes Nash thesis and his theory of economics?

Evidently your topic and mine are apples and oranges.

Assets are profit? Sweet, what B-school did you fail out of?

Assets have value, increases in assets is profit, are they not?

What school did you attend???

Perhaps you can tell me why privately owned federal reserve banks are tax exempt???

If you think this is the worst crisis in US history, there really is not much else to discuss. I can suggest a fantastic book about the 1907 panic.

Starting from when? 1901 when McKinley was assassinated because he opposed the central bank??

Suggest away, I'll read it.

Have you, perchance read Quigley's 'Tragedy and Hope?'

I explained the mechanism through bond flotation and repurchase in the earlier post. If you have some magic "trap" to spring on a technicality, go ahead and do so. Printing money and turning public flotations of debt into magic currency are pretty much the same thing. If you have a point, go ahead and make it. Both cause inflation.

What do you think of Kennedy's silver certificates?

COULD it? Sure it could. It could also summon Godzilla and Mothra to a battle of Tokyo.

Godzilla has anything to do with what we are talking about?? Do tell.

Congratulations. You chose the 1930s over the 1970s.

That is all.

We had hyperinflation in the '70s, dammit, I must have missed that.

There was not a hell of a lot that I did miss in the '70s and evidently that escapes you, if you want to get into the '70s, we will.

LOLOLOLOLOLOLOLOLOLOLOLOLOLOL

I'll give you a chance to step back on this if you want to. Do you really, really believe this? There are no cases of a gold standard with a central bank? Seriously, take a step back and make sure you're right before you make statements like this, child.

OK, define what you think of as a 'gold standard' baby boy.

So you and banker apparently agree with the way "banking used to be" under heavy regulation, before complete unregulation (started 30 years ago, finished 10 years ago) created universal banks, conflicts of interest, and a host of other problems.

You are full of pure BS, when I was a child any member of my family could walk into the local bank, talk to the bank president and ask for a loan.

He would say; 'how much and for how long' and the write the number on a debit sheet and say give this to the teller. The signature on the name was sufficient.

Not so any more and every banker I know says there is too much regulation rather than not enough.

The real problem was caused during the '90s when Clinton removed the traditional barrior between banking and insurance, hence the AIG crash.

I agree with both of you on this note. Universal banks monitor much worse. Universal banks who underwrite CDOs and MBOs monitor even worse. I was in DC for three weeks in January 2009 discussing this very topic with the House. It seems we agree. But this is an example of a market imperfection, of deregulation.

Good to see that we agree on something other than that animal rights proponents are the scum of the Earth.

Even then I don't think we really agree on what the basics of the problems are for the average American citizen.

What is your stance on the "Federal Transparency Act of 2009?" HR 1207

 

[shootermcgavin7]

Whooptedoo, you have side stepped most if not all of my petinent questions and what you call points I usually call obfuscation.


What is "sound money" a code word for.

Aside: If you would be kind enough to list questions you feel I "side stepped", I would be happy to answer them.

When people talk about sound money, they usually mean a metal-backed currency. In other words, the origin of this thread. I am sorry you think it is off-topic.

No one would? Why would anyone buy gold from the treasury?? What happens when the treasury has no more gold??


Without a money supply markets don't work, ref 1929.

Ok, let me take a step back. I'm referring to gold transferring borders, which is what you were concerned with in a previous post (all our gold is going to Switzerland oh noes oh noes oh noes).

Intra-border transactions have no effect on the gold prices or currency strength.

Are you referring to cross-border flows? If so, your comment is not really relevant. In other words, if a foreign investor wants to invest in the US (under a gold standard), they have to exchange gold for US dollars first - this increases the amount of gold in the US.

BTW, I quoted seveal folks, I doubt they all hated organized religion. Some of those quotes are no where near from 200 years ago.

You are wrong to begin with, he had nothing against organized religion, he did have (as anyone should,) organized religion controlling governemt.

This is a completely different thread, but Jefferson was certainly anti-religious. My comment was to mock the use of 300 year quotes for an exclusive point.

200 years or not, the same truths hold true.

This is complete nonsense, unless you think the Earth is flat and that the sun orbits us.

What do you think of the John Forbes Nash thesis and his theory of economics?

John Nash researched game theory. I notice that this comment has nothing to do with Bretton-Woods.

Assets have value, increases in assets is profit, are they not?

Ouch. Suppose I start a business with $1 mil. I buy a factory with this $1 mil. I lose a ****ton of money. I borrow another $1 mil and buy another factory. I lose more money.

Over the year, my assets have increased from $1 mil to $2 mil, but I have lost money.

Assets measure size (in book value). Nothing more. This is painful. This is accounting they teach to 18 year olds.

What school did you attend???

Many of them. Enough to where I learned not to answer a question with a question.

Perhaps you can tell me why privately owned federal reserve banks are tax exempt???

the same reason churches are. by the way, this has nothing to do with asset values, which is how you phrased your response

Starting from when? 1901 when McKinley was assassinated because he opposed the central bank??

He was assassinated by an anti-government nutjob. Does this remind you of a particular party?

What do you think of Kennedy's silver certificates?

I think it was no different than printing money, which was the point I was trying to get across.

Godzilla has anything to do with what we are talking about?? Do tell.

That kind of was the point. I'll let you figure it out.

We had hyperinflation in the '70s, dammit, I must have missed that.

There was not a hell of a lot that I did miss in the '70s and evidently that escapes you, if you want to get into the '70s, we will.

I was trying to make the point that deflation damages the median American and GDP a lot more than inflation does. I assumed you could figure that out but it appears I overestimated that ability.

OK, define what you think of as a 'gold standard' baby boy.

Your claim is that a gold standard cannot exist in the presence of a central bank. Correct?

Much of Europe had both, AS WELL AS the United States. You do realize we had two central banks before the Fed, right?

You are full of pure BS, when I was a child any member of my family could walk into the local bank, talk to the bank president and ask for a loan.

He would say; 'how much and for how long' and the write the number on a debit sheet and say give this to the teller. The signature on the name was sufficient.

Correct. Local banks had more information and made smarter loans. Local banks were destroyed by the bipartisan move to destroy the Glass-Steagall act (sponsored by Gramm) which eliminated a great deal of banking regulation and allowed the rise of massive universal banks.
It seems you agree with the conclusion, just not with the fact that removing regulation was the main cause.

Even then I don't think we really agree on what the basics of the problems are for the average American citizen.

The average American and the median American are not the same thing. An aside, I know.

What is your stance on the "Federal Transparency Act of 2009?" HR 1207

I assume you mean the Federal Reserve Transparency Act? I don't really care and don't think it will make any difference.



By the way, I realize that today's political machines communicate in choppy soundbites (it seems like it started in the 1980s), but I think it is hard to read and eliminates intelligent discussion. To me, it makes sense to communicate in full paragraphs rather than the quote/chop/response/chop/quote format. At least it results in more intelligent communication.

 

[gsvol]

Aside: If you would be kind enough to list questions you feel I "side stepped", I would be happy to answer them.

When people talk about sound money, they usually mean a metal-backed currency. In other words, the origin of this thread. I am sorry you think it is off-topic.





Ok, let me take a step back. I'm referring to gold transferring borders, which is what you were concerned with in a previous post (all our gold is going to Switzerland oh noes oh noes oh noes).

Intra-border transactions have no effect on the gold prices or currency strength.

Are you referring to cross-border flows? If so, your comment is not really relevant. In other words, if a foreign investor wants to invest in the US (under a gold standard), they have to exchange gold for US dollars first - this increases the amount of gold in the US.



This is a completely different thread, but Jefferson was certainly anti-religious. My comment was to mock the use of 300 year quotes for an exclusive point.



This is complete nonsense, unless you think the Earth is flat and that the sun orbits us.




John Nash researched game theory. I notice that this comment has nothing to do with Bretton-Woods.




Ouch. Suppose I start a business with $1 mil. I buy a factory with this $1 mil. I lose a ****ton of money. I borrow another $1 mil and buy another factory. I lose more money.

Over the year, my assets have increased from $1 mil to $2 mil, but I have lost money.

Assets measure size (in book value). Nothing more. This is painful. This is accounting they teach to 18 year olds.



Many of them. Enough to where I learned not to answer a question with a question.




the same reason churches are. by the way, this has nothing to do with asset values, which is how you phrased your response




He was assassinated by an anti-government nutjob. Does this remind you of a particular party?







I think it was no different than printing money, which was the point I was trying to get across.







That kind of was the point. I'll let you figure it out.









I was trying to make the point that deflation damages the median American and GDP a lot more than inflation does. I assumed you could figure that out but it appears I overestimated that ability.








Your claim is that a gold standard cannot exist in the presence of a central bank. Correct?

Much of Europe had both, AS WELL AS the United States. You do realize we had two central banks before the Fed, right?





Correct. Local banks had more information and made smarter loans. Local banks were destroyed by the bipartisan move to destroy the Glass-Steagall act (sponsored by Gramm) which eliminated a great deal of banking regulation and allowed the rise of massive universal banks.
It seems you agree with the conclusion, just not with the fact that removing regulation was the main cause.





The average American and the median American are not the same thing. An aside, I know.



I assume you mean the Federal Reserve Transparency Act? I don't really care and don't think it will make any difference.



By the way, I realize that today's political machines communicate in choppy soundbites (it seems like it started in the 1980s), but I think it is hard to read and eliminates intelligent discussion. To me, it makes sense to communicate in full paragraphs rather than the quote/chop/response/chop/quote format. At least it results in more intelligent communication.

Then I suppose you favor the Dodd bill that gives the fed evenmore control over all banking in America???

Nash proposed pegging the value of currency to various commodities.

Tell me this, why would the fed, a private banking consortium that makes profits, be tax exempt??

 

[shootermcgavin7]

complete aside: For the record, I am impressed you managed to post during the Coaching Crisis; I was much more absorbed by the recruiting boards.

Then I suppose you favor the Dodd bill that gives the fed evenmore control over all banking in America???

It is odd, actually. Fractional banking is what helps fund macroeconomic investment, but it is also too unstable to operate "normally" in the long run.

To answer your question: Yeah, actually I do. Mexico is an examine of a country which lets their government run the central bank, not the central bank to run independently.

Here's what happens: the government expands the money supply the year the before the election, then contracts it the year after.

Countries with independent (or quasi-independent) banks tend to do a lot better, and have healthier economies.

Nash proposed pegging the value of currency to various commodities.

You'd have to set an inflation target, but overall it works. This would be removing the "free" market in foreign currency exchange (which many macroeconomists suggest).

Tell me this, why would the fed, a private banking consortium that makes profits, be tax exempt??

I could be wrong, but I think you already asked this question - the same reason random religions and politically favorable charities are.

 

[gsvol]

complete aside: For the record, I am impressed you managed to post during the Coaching Crisis; I was much more absorbed by the recruiting boards.




It is odd, actually. Fractional banking is what helps fund macroeconomic investment, but it is also too unstable to operate "normally" in the long run.

To answer your question: Yeah, actually I do. Mexico is an examine of a country which lets their government run the central bank, not the central bank to run independently.

Here's what happens: the government expands the money supply the year the before the election, then contracts it the year after.

Countries with independent (or quasi-independent) banks tend to do a lot better, and have healthier economies.



You'd have to set an inflation target, but overall it works. This would be removing the "free" market in foreign currency exchange (which many macroeconomists suggest).




I could be wrong, but I think you already asked this question - the same reason random religions and politically favorable charities are.

Yep that money from Russia had a great affect on Mexican history, the Soviet embassy in Mexico City used to be the busiest of anyone's embassy in any country during the cold war.

So what then, you consider the private federal reserve banks to be some sort of charitible institutions??