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  • musketeernumberone musketeernumberone Jan 4, 2011 12:57 PM Flag

    RG: On Central Banking

    I tried to respond in previous thread but was blocked.

    1. I hardly qualify as an expert, so buy yourself an MBA-level text book on money and financial markets and read again and again the section on central banking. I think you will enjoy and benefit from this.

    2. Issuing debt does not add to the deficit, paying the interest on the debt does.

    3. Central banks create *money* in various ways. Using the Treasury to issue currency is the least important of these. Buying and selling securities on the open market is very important. Lending money to banks and encouraging them to lend it to businesses and individuals is probably the most important because a little bit is multiplied and goes a long way.

    4. If money is not being created where/when needed - or is being destroyed, as it was during the crisis - the economy suffocates. The responsible and appropriate response is to make more money available -- through various means - to nurture economic activity. That is what Ben has been doing.

    5. Running a modern economy on the gold standard is like running a multinational corporation with a typewriter -- the dark ages. Allowing populist elected officials - like Ron Paul - to interfere with the process is asking to end up like Argentina. Not a good thing.

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    • Fred, thanks for posting.

      I've read most of those quotes before, but could not find them myself.

      Sobering huh ?

    • Those banksters don't give up easy do they?

      But I think it would be a mistake to confine this discussion to the US.

      These banksters are an int'l group who potentially seek to enslave the world which is why the idea of global governance and global type currency arrangements must be rejected.

      Otherwise, the people lose accountability and transparency WRT how they are governed.

      It bothers me that Deutche Bank and other foreign banks are among the Federal reserves primary dealers and I kinda wonder what some of the principal backers of these organizations might be planning given another financial crisis that they might engineer when the time is right.

    • President Woodrow Wilson, after having broken campaign promises and betrayed his country by signing into law the Federal Reserve Act:

      "I am a most unhappy man. I have unwittingly ruined my country.

      A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation therefore, and all our activities, are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world. No longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

    • Bernanke and Giethner were the bozos in charge. They created this disaster and now they are supposed to fix it.

      You are delusional.

      Boom and Bust cycles ruin savings of the citizens who actually pay taxes and, are supposed to rely on those savings to retire.

      The NYFRB enables and encourages shysters on Wall Street and Foreign banks to devalue the savings of people who worked a lifetime and, those honest working people, then witness that lifetime of labor to evaporate in a weekend.

      Hank Paulson, Geithner, the Lehman bunch, Bear Stearns etc and the rest of the Goldman bunch ought to be executed for economic terrorism.

      I read the NYFRB hired the Chief Risk Officer from Bear Stearns to supervise banks in NY in Novenber 2008. I would laugh except the very thought in insane.

      The New York Federal Reserve Bank must be deposed. Those are supposed to be the brightest, smartest people? We are in serious trouble and a High School Drop out could make better decisions than that bunch, which leads me to believe they are simply thieves who ought to be treated as such.

      Go PBR! $47 to fill up my 4-runner. Yeah, thats right. No inflation you say?

    • OK, ok, ok. I am not an apologist for the system and I certainly do not think the Fed or any institution is perfect. I have tried to focus my comments on whether the policies enacted post-Lehman bros were the right ones... and they were because they are working. And the people involved are doing what they are doing because we all stand to benefit (though some will surely benefit more than others... this in not socialism, god forbid.)

      I agree that our problems today are the result of a lax attitude toward risk, the effective repeal of Glass-Stegall, and the coddling of bankers thanks to a revolving door between banking/ government/regulators. Some of these underlying problems have still not been addressed. (However, I do not agree that interstate banking is a bad idea... on the contrary.)

      The people working to fix the system -- Bernanke, Geitner, etc. -- seem both highly qualified and well intentioned. IMHO, they are doing many of the right things. And to think not is to deny the reality of our current, improved, situation. This board has a host of people who want to blame the ambulance driver for saving the patient. I just do not get that.

      Meanwhile, I have never once heard you curse Angelo Mozillo and his ilk... the real crooks who created a house of cards and enriched themselves while it crashed under its own weight.

      And I still think you should read-up on the Fed, RG. Why would you wish to remain uninformed about something so central to banking and the economy (pun intended)? You are not an ignoramus -- you are better than that.

    • "4. If money is not being created where/when needed - or is being destroyed, as it was during the crisis - the economy suffocates. The responsible and appropriate response is to make more money available -- through various means - to nurture economic activity. That is what Ben has been doing."

      Then why not return money directly to those who were the victims when their "money" was destroyed?

      The borrower is slave to the lender, and it looks like the game is rigged to enslave first the entire population of the USA (aside from the ruling class), and then to finish the job by enslaving the rest of the planet.

      It will not stop here. The next generation of Neocons will surely have an organization called Project for the New American Galaxy.

      • 1 Reply to fred.mrozek
      • *Then why not return money directly to those who were the victims when their "money" was destroyed? *

        Good post, good question: So whose money got destroyed? Anybody who owned stocks lost but has now been made more or less whole. Some bank and investment bank shareholders were partly destroyed and partly, though not completely, rescued. Bank bondholders will prove to have done better. Lehman and BearStearn bondholders and shareholders have been mostly wiped out. Some home owners have been hurt, but they invested as little as zero down and probably no more than 10% down. Many folks have substantial gains and their homes are still worth much more than what they bought them for. Some home-owners are under-water, but the real losers in the real estate mess are banks, their equity and debt holders, pensions, hedge funds and other that play in that market. Investors in CMOs and other mortgage derivatives lost money. GM employees did not lose out... they got to keep their jobs. GM bond-holder lost some but the stock holders lost more.

        Last time I looked, taxes are being cut, not raised... so joe taxpayer has not lost... yet. Maybe future generation lost, but they will probably do better that if we had done nothing to rescue the economy.

        Who do you think lost?

    • I'll fly my flag and support Ron Paul.Someone has to be the good guy.Seems our society as a whole is content in knowing we are being "had"by banksters and theives.I'm not.It's time to bring back some kind of justice in this country.Crooks,be it congressmen,judges,CEO's,fund managers,whoever,deserve to be prosecuted and jailed.Period.

    • musk

      I don't really give a damn about what's written intext books, these lawmakers have re-written the rules to serve themselves. They make up the rules as they go along... the Fed also.

      I'm not personally advocating returning to the gold standard. And I doubt RP would either if the Fed and the congress would return to some standard of fiscal responsibility. IT's ALL OUTTA CONTROL !!

      say musk, let me ask you a question. If you borrow money from a bank to purchase a home. Are you ONLY making an investment, ONLY borrowing money... or are you also SPENDING money ?
      I hope you said spending money also.
      Creating liquidity with money that you don't have it borrowing... in fact, it's worse... it's leveraging.

      Now let me take that a step further. What if you are buying the home with a credit card ? Is that stupid or what ?

      • 4 Replies to rgneckow
      • RG: The red wine is not working. Please try bourbon or scotch.

        I wrote a long and thoughtful response.. which will not post. The bottom line is this: if you do not wish to educate yourself, that is your choice.

        But the actions being taken to repair the economy are being taken on your behalf by people who are controlled, informed and competent; Whether you know it or not, you are benefiting and will continue to benefit from the actions of those people.

        P.S. The whole thing runs on leverage... but you will need to read up on central banking to understand that.

      • *I don't really give a #$%$ about what's written intext books, these lawmakers have re-written the rules to serve themselves. They make up the rules as they go along... the Fed also.* I TRY TO DISTINGUISH BETWEEN HOW THINGS ARE SUPPOSED TO WORK, HOW THEY REALLY WORK AND THE GAMES THAT GET PLAYED TO MAKE EM WORK THE WAY THEY DO... IF YOU CHO0SE NOT TO MAKE THIS DISTINCTION AND TO REMAIN UNINFORMED ABOUT HOW THINGS WORK, THAT IS YOUR CHOICE.

        *I'm not personally advocating returning to the gold standard. And I doubt RP would either if the Fed and the congress would return to some standard of fiscal responsibility. IT's ALL OUTTA CONTROL !!* THE FED IS NOT OUT OF CONTROL, IT IS HIGHLY CONTROLLED. APPARENTLY YOU DO NOT AGREE WITH THE DIRECTION OR THE METHODS OF CONTROL -- WHICH I FAIL TO UNDERSTAND SINCE IT IS TO YOUR BENEFIT. MAYBE YOU WOULD RATHER SUFFER MORE THAN LESS.

      • *I don't really give a #$%$ about what's written intext books, these lawmakers have re-written the rules to serve themselves. They make up the rules as they go along... the Fed also.* I TRY TO DISTINGUISH BETWEEN HOW THINGS ARE SUPPOSED TO WORK, HOW THEY REALLY WORK AND THE GAMES THAT GET PLAYED TO MAKE EM WORK THE WAY THEY DO... IF YOU CHO0SE NOT TO MAKE THIS DISTINCTION AND TO REMAIN UNINFORMED ABOUT HOW THINGS WORK, THAT IS YOUR CHOICE.

        *I'm not personally advocating returning to the gold standard. And I doubt RP would either if the Fed and the congress would return to some standard of fiscal responsibility. IT's ALL OUTTA CONTROL !!* THE FED IS NOT OUT OF CONTROL, IT IS HIGHLY CONTROLLED. APPARENTLY YOU DO NOT AGREE WITH THE DIRECTION OR THE METHODS OF CONTROL -- WHICH I FAIL TO UNDERSTAND SINCE IT IS TO YOUR BENEFIT. MAYBE YOU WOULD RATHER SUFFER MORE THAN LESS... THIS IS CALLED MASOCHISM.

        *say musk, let me ask you a question. If you borrow money from a bank to purchase a home. Are you ONLY making an investment, ONLY borrowing money... or are you also SPENDING money ? I hope you said spending money also.*NOT SURE I GET YOUR POINT... BORROWING MONEY IS SOMETHING THAT TAKES PLACE WITH AND ON A BALANCE SHEET. SPENDING IS SOMETHING THAT HAPPENS ON/WITH THE INCOME STATEMENT. BORROWING TO BUY A HOUSE IS BORROWING AND AFFECTS YOUR BALANCE SHEET (PRIMARLIY. THERE IS A BRIEF IMPACT ON YOUR INCOME STATEMENT WHEN THE CASH COMES TO YOU AND THEN FLOWS OUT TO THE SELLER). I GUESS BUYING A HOUSE IS SPENDING, AND AN INVESTMENT (ASSUMING YOU HOPE TO RECOUP YOUR MONEY WITH A PROFIT). INFLATING AN ECONOMY IS SPENDING AND AN INVESTMENT FOR THE SAME REASONS. YOU ARE RAISING CASH, THEN SPENDING IT IN THE HOPES OF A FUTURE RETURN.

        Creating liquidity with money that you don't have it borrowing... in fact, it's worse... it's leveraging. YOU DONT GET IT AND THIS IS WHY YOU SHOULD READ UP ON CENTRAL BANKING AND ECONOMICS, IN GENERAL. THE WHOLE THING DEPENDS ON LEVERAGE, WHICH IS AN EXCEPTIONALLY FAVORABLE THING (UNLESS MISUSED).

        HISTORICALLY SPEAKING, LENDING IS AT LEAST AS OLD AS WRITING -- AMONG THE EARLIEST DOCUMENTS ARE CUNIFORM ON CLAY SHARD DOCUMENTING MONEY EXTENDED IN ADVANCE - A LOAN - IN RETURN FOR A FUTURE RE-PAYMENT IN GRAIN. PAYMENT OF INTEREST ON A LOAN APPEARS TO BE NOT QUITE AS OLD -- BUT QUITE ANCIENT GIVEN BIBLICAL REFERENCES TO MONEY-LENDERS, ETC.

        Now let me take that a step further. What if you are buying the home with a credit card ? Is that stupid or what ? NOT STUPID IF THE INTEREST RATE IS FAVORABLE AND YOU HAVE SOME ABILITY TO PAY IT BACK.

        THE FED IS PAYING HISTORICALLY LOW INTEREST RATES ON IT DEBT -- THAT IS GOOD. AND, YES, WE HAVE SOME HOPE OF PAYING IT BACK, A #$%$ SIGHT MORE THAN IF THE ECONOMY WAS CHOKED FOR AIR FOR LACK OF LIQUIDITY. IT IS UNCLEAR IF THIS WILL HAPPEN IN A FISCALLY RESPONSIBLE WAY -- AS IN A RESPONSIBLE INVESTMENT FUNDED BY TAXES ON THE RICH, FOR EXAMPLE -- OR IN AN IRRESPONSIBLE WAY -- SAY BY PRINTING MONEY SOLELY FOR THE PURPOSE AS IN ARGENTINA.

    • Argentina is a great place!

 
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