Money, Banking and the Federal Reserve Videos

TheBalancedAmerican Says:

Feb 21, 2012 - @cbasallie I support "rules-based" monetary frameworks as an alternative to the current scenario because it is transparent and predictable, not because it is a perfect representation of output. One question to thing about is, "Is gold a perfect representation of output?" If not, what are the consequences. Imo, perfect monetary policy is close to impossible. So we basically take the best available choice, which is Friedman's k-percent model, imo.

TheBalancedAmerican Says:

Feb 21, 2012 - @Sm3rti *Sigh*...please tell me where I am in error. As far as I know I have accurately described the Hayek-Mises trade cycle theory, which says a period of deflation (which favors savings) is needed to "correct" the market. Read Tjtomkins posts on this page, he defends it very well.I do my best not to "lie." Perhaps you are advocating a different economic philosophy than Austrian. I would be interested in hearing it if it is reasonable. =)

TheBalancedAmerican Says:

Feb 21, 2012 - @Sm3rti The current fiat system has produced a more stable dollar than any commodity I can site. Please, offer me an example where the trading range (price stability) has been more stable in a commodity. You won't find one. =/

TheBalancedAmerican Says:

Feb 21, 2012 - @Sm3rti "People don not have to understand investing"So why don't people convert their dollars to gold certificates, or stocks, or bonds. It seems to me that most people are passive and complacent. If this were not the case, people would protect their saving now from the effects of inflation, but they do not. The only hedge the average Joe reaches for is a home mortgage, which has been pretty food until recently ;)I do agree with you when it comes to more informed people though =)

TheBalancedAmerican Says:

Feb 21, 2012 - @tjtomkins Agreed, this was the point i was trying to make to Sm3rti ;)

TheBalancedAmerican Says:

Feb 21, 2012 - @Sm3rti How is this related to quantity of money in the system? Everything you are describing happens in a Monetarist regime just like a Gold Standard regime, and none of it effects monetary policy as it is implemented today. =/

TheBalancedAmerican Says:

Feb 21, 2012 - @Sm3rti "how, then, could the dollar price of gold fluctuate"This is the point you aren't understanding. Money is not a product/asset/service. It's a imaginary unit used to exchange products/assets/services. The quantity of money in a system represents a framework in which the value of all products/assets/services float. Gold fluctuates inside of the dollar framework because of subjective demand. This is why trading indexes for dollars is more stable than indexes for gold. =/

TheBalancedAmerican Says:

Feb 21, 2012 - @tjtomkins I agree. Returning to a gold standard would increase the demand for gold. =)

TheBalancedAmerican Says:

Feb 21, 2012 - @tjtomkins "Well, you accept that central-planing is bad with everything else.........except money :)"I'm also a Ron Paul supporter...he is the only honest politician I can point at ;)

TheBalancedAmerican Says:

Feb 21, 2012 - @tjtomkins I guess I mean barter because gold, or any real product, has intrinsic market value. It is "actually" valuable. Whereas seashells, or fiat money doesn't really carry intrinsic value, they are only a framework for things that actually count. =)

TheBalancedAmerican Says:

Feb 21, 2012 - @tjtomkins Thanks for the suggestion...i'll check him out. =)

TheBalancedAmerican Says:

Feb 21, 2012 - @emetts2112 It is more like an unholy alliance between bankers and politicians. The bankers operate on the authority of the Treasury. However, politicians find it easy to endlessly borrow from the profits of bankers to finance wars and handouts for votes. They are essentially each other's best friend because they both enable the other.Besides a 6% dividend to member banks, and a couple of billion for the Rothschilds (pun), the Fed returns all of its profits to the Treasury =)

nowthatsinteresting1 Says:

Feb 22, 2012 - The problem with money and banks goes right back to the 1600s in the UK. Then, people deposited gold at goldsmiths for safe keeping, getting a note that showed how much they had deposited. This note was then like a very valuable bank note. The problem came when the goldsmiths realised that they could just keep on writing notes, no matter whether they had that total amount of gold in the vault or not. This is the basic fraud of banking, one that underlies every single boom and bust ever since.

cbasallie Says:

Feb 22, 2012 - @TheBalancedAmerican 1) Inflation from the FRB cannot possibly be the same as inflation which might occur when lending out TRULY available currency, How could lending out a currency which is actually possessed by the bank, devalue the purchase power. The FRB literally collects interest by lending out a product which they never had and which never existed. At one time that was considered criminal cont....

cbasallie Says:

Feb 22, 2012 - @cbasallie 2) Feeling the pain quickly can be a good thing. None of us wants to o turn off the heat sensing valve in our bodies. Right? . 3) Which nations abandoned gold because of inflation? How are they any better off today? America in 1900 had a large % of the population which owned homes outright. Now the % who may own homes outright can hardly afford the property taxes. 4) What about the rules imposed by the constitution. No one follows that. What rules and who would enforce them?

TheBalancedAmerican Says:

Feb 22, 2012 - @cbasallie Inflation from FRB doesn't come from the lending side. As far as banks know they are lending out dollars in their vault. The inflation is a side-effect of transactions between banks. When the dollars lent from one bank are deposited into another, the second bank counts the dollars as deposits, but no new dollars have been printed.The "money-multiplier" is literally an accounting glitch. The multiplier is determined by the reserve limit set by the Fed.

TheBalancedAmerican Says:

Feb 22, 2012 - @cbasallie 2) Very good point. I tend to agree with you, but since I am a Monetarist i worry about the compounding effects of deflation. Imo, deflation can cause an artificial depression, the same way that inflation can cause a boom.3) Nations abandoned gold because of deflation, not inflation. Britain during the depression is a classic example where a gold standard was preventing recovery.4) The Fed Gov has defiantly stepped outside the bonds of the original constitution. =/

sha370z Says:

Feb 22, 2012 - i just look at some New homes Feb 2012 and they where $760,000 to $870,000 Avg home North CA 

TheBalancedAmerican Says:

Feb 22, 2012 - @nowthatsinteresting1 Banks don't just lend out money they don't have. They must maintain a balance sheet. As far as banks know, they are only lending out what they have in their vault. The artificial inflation of money is a result of transactions between banks. It is literally an accounting "glitch" that occurs when money lent from one bank is deposited into another bank. Both banks account for the dollars as deposits. This is the basis for the money multiplier. =)

cbasallie Says:

Feb 22, 2012 - @TheBalancedAmerican See we disagree. Never mind the backing of gold. Let's say that the money which is printed doesn't represent gold or anything else for that matter. I believe this is deliberate. I don't believe that a glitch in the process causes them to give banks a false sense of available assets. I really do believe it is deliberate. I really believe that were gold backing the money, or not, that they would lend more than they had for nefarious reasons. .... continue

cbasallie Says:

Feb 22, 2012 - @cbasallie .....part 2) but.. I think that the absence gold to back the money makes it easier for them to practice this fractional lending. So for example if the dollars represented 10 lbs of gold but only 10 ounces were in the vaults then we could prosecute the banks for a type of fraud. But as it stands the paper represents... ??... So how do we prove that a deliberate act of fraud has occurred?. Don't you see? Gold backing would make their practices more transparent. Don't you agree?

cbasallie Says:

Feb 22, 2012 - @cbasallie part 3) You are right about the Fed gov't defiantly stepping outside the bonds of the original constitution.

ashwadhwani Says:

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TheBalancedAmerican Says:

Feb 22, 2012 - @cbasallie "See we disagree"Yes, we disagree. We do however agree that the current monetary system needs to be changed. You advocate for a solution based in the ideas of Hayek-Mises. I advocate for a solution based on the ideas of Friedman. In the end we're both libertarian. ;)"I don't believe that a glitch in the process causes them to give banks..."It is indeed an accounting glitch. One that is predictable and manageable. Economists have modeled the money multiplier.

TheBalancedAmerican Says:

Feb 22, 2012 - @cbasallie "So how do we prove that a deliberate act of fraud has occurred?"The same way that any dispute of law is resolved. With a law suit. =)"Don't you see? Gold backing would make their practices more transparent. "I agree...but a rules-based monetary framework is even more trasparent than a gold standard. There is actually nothing to hide in a rules-based system, monetary policy is an instrument of law. Simple, predicable, stable, and totally transparent. ;)