Paul Volcker gives Wall Street a "wake up" call

[Ausm]

http://business.timesonline.co.uk/t...ectors/banking_and_finance/article6949387.ece

I wonder if the rest of President Obama's economic team got this memo it doesn't sound like it.

 

[drebo]

He's not calling for the abolition of the Fed, thus he's not really looking to solve the problem.

The amount that bankers paid themselves is a pittance compared to the inflation and cash injected into the system by the Fed. Attack the problem at the source and the symptoms will go away. Predatory lending, stupid loan programs with balloon payments and negative amortization, ridiculous ARMs that were given out...none of those are feasible in the free market and rely on a steady stream of new cash from the Fed as well as a guarantee to pick up the tab when things go sour from the government.

Until an "economic leader" calls for the destruction of the Fed, he should not be taken seriously as trying to fix the problem.

 

[ayabe]

Abolition of the Fed, what a fucking joke - get a grip on yourself.

 

[drebo]

Oh, so you like an organization that is completely and totally out side of voter control or even oversight to have complete control over your economy?

In the 90 years since the Fed was created, the value of $100 has decreased 20-fold, the majority since the 1970s when the final ties to a gold standard were cut. In the 90 years before the Fed was created, the value of $100 INCREASED nearly 50%.

I don't know about you, but I definitely know which society I'd rather live in.

 

[fskimospy]

Oh, so you like an organization that is completely and totally out side of voter control or even oversight to have complete control over your economy?

In the 90 years since the Fed was created, the value of $100 has decreased 20-fold, the majority since the 1970s when the final ties to a gold standard were cut. In the 90 years before the Fed was created, the value of $100 INCREASED nearly 50%.

I don't know about you, but I definitely know which society I'd rather live in.

The gold standard was a catastrophe. There is a reason why every major nation on earth has abandoned it. Only in our country's worst nightmares would we be foolish enough to return to it.

I like a lot of the things that Ron Paul stands for but the one thing that made it absolutely certain that I could never in good conscience vote for him was his gold standard anti-fed quackery.

 

[Jaskalas]

The gold standard was a catastrophe. There is a reason why every major nation on earth has abandoned it. Only in our country's worst nightmares would we be foolish enough to return to it.

I like a lot of the things that Ron Paul stands for but the one thing that made it absolutely certain that I could never in good conscience vote for him was his gold standard anti-fed quackery.

You don't stop to wonder if all this fake wealth is hurting people when it all comes crashing down? It is at least worth consideration as to whether the Fed is the cause of this.

 

[bfdd]

You don't stop to wonder if all this fake wealth is hurting people when it all comes crashing down? It is at least worth consideration as to whether the Fed is the cause of this.

It's funny when people are in support of fake money. Right now it's simply a piece of paper that has no real value, it's pretend money.

 

[GuitarDaddy]

It's funny when people are in support of fake money. Right now it's simply a piece of paper that has no real value, it's pretend money.

You financial geniuses never cease to amaze me

The entire concept of currency is fake in your terms, I don't care if was on a gold standard, paper standard, wood standard or bubblegum standard. And the gold standard was especially bogus, the entire known world gold reserves could be stored in 2 olympic swimming pools and you actually believe that at any given point in history that any currency was completely backed up by gold reserves? LOL

You need to go back to bartering for goods and trading polished stones and shiny objects, thats a level of economics you might be able to uderstand.

 

[First]

He's not calling for the abolition of the Fed, thus he's not really looking to solve the problem.

The amount that bankers paid themselves is a pittance compared to the inflation and cash injected into the system by the Fed. Attack the problem at the source and the symptoms will go away. Predatory lending, stupid loan programs with balloon payments and negative amortization, ridiculous ARMs that were given out...none of those are feasible in the free market and rely on a steady stream of new cash from the Fed as well as a guarantee to pick up the tab when things go sour from the government.

Until an "economic leader" calls for the destruction of the Fed, he should not be taken seriously as trying to fix the problem.

Calling for destruction of the Fed is loony and is the surest sign someone isn't particularly experienced or well educated in about 99% of all cases.

It's funny when people are in support of fake money. Right now it's simply a piece of paper that has no real value, it's pretend money.

It's always interesting to hear people say dollars are fake money when antequated, 200 year old dollar bills from the early 19th century are worth more on the open market than a similar amount of weighted gold. How's that for holding value?

Fact is you could inflate the dollar until the end of time and it would still be a superior alternative to deflating the dollar in real and/or nominal terms. This is just the way the world works, the way businesses work, and the way consumers think; they'd rather have inflated dollars than deflated dollars. We know for a fact that deflated dollars led to the Depression, led to the 3-4 banking panics in the 19th century just in the last 3-4 decades of that period. We know we were on the gold standard the entire time and we know that fixed exchange rates constrain the ability of businesses to expand, constrain start-ups, and constrain innovation. It's why we have been far, far better off without the gold standard and it's why not a single country on the planet worth a damn is on anything resembling a commodity-backed currency.

 

[JS80]

It's funny when people are in support of fake money. Right now it's simply a piece of paper that has no real value, it's pretend money.

Money itself, whether fiat, shiny metal, seashells or flowers, is nothing and has no real value. ALL money is pretend money. But do you suggest we go back to bartering?

And abolish the Fed? To do what? To go back to bartering or to give monetary power to "the people"? We all know "the people" are fascist, racist, socialist, and communist. The fed represents the best form of government - a benevolent dictatorship, owned/controlled by shareholders, bondholders, depositors and employees. Sure they make mistakes, but what's the alternative? Give the power of money to the politicians? Look what happens to that - Obama budgets (through treasury monetization) and Zimbabwe inflation.

 

[StageLeft]

Does anybody have a brief bullet list of the important legal changes that have kicked in since this economic crisis kicked in that are attempting to prevent it from recurring? What laws has Congress passed in an effort to avoid a relapse?

 

[Special K]

Oh, so you like an organization that is completely and totally out side of voter control or even oversight to have complete control over your economy?

In the 90 years since the Fed was created, the value of $100 has decreased 20-fold, the majority since the 1970s when the final ties to a gold standard were cut. In the 90 years before the Fed was created, the value of $100 INCREASED nearly 50%.

I don't know about you, but I definitely know which society I'd rather live in.

If the value of a dollar decreases 20-fold over a period of 90 years, but incomes rise by the same amount, then what has really changed from a consumer's perspective?

I guess my question is this - what is the significance of devaluing the dollar at a rate of 3%/year (average long-term inflation rate) but then giving everyone a 3% COLA (again, a long-term average - I'm not suggesting that everyone gets exactly 3% each and every year). It seems like everyone is staying roughly the same in terms of buying power.

 

[Arkaign]

If the value of a dollar decreases 20-fold over a period of 90 years, but incomes rise by the same amount, then what has really changed from a consumer's perspective?

I guess my question is this - what is the significance of devaluing the dollar at a rate of 3%/year (average long-term inflation rate) but then giving everyone a 3% COLA (again, a long-term average - I'm not suggesting that everyone gets exactly 3% each and every year). It seems like everyone is staying roughly the same in terms of buying power.

What changes there is the value of savings. If you aren't collecting enough interest or appreciation on your assets during a time of continual inflation, then the $ you previously earned is now worth less than the time at which you earned it. Obviously this affects people that work paycheck to paycheck pretty minimally, but it does affect retirees and such that don't feel like playing investment games, of which some can spectacularly backfire.

 

[bfdd]

JS80, you're right all money is fake money but atleast they used to be connected to something tangible. Now it's merely a piece of cotton paper with some ink on it. What seperates how much a 10 dollar bill is actually worth vs how much a 100 dollar bill is worth? The picture inked on and the extra 0 inked on. It doesn't represent anything.

 

[da loser]

http://www.bloomberg.com/apps/news?pid=20601087&sid=amIDb6fD0ChQ&pos=8

Brown’s Tax

Finance-industry criticism was directed at a one-time levy of 50 percent on discretionary bonuses of more than 25,000 pounds ($40,800).

The tax will be paid by all banks that operate in the U.K., including units of U.S. firms such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. Darling is trying to mollify voter anger after committing more than 1 trillion pounds to prop up lenders including Royal Bank of Scotland Group Plc.

“Those who did most to cause the crash and did best from the boom make their proper contribution through a fair-tax system,” said Brendan Barber, general secretary of the Trades Union Congress, whose members fund two-thirds of the annual budget of Brown’s Labour Party.

how long will it take for obama/congress to follow suit?

http://features.csmonitor.com/econo...-proposal-three-reasons-it-wont-happen-in-us/

 

[JS80]

JS80, you're right all money is fake money but atleast they used to be connected to something tangible. Now it's merely a piece of cotton paper with some ink on it. What seperates how much a 10 dollar bill is actually worth vs how much a 100 dollar bill is worth? The picture inked on and the extra 0 inked on. It doesn't represent anything.

Actually, it's worse. Money is now 99% zeros and commas in the electronic ledger at the federal reserve.

Regardless, money does not require that it is tangible. If you had a bunch of gold, and no one else wanted it, what good is it as money?

Plus do you really want to give the power of money to politicians? To Barack Obama? Really?

 

[Special K]

What changes there is the value of savings. If you aren't collecting enough interest or appreciation on your assets during a time of continual inflation, then the $ you previously earned is now worth less than the time at which you earned it. Obviously this affects people that work paycheck to paycheck pretty minimally, but it does affect retirees and such that don't feel like playing investment games, of which some can spectacularly backfire.

I agree that the system does seem to punish saving. A typical savings account is not going to keep up with inflation in the long run, yet I think it is a good idea for everyone to keep some savings set aside in a safe, liquid account as opposed to investing it all in stocks.

My question was mainly with respect to income.

 

[werepossum]

A gold standard does not mean you have that much gold in a vault, it simply means the dollar would be tied to a specific value in gold and backed by an equal amount of wealth. You need only enough gold (or silver, copper, or other real things of value) to trade for the dollars of those who wish to cash them in. Similarly a bank does not keep in a vault all the dollars that are on deposit, but merely enough to provide dollars for those who wish to retrieve their deposits. The key is to tie money, which is inherently a place holder of no inherent value, to something of real inherent value in such as way as to prevent bankers or politicians from inflating currency for their own benefit. Although if our government were not so incompetently operated (by both parties) so that we have massive debt and far too much government spending, this would not be an issue, as our currency would tend to appreciate or at least remain stable.

The reason all nations have left the gold standard is not a flaw inherent in the gold system, but a flaw inherent in people - the desire to inflate our way out of short-term problems by trading them with long-term problems. Eliminating the Federal Reserve will only trade one problem (currency controlled for the benefit of bankers) for another (currency controlled for the benefit of politicians.)

 

[LegendKiller]

Oh, so you like an organization that is completely and totally out side of voter control or even oversight to have complete control over your economy?

In the 90 years since the Fed was created, the value of $100 has decreased 20-fold, the majority since the 1970s when the final ties to a gold standard were cut. In the 90 years before the Fed was created, the value of $100 INCREASED nearly 50%.

I don't know about you, but I definitely know which society I'd rather live in.

Why does a currency have to be an absolute 0 flat, or increasing, currency?

All that matters is purchasing power parity and the dollar has maintained that.

All of the bullshit people like you spew about it being "worth less" is just that, bullshit.

 

[LegendKiller]

You don't stop to wonder if all this fake wealth is hurting people when it all comes crashing down? It is at least worth consideration as to whether the Fed is the cause of this.

So there were *NEVER* any booms or busts due to "real wealth" under a gold standard?

Wow, interesting. Do you forget any of the thousands of years of history prior to the 20th century?

People like you forget that human nature trumps artificial boundaries of currency, stocks, bonds, or any other financial or economic instrument.

 

[LegendKiller]

A gold standard does not mean you have that much gold in a vault, it simply means the dollar would be tied to a specific value in gold and backed by an equal amount of wealth. You need only enough gold (or silver, copper, or other real things of value) to trade for the dollars of those who wish to cash them in. Similarly a bank does not keep in a vault all the dollars that are on deposit, but merely enough to provide dollars for those who wish to retrieve their deposits. The key is to tie money, which is inherently a place holder of no inherent value, to something of real inherent value in such as way as to prevent bankers or politicians from inflating currency for their own benefit. Although if our government were not so incompetently operated (by both parties) so that we have massive debt and far too much government spending, this would not be an issue, as our currency would tend to appreciate or at least remain stable.

The reason all nations have left the gold standard is not a flaw inherent in the gold system, but a flaw inherent in people - the desire to inflate our way out of short-term problems by trading them with long-term problems. Eliminating the Federal Reserve will only trade one problem (currency controlled for the benefit of bankers) for another (currency controlled for the benefit of politicians.)

How does gold have any inherent value?

It is a fiat currency, it's only worth what the collective insanity of humanity says it is worth. You can't eat it, you can't use it (80-90% of gold is used for worthless human baubles), you can't transport it easily. It's value is ONLY set by it's perceived worth as a medium of transaction.

Wait, doesn't that last sentence also describe paper currencies?

 

[LegendKiller]

I agree that the system does seem to punish saving. A typical savings account is not going to keep up with inflation in the long run, yet I think it is a good idea for everyone to keep some savings set aside in a safe, liquid account as opposed to investing it all in stocks.

My question was mainly with respect to income.

Why would a typical savings account keep up with inflation? There is no risk with a "typical savings account", then factor in costs of maintaining the account (and bank), you get less than inflation.

 

[LegendKiller]

Does anybody have a brief bullet list of the important legal changes that have kicked in since this economic crisis kicked in that are attempting to prevent it from recurring? What laws has Congress passed in an effort to avoid a relapse?

1. Repeal Glass Steagall through the Gramm-Leach-Bliley Act (combined commercial and investment banking as well as insurance)

2. Commodities and Futures Modernization Act (expanded CDS)

3. FAS140 (not a law, but an accounting standard from FASB, which sets US accounting standards). (Allowed off-balance-sheet securitizations, hiding liabilities, while booking gain on sale)

4. US Treasury decreasing the capital requirements of banks (allowed banks to get out of control)

Those are the top 4

 

[First]

JS80, you're right all money is fake money but atleast they used to be connected to something tangible. Now it's merely a piece of cotton paper with some ink on it. What seperates how much a 10 dollar bill is actually worth vs how much a 100 dollar bill is worth? The picture inked on and the extra 0 inked on. It doesn't represent anything.

You don't get it; gold doesn't fix that problem, because it doesn't really represent anything different or significant.

 

[Special K]

Why would a typical savings account keep up with inflation? There is no risk with a "typical savings account", then factor in costs of maintaining the account (and bank), you get less than inflation.

But why is it necessary for our money to lose spending power over time?