Shut Down the Federal Reserve?

[JMapleton]

Abolish the Federal Reserve and the IRS.

And to the idiots who think abolishing the Fed means abolishing "money," open a book before you open your mouth.

 

[Munky]

Interestingly enough, our chief economics says the indicators are just the opposite. Non-farm payrolls bottomed out, durable goods up etc etc. Employment is a lagging indicator, so if you're basing your view mostly on that, you'll be late to the party.

Our chief economists would like nothing better than for everyone to pretend the crisis is over and spend, spend, spend.

Our financial industry is anything but sound. After bailing out Freddie and Fannie, they're still losing money. Banks have adopted a "mark-to-model" that Hank Paulson fought to legalize, effectively allowing them to lie on their balance sheets, since the assets no longer had to reflect market value. The bank reserve ratio is at zero, and the leverage is effectively unlimited. But you can't argue with math, and whether or not you want to believe it, the banks are still sitting on a mountain of toxic assets and bad loans which, if forced to bear market value, would effectively render the banks insolvent.

And while I wish the economy could function while the banks that made bad bets eat their own sh!t, that's not likely to happen when Bernanke and Paulson go to congress and threaten civil war and tanks on the streets if they don't get the bailout.

 

[wiretap]

Interestingly enough, our chief economics says the indicators are just the opposite. Non-farm payrolls bottomed out, durable goods up etc etc. Employment is a lagging indicator, so if you're basing your view mostly on that, you'll be late to the party.

- In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?

- According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?

- The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?

- How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?

- With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?

- Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that “terrible cuts” are urgently needed in order to avoid a complete financial disaster in his state?

- But it just isn’t California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?

- In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?

- Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?

- The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?

- According to new reports, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?

- Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?

- The FDIC’s list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?

- The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?

- Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?

- Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two “pillars” of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?

- 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?

- The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America’s biggest cities?

- Gallup’s measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?

- Polls are showing that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?

- The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that “what is good for Wall Street is good for Main Street” actually true?

- Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?

- Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?

- In March, the price of fresh and dried vegetables in the United States soared 49.3% - the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?

- 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn’t we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words “economic recovery”?

The crisis is over, all is well.

 

[halik]

Yay lets cherry pick some stats, soundbytes, hyperboles, assumptions and make a conclusion based on those. Woohooo!

 

[halik]

Our chief economists would like nothing better than for everyone to pretend the crisis is over and spend, spend, spend.

Our financial industry is anything but sound. After bailing out Freddie and Fannie, they're still losing money. Banks have adopted a "mark-to-model" that Hank Paulson fought to legalize, effectively allowing them to lie on their balance sheets, since the assets no longer had to reflect market value. The bank reserve ratio is at zero, and the leverage is effectively unlimited. But you can't argue with math, and whether or not you want to believe it, the banks are still sitting on a mountain of toxic assets and bad loans which, if forced to bear market value, would effectively render the banks insolvent.

And while I wish the economy could function while the banks that made bad bets eat their own sh!t, that's not likely to happen when Bernanke and Paulson go to congress and threaten civil war and tanks on the streets if they don't get the bailout.

Mark to model makes sense when prices discovery is broken. Everyone took a whole bunch of impairments (especially on the fixed income side), but only a fraction of those turned into economic losses. Price of risk is one of the inputs to security valuation and if the market participants are irrational (say treasuries yielding negative), using that for GAAP impairment leads to weird results*.

What do you think would happen if your company couldn't give you a paycheck because their credit got pulled? And if that happens all around the country? You won't be able to use your CC, since the issuers would immediately try to de-risk. You can run to your bank and get cash, but hope you're the first one in line ... Truth be told, very few peopel appreciate how close we came to a huge clusterfuck.

* Every asset is someone else's liability, but you only mark to market on the asset side of the balance sheet. The counterparty's liability isn't marked down, so you end up with this self-reinforcing effect of capital erosion.

Good reading:
https://www.cfainstitute.org/learni...5.18.aspx?WPID=Topic_List_Tabbed&PageName=All

 

[wiretap]

Yay lets cherry pick some stats, soundbytes, hyperboles, assumptions and make a conclusion based on those. Woohooo!

Feel free to refute all of them if you believe they're incorrect.

It sucks learning the truth, I know. I was once in denial like you.

 

[halik]

Feel free to refute all of them if you believe they're incorrect.

It sucks learning the truth, I know. I was once in denial like you.

1)
Foodstamps:
http://www.reuters.com/article/idUSTRE4B28CB20081203


"That's approaching the all-time high of 10.5 percent of the population that used the program in 1994, and is similar to levels seen in the early 1980s, she said."


2,3)
Foreclosures, Delinquencies:
http://latimesblogs.latimes.com/mon...uencies-fall-but-foreclosures-up-sharply.html
"Mortgage delinquencies fall but foreclosures up sharply"
"The regulators attributed the increase to servicers having exhausted efforts to assist holders of troubled loans."

4)
Unless your mortgage is paid off, the bank always owned a huge segment on the residential market. It's a collateralized debt after all.

5)
Happened 00-06, economy didn't crash then? Also file that under specualtion; hardly a politically viable move

6)
California's hens coming to roost, local issue due to libtard legislature.

7)
Don't see too much rating erosion anywhere; there will be cuts all across the world.

8) Google debt/GDP. Nominal numbers is for people that don't know economics

9) Cherry picking data points...

10) Ceteris paribus extrapolation

11) Non-sequitur? BP is the biggest employer in south west right now, great for the economy

12,13) FDIC is doing its job; we did have a leverage-created crisis.

14) Inevitable correction; if anything people living in houses for free are boosting the economy.


... running out of energy. I bet this is a chain letter you got from some ron paul nut that had "BUY GOLD NOW!!111" on the bottom.

Also as far as "living in denial". I do investment management for living; we've got a weekely meeting where we review portfolio strategy based on econ forecasts. If there was actual data showing shit hitting the fan (again), we'd definitely notice.

 

[rchiu]

There is no rational reason why the U.S. Congress cannot print its own currency.

The American government could do the Federal Reserve's job for virtually nothing, and save the U.S. taxpayers between $200 and $900 billion each year in interest off a debt that will never be paid off."

Bwahahahahaha.....are u f'ing serious? Give politicians a free hand to print money. And government could do Fed's job for nothing?

I mean, seriously, do you writing all these $hit with a straight face while accusing people have little education about the Fed?

 

[JS80]

Bwahahahahaha.....are u f'ing serious? Give politicians a free hand to print money. And government could do Fed's job for nothing?

I mean, seriously, do you writing all these $hit with a straight face while accusing people have little education about the Fed?

Even people with college education in economics doesn't understand the Federal Reserve system. How do you expect these retards to get it?

 

[Special K]

Full audit.

That would bring down the entire monetary system.

Care to explain? That would imply the entire monetary system is built on lies and fraud... which doesn't sound entirely unbelievable.

I was also wondering if someone could elaborate on why a full audit would bring down the entire monetary system.

 

[wiretap]

1)
Foodstamps:
http://www.reuters.com/article/idUSTRE4B28CB20081203


"That's approaching the all-time high of 10.5 percent of the population that used the program in 1994, and is similar to levels seen in the early 1980s, she said."


2,3)
Foreclosures, Delinquencies:
http://latimesblogs.latimes.com/mon...uencies-fall-but-foreclosures-up-sharply.html
"Mortgage delinquencies fall but foreclosures up sharply"
"The regulators attributed the increase to servicers having exhausted efforts to assist holders of troubled loans."

4)
Unless your mortgage is paid off, the bank always owned a huge segment on the residential market. It's a collateralized debt after all.

5)
Happened 00-06, economy didn't crash then? Also file that under specualtion; hardly a politically viable move

6)
California's hens coming to roost, local issue due to libtard legislature.

7)
Don't see too much rating erosion anywhere; there will be cuts all across the world.

8) Google debt/GDP. Nominal numbers is for people that don't know economics

9) Cherry picking data points...

10) Ceteris paribus extrapolation

11) Non-sequitur? BP is the biggest employer in south west right now, great for the economy

12,13) FDIC is doing its job; we did have a leverage-created crisis.

14) Inevitable correction; if anything people living in houses for free are boosting the economy.


... running out of energy. I bet this is a chain letter you got from some ron paul nut that had "BUY GOLD NOW!!111" on the bottom.

Also as far as "living in denial". I do investment management for living; we've got a weekely meeting where we review portfolio strategy based on econ forecasts. If there was actual data showing shit hitting the fan (again), we'd definitely notice.

Nice try. Just so you know, red herrings, straw man arguments, and appeal to ridicule don't actually refute anything. Also, your links didn't disprove anything.

 

[halik]

Nice try. Just so you know, red herrings, straw man arguments, and appeal to ridicule don't actually refute anything. Also, your links didn't disprove anything.

You're the one that posted cherry picked news headlines without context to get some alarmist nonsense, I provided context that refutes that. Add to that hyperboles (gov't will quadruple gas tax, oil spilling to the gulf = world ending), linear extrapolations of non-linear data etc. If you honestly don't see that, there's just go point in having a discussion about it... run off to get some gold bricks.


Here's the gist of your arguments:

How can you say the economy is getting worse, when weekly jobless claims dropped?
http://www.cnbc.com/id/37894299

 

[Munky]

Mark to model makes sense when prices discovery is broken. Everyone took a whole bunch of impairments (especially on the fixed income side), but only a fraction of those turned into economic losses. Price of risk is one of the inputs to security valuation and if the market participants are irrational (say treasuries yielding negative), using that for GAAP impairment leads to weird results*.

What do you think would happen if your company couldn't give you a paycheck because their credit got pulled? And if that happens all around the country? You won't be able to use your CC, since the issuers would immediately try to de-risk. You can run to your bank and get cash, but hope you're the first one in line ... Truth be told, very few peopel appreciate how close we came to a huge clusterfuck.

* Every asset is someone else's liability, but you only mark to market on the asset side of the balance sheet. The counterparty's liability isn't marked down, so you end up with this self-reinforcing effect of capital erosion.

Good reading:
https://www.cfainstitute.org/learni...5.18.aspx?WPID=Topic_List_Tabbed&PageName=All

I don't know which company pays their employees off loans and credit, but mine certainly doesn't. In fact, my company doesn't take any loans at all, and we've been mostly unaffected by this financial mess.

As for CC's - some people are much less "risky" with credit than others. The ones who take on thousands in debt and barely manage minimum payment should probably not be using a CC in the first place.

Now for the banks - my deposits are insured by the FDIC. While those funds are limited, they're backed by the federal government. And so the gov would have to "bail out" my FDIC funds if it ever came to that.

Is there still a potential for an economic meltdown? Of course there is. But if it happens, it won't be an accident, but rather a result of bad bets and decisions made by the banks and the failure of the government to regulate them.

 

[halik]

I don't know which company pays their employees off loans and credit, but mine certainly doesn't. In fact, my company doesn't take any loans at all, and we've been mostly unaffected by this financial mess.

As for CC's - some people are much less "risky" with credit than others. The ones who take on thousands in debt and barely manage minimum payment should probably not be using a CC in the first place.

Now for the banks - my deposits are insured by the FDIC. While those funds are limited, they're backed by the federal government. And so the gov would have to "bail out" my FDIC funds if it ever came to that.

Is there still a potential for an economic meltdown? Of course there is. But if it happens, it won't be an accident, but rather a result of bad bets and decisions made by the banks and the failure of the government to regulate them.

Revolving line of credit is anywhere between 0.5 - 1.5 trillion dollar /yr market. Many, many companies use it for cash flow management.

If Amex's balance sheet is getting killed on the asset side, they won't give a crap if you're less "risky" or not. They will wind down their exposure and halt your credit. It's got nothing to do with you and everything to do with their enterprise risk management.

It's true that FDIC insures the funds, but how long did people have to wait to get money out of their sun west/trust accounts? Doesn't do you a whole lot of good if you didn't get a pay check and your cc isn't working.

Honestly most people have very little appreciation of how intertwined the global finance system is.

 

[Babbles]

Abolish the Federal Reserve and the IRS.

And to the idiots who think abolishing the Fed means abolishing "money," open a book before you open your mouth.

Protip: You can't say idiotic things then call other people idiots.

 

[SlitheryDee]

Shut it down.

 

[JMapleton]

Protip: You can't say idiotic things then call other people idiots.

Fact #1 Our money supply can be supplied through other means besides the privately owned Federal Reserve, which prints literally worthless paper then convinces people it has actual productive value.

Fact #2 By closing all US military bases in foreign countries, it would save us enough money to eliminate the US personal income tax completely.

 

[rchiu]

Even people with college education in economics doesn't understand the Federal Reserve system. How do you expect these retards to get it?

Well, I don't expect retard to get it. But it is a problem when they think they are entitled have people break down PhD level economic stuff down to plain English, and have bunch of career politicians and fresh colleague grad auditor to tell those PhD's how to manage a country's monetary policy.

 

[LegendKiller]

Fact #1 Our money supply can be supplied through other means besides the privately owned Federal Reserve, which prints literally worthless paper then convinces people it has actual productive value.

Fact #2 By closing all US military bases in foreign countries, it would save us enough money to eliminate the US personal income tax completely.

You mean, the Fed does exactly what people who advocate Gold do? Goldbugs dig gold out of the ground and convince people it has actual productive value. The Fed is only privately held in one perspective, otherwise it's a US Government institution. It's leaders are appointed by the US Government, it's oversight is by Congress, it's charter is by Congress. It makes no profit and only gives its members dividends on capital invested in the Fed, everything else is returned to the government.

Oops.


Isolationism was proven 100% incorrect in the last 100 years. Are you really advocating that again?


What's amusing to me is the number of completely uneducated people in this thread voting to abolish the Fed. There hasn't been one argument made above that halik or I (or others) haven't completely destroyed. Yet, somehow, the anti-Fed people still think they are correct.

 

[IceBergSLiM]

You mean, the Fed does exactly what people who advocate Gold do? Goldbugs dig gold out of the ground and convince people it has actual productive value. The Fed is only privately held in one perspective, otherwise it's a US Government institution.

1) It's leaders are appointed by the US Government,

2) it's oversight is by Congress,

3) it's charter is by Congress.

4) It makes no profit and only gives its members dividends on capital invested in the Fed, everything else is returned to the government.

1) Is this supposed to make us feel warm and fuzzy inside because some corrupt politician with wall street ties appointed some wall street banksters? The fact that it is an appointment and their is no vote makes it all the more sketchy.

2) Oversight by congress until of course congress wants details of the organization then they are told no- fuck off. its oversight in name only. Congress influence on the FED is nil, its the other way around.

3) this doesn't really extend legitimacy, congress has a long history of chartering failed and corrupt organizations that don't work in the best interests of the people.

4) The fact that the FED doesn't make profit is irrelevant, when you are on the inside of the money supply you have all the power and influence you need, you can always make the right bets. I'd do the job for free too.

 

[halik]

You mean, the Fed does exactly what people who advocate Gold do? Goldbugs dig gold out of the ground and convince people it has actual productive value. The Fed is only privately held in one perspective, otherwise it's a US Government institution. It's leaders are appointed by the US Government, it's oversight is by Congress, it's charter is by Congress. It makes no profit and only gives its members dividends on capital invested in the Fed, everything else is returned to the government.

Oops.


Isolationism was proven 100% incorrect in the last 100 years. Are you really advocating that again?


What's amusing to me is the number of completely uneducated people in this thread voting to abolish the Fed. There hasn't been one argument made above that halik or I (or others) haven't completely destroyed. Yet, somehow, the anti-Fed people still think they are correct.

I made the same comment over at wilmott forums - i don't understand why people w/o any real background in the subject are so insistent on the crackpot view of the world. I guess it's easy to sell the conspiracy theory or something.

 

[Babbles]

Fact #1 Our money supply can be supplied through other means besides the privately owned Federal Reserve, which prints literally worthless paper then convinces people it has actual productive value.

Fact #2 By closing all US military bases in foreign countries, it would save us enough money to eliminate the US personal income tax completely.

Your so called "facts" are not facts. First the Fed does not print money, the Department of Treasury does, perhaps you heard of it. The Fed can use the money to buy government securities thereby introducing more liquid cash into the economy. However this is the purchase of assets (i.e. securities) and NOT just printing money and dumping it into people's hands. Likewise the government can sell securities (i.e. assets) to banks taking liquid cash out of the economy thereby driving up interest rates.

Jesus Christ, do you even know how the Fed works?? You may want to figure stuff out before you just throw out false "facts."

Secondly your "fact #2" is nothing more than a baseless assertion. Frankly it's just a mind-boggling stupid assertion. Hell my cat just walked by and saw what you typed and laughed his furry ass off. Even my cat understands this shit more than you do.

 

[IceBergSLiM]

I made the same comment over at wilmott forums - i don't understand why people w/o any real background in the subject are so insistent on the crackpot view of the world. I guess it's easy to sell the conspiracy theory or something.

I wouldn't describe them as crackpots at all. Well their are two types of people. Those that believe bankers have the interests of the american people in mind and those that remember the financial collapse of 2008 and the on going ramifications.

 

[halik]

I wouldn't describe them as crackpots at all. Well their are two types of people. Those that believe bankers have the interests of the american people in mind and those that remember the financial collapse of 2008 and the on going ramifications.

You just put yourself in the crackpot category with the nonsense above...

 

[IceBergSLiM]

You just put yourself in the crackpot category with the nonsense above...

ok and your still obviously on your knees sucking the banks cocks. soooo what?