• Guest, The rules for the P & N subforum have been updated to prohibit "ad hominem" or personal attacks against other posters. See the full details in the post "Politics and News Rules & Guidelines."

The Economics Game: Understanding Monetary Policy

Page 2 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.

Dissipate

Diamond Member
Jan 17, 2004
6,829
0
0
Economics aside, the bottom line is this: as a customer(depositor) of a bank, I have no vested interest whatsoever in that bank loaning out my money. What do I get? 'Free' checking? 'Free' checking is certainly not free because the dollars in my 'free' checking depreciate significantly over time.

But that's not all. Banks are also spies for the government with their "know your customer" policies. I go to a bank and withdraw over $10,000 in cash, the IRS is immediately notified. What kind of a f*ked up business intentionally spies on its customers for anyone, let alone the government?

Banks are essentially quasi private government bureaucracies. They are extremely slow, archaic and inimical to basic financial freedom. For instance, I have a credit card at my bank Washington Mutual that I use on a regular basis. I also have a checking account with Wamu. When I pay my credit card balance off using a transfer from my checking account it can take 3 to 4 days to process the payment and deduct the money from my checking account. Wamu can't even process transactions within it's own fing accounts within a reasonable amount of time!

If I transfer funds to my Sharebuilder.com brokerage account from my Wamu checking account, the funds are in the account the next day.

From a fundamental standpoint of service and efficiency banks get an F MINUS. They spy on you and they are bureaucratic and DOG slow from the top to the bottom.

I ask another question: what fundamental technical reason is there from consumer standpoint to use a traditional bank, when we have the Internet and the capability to transfer funds as fast as an email? Tradition? That's a non-reason. I can use the Internet to transfer funds instantaneously without a spying, lying, sleazy @ss bank.

In fact, right now most of my money is kept in my Sharebuilder brokerage account where I can keep it invested in gold & bond ETFs that earn income & interest. I can sell these ETFs immediately and transfer the funds to my checking account within a couple of days. I keep $1,500 max in my checking account. Right now my checking account is just a middleman, slowing down my financial life significantly.

VOIP and cell phones are replacing traditional phones

email has replaced traditional hand written letters

Online investment and payment services will replace banks
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,716
6
76
You know its funny, this threads intention was completely and totally missed by every "finance expert". Immediately you guys jumped at the opportunity to bash as if this thread was to advocate gold, which leads me to believe you probably didn't read past the first sentence. Maybe if you guys would have read the entire OP, you would have noticed the summation at the end. Let me quote it for you:

I will not say anymore that Fiat is bad or is inferior to the Gold Standard. Why? Because in both cases man (politician/political power/corporations) has ruined it. Man is to blame for the "run on gold" by way of the fractional reserve system and as is now, man is also responsible for increasing the money supply when all signs say to decrease it. Politicians and or powerful men regarded their "legacy" or retirement much more important than the citizen. Its not the monetary policy to blame, its the people in control of it.
Greed is the reason. Mans greed for power/control/influence is the downfall for any currency no matter what it is. This thread is not to advocate Gold nor Fiat, its to show that both are vulnerable to mans innermost desires.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,716
6
76
Originally posted by: halik

"Relies on the fallibility of man".... what?

<- B.S. Economics '06, M.A. Applied Economics '09... both top 5/10 programs in the country
I have edited that out in the OP, what I was trying to point out with that failed statement was that its value is tied to a few men who need to control their lust for power/wealth/political success for it to work.

The Keynesian Theory is good in practice but what has happened in the past 10yrs or so those men with the power have seen fit to increase the money supply regardless of market conditions. Disregarding it for a quick fix instead. We have yet to see the full brunt of these monetary mistakes.

 

halik

Lifer
Oct 10, 2000
25,708
1
0
Originally posted by: PC Surgeon
Originally posted by: halik

"Relies on the fallibility of man".... what?

<- B.S. Economics '06, M.A. Applied Economics '09... both top 5/10 programs in the country
I have edited that out in the OP, what I was trying to point out with that failed statement was that its value is tied to a few men who need to control their lust for power/wealth/political success for it to work.

The Keynesian Theory is good in practice but what has happened in the past 10yrs or so those men with the power have seen fit to increase the money supply regardless of market conditions. Disregarding it for a quick fix instead. We have yet to see the full brunt of these monetary mistakes.
Fed funds rates were actually going up in late 90s and and from '04 on... what exactly are you talking about?

If anything, blame the people you've elected. Budget deficits and bullshit spending (iraq, bridges to nowhere etc.) put inflationary pressure on the economy.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,716
6
76
Originally posted by: halik
Originally posted by: PC Surgeon
Originally posted by: halik

"Relies on the fallibility of man".... what?

<- B.S. Economics '06, M.A. Applied Economics '09... both top 5/10 programs in the country
I have edited that out in the OP, what I was trying to point out with that failed statement was that its value is tied to a few men who need to control their lust for power/wealth/political success for it to work.

The Keynesian Theory is good in practice but what has happened in the past 10yrs or so those men with the power have seen fit to increase the money supply regardless of market conditions. Disregarding it for a quick fix instead. We have yet to see the full brunt of these monetary mistakes.
Fed funds rates were actually going up in late 90s and and from '04 on... what exactly are you talking about?
In the OP I show the M3 report I am talking about.

If anything, blame the people you've elected. Budget deficits and bullshit spending (iraq, bridges to nowhere etc.) put inflationary pressure on the economy.
I am blaming them but also the two party system where tenure/connections/political agendas are shaping monetary policy (the things you have mentioned as well) in their favor and not in the citizens favor.

 

halik

Lifer
Oct 10, 2000
25,708
1
0
Originally posted by: PC Surgeon
Originally posted by: halik
Originally posted by: PC Surgeon
Originally posted by: halik

"Relies on the fallibility of man".... what?

<- B.S. Economics '06, M.A. Applied Economics '09... both top 5/10 programs in the country
I have edited that out in the OP, what I was trying to point out with that failed statement was that its value is tied to a few men who need to control their lust for power/wealth/political success for it to work.

The Keynesian Theory is good in practice but what has happened in the past 10yrs or so those men with the power have seen fit to increase the money supply regardless of market conditions. Disregarding it for a quick fix instead. We have yet to see the full brunt of these monetary mistakes.
Fed funds rates were actually going up in late 90s and and from '04 on... what exactly are you talking about?
In the OP I show the M3 report I am talking about.

If anything, blame the people you've elected. Budget deficits and bullshit spending (iraq, bridges to nowhere etc.) put inflationary pressure on the economy.
I am blaming them but also the two party system where tenure/connections/political agendas are shaping monetary policy (the things you have mentioned as well) in their favor and not in the citizens favor.
I still don't see how the increase of nominal currency is relevant to the topic on hand; if the FED was running expansionary policy, we'd see a huge spike of consumer price index. That hasn't been the case : link

If anything that growth can be attributed to China financing our deficits (they're sitting on some 1 trillion now? ) or in other words the money is not in circulation.

edited for clarity
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,716
6
76
Originally posted by: halik

I still don't see how the increase of nominal currency is relevant to the topic on hand; if the FED was running expansionary policy, we'd see a huge spike of consumer price index. That hasn't been the case : link

If anything that growth can be attributed to China financing our deficits (they're sitting on some 1 trillion now? ) or in other words the money is not in circulation. link
Well there is a little games the FED plays with figures. Taking out or reducing the size of certain products to lower the percentage of CPI. Not only that, but I am willing to bet those are Core CPI numbers which excludes unnecessary products like Energy & Food. The excuse they give for excluding it from the public eye is that its "too volatile" for accurate numbers. I disagree whole heartedly, the first place inflation rears its ugly head is Energy & Food.
 

SleepWalkerX

Platinum Member
Jun 29, 2004
2,650
0
0
Originally posted by: halik
Originally posted by: SleepWalkerX
Originally posted by: halik
That ought to be interesting....

The whole gold standard is nothing but libertopian notion that has failed in practice before - it doesn't prevent government from deficit spending and therefore creating inflationary pressures (ask Nixon) and at the same time it doesn't allow for monetary flexibility.
So it failed.. because of the government? So we have to change our money supply to suit the government's inept behavior?

Originally posted by: halik
Also the main advantage of a flexible monetary system is to be able to shorten recession, not to curb inflation during recession. Refer to any variant of the phillips curve model to see how monetary policy can shorten the time it takes to get to a new equilibrium (and reduce unemployment).
Lol, phillips curve? Hasn't that been debunked for some time now? Economic growth does not directly cause inflation.. That would be silly.

Originally posted by: halik
"Relies on the fallibility of man".... what?
Or in other words, government intervention.

Originally posted by: halik
<- B.S. Economics '06, M.A. Applied Economics '09... both top 5/10 programs in the country
What kind of economic theory did they teach you? Keynesian economics? I'm taking economic courses in my college next semester. Hopefully they won't teach the same garbage, or I'll have to remain very critical in class.
It failed because it is based on unrealistic expectations, much like the rest of libertopian ideas that disregard market externalities and human nature.
Eh? Austrian-economics revolves around the concept of human interaction. It was built around that. It is Keynesian economics that fails to address human nature and completely relies on mathematical calculations and predictions. Market externalities are addressed through Austrian-economics. Perhaps not always in the best light, but they are.

Originally posted by: halik
I want to say you're thinking about the Laffer curve (cut taxes, tax revenue will rise) aka supply side economics. Here's a recent paper about Phillips curve linkie

If your program is any good, they'll cover the same exact (though with less detail). The stuff I'm talking about is regular Graduate economics curriculum
I tried to just read the first paragraph of your link, but its very difficult. It throws out acronyms without defining what they mean. I had to read up the Phillips Curve from wikipedia. In fact, in that wikipedia entry there is a statement that the Phillips Curve fails to apply to periods of stagflation (when both high unemployment and rampant inflation exists).
 

halik

Lifer
Oct 10, 2000
25,708
1
0
Originally posted by: PC Surgeon
Originally posted by: halik

I still don't see how the increase of nominal currency is relevant to the topic on hand; if the FED was running expansionary policy, we'd see a huge spike of consumer price index. That hasn't been the case : link

If anything that growth can be attributed to China financing our deficits (they're sitting on some 1 trillion now? ) or in other words the money is not in circulation. link
Well there is a little games the FED plays with figures. Taking out or reducing the size of certain products to lower the percentage of CPI. Not only that, but I am willing to bet those are Core CPI numbers which excludes unnecessary products like Energy & Food. The excuse they give for excluding it from the public eye is that its "too volatile" for accurate numbers. I disagree whole heartedly, the first place inflation rears its ugly head is Energy & Food.
CPI is produced by the Beaureau of Labor and Statistics (not FED) and they look at a price of a large basked of goods (not money supply or anything like that). You can include oil if you'd like, but it only skews the states, since that's an exogenous variable (fed has little say in what OPEC charges). Food is included IIRC
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,716
6
76
Originally posted by: halik
Originally posted by: PC Surgeon
Originally posted by: halik

I still don't see how the increase of nominal currency is relevant to the topic on hand; if the FED was running expansionary policy, we'd see a huge spike of consumer price index. That hasn't been the case : link

If anything that growth can be attributed to China financing our deficits (they're sitting on some 1 trillion now? ) or in other words the money is not in circulation. link
Well there is a little games the FED plays with figures. Taking out or reducing the size of certain products to lower the percentage of CPI. Not only that, but I am willing to bet those are Core CPI numbers which excludes unnecessary products like Energy & Food. The excuse they give for excluding it from the public eye is that its "too volatile" for accurate numbers. I disagree whole heartedly, the first place inflation rears its ugly head is Energy & Food.
CPI is produced by the Beaureau of Labor and Statistics (not FED) and they look at a price of a large basked of goods (not money supply or anything like that). You can include oil if you'd like, but it only skews the states, since that's an exogenous variable (fed has little say in what OPEC charges). Food is included IIRC
Core CPI figures exclude Food & Energy Link

Although I had it wrong (FED produces figures), it doesn't change the fact that the statistics are played with. Numbers are manipulated to show a lower inflation rate.

As I said before though, its not that Fiat is bad or wrong, as long as we have men with honesty & integrity in positions of power. Hopefully we will avoid the great crash that I think is coming, if we do not, we must find another way to guard against mens lusts. Don't ask me what that would be, I have been racking my brain trying to figure that one out.
 

SleepWalkerX

Platinum Member
Jun 29, 2004
2,650
0
0
Originally posted by: LegendKiller
They'll just dismiss the notion and come up with some kind of "inflation = tax", yet they fail to provide who it taxes and to what extent.
Inflation by itself is not a tax. Inflation just describes a process, or outcome. When inflation is caused by federal government spending (or when it gets the Fed to print money by issuing bonds or securities) its a tax on everyone because it devalues the dollar. Instead of directly taxing the tax payers it can just devalue the dollar by printing money and the effects are not directly noticed. This leads to less of a government outcry by the people because most don't understand how the federal government can pay for things without directly taxing the tax payers.

Unfortunately this is apparently how we get new money introduced to our money supply in the first place (only later does fractional reserve banking take place and manipulate that money to be more money). Its quite a sick process.

Originally posted by: LegendKiller
Then they'll move onto "gold prevents debt", yet they fail to acknowledge that our government had to take out debt to save the gold standard and we had plenty of debt before that. They also forget to mention that prior to the federal government having massive amounts of debt, the states did.
Gold doesn't prevent debt. However, if used as money it does allow us to bypass the need for debt based money.

Originally posted by: LegendKiller
Then they'll say that gold is more stable. Yet overlook the notion that the GD could have been likely caused by us depressing our interest rates to help the UK refloat their own gold program, after we extended than $200MM in credit. We then did the same to Italy. Both systems failed under the weight of the world, which precipitated a flock away from hard currencies, as people realized they did nothing for economic stability and even caused instability.
Us? You mean the government. And people did not flock away from hard currencies, they traded their worthless dollars for tangible gold during that time. The governments flocked away from hard currencies.

Originally posted by: LegendKiller
They also forget that the very same people they deride for being anti-gold by creating the Fed, or that the Fed was "evil" are the same ones who championed Gold as the only way to go (JP Morgan, Rothschilds, Goldman Sachs...etc) because they are the ones who propped up the gold banks several times, Rothschild propped up Austria's gold system twice. Pierpont propped the US system up twice, and Jack Morgan kickstarted the UK's.
That's why I'm against the government forcing a gold standard. I don't doubt that several people with large stakes in gold want to keep gold as the only single form of money. Just like the Fed would like to keep the dollars as the only form of currency while they sit there and make billions of the interest.

Originally posted by: LegendKiller
They fail to mention how we will acquire the gold, since we'd have to take out hundreds of billions in loans to do it. They fail to solve how we can encapsulate an infinite economy inside of a finite good, without depressing the economical uses of hard assets.
Any finite resource can be used as money. In fact, its normally a good idea because power entities cannot manipulate physical resources. I agree that forcing a particular form of money on the population is not necessarily the best idea.

Originally posted by: LegendKiller
This naturally leads to a question about how we can keep gold, since when we, and other countries throughout history, have gone into debt, we/they have been unable to keep the gold in system, since it'll have to be used to repay debts, leading to shaky bank foundations (which they attribute to fractional systems).
Well bank failures wouldn't happen if the banks kept enough money to back their loans, correct?

Originally posted by: LegendKiller
Ohh yes, they have all of these great theories, yet theories are bullshit until they are practical and are implemented. At all points in history gold standards have failed in the long run. In a modern economy it'd fail in years as opposed to decades.
In all of history, which form of money has always shown some form of interest by individuals and countries which all countries still to this day keep a vault of?
A) The United States Dollar
B) Gold
C) Rome's Denarius
D) The Weimar's Mark

Fiat currencies are doomed for failure.

Originally posted by: LegendKiller
They deride the Fed, yet fail to understand it's mandate and reason. They claim that inflation is a "tax", yet fail to understand that it doesn't tax unless you hold cash and the vast majority of people don't. However, the vast majority of people do benefit from the economic stability of the Fed and fiat currency.
WHAT?! Practically every transaction is made by the dollar. Stocks are denoted by the dollar, people save money in their back accounts denoted by dollars. Only recently have I been helping my mom invest in things that can get royally fucked by our government.

Originally posted by: LegendKiller
The good of the many outweigh the good of the few.
I'm sorry you feel that way. Perhaps if I push for eminent domain on all your property you'll feel otherwise.

Originally posted by: LegendKiller
Yes, these gold idolators and believers in "austrian economics" are laughable at best. Had it not been for the Rothschilds the Austrian gold system would have failed more than once, yet they love it to death. They have no practical knowledge, nor in-depth knowledge of history. They jeer liquidity support yet have no concept of what would happen if support weren't forthcoming. They cry foul at the "tax" yet fail to accept that there is a balance to that equation. They lack market knowledge, yet claim they can be good judges of a system that has proven historically unreliable.
History has shown that people believe gold has value and that government is good at fucking things up.

Originally posted by: LegendKiller
But then, those that know, that are the opposide, are judged as "insiders" and profiteers, not as people who might actually know better.

<- MBA, CFA Charter, looking to maybe start another finance/econ degree, perhaps in financial engineering.
Cool, I'm glad you know how to profit/prosper off of a lot of economic situations. I don't mean that as a jeer. I know how to as well so I won't be as worse off in the recession we're headed in to. Its just unfortunate that our system exists as it does.

The message is no longer be a hard working American and you'll achieve anything you want to, but rather you can just get by. The message is now if you have the know-how you'll make shit tons of cash at the expense of others.
 

SleepWalkerX

Platinum Member
Jun 29, 2004
2,650
0
0
Originally posted by: Farang
Please post your credentials to teach me economic theory and then I might read past your second sentence.
No offense, but why don't you try just using your brain and respond with logic, facts, and sources? That's what peer reviewing is all about right?
 

SleepWalkerX

Platinum Member
Jun 29, 2004
2,650
0
0
Originally posted by: Nebor
Do you really feel that gold has intrinsic value?

If we lived in a gold standard economy, and the economy was in deep, dark recession, and I came up to you and said, "Hey there, PC Surgeon, I've got these 5 lbs of gold. I'll trade it to you for 7,000 rounds of 5.56mm ammunition, 50 cans of tuna, and 20 rolls of toiletpaper." Would you take that deal?
Well it really all depends on the situation surrounding this impeding recession. Was the recession caused by someone issuing too much credit? Are people swamping to gold because of a currency that failed? Is there just suddenly an abundance of gold?

But besides that, if I had 500,000 rounds of ammunition, 5,000 cans of tuna, and 20,000 rolls of toiletpaper and no supply of gold to trade for other items then it might not be such a bad idea, no?
 

SleepWalkerX

Platinum Member
Jun 29, 2004
2,650
0
0
Originally posted by: MadRat
Could it be that our current system is not working because of the head honcho in the White House meddling in affairs he knows nothing about? I'd hate to be the chairman of the Federal Reserve right now. Think of the pressure he's under when the White House calls up and tells him an opinion. Right or wrong, you know that executive opinion will move the Federal Reserve policy.
Well it makes whoever appointed the chairman of the Federal Reserve at the time look like he didn't make the right decision if that person fails, but I don't feel that its necessarily the President's fault for the person he appointed. I'm sure Bernanke did the best he could with an institution bound to fail.
 

bamx2

Senior member
Oct 25, 2004
483
1
81
The banks get a $200 billion bailout ( aka " liquidity injection " ) . Meanwhile the FBI is investigating some of the them -most notably Countrywide . This reminds me of the S&L scandals and gov't whitewash ( eg Siverado, Whitewater ) except the tis problem is far bigger. It would seem to me that this bailout is only a temporary fix ( to get votes?) and t exacerbate the other problems budget deficit, trade deficient, inflation. How about doing something about about spending on war in Iraq and our dependence on foreign energy sources.
 

Dissipate

Diamond Member
Jan 17, 2004
6,829
0
0
I would like to ask if I may, what the economics 'expert' halik, and the banking 'expert' LegendKiller have to say about this shocking paper posted to the St Louis Federal Reserve Bank web site entitled nonetheless: Is the United States Bankrupt?

What does this paper, posted by the St Louis Federal Reserve Bank predict? A good possibility of hyperinflation nonetheless! Now, when a Federal Reserve Bank itself is predicting possible hyperinflation on the horizon, something is very wrong.

Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's insolvency, they will start worrying about inflation and about being paid in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation-exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation.
Linky!

These kinds of words from a federal reserve bank is rather shocking to say the least. Please, would one of the resident experts explain this?
 

MadRat

Lifer
Oct 14, 1999
11,607
3
76
How did the average Russian survive their economic collapse? I sure hope its not by resorting to obtain protection from insolvancy via the mob.
 

SleepWalkerX

Platinum Member
Jun 29, 2004
2,650
0
0
Originally posted by: Dissipate
I would like to ask if I may, what the economics 'expert' halik, and the banking 'expert' LegendKiller have to say about this shocking paper posted to the St Louis Federal Reserve Bank web site entitled nonetheless: Is the United States Bankrupt?

What does this paper, posted by the St Louis Federal Reserve Bank predict? A good possibility of hyperinflation nonetheless! Now, when a Federal Reserve Bank itself is predicting possible hyperinflation on the horizon, something is very wrong.

Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's insolvency, they will start worrying about inflation and about being paid in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation-exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation.
Linky!

These kinds of words from a federal reserve bank is rather shocking to say the least. Please, would one of the resident experts explain this?
Shh! Quit speculating! Our dark shadowy overlords will fix this problem for us! Don't bother questioning our administration either, they're under strict orders not to talk about it. God forbid they talk about it with the people. That would lead to problems. Market instability! Crashes! Oh wait..
 

Dissipate

Diamond Member
Jan 17, 2004
6,829
0
0
Originally posted by: SleepWalkerX
Originally posted by: Dissipate
I would like to ask if I may, what the economics 'expert' halik, and the banking 'expert' LegendKiller have to say about this shocking paper posted to the St Louis Federal Reserve Bank web site entitled nonetheless: Is the United States Bankrupt?

What does this paper, posted by the St Louis Federal Reserve Bank predict? A good possibility of hyperinflation nonetheless! Now, when a Federal Reserve Bank itself is predicting possible hyperinflation on the horizon, something is very wrong.

Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's insolvency, they will start worrying about inflation and about being paid in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation-exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation.
Linky!

These kinds of words from a federal reserve bank is rather shocking to say the least. Please, would one of the resident experts explain this?
Shh! Quit speculating! Our dark shadowy overlords will fix this problem for us! Don't bother questioning our administration either, they're under strict orders not to talk about it. God forbid they talk about it with the people. That would lead to problems. Market instability! Crashes! Oh wait..
I wonder if LK and halik have factored the probability of government bankruptcy & hyperinflation into their fancy formulas.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,716
6
76
Originally posted by: SleepWalkerX
Originally posted by: Dissipate
I would like to ask if I may, what the economics 'expert' halik, and the banking 'expert' LegendKiller have to say about this shocking paper posted to the St Louis Federal Reserve Bank web site entitled nonetheless: Is the United States Bankrupt?

What does this paper, posted by the St Louis Federal Reserve Bank predict? A good possibility of hyperinflation nonetheless! Now, when a Federal Reserve Bank itself is predicting possible hyperinflation on the horizon, something is very wrong.

Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's insolvency, they will start worrying about inflation and about being paid in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation-exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation.
Linky!

These kinds of words from a federal reserve bank is rather shocking to say the least. Please, would one of the resident experts explain this?
Shh! Quit speculating! Our dark shadowy overlords will fix this problem for us! Don't bother questioning our administration either, they're under strict orders not to talk about it. God forbid they talk about it with the people. That would lead to problems. Market instability! Crashes! Oh wait..
This is troubling to see. From conversations that I have had with others, it seems the markets are the same abroad as it is here. People aren't spending because of fear and what spending does happen is through credit. The Great Depression on 1929 had vast world effects and this one seems to be showing some of the same signs. :(
 

LegendKiller

Lifer
Mar 5, 2001
18,261
68
86
Originally posted by: Dissipate

I wonder if LK and halik have factored the probability of government bankruptcy & hyperinflation into their fancy formulas.
Where exactly have I ever said this wasn't a problem? I would love for you to point out in what post I have said that our government's spending spree is nothing to worry about.

Good luck.
 

LegendKiller

Lifer
Mar 5, 2001
18,261
68
86
Originally posted by: PC Surgeon

This is troubling to see. From conversations that I have had with others, it seems the markets are the same abroad as it is here. People aren't spending because of fear and what spending does happen is through credit. The Great Depression on 1929 had vast world effects and this one seems to be showing some of the same signs. :(
1929 has similarities to this situation, but also a lot of differences.

29 was caused by the easing of credit in the Fed's support for the UK to get back on the gold standard. We held down rates to ensure the Pound was strong, which actually caused massive problems in the UK. As a result, credit was cheap. Companies such as the Allegheney company were nothing more than companies purchased with debt which was then pledged to other debt on top of debt with more debt. While it may seem similar to the current situation, it's actually fundamentally different.

In response to the potential inflation problem, the Fed reacted in the way that classic monetarists say it should, they jacked up rates. This caused a huge liquidity crunch, creating deflationary pressures.

I will post more later.
 

3chordcharlie

Diamond Member
Mar 30, 2004
9,861
1
81
Originally posted by: Dissipate

This short book written by a well known looney-tunes nutjob economist explains why the Fed and central banking is a scam.
fixed;)

The case against central banking is as strong as the one against democracy. But as easy as it is to criticize, a position needs to offer an alternative, and so far, I see none.

Ending central banks requires at a minimum, a viable alternative with either automatic or interventionary control of any defaltion, and excessive inflation to become an actual position.

The gold standard fails spectacularly, and the history of private banks is terrible. In fact, it's half the reason for central banking existing at all (with seniorage being the other half).
 

halik

Lifer
Oct 10, 2000
25,708
1
0
Originally posted by: Dissipate
Originally posted by: SleepWalkerX
Originally posted by: Dissipate
I would like to ask if I may, what the economics 'expert' halik, and the banking 'expert' LegendKiller have to say about this shocking paper posted to the St Louis Federal Reserve Bank web site entitled nonetheless: Is the United States Bankrupt?

What does this paper, posted by the St Louis Federal Reserve Bank predict? A good possibility of hyperinflation nonetheless! Now, when a Federal Reserve Bank itself is predicting possible hyperinflation on the horizon, something is very wrong.

Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's insolvency, they will start worrying about inflation and about being paid in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation-exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation.
Linky!

These kinds of words from a federal reserve bank is rather shocking to say the least. Please, would one of the resident experts explain this?
Shh! Quit speculating! Our dark shadowy overlords will fix this problem for us! Don't bother questioning our administration either, they're under strict orders not to talk about it. God forbid they talk about it with the people. That would lead to problems. Market instability! Crashes! Oh wait..
I wonder if LK and halik have factored the probability of government bankruptcy & hyperinflation into their fancy formulas.

Re-read what I said, we're heading into a bad place because of FISCAL policy (spending on stupid crap like iraq and not financing it through taxes), not MONETARY policy. Even Greenspan was bitching about Bush's wide open wallet limiting his options.

I've do have an issue with nutjobs claiming that FED is stealing their money or that gold standard will fix all of the world's problems.
 

Dissipate

Diamond Member
Jan 17, 2004
6,829
0
0
Originally posted by: halik

Re-read what I said, we're heading into a bad place because of FISCAL policy (spending on stupid crap like iraq and not financing it through taxes), not MONETARY policy. Even Greenspan was bitching about Bush's wide open wallet limiting his options.

I've do have an issue with nutjobs claiming that FED is stealing their money or that gold standard will fix all of the world's problems.

How could such flagrant spending continue on without a fiat monetary system to support it? Without the Fed the SOBs in Congress wouldn't be able to conjur up trillions of borrowed money for war adventures.

Hyperinflation would not be possible with a commodity backed currency, and it looks like we are heading in that direction right now. Unless you think the government can just print up $54 trillion and spend it without prices going to the moon.
 

ASK THE COMMUNITY

TRENDING THREADS