Ron Paul’s Amendment To Audit The Federal Reserve Approved
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actually in this case, this is speculation on my part, but i believe part of it probably has to do with fractional reserve banking. the only way a bank can fail is if they don't have enough actual currency to pay their holders the share that they want from their accounts... aka a bank run. banks did fail in just about every case you stated, but like i say, the only way that can happen is upon bank runs. banks also fail normally, because of lack of business, but depressions/recessions are caused by many bank failures. i want to make further speculation for each of the cases listed. 1796-1797: This is listed as being caused by speculation on land. This makes sense, because contracts on land were held by the crown, until we were separated from England. So of course, people wanted to expand their land size and claim more, because we were completely free. The market boomed, and in order to keep competitive, businesses selling land would lower interest rates. Once people were settled, the market had to make interest rates higher to keep profits up, therefore creating a bust. This bust was long overdue because we were technically under the Articles of Confederation in 1776, then under the Constitution in 1787. Nine years later, the bust by higher interest rates. Plus, under the Articles, we were paying back France for their help in the war. The Continental was inflated, therefore creating panic as well. Hence the term, "not worth a continental". 1819: The war of 1812 created inflation for the dollar. This is an easy one. When the government wants to go to war, inflation always occurs. During wars, we barely feel it as a population, because it seems that the dollar has actually GAINED in value, because we're not using all of the dollars. We only use some of the dollars; the dollars that we don't use go to the military industrial complex, and we don't touch it. So the boom occurred during the war, the bust happened after it. Notice the war ended in 1815, and then four years later the effects of the war come to fruition, because the dollars actually started going into circulation. The bust is always just a correction in the markets. By the way, the Second Bank of the United States was in place at this time, which was a central bank, just as the Fed is, so I didn't even really have to retort this one in my opinion. 1837: This was the correction (bust) after the Second Bank of the United States was rescinded. 1857: This was an actual FREE market correction. There was no central bank, the
Well, I'm no economist, so I'm mostly limited to what I can research and deduce. I do agree that bank failures are a result of fractional reserve banking, but how else can a bank make money? If all they do is keep everyone's money in a box, then where would they get the income to stay in business? You'd have to PAY to store your money, the same way you rent a safe deposit box today. So I think it's safe to say that banks in general are reliant on fractional reserve banking, whether the currency is backed by gold or not, and whether we have a Fed or not. As to the specific cases...
josda1000 wrote:
1796-1797: This is listed as being caused by speculation on land. ... Once people were settled, the market had to make interest rates higher to keep profits up, therefore creating a bust.
In your own words, the market caused the bust, not a central bank. But interest rate changes caused by the market are a result of perception... An interest rate on a loan is calculated based on the probability of default (Of the person not being able to pay it back). If the borrower is deemed risky, the interest rate is increased for them. If people think the market will turn south, then it's only natural for interest rates to rise in general. This, in turn, weakens the market... Perception becomes reality.
josda1000 wrote:
1857: This was an actual FREE market correction
The correction was helped along because the government lowered tariffs. The government was seen as "solving the problem." The tariff reduction helped the economics, but I would theorize that the lifting of morale had a larger effect. Honestly, I think if the government claimed to have a magic rock that fixed everything, and enough people were dumb enough to believe it, the same thing would have happened. :)
josda1000 wrote:
1884: This was only a recession according to popular belief ... When the currency is not backed by gold or hard money, there's no reason for belief in it.
But belief doesn't really affect whether there'll be a bank run, does it? A bank run comes from enough people being worried that their money won't be there tomorrow. If they think the bank might fail, they take their money out. It's a result of fractional reserve banking. You make some good points, and as I'm no historian, it's difficult to dispute some of the specifics. I do agr
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Lets get something strait. I understand this issue more than you. You are on the loosing side, always remember that. You are wrong, don't you ever forget that.
You can claim whatever you want, but your posts speak to the contrary. Make some intelligent deductions instead of quoting AJ's rhetoric, and people might respect you a little more.
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
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Well, I'm no economist, so I'm mostly limited to what I can research and deduce. I do agree that bank failures are a result of fractional reserve banking, but how else can a bank make money? If all they do is keep everyone's money in a box, then where would they get the income to stay in business? You'd have to PAY to store your money, the same way you rent a safe deposit box today. So I think it's safe to say that banks in general are reliant on fractional reserve banking, whether the currency is backed by gold or not, and whether we have a Fed or not. As to the specific cases...
josda1000 wrote:
1796-1797: This is listed as being caused by speculation on land. ... Once people were settled, the market had to make interest rates higher to keep profits up, therefore creating a bust.
In your own words, the market caused the bust, not a central bank. But interest rate changes caused by the market are a result of perception... An interest rate on a loan is calculated based on the probability of default (Of the person not being able to pay it back). If the borrower is deemed risky, the interest rate is increased for them. If people think the market will turn south, then it's only natural for interest rates to rise in general. This, in turn, weakens the market... Perception becomes reality.
josda1000 wrote:
1857: This was an actual FREE market correction
The correction was helped along because the government lowered tariffs. The government was seen as "solving the problem." The tariff reduction helped the economics, but I would theorize that the lifting of morale had a larger effect. Honestly, I think if the government claimed to have a magic rock that fixed everything, and enough people were dumb enough to believe it, the same thing would have happened. :)
josda1000 wrote:
1884: This was only a recession according to popular belief ... When the currency is not backed by gold or hard money, there's no reason for belief in it.
But belief doesn't really affect whether there'll be a bank run, does it? A bank run comes from enough people being worried that their money won't be there tomorrow. If they think the bank might fail, they take their money out. It's a result of fractional reserve banking. You make some good points, and as I'm no historian, it's difficult to dispute some of the specifics. I do agr
Ian Shlasko wrote:
and that the Fed performs a positive service by lessening the amplitude of these waves.
Statistics please... Regardless the Fed is super secretive private bank that has absolute power over our currency and they do as they please with it. Everyone understands why a person like you Ian, would think it is okay for a small group of unelected self-perpetuated bankers to govern with near absolute power, raping and pillaging the masses.
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Well, I'm no economist, so I'm mostly limited to what I can research and deduce. I do agree that bank failures are a result of fractional reserve banking, but how else can a bank make money? If all they do is keep everyone's money in a box, then where would they get the income to stay in business? You'd have to PAY to store your money, the same way you rent a safe deposit box today. So I think it's safe to say that banks in general are reliant on fractional reserve banking, whether the currency is backed by gold or not, and whether we have a Fed or not. As to the specific cases...
josda1000 wrote:
1796-1797: This is listed as being caused by speculation on land. ... Once people were settled, the market had to make interest rates higher to keep profits up, therefore creating a bust.
In your own words, the market caused the bust, not a central bank. But interest rate changes caused by the market are a result of perception... An interest rate on a loan is calculated based on the probability of default (Of the person not being able to pay it back). If the borrower is deemed risky, the interest rate is increased for them. If people think the market will turn south, then it's only natural for interest rates to rise in general. This, in turn, weakens the market... Perception becomes reality.
josda1000 wrote:
1857: This was an actual FREE market correction
The correction was helped along because the government lowered tariffs. The government was seen as "solving the problem." The tariff reduction helped the economics, but I would theorize that the lifting of morale had a larger effect. Honestly, I think if the government claimed to have a magic rock that fixed everything, and enough people were dumb enough to believe it, the same thing would have happened. :)
josda1000 wrote:
1884: This was only a recession according to popular belief ... When the currency is not backed by gold or hard money, there's no reason for belief in it.
But belief doesn't really affect whether there'll be a bank run, does it? A bank run comes from enough people being worried that their money won't be there tomorrow. If they think the bank might fail, they take their money out. It's a result of fractional reserve banking. You make some good points, and as I'm no historian, it's difficult to dispute some of the specifics. I do agr
I'm not an historian myself, obviously. I'm a programmer, just as you probably are. But to me, a lot of this is just common sense. I should clarify; perception does play into economics a lot. If people see that something is going wrong in a sector, they will back out of it, creating a bust. But this is precisely my point: when interest rates are set higher in a sector, people back out, creating a bust. But the people backing out of a sector is not the real cause of it, is it? it's the interest rate setting. Whether it's a free market setting it because they need more money based on profit, a free market setting it because they see that the loan could be risky, or the central bank setting it "to offset inflation", it is the interest rate setting that creates the bust. the boom is when the interest rate is set lower, whether the free market businesses want to compete or the central bank wants more consuming in that sector. So I should also clarify that I do agree that central banks do not have all of the argument against them; but why not get rid of them, if they are a major cause of it? if the market can correct itself, why have the central banks add to it?
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You can claim whatever you want, but your posts speak to the contrary. Make some intelligent deductions instead of quoting AJ's rhetoric, and people might respect you a little more.
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
I disagree, you are just a Wall Street groupie. Everyone knows that.
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Both theories advocate a return to a "freedom loving" currency, meaning a hard asset (commodity) standard. Austrians would like to go back to using actual gold coins/silver coins as the real currency, but would love the stepping stone of using certificates in order to exchange the certificate for the commodity at any time. That's the main difference in the philosophy, in my opinion. But both schools do agree, apparently, on the basis of where the inflation came from, and where the booms and bust really do originate. Both say that it comes from the central banking idea. The government can print money out of thin air, based on nothing. And we have since 1971. We were the richest country in the world, and it's been dying down since then. This is not just an accident: Currency is inflated when you push more of it into the economy, and is deflated by pulling it back. You can't easily inflate/deflate when using a hard money. You can even hear Ben Bernanke talk about this at a Congressional hearing held in the summer. youtube: Ron Paul questions Ben Bernanke on definition of inflation 07/21/2009[^] Since the principles of both schools are the same, definitions should also be the same, as stated above. But Bernanke is playing politics and trying to confuse the public. I was taught the definition of inflation back in third grade; how can people just change their minds about a simple definition when out of school? Anyway, I've gone overboard.
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Some might argue that the Central Banking system creates the market conditions. Others might argue that the Central Banking systems are responding to the requirements of the market - following not creating.
They have the power do to as they please with it. Enough theory and speculation. The fact is that ill gotten monetary powers have been consolidated and misplaced. Decentralization is the key to a more stable economy. Power corrupts, and absolute power corrupts absolutely. Nobody, I repeat, nobody needs to be in a position of power where he/she can just print money out of thin air.
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josda1000 wrote:
Gold and/or silver coins, maintained by the People under Congress and held by the Treasury. Not maintained AND held by a "central" private bank. Quote Selected Text
Gold and silver would be fantastic. However the central bankers have large stocks of it. They own and control most of the world's wealth. They really got us by the balls. So I think the first step would be to use United States Notes to replace the federal reserve notes. There are a lot of details and steps to liberate ourselves from the grip of the corruptoids but it must be done. No excuses, no bullshit, just do it...the sooner the better.
CaptainSeeSharp wrote:
No excuses, no bullsh*t, just do it...the sooner the better.
Reminds me of the Slayer lyrics to Divine Intervention: "No mercy, no reason, just PAIN!"
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They have the power do to as they please with it. Enough theory and speculation. The fact is that ill gotten monetary powers have been consolidated and misplaced. Decentralization is the key to a more stable economy. Power corrupts, and absolute power corrupts absolutely. Nobody, I repeat, nobody needs to be in a position of power where he/she can just print money out of thin air.
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They have the power do to as they please with it. Enough theory and speculation. The fact is that ill gotten monetary powers have been consolidated and misplaced. Decentralization is the key to a more stable economy. Power corrupts, and absolute power corrupts absolutely. Nobody, I repeat, nobody needs to be in a position of power where he/she can just print money out of thin air.
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Ian Shlasko wrote:
and that the Fed performs a positive service by lessening the amplitude of these waves.
Statistics please... Regardless the Fed is super secretive private bank that has absolute power over our currency and they do as they please with it. Everyone understands why a person like you Ian, would think it is okay for a small group of unelected self-perpetuated bankers to govern with near absolute power, raping and pillaging the masses.
Less rhetoric, more intelligence.
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
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Lets get something strait. I understand this issue more than you. You are on the loosing side, always remember that. You are wrong, don't you ever forget that.
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I'm not an historian myself, obviously. I'm a programmer, just as you probably are. But to me, a lot of this is just common sense. I should clarify; perception does play into economics a lot. If people see that something is going wrong in a sector, they will back out of it, creating a bust. But this is precisely my point: when interest rates are set higher in a sector, people back out, creating a bust. But the people backing out of a sector is not the real cause of it, is it? it's the interest rate setting. Whether it's a free market setting it because they need more money based on profit, a free market setting it because they see that the loan could be risky, or the central bank setting it "to offset inflation", it is the interest rate setting that creates the bust. the boom is when the interest rate is set lower, whether the free market businesses want to compete or the central bank wants more consuming in that sector. So I should also clarify that I do agree that central banks do not have all of the argument against them; but why not get rid of them, if they are a major cause of it? if the market can correct itself, why have the central banks add to it?
Yep, I'm a programmer, too. I do work for a hedge fund, but that doesn't make me a financial expert by any stretch... I just have a slightly-better view of the industry than some people. The market can correct itself, yes, but it's a slow process. It all comes down to psychology... Without an outside stimulus, when do people start buying? Everyone wants to get in at the bottom and sell at the top, right? The old "Buy low, sell high". So people aren't going to buy until they think it's the bottom. So how do they define the bottom? The point at which it can't get any worse, so it has to go back up. People with money to risk, when the market is falling, tend to be pessimistic, so it has to be REALLY bad before they'll jump in. That means a depression, or at least a bad recession. On the other hand, if an outside force acts, such as the Fed lowering interest rates, people see that as "Hey, the government is going to fix it. it's going to go back up. Better get in quick!" So yes, the lower interest rates help the economy... That's a well known fact. But it's the ACT of lowering them that turns things around. Even if the Fed Funds rate was zero, the bubbles would eventually pop and we'd bust... But if the rate was 5% at the top, and then the Fed lowered it to 1-2%, the act of lowering it would help convince people to move in. Yes, interest rates would rise at the top, but would they naturally lower again at the bottom, without government help? No, because interest rates only naturally lower when perceived risk goes down. The Fed, or a similar government institution, is the only entity that can really afford to LOWER rates to trigger the end of the bust. I'm rambling a little, but I'm running through this in my head as I type... The way it seems to work, at least as I see it, is that the NATURALLY-changing interest rates will drop while the economy is moving upward (Things are getting better, people are more likely to be able to repay), and will rise when the economy is moving downward (Things are getting worse, people are more likely to default)... So when it's moving upward (Without a Fed), interest rates will steadily fall (To stay competitive, since risk is low) until banks can no longer make a decent profit. When profits drop, the weaker banks will start to wobble, so to speak... That scares people, so lending slows down... Interest rates start to rise, and the cycle swings downward. Just had a half a pint of Ben & Jerry's, so my brain is a little weird right now... Hope I
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I disagree, you are just a Wall Street groupie. Everyone knows that.
Everyone != You
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
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Everyone != You
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
Ian Shlasko wrote:
Everyone != You
Yet, they still know that you are a wall street groupie.
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Yep, I'm a programmer, too. I do work for a hedge fund, but that doesn't make me a financial expert by any stretch... I just have a slightly-better view of the industry than some people. The market can correct itself, yes, but it's a slow process. It all comes down to psychology... Without an outside stimulus, when do people start buying? Everyone wants to get in at the bottom and sell at the top, right? The old "Buy low, sell high". So people aren't going to buy until they think it's the bottom. So how do they define the bottom? The point at which it can't get any worse, so it has to go back up. People with money to risk, when the market is falling, tend to be pessimistic, so it has to be REALLY bad before they'll jump in. That means a depression, or at least a bad recession. On the other hand, if an outside force acts, such as the Fed lowering interest rates, people see that as "Hey, the government is going to fix it. it's going to go back up. Better get in quick!" So yes, the lower interest rates help the economy... That's a well known fact. But it's the ACT of lowering them that turns things around. Even if the Fed Funds rate was zero, the bubbles would eventually pop and we'd bust... But if the rate was 5% at the top, and then the Fed lowered it to 1-2%, the act of lowering it would help convince people to move in. Yes, interest rates would rise at the top, but would they naturally lower again at the bottom, without government help? No, because interest rates only naturally lower when perceived risk goes down. The Fed, or a similar government institution, is the only entity that can really afford to LOWER rates to trigger the end of the bust. I'm rambling a little, but I'm running through this in my head as I type... The way it seems to work, at least as I see it, is that the NATURALLY-changing interest rates will drop while the economy is moving upward (Things are getting better, people are more likely to be able to repay), and will rise when the economy is moving downward (Things are getting worse, people are more likely to default)... So when it's moving upward (Without a Fed), interest rates will steadily fall (To stay competitive, since risk is low) until banks can no longer make a decent profit. When profits drop, the weaker banks will start to wobble, so to speak... That scares people, so lending slows down... Interest rates start to rise, and the cycle swings downward. Just had a half a pint of Ben & Jerry's, so my brain is a little weird right now... Hope I
But there has been a mass awakening to the fact that the fed is a corrupt institution that has been given ill gotten monetary powers that are consolidated and highly concentrated. No longer will cheap psychological tricks and deliberate attempts to confuse the citizenry of this country work for the exploitation of their hard earned money, only for the decentralization of monetary powers and arrests.
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CaptainSeeSharp wrote:
I understand this issue more than you.
In what way might the use of the Output Gap to determine monetary policy have been compromised in the USA's economy?
Bob Emmett If it ain't broke, it ain't Britain.
Cutesy words like Quantitative Easing and Output Gap are not enough to get people to forget about the fact that their money is exploited by a few men and quickly becoming worthless.
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Ian Shlasko wrote:
Everyone != You
Yet, they still know that you are a wall street groupie.
And I'm sure if I was working at a big company, you'd call me a corporate shill... And if I worked for a non-profit, you'd assign some sort of political agenda. Honestly, I don't care what you think, because the mere fact that you attack me instead of the issues means that you have no argument. Back in your cave, kiddo. I'm done talking to you.
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
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But there has been a mass awakening to the fact that the fed is a corrupt institution that has been given ill gotten monetary powers that are consolidated and highly concentrated. No longer will cheap psychological tricks and deliberate attempts to confuse the citizenry of this country work for the exploitation of their hard earned money, only for the decentralization of monetary powers and arrests.
Excuse me... The adults are talking. Mind stepping aside?
Proud to have finally moved to the A-Ark. Which one are you in? Developer, Author (Guardians of Xen)
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Ian Shlasko wrote:
and that the Fed performs a positive service by lessening the amplitude of these waves.
Statistics please... Regardless the Fed is super secretive private bank that has absolute power over our currency and they do as they please with it. Everyone understands why a person like you Ian, would think it is okay for a small group of unelected self-perpetuated bankers to govern with near absolute power, raping and pillaging the masses.
CaptainSeeSharp wrote:
Statistics please...
Hi, Private Wee Parts. Double standards, eh? We have to provide evidence of reduced amplitude[^] (thought you knew this stuff), while you can't be bothered to provide evidence to support your assertions.
CaptainSeeSharp wrote:
Regardless the Fed is super secretive private bank that has absolute power over our currency and they do as they please with it.
And when "power" is returned to their puppets in Congress ... ?
Bob Emmett Congress for Financial Responsibility - you know it makes sense!
