Do We Really Need The Federal Reserve?

[PeterMP]

Right, private currency is illegal. Many would like to legalize it.

Well, then your problem isn't the Fed, but the Constitution:

"Section 8 - Powers of Congress

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures"

I guess you could argue that Congress has given this power to the Fed so why couldn't it give it to others, and I'd even agree w/ respect to coin the money, but the idea that you could have multiple people coining money and Congress could practically regulate the value seems extremely unlikely (or at least at any level where it would actually matter that you'd have a "free market" (it doesn't matter if you have multiple people producing money if all of their currencies have the same value or some simple translation between them)).

More to the point, it isn't practical. Beyond the Fed, there is a reason this was put in the Constitution. The idea was to have a national currency that would support inter-state commerce and travel. Allowing for different currencies would beg for popurlarly local currencies that would the economy greatly.

Its as true today as then. A national currency is important for economic effeciency and contributes the adhesiveness of the country. It is one reason Europe moved to the Euro.

[PeterMP]

Only Congress has the authority right? And even still they're not supposed to print paper money right? Doesn't it say in the Constitution we're only supposed to have coin money or currency? I'm not 100%, but I think is says something like this.

Anyway, who holds the fed's accountable b/c Congress doesn't really do crap?

Well, I'm happy reading the Constitution as literally as anybody here, but even I think going to coins means we shouldn't have paper money is over the top. If it makes you feel better, think of paper money as "securities", which the Constitution gives Congress authority over too.

Just because Congress doesn't do a good job of it isn't a reason to blame the Fed. Its a reason to blame us; the people that vote for the people in Congress.

Again, take it from the Fed and give it the power to somebody else (or even keep it w/ in Congress itself), is it going to matter if Congress does a poor job of staying on top of the situation? No.

[brandymac27]

Well, I'm happy reading the Constitution as literally as anybody here, but even I think going to coins means we shouldn't have paper money is over the top.

Let me clarify. I thought I read somewhere that it is actually illegal, according to the constitution, to have paper money. I agree that it sounds over the top. I'm only asking b/c I know I read this somewhere, though it could well be garbage. I was just wondering if anyone else can add to this.

[luckydevil]

Well, then your problem isn't the Fed, but the Constitution:

No the fed is the problem, but the constitution is a problem as well. It wasn't radical enough,

[PeterMP]

Let me clarify. I thought I read somewhere that it is actually illegal, according to the constitution, to have paper money. I agree that it sounds over the top. I'm only asking b/c I know I read this somewhere, though it could well be garbage. I was just wondering if anyone else can add to this.

http://www.usconstitution.net/const.html

The Constitution doesn't specifically mention paper money. It does say "coin", but it also mentions "securities". Like I said, you don't like paper money- fine think of them as securities.

"Section 8 - Powers of Congress

The Congress shall have Power

To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;"

[JohnLockesGhost]

Only Congress has the authority right? And even still they're not supposed to print paper money right? Doesn't it say in the Constitution we're only supposed to have coin money or currency? I'm not 100%, but I think is says something like this.

Anyway, who holds the fed's accountable b/c Congress doesn't really do crap?

I just read Federalist 10 with my history class and Madison describes the printing of paper money as "wicked." My class had a pretty good laugh at that considering what the many framers considered evil, we just accept without thinking.

Also I think you should study the many private mints that arose in the old West after the gold rush. The amount of usable specie was so low they just arose from the market. There's nothing wrong with those coins just because they were minted by private firms.

[footballhenry]

at least they kept us out of our current money crisis.

Problem. Reaction. Solution.

The Fed creates the problem through inflation (ex: increasing the money supply exponentially) and then looks to create solutions for the problems its responsible for. A look into Austrian Economics will help one understand the monetary crisis facing this country more thoroughly.

I highly recommend this website: www.mises.org

Also, personally I find the documentary Zeitgeist: Addendum very insightful and informative, found here: www.zeitgeistmovie.com or you can search for it via google.

Personally, I believe that this is the most pressing issue of our time. Until we the people rise up and demand a new monetary system (one that is constitutional and preferably run by the government as opposed to the private Fed) then we are going to suffer the consequences of recessions, depressions, and perpetual debt.

[Hubbs]

Zeitgeist? You can't be serious.

[footballhenry]

I'm curious as to what the opposite of the Fed is. SOMEBODY most control distribution of the currency.

The distribution should be rightfully controlled by the government through congress and public oversight. The rub with the Fed right now is that it has zero oversight and is a private entity. Indeed our tax dollars are used to pay off the interest incurred because the government has to 'borrow' money from the Fed (i.e. loans). I did my senior seminar report on the Federal Reserve and there is no doubt in my mind after researching it thoroughly that it is the biggest scam ever employed on a civilization. Its quite startling because nearly all Americans are completely oblivious to it; in fact most simply 'dont care'.

"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

- Henry Ford

"By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft."

- John Maynard Keynes

[footballhenry]

Zeitgeist? You can't be serious.

Have you seen it? Have you verified the sources? Of course there are over-dramatic arcs in zeitgeist....but again, this monetarily focused 'addendum' is much more substantive in my honest opinion than the former documentary you may be referring to with your condescending post.

This is the problem with society, we encounter information that runs paramount to our belief structures so we automatically discount any possible relevance. Its akin to 'cognitive dissonance'.

Hell theres no official law on the books, nor in the Internal Revenue Code that requires Americans to pay an income tax. But again you'll probably discount that as a possibility because of the societal conditioning (even so, as so many have stated in court cases- 'show me the law'). Indeed, we are all 'conditioned' and its up to us to free our minds from the controls all around us. Too heavy? Perhaps, but it's the damn truth.

[PeterMP]

The distribution should be rightfully controlled by the government through congress and public oversight. The rub with the Fed right now is that it has zero oversight and is a private entity. Indeed our tax dollars are used to pay off the interest incurred because the government has to 'borrow' money from the Fed (i.e. loans). I did my senior seminar report on the Federal Reserve and there is no doubt in my mind after researching it thoroughly that it is the biggest scam ever employed on a civilization. Its quite startling because nearly all Americans are completely oblivious to it; in fact most simply 'dont care'.

If there is no over sight that is not the fault of the Fed, but the fault of Congress, whom we elect.

It did have oversight before we left the gold standard. Essentially, they were limited to what they could do based on the gold the goverment held. I don't think there were any substantial changed to the Fed after that.

As far as I know, Congress could wake up tomorrow and say, 'The total US money supply needs to be related to the assets held by the federal goverment by this forumal.' or 'The total US money supply needs to be related to the running 10 year average of the US GDP by this formula.' and the Fed would have to comply.

Congress choses not to do that.

My understanding is the Fed "buys" Notes and Securities that they never cash in and so in fact never collect the interest they are owed much less their purchase price. Am I wrong? If that ever changes, then obviously that will get peoples interest. Until then, I don't think people are going to get mad or care about owing money that intentionally never gets collected.

[PeterMP]

Have you seen it? Have you verified the sources? Of course there are over-dramatic arcs in zeitgeist....but again, this monetarily focused 'addendum' is much more substantive in my honest opinion than the former documentary you may be referring to with your condescending post.

This is the problem with society, we encounter information that runs paramount to our belief structures so we automatically discount any possible relevance. Its akin to 'cognitive dissonance'.

Hell theres no official law on the books, nor in the Internal Revenue Code that requires Americans to pay an income tax. But again you'll probably discount that as a possibility because of the societal conditioning (even so, as so many have stated in court cases- 'show me the law'). Indeed, we are all 'conditioned' and its up to us to free our minds from the controls all around us. Too heavy? Perhaps, but it's the damn truth.

The IRS/Supreme Court stuff in the original movie was garbage and easily verified to be false. Once you spread blatant lies and garbage like that it I am hesitant to believe anything else you say, especially if it isn't easily verifiable.

[PeterMP]

I just read Federalist 10 with my history class and Madison describes the printing of paper money as "wicked." My class had a pretty good laugh at that considering what the many framers considered evil, we just accept without thinking.

Also I think you should study the many private mints that arose in the old West after the gold rush. The amount of usable specie was so low they just arose from the market. There's nothing wrong with those coins just because they were minted by private firms.

1. The Federalist papers aren't the Constitution.

2. Want to bet that private mints don't commit fraud and do things like sell coins containing less gold than stated.

[footballhenry]

If there is no over sight that is not the fault of the Fed, but the fault of Congress, whom we elect.

It did have oversight before we left the gold standard. Essentially, they were limited to what they could do based on the gold the goverment held. I don't think there were any substantial changed to the Fed after that.

As far as I know, Congress could wake up tomorrow and say, 'The total US money supply needs to be related to the assets held by the federal goverment by this forumal.' or 'The total US money supply needs to be related to the running 10 year average of the US GDP by this formula.' and the Fed would have to comply.

Congress choses not to do that.

My understanding is the Fed "buys" Notes and Securities that they never cash in and so in fact never collect the interest they are owed much less their purchase price. Am I wrong? If that ever changes, then obviously that will get peoples interest. Until then, I don't think people are going to get mad or care about owing money that intentionally never gets collected.

Your certainly correct about the Fed transferring money in exchange for bonds and securities. I will say that you've opened up a new avenue of research for me as I haven't yet found evidence of what they do with those bonds exactly. Even so, from what I have read even though I may not grasp it fully, something seems incredibly fishy about this entire system; and I've thought that naturally since I was young.

Also, your right about it being the responsibility of Congress. Hell, the Fed is just doing what all institutions do....ensuring its 'self-preservation'. Its up to Congress to change this system as it always has been. Bottom line is its a unconstitutional system, anyone that researches the founders' philosophy even briefly will find that the idea of a Central Private Bank controlling the money supply has long been fought against as it eventually leads to debt enslavement of societies. I stick by my premise, that until we change the system to a more constitutional basis we will continue to see debts rise and the gap between rich and poor grow.

[footballhenry]

The IRS/Supreme Court stuff in the original movie was garbage and easily verified to be false. Once you spread blatant lies and garbage like that it I am hesitant to believe anything else you say, especially if it isn't easily verifiable.

Its good to learn from each other. Are you talking about the first movie or addendum specifically? I'm not entirely familiar with the IRS/Supreme Court info your speaking of but I certainly am interested, care to enlighten?

[Hubbs]

Have you seen it? Have you verified the sources? Of course there are over-dramatic arcs in zeitgeist....but again, this monetarily focused 'addendum' is much more substantive in my honest opinion than the former documentary you may be referring to with your condescending post.

This is the problem with society, we encounter information that runs paramount to our belief structures so we automatically discount any possible relevance. Its akin to 'cognitive dissonance'.

Hell theres no official law on the books, nor in the Internal Revenue Code that requires Americans to pay an income tax. But again you'll probably discount that as a possibility because of the societal conditioning (even so, as so many have stated in court cases- 'show me the law'). Indeed, we are all 'conditioned' and its up to us to free our minds from the controls all around us. Too heavy? Perhaps, but it's the damn truth.

Ha. First of all, I majored in Psychology, so, yes, I'd say I understand cognitive dissonance pretty well.

Second, I'll admit that I was mistaken - when I saw the url you posted, I thought it was the same as the original movie, which I watched in its entirety and found immensely interesting. The problem was, I also did some research on some of its claims after I watched it, and found them to generally be immensely wrong. But I have no qualms with taking a gander at this "addendum" - hell, I'll probably find this one interesting, too. I'm a dork for this kind of stuff. But I'll also see if any of its claims can be backed up afterwards.

I've heard the claim about no income tax law. I'm assuming you're basing it on argument over whether or not the Sixteenth Amendment was properly ratified? In the end, it doesn't matter. We have come to accept the income tax as one of the government's roles in this country for a century now. It would, of course, be possible to galvanize a movement in the country to repeal the income tax and change the government's major sources of income. But simply saying that it's an illegal tax and everyone's being duped is irrelevant. Please be careful to note the specific word I'm using. Not wrong. Irrelevant. You could, at the end of the day, be technically correct from a legal standpoint. Being right doesn't always matter. You'll never get enough Americans to adopt your specific point of view. If you want to fight the income tax, you have to do it another, more culturally acceptable way.

[PeterMP]

Its good to learn from each other. Are you talking about the first movie or addendum specifically? I'm not entirely familiar with the IRS/Supreme Court info your speaking of but I certainly am interested, care to enlighten?

The original movie. They claimed two things from memory:

1. The Supreme Court had found the income tax unconstitutional, while true it ignored decisions that came AFTER that decision. That's like me saying that segregation is legal because of Plessy vs. Ferguson and ignoring Brown v. B. of Ed. of Topeka

2. They claimed the IRA didn't "allow" the Supreme Court to hear income tax related issues. The Supreme Court doesn't hear many income tax cases, but the Supreme Court doesn't hear a lot of cases. Searches of the Supreme Court does reveal cases, some even pretty recent, w/ respect to the income tax code.

[JMS]

If there is no over sight that is not the fault of the Fed, but the fault of Congress, whom we elect.

No oversite? According to the Federal Reserves Charter they have to report to congress weekly... The Federal Reserve is highly regulated.

What does the fed do? It literally prints the money and controls the money supply. It doesn't "distribute" the money either. What it does is act as a clearing house.

You want to wire money to your mom in Florida. You pay a 20$ fee or whatever. That's a federal reserve transaction. The Federal Reserve acts as a clearing house for transactions between banks.

Do we need the Federal Reserve. Hell Yes. To assert otherwise is just displaying ignorance of what the Federal Reserve does.

[PeterMP]

Its up to Congress to change this system as it always has been. Bottom line is its a unconstitutional system, anyone that researches the founders' philosophy even briefly will find that the idea of a Central Private Bank controlling the money supply has long been fought against as it eventually leads to debt enslavement of societies. I stick by my premise, that until we change the system to a more constitutional basis we will continue to see debts rise and the gap between rich and poor grow.

1. It isn't unconstitutional. You might think it is, but that doesn't make it so. Only the Supreme Court can declare it as unconstitutional.

2. I'd disagree w/ you. The Constitution gives Congress the authority to control coinage and securities. They are executing that authority via the Fed. You might not like the amount of control of the system that they've retained, but that is their choice. The Fed, as far as I know, is bound by laws of Congress, and if Congress wanted to issue more authority, they could.

3. There isn't anything inherently debt causing from a central bank operated system vs. any other system that controls the money supply.

[JohnLockesGhost]

1. The Federalist papers aren't the Constitution.

2. Want to bet that private mints don't commit fraud and do things like sell coins containing less gold than stated.

1) What makes you think I was arguing the Federalist is the Constitution. I was just making a broader point about attitudes then and now.

2) a) Find me an example. I would maintain private firms maintain more rigorous quality controls than public ones. Once they ruin there brand, it's difficult to recover it. There will be the odd-ball cheater, but cheaters will be caught eventually.

If a private mint were to debase its coinage, it could be prosecuted for fraud. Whereas the state can do it with impugnity.

[JMS]

Your certainly correct about the Fed transferring money in exchange for bonds and securities. I will say that you've opened up a new avenue of research for me as I haven't yet found evidence of what they do with those bonds exactly. Even so, from what I have read even though I may not grasp it fully, something seems incredibly fishy about this entire system; and I've thought that naturally since I was young.

The federal reserved doesn't sell bonds in exchange for transferring money.. They charge a fee. If you wire transfer money to another bank in another state and want it their soonest you will probable use the federal reserve to do it, and you will pay a fee. That fee is how the federal reserve makes it's operating budget and how they actually kick back money to the federal government every year, to the tune of tens of billions of dollars.

Also, your right about it being the responsibility of Congress. Hell, the Fed is just doing what all institutions do....ensuring its 'self-preservation'. Its up to Congress to change this system as it always has been. Bottom line is its a unconstitutional system, anyone that researches the founders' philosophy even briefly will find that the idea of a Central Private Bank controlling the money supply has long been fought against as it eventually leads to debt enslavement of societies. I stick by my premise, that until we change the system to a more constitutional basis we will continue to see debts rise and the gap between rich and poor grow.

Actually because the federal reserve is so integral to the US banking system, they are required to give Congress a weekly status on their holdings. Their is quite a lot of transparency and oversite at the federal reserve. It's written into their charter

[PeterMP]

2) a) Find me an example. I would maintain private firms maintain more rigorous quality controls than public ones. Once they ruin there brand, it's difficult to recover it. There will be the odd-ball cheater, but cheaters will be caught eventually.

If a private mint were to debase its coinage, it could be prosecuted for fraud. Whereas the state can do it with impugnity.

1. Go to google, type in mint coin fraud gold. I only get 60,500 hits. Here's one:

http://query.nytimes.com/gst/fullpage.html?res=9C0CE3D6133EF930A25751C0A966958260

2. You think that the CEO of AIG cares that he ruined the AIG brand?

3. They could be, but does that really matter if people have already lost a bunch of money.

4. Ideally, they can't. They should lose their jobs.

[JMS]

1) What makes you think I was arguing the Federist is the Constitution. I was just making a broader point about attitudes then and now.

The federalist papers aren't "the constitution", but they are literally essays written by the framers of the constitution and capture their thinking on different ammendments and give insite into what the constitution meant to the founding fathers.

2) a) Find me an example. I would maintain private firms maintain more rigorous quality controls than public ones. Once they ruin there brand, it's difficult to recover it. There will be the odd-ball cheater, but cheaters will be caught eventually.

Cheaters cheat because their is a lot of money in cheating. Private institutions are designed to make money. It's a bogus argument to claim that all private industries "maintain more rigorous quality controls than public ones", we lost a couple of hundred thousands pets last year when some of our finest petfood manufactures purchased cheap protein source from China which turned out to be poisonous.

I disagree the motivation for profit is universally decided in the consumers favor in the absense of regulation.

If a private mint were to debase its coinage, it could be prosecuted for fraud. Whereas the state can do it with impugnity.

Prosecuted for what? If a private company mints a coin which has an once of gold in 2001, there is nothing to stop them from making the same coin in 2008 with only .8 oz of gold.

Regulating the money is an important responsibility of the Federal government and is written into the constitution. It provides a standard for transactions which facilitate economic developement. Suggesting we go to private mints as "more trustworthy", is like saying houses never burned down when we lived in caves... let's go back to caves.

http://www.usconstitution.net/const.html

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

[JohnLockesGhost]

1. Go to google, type in mint coin fraud gold. I only get 60,500 hits. Here's one:

http://query.nytimes.com/gst/fullpage.html?res=9C0CE3D6133EF930A25751C0A966958260

That's a counterfeiting ring not a legitimate mint trying to convince people to use their coins like in California circa 1860.

2. You think that the CEO of AIG cares that he ruined the AIG brand?

Yes.

3. They could be, but does that really matter if people have already lost a bunch of money.

4. Ideally, they can't. They should lose their jobs.

People are hurt by crooks. Unfortunately this is just a fact of life. The best we can do is catch them when they do wrong and deal with them.

[PeterMP]

That's a counterfeiting ring not a legitimate mint trying to convince people to use their coins like in California circa 1860.

Yes.

People are hurt by crooks. Unfortunately this is just a fact of life. The best we can do is catch them when they do wrong and deal with them.

Look, there is a reason that the ability to control coinage was given to Congress. It is just a good idea now as then.

The ability for fraud and counterfeiting will go up as you have more people producing more types of money. This will be a burden on the economy and businesses (how do I know the coin you gave me is good IF I trust the company?). It will also result in issues w/ respect to inter-state commerce and travel (I have coins from a company in NJ, but what if I go to OK. Will they take the coins?).

Lastly, there is nothing associated with a free market system that doesn't similarily apply to Congress w/ respect to currency instability/value and responsiblity.

'People are hurt by criminals. The best we can do is catch them and punish them.'

'People are hurt by Congress. The best we can do is identify the particular Congresspersons responsible and vote them out of office.'

If fact, there are alot fewer people in Congress to "investigate" than in the general public.