Do We Really Need The Federal Reserve?

[JohnLockesGhost]

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.

Thanks for that. I wasn't sure what the Federalist was.

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.

Bastiat claimed that cheaters cheat as long as the pain incured when they're caught doesn't outweigh the pain of labor. In other words, men will seek the easiest way of making money. The Law's proper function therefore is to make those who cheat suffer, so instead they will labor for the bread.

Thought the bad dog food came from Canada. Anyway, what were the brands that were contaminated? How quickly did they yank their product off the shelf voluntarily once the mistake was realized?

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

Profit, in a free market, can only be had through a customer voluntarily handing over his/her money. So it takes trust on the part of the consumer and persuasion on the part of the firm. If that trust is broken, the firm will die.

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.

If they lie about how much gold there is in the coin, that's fraud and punishable.

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.

I never said we should just go with private mints. I've just said they've existed in the past and been quite successful. If the government were to mint coins and people like them better, that's fine. But if the government is the one cheating the public by debasing their coinage and a private mint minted coins the people trusted more, then there's nothing wrong with people using those coins instead.

It's that competition you say we need so badly. I agree.

[JohnLockesGhost]

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?).

People have to be convinced to use the currency. Even if we pursued a currency that emerges from the free market as Hayek suggests, there would still be a currency that the government would use to pay its employees and it would accept in taxes as such. So there would still be a sort of "legal currency" even if it wasn't "legal tender."

Who knows, maybe Wal-Mart will come up with coupons that people will start using as a medium of exchange.

[GibbsFactor]

If anyone wants to know more about the Fed, I suggest reading this speech from Congressman McFadden from 1934.

http://home.hiwaay.net/~becraft/mcfadden.html

“The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

- Congressman Louis T. McFadden (speaking in the Senate)

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance."

- James Madison

"Give me control of a nation's money and I care not who makes it's laws."

- Mayer Amschel Bauer Rothschild

"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations."

- Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create deposits."

- SIR Josiah Stamp, (President of the Bank of England in the 1920's, the second richest man in Britain)

"People who will not turn a shovel full of dirt… nor contribute a pound of material, will collect more money from the United States than will the People who supply all the material and do all the work. This is the terrible thing about interest ...But here is the point: If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way. It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People. If the currency issued by the People were no good, then the bonds would be no good, either. It is a terrible situation when the Government, to insure the National Wealth, must go in debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold. Interest is the invention of Satan."

- Thomas Edison

“I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”

-Thomas Jefferson

"Emitting bills of credit, or the creation of money by private corporations, is what is expressly forbidden by Article 1, Section 10 of the U.S. Constitution."++

-U.S. Supreme Court, Craig v. Missouri

"Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose."

-John Maynard Keynes,

The Economic Consequences of the Peace, 1920, page 235

"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation."

-John Adams letter to Thomas Jefferson

"Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice."

-George Washington 1787

"Madison, agreeing with the journal of the convention, records that the grant of power to emit bills of credit was refused by a majority of more than four to one. The evidence is perfect; no power to emit paper money was granted to the legislature of the United States."

-George Bancroft, A Plea for the Constitution (1886)

No state shall emit bills of credit, make any thing but gold and silver coin a tender in payment of debts, coin money---."

Article One, Section Ten, United States Constitution

"The Federal Reserve bank buys government bonds without one penny."

- Congressman Wright Patman, Congressional Record, Sept. 30, 1941

"When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money."

- Putting it simply, Boston Federal Reserve Bank Federal Reserve

"...the increase in the assets of the Federal Reserve banks from 143 million dollars in 1913 to 45 billion dollars in 1949 went directly to the private stockholders of the [Federal Reserve] banks."

- Eustace Mullins

Here's what the man who put the Fed in power has to say, quotes from Woodrow Wilson:

"A little group of willful men, representing no opinion but their own, have rendered the great government of the United States helpless and contemptible."

"The government, which was designed for the people, has got into the hands of the bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy. "

""I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson, after signing the Federal Reserve into existence"

But to answer the OPP:

"As long as we issue fiat currency, I see no alternative to a legal tender law."

-Alan Greenspan

Now I'm not a very smart man but I do respect the men that made the quotes above. Doesn't sound good at all. All I ever hear in defense of the reserve is "what else could we do".

[JMS]

Bastiat claimed that cheaters cheat as long as the pain incured when they're caught doesn't outweigh the pain of labor. In other words, men will seek the easiest way of making money. The Law's proper function therefore is to make those who cheat suffer, so instead they will labor for the bread.

Alan Greenspan said before congress yesterday that he made a mistake in the banking crisis. His mistake was in thinking the banks were the best folks to look after their own best interest.

Thought the bad dog food came from Canada. Anyway, what were the brands that were contaminated? How quickly did they yank their product off the shelf voluntarily once the mistake was realized?

Science Diet, Eukanuba, Iams are the three which I'm aware off. None of them yanked their products from the market. After the pets started dieing, they all just kept selling their products...

Profit, in a free market, can only be had through a customer voluntarily handing over his/her money. So it takes trust on the part of the consumer and persuasion on the part of the firm. If that trust is broken, the firm will die.

But non of that matters if the guy in the company breaking the trust, walks away with 100 million dollars. 500 million in the case of one recently retired oil executive. There is huge money to be made in acting in your own self interest. Huge money is always a greater incentive by many people, than doing what benifits the company or the consumer.

If they lie about how much gold there is in the coin, that's fraud and punishable.

What if they tell you in 2000 the coin has an oz. But in 2008 they just forget to tell you they changed it to .8 oz? Nothing illegal about that, it's their coin after all.

I never said we should just go with private mints. I've just said they've existed in the past and been quite successful.

Actually they haven't. The primary reason they existed in the passed was because the US mint was so far removed from the gold source that private mints sprang up to fill a need. Those private mints were not sucessful and were quickly put out of business. The US currency stamped on your coin is the gold standard in the global economy. It's laughable you think anybody can print money and that that would be a better thing or even a good thing.

It would be a really really bad thing and lead to more confusion, mistrust, and fraud.

If the government were to mint coins and people like them better, that's fine. But if the government is the one cheating the public by debasing their coinage and a private mint minted coins the people trusted more, then there's nothing wrong with people using those coins instead.

It's that competition you say we need so badly. I agree.

Recently (few years back) the federal government under Bush raided and confiscated a private mint's gold and silver. This mint was in the business of creating libertarian money to compete with the US Dollar.

I believe if the coins were to be used for investment purposes they wouldn't have had any problems. Bush acted agaisnt the libertarians because they were minting coins to be used as tender which would have confused the tax system... I agree with you, Bush is an idiot and any confusion in the tax system could have/ should have, been cleared up rather than confiscating the assets of the company...

Since Nixon it's not illegal to own gold in this country. I own gold, and there are many private companies which mint gold for investment purposes, and that's perfectly legal..

[wilsonian]

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

Why do we need the Federal Reserve? Our country did just fine for nearly 140 years without it.

Look at the track record of the Federal Reserve. It creates inflation, sends false signals to the economy, creates boom/bust cycles, and then tries to "save" the economy with more inflation. Why do you think the founding fathers were so against the idea of a central bank? They had experienced runaway inflation and the collapse of the Continental Dollar.

As long as the Federal Reserve is around, we will continue to experience painful boom/bust cycles and see our currency devalued.

[JMS]

If anyone wants to know more about the Fed, I suggest reading this speech from Congressman McFadden from 1934.

You know for long periods of western history Christians believed loaning money for interest was a sin. It was an excommunicatable offense. That's why Jews became so powerful in international banking historically, because it wasn't a sin to borrow, just to loan for a profit... Non Christians had a monopoly. This is also one of the outdated themes of anti semitism which exists today....

Used to be before a king could make war on his neighbor he would have to ask one of the international banking families such as the Rothchilds for financing; which did in fact give the banks vast control over kings and countries... The Rothchilds for example were instumental in financing Britain's war against Napolian in the early 1800's..

Your quotes skirt the classic antisemetic arguments against the banking families (usery); and are using the arguments to try to rip down the system that competed with and replaced the old flawed system which put so much power in the hands of a few.

[PleaseBlitz]

I'm wondering, I know what the federal reserve does, but my question is why do we still need it? The people in control of the FR are basically held unaccountable for their actions, and at the same time, they are unelected, yet they play such a big part in the US economy.

I seriously doubt you know what the Fed does. But im willing to be proven wrong. How about starting with what the FOMC does, without copying and pasting from Wikipedia.

[footballhenry]

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.

Ah, kudos. I agree with everything you said here. Perhaps one day we will have such a movement by the people, for the people.

[footballhenry]

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.

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

First and foremost, I never once stated that the Fed sells bonds. I said that the government sells bonds to the Federal Reserve, if this is incorrect then please do point me in the right direction with a source. Also, while I am well aware that Congress has meetings with the Fed Chairman (believe me I've seen Ron Paul grill Bernanke many many times) this does not constitute the oversight that I and many others are looking for. The 'meetings' that decide policy are wholly private, with only portions being allowed to be made public. It is no secret that the Fed has been half secretive and half transparent during its tenure. My point is that it should be run openly; hell the job of money creation should soley be given to the government and not private bankers or a private corporation (which, no matter what you say, is in essence what the Federal Reserve is).

[PeterMP]

Why do we need the Federal Reserve? Our country did just fine for nearly 140 years without it.

Look at the track record of the Federal Reserve. It creates inflation, sends false signals to the economy, creates boom/bust cycles, and then tries to "save" the economy with more inflation. Why do you think the founding fathers were so against the idea of a central bank? They had experienced runaway inflation and the collapse of the Continental Dollar.

As long as the Federal Reserve is around, we will continue to experience painful boom/bust cycles and see our currency devalued.

Do you think they created the Fed just for kicks?

This is halirious:

http://en.wikipedia.org/wiki/First_Bank_of_the_United_States (1791)

http://en.wikipedia.org/wiki/Long_Depression

http://en.wikipedia.org/wiki/Panic_of_1907

http://en.wikipedia.org/wiki/Panic_of_1896

http://en.wikipedia.org/wiki/Panic_of_1893

http://en.wikipedia.org/wiki/Panic_of_1884

http://en.wikipedia.org/wiki/Panic_of_1873

http://en.wikipedia.org/wiki/Panic_of_1857

http://en.wikipedia.org/wiki/Panic_of_1837

http://en.wikipedia.org/wiki/Panic_of_1819

http://en.wikipedia.org/wiki/Depression_of_1807

[footballhenry]

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.

I suppose its in its interpretation but I sincerely believe that the Founders intended the money supply be controlled by Congress not 'via the Fed' (or any other private entity). Naturally Jefferson and co. saw the threats of private financiers controlling the money supply. I fully understand your point of Congress giving the authority to the Fed, but my point is that the Constitution makes it clear that the particular duty should be Congress' responsibility and thus not delegated to private entities.

[PeterMP]

Here's what the man who put the Fed in power has to say, quotes from Woodrow Wilson:

"A little group of willful men, representing no opinion but their own, have rendered the great government of the United States helpless and contemptible."

"The government, which was designed for the people, has got into the hands of the bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy. "

""I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson, after signing the Federal Reserve into existence"

At best, your quote would appear to have issues:

http://en.wikiquote.org/wiki/Talk:Woodrow_Wilson#.22I_am_a_most_unhappy_man....22

Most of your quotes have little to do directly with the Fed. Do away with the Fed tomorrow, there will still be banks.

[PeterMP]

I suppose its in its interpretation but I sincerely believe that the Founders intended the money supply be controlled by Congress not 'via the Fed' (or any other private entity). Naturally Jefferson and co. saw the threats of private financiers controlling the money supply. I fully understand your point of Congress giving the authority to the Fed, but my point is that the Constitution makes it clear that the particular duty should be Congress' responsibility and thus not delegated to private entities.

The first national bank was established in 1791:

http://en.wikipedia.org/wiki/First_Bank_of_the_United_States

[GibbsFactor]

At best, your quote would appear to have issues:

http://en.wikiquote.org/wiki/Talk:Woodrow_Wilson#.22I_am_a_most_unhappy_man....22

Most of your quotes have little to do directly with the Fed. Do away with the Fed tomorrow, there will still be banks.

You didn't even read that link did you. He corrects himself numerous times saying that the quote is infact, true.

[JMS]

Why do we need the Federal Reserve? Our country did just fine for nearly 140 years without it.

Actually it didn't. There have been many instances of a central banking system in this country. First was the Bank of the United States which Andrew Jackson fought with and eventually detroyed in the mid 1830's.

After Jackson took the government out of the central banking business Rockefeller filled the void by creating a banking cartel, which allowed Rockefeller to manipulate and regulate the ecnomy as a private citizen.

The federal reserve as we know it today was established in 1913, 126 years after the constitution was ratified....

I think you would be hard pressed to think the largely agrarian economies of the 1700's and 1800's with their less sucessful banking systems are superior or even preferable to the federal reserve system which has helped make us the envy of the world economically.

Look at the track record of the Federal Reserve. It creates inflation, sends false signals to the economy, creates boom/bust cycles, and then tries to "save" the economy with more inflation. Why do you think the founding fathers were so against the idea of a central bank? They had experienced runaway inflation and the collapse of the Continental Dollar.

Everything you are saying has the ring of true, and is factually correct; but intellectually wrong. The federal Reserve's goal is to protect the economy and 99% of the time that means it fights inflation, it doesn't creat inflation... In times of great economic termiols like the Great Depression and today's economic melt down, Inflation isn't the most important thing to be fighting... So yes as the money supply has been tightenned upon the fears and panic of bank solvencies; the federal reserve is trying to ensure banks can still borrow money and avert an economic collapse... and yes that is inflationary.. But it's better than 20-30-40% unemployment which we saw during the Great depression when the federal government didn't take proper action to advert economic crisis.

What we knew about economic policy in the days of the colonials could be written on teh back of a single sheat of paper. Today we have super computers modeling the economy. Saying we should go back to their economic model is like saying we should return to the colonial system of medicine... You can make it sound good on a rhetorical level if you don't actually think about it. But it's farsically flawed to anybody who does try to understand what it means.

As long as the Federal Reserve is around, we will continue to experience painful boom/bust cycles and see our currency devalued.

The federal reserve fights boom and bust cycles. It's why they raise and drop interest rates bank use to lend to other banks. To slow down or to speed up the economy counter to a trend.

As for the economy, You might want to pick up a WSJ. Our currency isn't devalued. It's actually appreciating significantly over this crisis. That's because people around the world are buying up T bills and dollars as safe investments. The world believes we will handle this crisis better than their own governments...

That's not a good thing, because it's destabilizing to other international banks as currency flows to safety. We want those foreign economies strong so they can buy and we can export products to them... It's a negative that the dollar is appreciating, cause it makes our exports more expensive, imports cheaper, and destabilizes the folks who would buy our exports.

[PeterMP]

You didn't even read that link did you. He corrects himself numerous times saying that the quote is infact, true.

Did you read it?

The quote appears to be woven together from multiple sources. None of which contain this part:

"I am a most unhappy man. I have unwittingly ruined my country."

Except for one source that nobody seems to be able to supply ("Senate Documents Co. 3, No. 23, 76th Congress, 1st session, 1939"), but is after Wilson's death so at best it is still a poor contribution to Wison.

Much of it comes from a speech before he was PRESIDENT so before he signed the Fed came to be:

http://www.woodrowwilson.org/learn_sub/learn_sub_show.htm?doc_id=472697

[JohnLockesGhost]

Alan Greenspan said before congress yesterday that he made a mistake in the banking crisis. His mistake was in thinking the banks were the best folks to look after their own best interest.

Quite frankly, Greenspan's statement is silly. How is it that all these banks made all these stupid, self-destructive decisions at the very same time, huh? What an amazing coincidence.

It wasn't that these banks were just blindly pursuing self-interest on a path toward self-destruction, they were getting winks, guarantees and bad signals from the federal government.

Science Diet, Eukanuba, Iams are the three which I'm aware off. None of them yanked their products from the market. After the pets started dieing, they all just kept selling their products...

I worked for Safeway as this happened and let me tell you, we yanked all the dog food off the shelves. There must have been twenty cartloads of the crap. We barely had enough room in the back of the store to fit it. There were recalls galore.

But non of that matters if the guy in the company breaking the trust, walks away with 100 million dollars. 500 million in the case of one recently retired oil executive. There is huge money to be made in acting in your own self interest. Huge money is always a greater incentive by many people, than doing what benifits the company or the consumer.

If he earns that money, more power to him. If he gets that money through lying and deception, he should be prosecuted.

What if they tell you in 2000 the coin has an oz. But in 2008 they just forget to tell you they changed it to .8 oz? Nothing illegal about that, it's their coin after all.

I think you could definitely build a good case in front of a judge that they've committed fraud.

Actually they haven't. The primary reason they existed in the passed was because the US mint was so far removed from the gold source that private mints sprang up to fill a need. Those private mints were not sucessful and were quickly put out of business. The US currency stamped on your coin is the gold standard in the global economy. It's laughable you think anybody can print money and that that would be a better thing or even a good thing.

The dollar came out of the private market. Some Bohemian duke or count minted coins of silver called the Thaler. They were soon circulated because the people trusted them more than the other coins that were debased by governments because of war. Eventually it led to the Spanish dollar and then the American dollar. So it came from a market of freely competing currencies, not government.

Recently (few years back) the federal government under Bush raided and confiscated a private mint's gold and silver. This mint was in the business of creating libertarian money to compete with the US Dollar.

I believe if the coins were to be used for investment purposes they wouldn't have had any problems. Bush acted agaisnt the libertarians because they were minting coins to be used as tender which would have confused the tax system... I agree with you, Bush is an idiot and any confusion in the tax system could have/ should have, been cleared up rather than confiscating the assets of the company...

Barter is still legal. If I offer you my toaster for your TV that's legal. What does it matter if I offer you a couple pieces of silver instead?

[JMS]

First and foremost, I never once stated that the Fed sells bonds. I said that the government sells bonds to the Federal Reserve, if this is incorrect then please do point me in the right direction with a source.

The Federal Reserve doesn't buy T bills.. Treasury bills are sold by the treasury to anybody who want to invest in them. Some foreign governments like China, Japan, and Britan buy T bills, but also US financial institutions buy them because they are extremely safe investments..

The Federal Reserved doesn't buy them. The Federal Reserve charges fees to it's client banks for money transfers, and also interest on short term loans. This is how the federal reserve makes it's money. Most of the money they make goes back to the Federal government. Some of the money is used as an operating budget. That operating budget is approved by congress. and Federal Reserve accounts are closely monitored by congress.

Also, while I am well aware that Congress has meetings with the Fed Chairman (believe me I've seen Ron Paul grill Bernanke many many times) this does not constitute the oversight that I and many others are looking for.

Every member including the chairman of the federal reserve is appointed by the President, and is approved by the senate. Congress get's detailed weekly reports on the status of the Federal Reserves accounts and what they are currently spending money on. In addition to that the Chairman of the federal reserve regularly meets with congress to discuss the economy.

The 'meetings' that decide policy are wholly private, with only portions being allowed to be made public. It is no secret that the Fed has been half secretive and half transparent during its tenure. My point is that it should be run openly; hell the job of money creation should soley be given to the government and not private bankers or a private corporation (which, no matter what you say, is in essence what the Federal Reserve is).

Not Exactly. You ever listen to Alan Greenspan on the economy. One of his famous quotes was "if you think you understood what I am saying, I think you are mistaken". The reason the fed is cryptic/secretive about their process is on purpose. If you know what the federal reserve is going to do you can trick out the market. Their role is to bust bubles and flaten out slumps. If everybody knew what they were going to do, it would be possible to play the system to always make money...

If you know ahead of times the fed is going to cut interest rates by a point... you could pre-empt the cut with an investment. That's why their secretive, cause they are in the business of regulating the market, they don't want to become the market....

People invest huge money in trying to figure out what the fed is going to do. publishing the thinking of the members of their board would do a serious disservice to the economy....

Also the Fed isn't a private institution. All of their board members are appointed by the President to 8 year terms. The make money, but they aren't private. They are strictly regulated and monitored by congress...

It was just decided a long time ago that a non political regulated body of professionals was a better steward of the day to day, month to month money supply than political figures. Political figures have a hard time making the tough moves to fight inflation which are sometimes needed. Politcal leaders have a vested interest in spuring economic development to the overall detriment of the economy; that's why money supply issues were removed from politicians direct control..

[JMS]

Quite frankly, Greenspan's statement is silly. How is it that all these banks made all these stupid, self-destructive decisions at the very same time, huh? What an amazing coincidence.

The banking institutions are all inter linked. When the #1 asset of consumers in the #1 economy in the world looses 10-20% of it's value it's sends shock waves through the global economy.

Basically from 1990, to 2000 global capital doubled. a lot of that global capital came here in the form of T-bills and inflating our stock market. Those are all good things.. The bad thing was the bouble wasn't detected and popped before it could destabalize everything.

This is primarily because many folks, like Greenspan and Friedman believed that deregulated markets where folks looked after their own best interest were the most efficient model for the banking industry. And other people who didn't know listenned to them.

It wasn't that these banks were just blindly pursuing self-interest on a path toward self-destruction, they were getting winks, guarantees and bad signals from the federal government.

Actually the government wasn't doing enough to reel them in... I don't think congress was actively participating in the scheemes to attact more investoer and incure more risky debt.

I worked for Safeway as this happened and let me tell you, we yanked all the dog food off the shelves. There must have been twenty cartloads of the crap. We barely had enough room in the back of the store to fit it. There were recalls galore.

I owned to cats who both croaked within two weeks of each other. I think there were "volentary" recalls by Mars and Natural Balance. Nobody had a manditory recall, all of them continued to sell their poisoned products in most stores. Glad to hear safeway yanked them.

If he earns that money, more power to him. If he gets that money through lying and deception, he should be prosecuted.

How about he defrauds the public, and still keeps the money... That was our model under Bush.

The dollar came out of the private market. Some Bohemian duke or count minted coins of silver called the Thaler. They were soon circulated because the people trusted them more than the other coins that were debased by governments because of war. Eventually it led to the Spanish dollar and then the American dollar. So it came from a market of freely competing currencies, not government.

Comparing the US economy to a dark ages or middle ages economy isn't really meaningful. We would be way worse off without the federal government regulating curencies.

Barter is still legal. If I offer you my toaster for your TV that's legal. What does it matter if I offer you a couple pieces of silver instead?

Agreeed barter is legal and so is owning precious medals. The problem the libertarians had is they were advertising their money as a compeditory to the US dollar, inside the United States. The constitution gives the federal government sole rights to print / coin money.

They would have been fine if they wern't adversizing themselves as a counter to the US dollar.

[PeterMP]

Agreeed barter is legal and so is owning precious medals. The problem the libertarians had is they were advertising their money as a compeditory to the US dollar, inside the United States. The constitution gives the federal government sole rights to print / coin money.

They would have been fine if they wern't adversizing themselves as a counter to the US dollar.

I think their biggest problem was that they said the value of one of the dollars was the same as a US dollar (at least initially) and tried to get people to push them that way on vendors.

JLG- I'm not sure what your issue is if that's what you want. To my knowledge, if you set up and started making silver or gold pieces to buy and sell things (essentially as barter) w/ no link or attempt to associate them w/ the US dollar you'd be fine. The Fed isn't preventing that.

[JohnLockesGhost]

I think their biggest problem was that they said the value of one of the dollars was the same as a US dollar (at least initially) and tried to get people to push them that way on vendors.

JLG- I'm not sure what your issue is if that's what you want. To my knowledge, if you set up and started making silver or gold pieces to buy and sell things (essentially as barter) w/ no link or attempt to associate them w/ the US dollar you'd be fine. The Fed isn't preventing that.

I really don't have any issues. I'm just an intellectually curious person (read "nerd"), so I like thinking about things.

What's at the center of it all is the Federal Reserve's monopoly on money. As you point out, I could make my own money (JLG Bucks) and try to convince people to use it. But this can only go so far because of Legal Tender laws that force people to accept dollars even if they'd rather have JLG Bucks. So even if people lose faith in the dollar (because of inflation, debauchment), they are slaves to it because of Legal Tender laws.

[SnyderShrugged]

Money, Banking, and The Federal Reserve

Part 1: http://www.youtube.com/watch?v=LbiHpDnpoRc

Part 2: http://www.youtube.com/watch?v=Fm6xi-h-1jM&feature=related

Part 3: http://www.youtube.com/watch?v=TjyXYr_x_QI&feature=related

Part 4: http://www.youtube.com/watch?v=81Y3gx_UMdU&feature=related

These are a little dated, but very imformative and easy to understand. I highly suggest them as a primer to the Fed topic from a Mises/Rothbard perspective. Even if you disagree with their view, these videos are still worth watching.

[PeterMP]

What's at the center of it all is the Federal Reserve's monopoly on money. As you point out, I could make my own money (JLG Bucks) and try to convince people to use it. But this can only go so far because of Legal Tender laws that force people to accept dollars even if they'd rather have JLG Bucks. So even if people lose faith in the dollar (because of inflation, debauchment), they are slaves to it because of Legal Tender laws.

I never said we should just go with private mints. I've just said they've existed in the past and been quite successful. If the government were to mint coins and people like them better, that's fine. But if the government is the one cheating the public by debasing their coinage and a private mint minted coins the people trusted more, then there's nothing wrong with people using those coins instead.

It's that competition you say we need so badly. I agree.

You'd still be bringing competition. You'd still have people shift to your coins from goverment currency.

The goverment currency will always be there, but there is no requirement that it be used. Everybody I know still get US postal mail. Sometimes they use other things though.

And I think most people would agree the US postal system got better.

[PeterMP]

Money, Banking, and The Federal Reserve

Part 1: http://www.youtube.com/watch?v=LbiHpDnpoRc

Right off the back. No congressional comittee can supervise its actions because they chose not to. If Congress passed a law that said, 'The Fed must do X, Y, and Z or be disbanded.' that law would be valid and enforcable. So in fact they CAN supervise the just DON'T.

Inflation happened before the federal reserve.

Money was very unstable before the federal reserve.

The federal reserve and the gold standard are not incompatible.

Money did not reliably increase in value while on the gold standard.

I think I got about 5 minutes in the first one.

[skinfan133]

Have you seen it? Have you verified the sources?

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'.

I remember Techboy going through, evaluating each of the cited sources used in that 'movie' and linking his finds. disturbingly funny results to say the least, especially in the religion part. It's a movie made by an idiot who probably lives in his basement and owns voice recording software and microsoft powerpoint. but thats not the point.