The Federal Reserve

[lord o kelly]

I found this really interesting video on the FED. I personally am very against the FED in practice and principle. Can anyone tell me why we should still keep it around.

[waidizss]

FED did a great job on profiting from wars,crisis and anything related to money. We keep it around because it has too much power.

[Thorn777]

@op

"its independence is crucial to keep politics as far away as possible from central-banking"

thats the official reason as to why...

[Viking Prince]

I am very tempted to close this thread since there is nothing really to discuss from the opening position of the first post. Youtube videos are not a good start to a thread in the D&D. The forum is present to discuss (not to view, listen, etc.) topics among the members. Rather than saying you are for or against the federal reserve, how about stating why?

I will leave it to the member opening this thread to continue to work to start this discussion. Otherwise, it shall be closed.

VP

[Sphere]

I found this really interesting video on the FED. I personally am very against the FED in practice and principle. Can anyone tell me why we should still keep it around.

Because an independent central bank is a key to peace and prosperity and thats why almost every industrialized nation has one.

FED did a great job on profiting from wars,crisis and anything related to money. We keep it around because it has too much power

.

I hope people here understand that the Fed cannot actually make a profit, legally any and all profits the Fed portfolio produces must be returned to the US treasury. Between 2005-2009 the Fed paid all $162 Billion of its profits into the US treasury.

[Platon]

Because an independent central bank is a key to peace and prosperity and thats why almost every industrialized nation has one.

Hmm.. that explains how the US kept out of wars as long as the FED existed
It's of cource very important to keep the FED secret to protect the true owners. God forbid our elected politicians would control the money..
For me it's just amazing that the public, and even our politicians accept this. But the plain truth is, they just have no idea..

I hope people here understand that the Fed cannot actually make a profit, legally any and all profits the Fed portfolio produces must be returned to the US treasury. Between 2005-2009 the Fed paid all $162 Billion of its profits into the US treasury.

Before the FED can have their 162 Billions, the private banks got their share (much bigger sum..)
-Why can't the FED (if it really was under government control) just lend the money directly to the state, businesses and public without going through private banks..? I tell you why. Because the private banks are owned by the same people who have control over the FED. And they want to make free money - a LOT of free money!!

[Sphere]

For me it's just amazing that the public, and even our politicians accept this. But the plain truth is, they just have no idea..

If only they read the internet, then they would understand.

Really, you have to present the argument why the 1800's (when the US had no central bank) was somehow better than the 1900's (with the Fed). Are you trying to say there weren't power banking interests, monopolies, abuse of labor etc. in the 1800's? That the 1900's wasn't an era of an increasingly wealthy middle class? Really what great wrong has the Fed produced that you are arguing agaisnt?

Or is it only just these scary "men in the shadows", is that really all you have?

[Thorn777]

If only they read the internet, then they would understand.

Really, you have to present the argument why the 1800's (when the US had no central bank) was somehow better than the 1900's (with the Fed). Are you trying to say there weren't power banking interests, monopolies, abuse of labor etc. in the 1800's? That the 1900's wasn't an era of an increasingly wealthy middle class? Really what great wrong has the Fed produced that you are arguing agaisnt?

Or is it only just these scary "men in the shadows", is that really all you have?

Many things: for instance during the great recession in Austria there was this region almost unhit because it decided to offer their own currency. Everything went well there contrary to the rest of the country. Then the Austrian CB stepped in and declared it illegal. Then the region went bonkers like the rest of the country.

Just one example. But what about this 0,01% interest rate now with consumer-banks lending at 19% or whatever? Explain me how this is for the common good?

I see there is an absolute need for central-banking, but almost no democratic oversight at all coupled with many questionable policy's makes me really more and more weary about this set-up we almost all have in our country's.

[Platon]

..Really, you have to present the argument why the 1800's (when the US had no central bank) was somehow better than the 1900's (with the Fed). Are you trying to say there weren't power banking interests, monopolies, abuse of labor etc. in the 1800's? That the 1900's wasn't an era of an increasingly wealthy middle class? Really what great wrong has the Fed produced that you are arguing agaisnt?..

There are many reasons why the 1900:s was better than previous. Most important was workers rights, unions, the welfare state etc..
When we, through politics, created a more equal society - like we have done in the western world after WW2 - we had enormous progress.
This is of cource not the only reason, but a big part of it. When the socialist "threat" dissapeared 20 years ago the neoliberal ideas took over. Workers rights are gone.. work for slave wages or starve - dramatically increase of inequality, and an enormous wealth back in the hands of the few.
In the 60:s one salary could support the whole family... now both parents have to work (.. and the 8 hour work day is a thing of the past) - and still we can't afford to buy a house or a car unless we get a loan.

What does the FED have to do with all this? Well, they are in the center of this problem. They are the guarantor of the bank cartels that rules the country.

[Enemy of the State]

This film is spreading like wildfire. I've never seen as much attention aimed at the Fed.

Kill the bank!

[Sphere]

Workers rights are gone.. work for slave wages or starve - dramatically increase of inequality, and an enormous wealth back in the hands of the few.
In the 60:s one salary could support the whole family... now both parents have to work (.. and the 8 hour work day is a thing of the past) - and still we can't afford to buy a house or a car unless we get a loan.

What does the FED have to do with all this? Well, they are in the center of this problem. They are the "guarantor of the bank cartels" that run the country.

You sir have a beef with Congress and the policies it created. Did the Fed repeal Glass-Steagle? No, it was congress. Did the the Fed lower high end taxes? No it was Congress. Did the Fed alter Union laws to make union busting easier? No it was congress. Did the Fed relax bank regulation? No it was Congress. Did the Fed let the minimum wage lag behind inflation? No, it was congress. This might be repititous, but thats because of the simple fact that the Fed has essentially no power to set public policy, it can only manage its assets, set interest rates and sell treasuries.

Really this is just shear lazy leftism, you want to amalgamate your displeasure of a shrinking middle-class and a widening income gap (concerns which I deeply share being a proud and outspoken progressive) and focus it at a single institution which doesn't even have the ability to set public policy.

The worst accusation you can throw at it is the undeniably vague assertion that it is the "guaranteer of bank cartels". With that that I cannot but point out the obvious, the Fed did not save Lehman, nor any of the other major banks from collapse for the simple reason that they did not have the legal power to do so. The US Treasury, using funds allocated from the US congress propped up the banking sector.

Also taking even the briefest look back to history, you see that the largest banking cartels sprung up in the era of the late 1800's early 1900's when the US did not have a central bank, with that role instead being played by men like J.P Morgan, George Perkins, Marcus Goldman etc. who exerted dangerous power over the financial industry because they, and not the government, had control over the availability of funds.

Just one example. But what about this 0,01% interest rate now with consumer-banks lending at 19% or whatever? Explain me how this is for the common good?

Thats straight forward. Do you think the bank lending rate would be lower or higher if they didn't have a source of .01% loans? I hope I don't have to explain why it would be a dumb idea for a the central to provide consumer loans directly.

[Thorn777]

^While Im inclined to say it will be lower from a pure pragmatic eco point of view. Past reality though shows they haven't been lending all that much because of it, nor did they pas on these lower interests. Though I guess the situation would have been worse ATM with the crisis, nevertheless there is a huge trade-off to this and a price the average consumer pays trough the printing and possible risks that come with increasing devaluation. Nvm that fed-interests where already obscurely low the years before the current situation, which is much more what Im arguing against. I know the FED is desperate and uses every trick in the book...

And please explain why a FED shouldn't lend money to consumers?

[Sphere]

^While Im inclined to say it will be lower from a pure pragmatic eco point of view. Past reality though shows they haven't been lending all that much because of it, nor did they pas on these lower interests. Though I guess the situation would have been worse ATM with the crisis, nevertheless there is a huge trade-off to this and a price the average consumer pays trough the printing and possible risks to this. Nvm that fed-interests where already obscurely low the years before the current situation, which is much more what Im arguing against.

I absolutely agree that the Fed set rates too low in the 2003-2007 era which contributed to the asset bubble. However, I cannot accept the idea that the US should not have a central bank setting interest rates at all. The UK, the Eurozone, China, Brazil, Canada, India, Japan, Israel etc. all have central banks which control interest rates for a reason. And its not because some mysterious banking ninja clan has taken over the world, its because it is the soundest way to manage a market economy.

And please explain why a FED shouldn't lend money to consumers?

It wouldn't be a very competative market place if one player had the option of creating money from nothing to fund its loans would it? It would become a state mandated monopoly in a hurry.

[Thorn777]

I absolutely agree that the Fed set rates too low in the 2003-2007 era which contributed to the asset bubble. However, I cannot accept the idea that the US should not have a central bank setting interest rates at all. The UK, the Eurozone, China, Brazil, Canada, India, Japan, Israel etc. all have central banks which control interest rates for a reason. And its not because some mysterious banking ninja clan has taken over the world, its because it is the soundest way to manage a market economy.

Like I said Im not against central-banking etc, I just have a problem with its lack of democratic oversight coupled with a number of questionable policy's. You'd think something having so much say over the lives of all should be more accountable than it is right now.

It wouldn't be a very competative market place if one player had the option of creating money from nothing to fund its loans would it? It would become a state mandated monopoly in a hurry.

Twas a jokingly meant question since you came across a bit untamed the post before. Never seen you do that...

But anyway, Im all for state-banks though who can provide credits to businesses in such times where most commercial banks are retracting. Did a great job in Germany...

[Platon]

Look Sphere, I'm not saying that the FED is behind all. They are just controlled by the bank catels (and so is congress btw..)
Why did FED print trillions since -08 and congress decided to hand over everything to the private banks?? Why not hand it over to the Gov. so they can put the money to work - build roads, bridges, hospitals, schools -pay teachers, invest in clean energy etc.. then that money would actually create something. Now that money goes to save the banks who made bad bets in the wall street casino. And the bill goes to the taxpayers. It's pure insanity and it doesen't make any sense at all.

edit: btw, the ECB and other central banks are not much better. These "bailouts" of Greece and Ireland for example are designed in a simiral manner: Save the banks - destroy the welfare state!

[last_name_left]

Really this is just shear lazy leftism

Please, it isn't "leftism". What's "left" about it? It's woolly conspiracism, not leftism. It's the socialism of fools maybe, but not socialism.

Now that money goes to save the banks who made bad bets in the wall street casino. And the bill goes to the taxpayers. It's pure insanity and it doesen't make any sense at all.

Whose money was in the banks? Who works at the banks? Who works at places dependent on banks? Whose lives are dependent on the successful operation of the banks?

Let's not pretend that "the people" have no self-interest being served by all this?

And let's not pretend that the Fed (and modern central banking generally) are ostensibly products of liberal-democracy and liberalism and as such subject to the wishes of the electorate....

As a socialist I am naturally sympathetic to the appeal of all this stuff about "damned bankers" et al.....but I am sick of this idea that the general public are simply victims in all this. To take just one question as an example - "Whose house-prices skyrocketed through the last 20 years?"

[Matthias]

Wow, that film was almost criminally stupid brainwashing bullsquat. Why would a film have so many falsehoods? Oh yeah, they have a motive....

http://www.theamericandreamfilm.com/the-good-guys.php


Wow, the biggest toolbags on the right are behind this film.

Ahh yes, Thomas Jeffreson, the slave owner, he really was all about freedom, wasn't he?

This film was so chockfull of libertarian faillogic and mythology it's hilarious!

As for why we (and every other developed nation on Earth) has a central bank:

http://money.howstuffworks.com/fed1.htm (it's a lot of reading)

Notice how the film just glided over the ol' Great Depression? You know why? Because in that case, the banks were not rescued by the Fed, and that was the result.

Also notice how the film never mentioned how the economy was before the federal bank. Before the federal bank, there were frequent boom and busts in the economy and a whole lot of uncertainty, much more so than today. Bank runs were frequent. This really hurt the economy and made it hard to invest or grow. The film also claims that there was tons of prosperity before the federal bank, but the fantastic growth in the US economy mostly happened with the presence of a federal bank.

Also, all the hooey about fractional reserve banking was pretty hilarious. Without it, the modern US economy wouldn't be around. Here is the reason for fractional reserve banking:

http://en.wikipedia.org/wiki/Fractio..._for_existence

Basically, under the libertarian model, there are tons of different currencies, lots of bank runs, or, if they don't want any fractional reserve banking, little to no investment going on. Such modern investment practices are necessary for any big modern economy to run at all. The FED has brought stability to the system, with the one notable exception being the Great Depression, when the banks were not bailed out.

The FED has worked very well in stabilizing the economy. However, there are also banking regulations out there that stop some of the worst practices out there of banks. For example, banks must keep a regulated amount available in their fractional reserve in case there is a panic. However, a lot of the modern regulatory policies were repealed by Reagan and haven't come back since. Since then, banks have been allowed to be much more risky in their investment practices. The FED is still doing its job of trying to stabilize the economy when banks get it wrong, and also just the usual business cycle, but now banks have been given more power than ever to get it hugely wrong and tank our economy. The regulations were dropped by conservatives under the understanding that regulations hurt efficiency and that more risky investments can get bigger profits, which is true, but can also result in huge losses.

Since a Great Depression is far more costly to the US economically than temprorarily bailing banks out, the too big to fail banks basically have their way with what they can do. The only solution is breaking them up into smaller banks, not destroying the central bank that keeps business cycles form being extreme and that has created a nice stable investment environment never seen before in human history.

[last_name_left]

FED print trillions since -08 and congress decided to hand over everything to the private banks?? Why not hand it over to the Gov. so they can put the money to work - build roads, bridges, hospitals, schools -pay teachers, invest in clean energy etc.. then that money would actually create something.

ever hear of the tea-party?

[Dr. Oza]

This is a warping of history.

Alexander Hamilton was a not an "evil" man , his economic policies lifted america out of debt as opposed to trapping america in it

and Jackson's shutting down of the Bank of the USA resulted in an economic depression and the role of central banking was assumed by private banks that eventually grew bigger and bigger, and they became the "evil" banks the video presents...

this is libertarian propaganda at its finest...

system works reasonably fine with regulation

---

and the fed isnt exactly a private bank, they still have to answer to the board of governors and the chairman of the fed is appointed by the president

[Platon]

@Matthias

The FED had nothing to do with the stability of the economy. The US have, since WW2, lead the global economy where US companies dominated manufactoring and trade. They had also control (direct or indirect) over most of the worlds oilreserves. Plus the dollar being the worlds reserve currency. But this started to change in the 70:s, and soon the game will be over. And there is nothing the FED can do about it.
I totally agree that teapartiers and libertarians are pathetic when they are focusing their critique on the FED and this whole fractional reserve system, while ignoring the underlying causes of the economic crisis. But they are completely right in one aspect. You can't keep printing money and increase the state and public debt levels forever - you will sooner or later have to pay back either directly or through inflation.
On the other hand if, back in -08, they didn't bail out the banks - we would enter a worldwide depression with huge consequences... but that will come anyway eventually.
The only way the 30:s depression could end was because ww2. And thats what I see could happen again.