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Author Topic: Federal Reserve Increasing Monetary Instability? Excessive Risk? Bank Failures  (Read 1672 times)
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WhiskeyGirl
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« on: September 02, 2009, 12:23:33 PM »

An interesting article ~

"The Federal Reserve and Social Justice: Questions for Fed supporters"
 

at http://caps.fool.com/Blogs/ViewPost.aspx?bpid=252757&t=01000860093551905860

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...knowing the damaging effects of the Federal Reserve's stated policy of inflation on the purchasing power of people on fixed incomes, how can you continue to support its existence?

Is this why the Medicare/Social Security brigade is organizing?  All that spending and money reduces their income?  They can no longer make ends meet?

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So my next question for Fed supporters is how can the Federal Reserve ever be right about the price of money?  And if you believe the Fed can manage the money supply, why don't they coordinate steel production, farming, etc?  Why not just set up a Communist State and get it over with?


How well did any central planning do over time?  Even China has embraced private enterprise and wealth creation.
The Proper Amount of Money

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The proper amount of money is whatever amount the market can bear.  Currently, the cart pulls the horse.  Money is increased in an effort to stimulate the economy, to stimulate productivity.  This is backasswards. 

Increased productivity increases the amount of goods available.  This increase in goods leads to a drop in prices relative to the supply of money.  This drop in prices makes the production of money (real money - the stuff that the central banks hoard, gold and silver)  more profitable.  New money enters the economy. Prices rise again.  This is how the horse pulls the cart.  So why the switch-a-roo?

"I am of the opinion that the main and final cause why the prince pretends to the power of altering the coinage is the profit or gain which he can get from it; it would otherwise be vain to make so many and so great changes.... Besides, the amount of the prince's profit is necessarily that of the community's loss." Nicole Oresme, Treatise on the Alteration of Money, 1371


A really good comment -

Quote
#3) On September 02, 2009 at 12:03 PM, whereaminow (83.30) wrote:
I have to run, so as fun as this debate was about to be, let me go ahead and spoil the party.

Bagehot noted that providing a lender of last resort and eliminating competition in currency, a central bank actually increased monetary instability. (I would suggest a re-reading to chk999 but he thinks he knows what he is talking about.) 

The mere existence of a lender of last resort “encourages banks to take on excessive risks, leading to trouble. . . ."

This problem, which has been called ‘The Bagehot Problem’ would be avoided if the lender of last resort followed Bagehot’s advice — in offering support only to solvent institutions at penalty rates.

Bagehot proposed that central banks could avoid this fate by only helping solvent banks and by doing so at penalty rates! 

But in reality, the Federal Reserve and central banks never follow Bagehot's advice, which is why I find it so unusual that a Bagehot reader would use Bagehot to justify policies Bagehot would find despicable.

David on His Way Out

Maybe this is why the founders and framers of the Constitution didn't want a central bank? 

The Federal Reserve is some kind of central bank or blight on the nation?
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Deenie
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Year of Karma ~ 2009


« Reply #1 on: September 02, 2009, 09:25:52 PM »

WhiskeyG,

I skimmed your post. I have to say that if " You" personally were to go out on your street and take a camera (recording device for video) ..And you randomly asked People questions ..You would be amazed by their answers.
Like for Example Jay Leno goes out and asks random questions and He shows those who give the most  responses ( or he did).
If you Wg were to ask people on your street - Who is the Federal Reserve?
What is the Federal Reserve?

Now I noticed this over two years ago on CNN and other cable news that they were not using the proper terms of Federal Reserve when speaking to the public. They coined it to be " THE FED" now correct me if I am wrong.  FED means Federal Govt. Which the Federal Reserve is no part of.  It is a separate deity and has no affiliation with the White House nor our Govt.
 
How Many people though Know this? If its being pumped and stated within Media they are THE FED ?  In the masses...who are they to question it? If they within do not investigate?

How many will ? not many because they do not Trust the Govt Period. They will leave the sleeping dog lie literally ..and complain and retch about it to all that they know. This is what uniformed people do. They forget that they have " personal power of research and reading" - It is much easier to sit and B@tch ..than it is to attempt to gain knowledge.
Now why is that ?

Because People in general do not question (as much as they hate/no trust for Govt right now). They feel that they are faceless/nameless and can do nothing to change what is ........ its much easier to complain with ones mouth to others local... than it is to write a letter to the powers that be. Why? Because for many years it is has been punched into our heads that IF YOU John/Jane Public cause a Stir within the GOVT  - you will become Watched. You will then be what is Anti Govt and or labeled. That is what is and felt by most.
How is that? It has been transcended via media for the most part. The Media has said for years - If you make waves your out.
Now the Media is owned by few people within the World and they Are even more powerful than our Govt. The Media owned by the Elite that spear head all of our minds daily, hourly, by the min with their soldiers of " Truth " highly paid Cyber Puppets. - the People who sit and read the dialog from their Desk that are now considered to the the all knowing - Gag me. They should be labeled as Puppets/Influence to the Masses. They report nothing. They Read teleprompters period. They simply read and spew what is before them. They do it for the $$$ and the prestige and the God feeling of respect from the % of tiny minded USA people who sit on their word as Truth. Most of the time as I watch them on the cable news - they don't even pay attention to what they are reading. They read about a Death or a Murder as if they are talking about a used shoe. No emotion. No nothing. They just Read what is before them.

But People actually consider them to be Celebrity and or Rock Star Journalists.
That OMG these People who are News " Reporters" actually tell the world " I am on Vacation" but you can follow me on Twitter ......... ARE YOU KIDDING ME?
I saw that the other night on CNN. I almost puked. That a CNN person was on vacation - yet was Available to All 24/7 - that he could be followed on Twitter and or Facebook if he was Needed or was to be contacted. 

 

Now How do you Expect the Ave Person to Really Care about or Know About the Federal Reserve? 

I am playing devils advocate. Not to you but for you to chew on. I know YOU know better.
Your a Wise Open Minded Monkey
 
 
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