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Milton Friedman on the Great Depression

Canell

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Thoughts, comments anyone? :)
 
So he blames "government" for the failures of private business to keep it in its own pants.. that is like blaming a rape victim for being raped...

plus.. the Federal Reserve is as good as private.. and was especially back in the 1920s.

He has always been a borderline hack on some issues because of his narrowminded focus on defending the private sector against "government".
 
So he blames "government" for the failures of private business to keep it in its own pants.. that is like blaming a rape victim for being raped...

plus.. the Federal Reserve is as good as private.. and was especially back in the 1920s.

He has always been a borderline hack on some issues because of his narrowminded focus on defending the private sector against "government".

I'm sure it's just a wild coincidence that it happened after the first big cheap credit push by the federal reserve in the 20's. If only they had pumped more money at it, we would've been alright!

How is this anything like a rape victim? That was possibly the worst analogy I've ever heard. The federal reserve is the one in power, taking credit for any progress, while shifting any blame onto others.

Some genius banker thought of a great idea: create a government organization that can loan only to banks and billionaires at sub-market interest levels, so that the banks could turn around and reloan that same taxpayer funding to the taxpayers at a much higher interest rate, essentially giving them free money. Then, if the banks make terrible investments, that same tax payer funded organization can just bail them out. I think you missed the mark on who is ****ing who here.

The fed was made by private bankers, for private bankers.
 
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Thoughts, comments anyone? :)


Ben Bernake agreed in part with Friedman but more recent research since Friedman and Swartz wrote their excellent book in 1960, now points to the gold standard and international monetary policies as the cause. Because lets not forget, the US wasn't the only country suffering from the depression. What the new research showed was that the economy of countries that went off the gold standard recovered more quickly than those that didn't. The Feds even at one point argued that because of the gold standard their hands were tied because by law they couldn't print any more money than what was held in reserves.

Very informative speech....

FRB: Speech, Bernanke--Money, Gold, and the Great Depression --March 2, 2004
 
Ben Bernake agreed in part with Friedman but more recent research since Friedman and Swartz wrote their excellent book in 1960, now points to the gold standard and international monetary policies as the cause. Because lets not forget, the US wasn't the only country suffering from the depression. What the new research showed was that the economy of countries that went off the gold standard recovered more quickly than those that didn't. The Feds even at one point argued that because of the gold standard their hands were tied because by law they couldn't print any more money than what was held in reserves.

Very informative speech....

FRB: Speech, Bernanke--Money, Gold, and the Great Depression --March 2, 2004

Hrm... yeah... I guess it's better for all of us if the banks get near zero interest rates subsidized by our taxes (or dollar value if printing money), so that they can turn around and loan to us common-folk at 6%.

And somehow the solution for most of the left is to raise taxes instead of eliminating the unfair practice in the first place. How could we ever survive without a big master market manipulator controlling our economy and handing sacks of money to billionaires?
 
I'm sure it's just a wild coincidence that it happened after the first big cheap credit push by the federal reserve in the 20's. If only they had pumped more money at it, we would've been alright!

How is this anything like a rape victim? That was possibly the worst analogy I've ever heard. The federal reserve is the one in power, taking credit for any progress, while shifting any blame onto others.

Some genius banker thought of a great idea: create a government organization that can loan only to banks and billionaires at sub-market interest levels, so that the banks could turn around and reloan that same taxpayer funding to the taxpayers at a much higher interest rate, essentially giving them free money. Then, if the banks make terrible investments, that same tax payer funded organization can just bail them out. I think you missed the mark on who is ****ing who here.

The fed was made by private bankers, for private bankers.

Hmm we agree some what.. my point is that, it was the bankers who ****ed up and that caused the problem, not "government regulation", since there was pretty much non of that. What Friedman is and did try to do, is what many on the right do.. blame some mythical government for the private sectors failures and the failures of the free market.
 
Imo, Friedman was right on what caused the stock market crash......it's quite a kicker.....


"....Friedman and Schwartz emphasized at least four major errors by U.S. monetary policymakers. The Fed's first grave mistake, in their view, was the tightening of monetary policy that began in the spring of 1928 and continued until the stock market crash of October 1929 (see Hamilton, 1987, or Bernanke, 2002a, for further discussion). This tightening of monetary policy in 1928 did not seem particularly justified by the macroeconomic environment: The economy was only just emerging from a recession, commodity prices were declining sharply, and there was little hint of inflation. Why then did the Federal Reserve raise interest rates in 1928? The principal reason was the Fed's ongoing concern about speculation on Wall Street. Fed policymakers drew a sharp distinction between "productive" (that is, good) and "speculative" (bad) uses of credit, and they were concerned that bank lending to brokers and investors was fueling a speculative wave in the stock market. When the Fed's attempts to persuade banks not to lend for speculative purposes proved ineffective, Fed officials decided to dissuade lending directly by raising the policy interest rate.
The market crash of October 1929 showed, if anyone doubted it, that a concerted effort by the Fed can bring down stock prices. But the cost of this "victory" was very high. According to Friedman and Schwartz, the Fed's tight-money policies led to the onset of a recession in August 1929, according to the official dating by the National Bureau of Economic Research. The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October. In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it. Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930....."
FRB: Speech, Bernanke--Money, Gold, and the Great Depression --March 2, 2004



And there it is....the feds were worried that people were speculating too much and decided to pull the rug out from under the market by raising interest rates....and the walls came tumbling down.
 
Hmm we agree some what.. my point is that, it was the bankers who ****ed up and that caused the problem, not "government regulation", since there was pretty much non of that. What Friedman is and did try to do, is what many on the right do.. blame some mythical government for the private sectors failures and the failures of the free market.

Not really, he's blaming the government because they were bought by these billionaires like packs of cigarettes. It's a scheme that is obviously extremely advantageous to bankers, and we're being sold a propaganda campaign about how terrible our lives would be without the fed sucking the nuts of the mega rich.

When someone in the private sector buys someone in our government, I tend to be more upset with the government, because they are the ones who are supposed to represent us, and can use the force of law. The private sector doesn't have an obligation to me, and I don't have any obligation to them. I only have one government.

Imo, Friedman was right on what caused the stock market crash......it's quite a kicker.....

The principal reason was the Fed's ongoing concern about speculation on Wall Street. Fed policymakers drew a sharp distinction between "productive" (that is, good) and "speculative" (bad) uses of credit, and they were concerned that bank lending to brokers and investors was fueling a speculative wave in the stock market. When the Fed's attempts to persuade banks not to lend for speculative purposes proved ineffective, Fed officials decided to dissuade lending directly by raising the policy interest rate.

And why did they have all of this cheap credit to speculate wildly with? The fed. Throw that in with a "Don't worry if you go bankrupt, bro, we got you", and the problem seems pretty obvious.
 
Hrm... yeah... I guess it's better for all of us if the banks get near zero interest rates subsidized by our taxes (or dollar value if printing money), so that they can turn around and loan to us common-folk at 6%.

That is the result not the symptom. Near zero interest rates is a monetary attempt to save the banking industry and kick start the economy. The banks have been saved but the economy has not been kick started.. because the banks are abusing the system to generate record profits. The irony is, that the banks have just replaced their money train from sub-prime with this.. and the politicians could care less. Even state owned banks in the UK are massively abusing the system.

And somehow the solution for most of the left is to raise taxes instead of eliminating the unfair practice in the first place.

No, that is the typical right wing response.. blaming the left. The left wing response is to attempt to enforce regulation on the books or add more red tape, so that this can be prevented in the future.... where as we saw what the right wing idea did ... as it was that idea that caused ultimately the crisis in the first place. .. no regulation is bad...

How could we ever survive without a big master market manipulator controlling our economy and handing sacks of money to billionaires?

Hey the right had 6 years of absolute power to deal with this.. but what did they do? Nothing.. in fact they encouraged even more... and have been since Reagan.
 
Not really, he's blaming the government because they were bought by these billionaires like packs of cigarettes. It's a scheme that is obviously extremely advantageous to bankers, and we're being sold a propaganda campaign about how terrible our lives would be without the fed sucking the nuts of the mega rich.

When someone in the private sector buys someone in our government, I tend to be more upset with the government, because they are the ones who are supposed to represent us, and can use the force of law. The private sector doesn't have an obligation to me, and I don't have any obligation to them. I only have one government.

The bold part.. HAHAHAHAH they have not been that since forever. They are the puppets of big business pure and simple.
 
That is the result not the symptom. Near zero interest rates is a monetary attempt to save the banking industry and kick start the economy. The banks have been saved but the economy has not been kick started.. because the banks are abusing the system to generate record profits. The irony is, that the banks have just replaced their money train from sub-prime with this.. and the politicians could care less. Even state owned banks in the UK are massively abusing the system.



No, that is the typical right wing response.. blaming the left. The left wing response is to attempt to enforce regulation on the books or add more red tape, so that this can be prevented in the future.... where as we saw what the right wing idea did ... as it was that idea that caused ultimately the crisis in the first place. .. no regulation is bad...



Hey the right had 6 years of absolute power to deal with this.. but what did they do? Nothing.. in fact they encouraged even more... and have been since Reagan.

Massively abusing the system? The system was created by a group of bankers specifically to be used for that purpose. 2008 is a prime example, all of the banks and insurance agencies got bailed out while the rest of America got hung out to dry.

Don't get me wrong, the right is just as bad but I think "just raise the taxes on rich people" is a pretty terrible solution that doesn't even address the original problem.

The bold part.. HAHAHAHAH they have not been that since forever. They are the puppets of big business pure and simple.

You can try to call the fed private, but whoever does is simply wrong. They have a charter to print and manipulate our currency at will. Such power can only come from government.
 
Hrm... yeah... I guess it's better for all of us if the banks get near zero interest rates subsidized by our taxes (or dollar value if printing money), so that they can turn around and loan to us common-folk at 6%.

And somehow the solution for most of the left is to raise taxes instead of eliminating the unfair practice in the first place. How could we ever survive without a big master market manipulator controlling our economy and handing sacks of money to billionaires?

Hoover was a conservative free market laizze fair republican and it was his tight monetary policy that exacerbated what should have just been a small recession into a full blown depression. He didn't start spending and injecting money into the economy until it was too late.
 
Massively abusing the system? The system was created by a group of bankers specifically to be used for that purpose. 2008 is a prime example, all of the banks and insurance agencies got bailed out while the rest of America got hung out to dry.

No ****.. but saying that, had the banks not been bailed out, then the rest of America would have been far worse off... Having all major banks go under would have gutted the US economy overnight.

Don't get me wrong, the right is just as bad but I think "just raise the taxes on rich people" is a pretty terrible solution that doesn't even address the original problem.

"raise the taxes on rich people" is something the voters understand and that is the point. It is a political ploy to satisfy the masses, but it also has the goal of actually trying to improve the system by not allowing the wealthy to pay less in % than the masses.. which is EXACTLY what they do now. The right is bad at history and always has been.. they have already forgotten why Lenin came to power, why the French Revolution happened and even the American Revolution.... that there was a few rich privileged and a mass of poor people. And then there is the rights ability to manipulate the truth... like with Buffet and his secretary, where a real world example of how wacked out your tax system is.. was turned and twisted into a massive attack on Buffet.

You can try to call the fed private, but whoever does is simply wrong. They have a charter to print and manipulate our currency at will. Such power can only come from government.

I agree.. which is why that happens in most countries..
 
....And why did they have all of this cheap credit to speculate wildly with? The fed. Throw that in with a "Don't worry if you go bankrupt, bro, we got you", and the problem seems pretty obvious.

Because the banks were lending. It's almost like people taking out home equity loans when home prices were skyrocketing and using the money for vacations, new cars, etc.. People were using their homes as a line of credit to gamble with and then guess what happened? Greenspan raised interest rates. Thats what the Feds did in 1929, too.
 
No ****.. but saying that, had the banks not been bailed out, then the rest of America would have been far worse off... Having all major banks go under would have gutted the US economy overnight.
Then there's something fundamentally wrong with our financial system, and it should be changed. ****'s pretty bad when you have to bail out billionaires for the "good" of the citizenry.


"raise the taxes on rich people" is something the voters understand and that is the point. It is a political ploy to satisfy the masses, but it also has the goal of actually trying to improve the system by not allowing the wealthy to pay less in % than the masses.. which is EXACTLY what they do now. The right is bad at history and always has been.. they have already forgotten why Lenin came to power, why the French Revolution happened and even the American Revolution.... that there was a few rich privileged and a mass of poor people. And then there is the rights ability to manipulate the truth... like with Buffet and his secretary, where a real world example of how wacked out your tax system is.. was turned and twisted into a massive attack on Buffet.

Why does it even matter what the tax rate is if any banker can get a near zero interest guaranteed loan that he can turn around and resell at a massive markup?

I agree.. which is why that happens in most countries..
The best example would be if I were the government and I came to you and said "Pete, you are NOT the government, but I'm giving you all the powers and more of the government, but none of the oversight and responsibility."

At an absolute minimum we should have regular and complete audits of the fed. We deserve to know what they are doing with OUR money.


Hoover was a conservative free market laizze fair republican and it was his tight monetary policy that exacerbated what should have just been a small recession into a full blown depression. He didn't start spending and injecting money into the economy until it was too late.

LOL, the depression was all Hoover's fault! If only they had thrown more money at it, everything would've been kosher.

Classic.

Because the banks were lending. It's almost like people taking out home equity loans when home prices were skyrocketing and using the money for vacations, new cars, etc.. People were using their homes as a line of credit to gamble with and then guess what happened? Greenspan raised interest rates. Thats what the Feds did in 1929, too.

I'm sorry, this rhetoric has gotten too stupid for me. You've shifted the blame on to the average American because they were obviously gambling it all away. Definitely wasn't the bankers!
 


Thoughts, comments anyone? :)


Cut me a break. His thesis is that since the Federal Reserve had the power to simply "print more money" that would have solved the problem back in 1929.

There would have been no problem if the regulations had not allowed a 90% margin for stock purchases so that anyone could buy stock for 10% of it's worth. As other members have stated, it is business interests who control the workings of our government, and they directed how Congress would be allowed to "regulate" their profit-making ventures. Business was just as responsible for the Great Depression as it is now for the Great Recession.

He did get one thing right, inflation is due to the Federal Reserve's power to print fiat money and flood the system with excess capital thus reducing the overall value of currently existing monetary amounts. Yet it is Investment Banking and Corporate interests who desired this type of fiscal policy in the first place, in order to give them more ready capital for growth and investment.

Still, the result is that corporations are even more concerned with quick and massive profits. They recognize the same thing the common worker does when it comes to the value of each dollar...it is shrinking at a fairly constant rate as more money is pushed into the market system. Thus the only way to ensure valid profit is to make as much back as possible on each and every investment opportunity. Unfortunately, you and I (members of the common working class) don't have that kind of fiscal flexibility when it comes to our personal finances.
 
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Then there's something fundamentally wrong with our financial system, and it should be changed. ****'s pretty bad when you have to bail out billionaires for the "good" of the citizenry.

No ****. The problem is "too big to fail" companies.. we have allowed the free market to do its worst... to generate into oligopoly type markets, and the government not only allows it but in many cases protects the sectors form any competition. OH and it is not only an American problem.

No, what should have been done was to make sure the bank sector did not implode, and the break up the big banks. The last part never happened and they are even more "too big to fail" today than they were in 2007-8.

Why does it even matter what the tax rate is if any banker can get a near zero interest guaranteed loan that he can turn around and resell at a massive markup?

Because the tax on the profit he makes is only 15% vs the 30% everyone else pays. Not only are you encouraging people to jump into the "banking" sector because of the much lower tax rate instead of doing an honest days work, but you are providing them with the cash to do it with. I agree that near zero interest rate is bad, but there are reasons for this... reasons that Friedman would agree with ironically. But it ends there, since the theory says lower interest rates and help banks loan money into the economy to kick start it.. problem is the banks are not loaning, because they can earn more on manipulating the markets..

For example... oil. In the 1980s under 30% of all oil contracts was bought by speculators who's only goal was to make money instead of using the oil. Today... that number is over 60%, which means the speculators can set the oil price if they joined together. And oil is just one of many commodity markets that have this problem, and it has been driving up prices world wide, making the economic crisis even worse for the average joe, since food and fuel costs have gone up and up but incomes have at best been stagnant.. but more likely fallen.

The best example would be if I were the government and I came to you and said "Pete, you are NOT the government, but I'm giving you all the powers and more of the government, but none of the oversight and responsibility.

Yep, and the US government does that all the time.. because their masters in big business says so. Look at your military and its dependence on private contractors.. not only do the private contractors often not deliver but they also overcharge big time.. and are for the most part exempt from legal action if they do abuse the system. Billions were lost in Iraq because of private sector contractors ****ing up.. but very few have been put on trial for fraud. Private contractors murdered thousands in Iraq, but have never and will never be charged or convicted.. The list goes on and on.

Just because you work for government, does not mean that you are untouchable.. and that is exactly what happens in the US government.

At an absolute minimum we should have regular and complete audits of the fed. We deserve to know what they are doing with OUR money.

Yep... although there is no "our" money.. it is the 1%s money, since most of the wealth is in the hands of the 1-5% of the population.
 
No ****. The problem is "too big to fail" companies.. we have allowed the free market to do its worst... to generate into oligopoly type markets, and the government not only allows it but in many cases protects the sectors form any competition. OH and it is not only an American problem.

No, what should have been done was to make sure the bank sector did not implode, and the break up the big banks. The last part never happened and they are even more "too big to fail" today than they were in 2007-8.



Because the tax on the profit he makes is only 15% vs the 30% everyone else pays. Not only are you encouraging people to jump into the "banking" sector because of the much lower tax rate instead of doing an honest days work, but you are providing them with the cash to do it with. I agree that near zero interest rate is bad, but there are reasons for this... reasons that Friedman would agree with ironically. But it ends there, since the theory says lower interest rates and help banks loan money into the economy to kick start it.. problem is the banks are not loaning, because they can earn more on manipulating the markets..

For example... oil. In the 1980s under 30% of all oil contracts was bought by speculators who's only goal was to make money instead of using the oil. Today... that number is over 60%, which means the speculators can set the oil price if they joined together. And oil is just one of many commodity markets that have this problem, and it has been driving up prices world wide, making the economic crisis even worse for the average joe, since food and fuel costs have gone up and up but incomes have at best been stagnant.. but more likely fallen.



Yep, and the US government does that all the time.. because their masters in big business says so. Look at your military and its dependence on private contractors.. not only do the private contractors often not deliver but they also overcharge big time.. and are for the most part exempt from legal action if they do abuse the system. Billions were lost in Iraq because of private sector contractors ****ing up.. but very few have been put on trial for fraud. Private contractors murdered thousands in Iraq, but have never and will never be charged or convicted.. The list goes on and on.

Just because you work for government, does not mean that you are untouchable.. and that is exactly what happens in the US government.



Yep... although there is no "our" money.. it is the 1%s money, since most of the wealth is in the hands of the 1-5% of the population.

I find this fascinating. You and I both agree that the federal reserve and the banks are in bed together, and that this is bad. You however don't want to change this arrangement, you just want to regulate banks more and raise taxes. The entire purpose of the federal reserve is to benefit billionaires and nobody else. It's an inherently flawed and immoral system designed to redirect value from the taxpayer/average citizen to the 1%. Can you honestly sit there with a straight face and tell me our federal reserve system is designed fundamentally well, it's just those rich banker rascals that take advantage of it?

For some reason you advocate giving this same corrupt government entity MORE power and money. For instance, to me it seems illogical to give a government that can't manage a budget MORE funding. As you pointed out with the military industrial complex example, the government is TERRIBLE at managing money, so why do you want to give them a raise by giving them more taxes?

It doesn't matter if the tax rate is 1%, 15%, 30%, or 95%, the end effect is the same: bankers get near guaranteed returns with little to no risk. They can borrow at near nothing and re-loan it out at a premium.
 
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Cut me a break. His thesis is that since the Federal Reserve can simply "print more money" that would have solved the problem back in 1929.

There would have been no problem if the regulations had not allowed a 90% margin for stock purchases so that anyone could buy stock for 10% of it's worth. As other members have stated, it is business interests who control the workings of our government, and they directed how Congress would be allowed to "regulate" their profit-making ventures. Business was just as responsible for the Great Depression as it is now for the Great Recession.

He did get one thing right, inflation is due to the Federal Reserve's power to print fiat money and flood the system with excess capital thus reducing the overall value of currently existing monetary amounts. Yet it is Investment Banking and Corporate interests who desired this type of fiscal policy in the first place, in order to give them more ready capital for growth and investment.

Still, the result is that corporations are even more concerned with quick and massive profits. They recognize the same thing the common worker does when it comes to the value of each dollar...it is shrinking at a fairly constant rate as more money is pushed into the market system. Thus the only way to ensure valid profit is to make as much back as possible on each and every investment opportunity. Unfortunately, you and I (members of the common working class) don't have that kind of fiscal flexibility when it comes to our personal finances.

What businesses? Banks, perhaps? By law banks have to keep a certain amount of reserves with the Federal Reserve and any excess reserves the Feds pay an interest on. So the banks figure they can make more money just from the interest on their excess reserves than they would lending it out at say 4% interest to small businesses and home buyers. The excess reserves are the corporation's cash deposits so they are making money just letting their trillions earn interest as well. There is no incentive for either the banks or the corporations to start loaning and investing back into the economy to create jobs or anything else because the Feds are paying them not to.
 
So he blames "government" for the failures of private business to keep it in its own pants.. that is like blaming a rape victim for being raped...

plus.. the Federal Reserve is as good as private.. and was especially back in the 1920s.

He has always been a borderline hack on some issues because of his narrowminded focus on defending the private sector against "government".

In a sense the government or in this case the FED are always responsible for what happens. Private individuals and companies are like a swarm with certain behavioral attributes but pretty much unruly and non coordinating and without a formal plan. They are quite chaotic. We employ government to make rules and other adjustments to our societal environment that allow all these people to work and play together without or at least with a minimum of hitches. Where major bad things happen, the guys and girls we employed to keep the track clear failed. There is more to it than that, but in essence?

Take the 1990s. The economy was roaring ahead and expanding with asset class prices exploding. The Chairman of the FED mused about irrational exuberance and watched, while pouring more money into the booming economy running hot. It boomed and boomed and boomed and pop went the dot.com bubble. We are still recovering.
 
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I find this fascinating. You and I both agree that the federal reserve and the banks are in bed together, and that this is bad. You however don't want to change this arrangement, you just want to regulate banks more and raise taxes. The entire purpose of the federal reserve is to benefit billionaires and nobody else. It's an inherently flawed and immoral system designed to redirect value from the taxpayer/average citizen to the 1%. Can you honestly sit there with a straight face and tell me our federal reserve system is designed fundamentally well, it's just those rich banker rascals that take advantage of it?

No no, I dont want to maintain the arrangement.. I want the Federal in the Federal Reserve to actually mean that it is Federal and the link between the banks and the national bank to be purely professional and not incestious as it is now.

You can not run a country without a national bank.. someone has to print the money, and in my opinion it should be the government in an independent organisation... independent of political meddling.

For some reason you advocate giving this same corrupt government entity MORE power and money.

No, I have never said that. I want the government to be reformed so it is by the people for the people again and not for the 1%. That is the point. You can not "dump the fed" if you do not reform the overall system in the process. And to reform the system, then you need to tackle the money in politics first since that is what ultimately creates the problem. That elected officials have to collect millions if not hundreds of millions of dollars to just get elected .. is a massive problem.

For instance, to me it seems illogical to give a government that can't manage a budget MORE funding.

Government can manage a budget.. it is the politicians who cant.. and they are the ones giving government the orders.

Yes I actively split Government from elected officials.. because I respect the people working in government because they get blamed for everything and their political leaders get none of the blame, despite it being 100% their fault.

Take waste in government.. every piece of pork and waste is due to elected politicians wanting some sort of handout for him or his friends in his constituency. Everything from the bridge to no where, to airplanes and helicopters that the military does not want or need, to funding libraries where family members get a job..

As you pointed out with the military industrial complex example, the government is TERRIBLE at managing money, so why do you want to give them a raise by giving them more taxes?

Government is not the problem, it is the political leaders of government that is the problem. Cutting "government" wont do jack**** if the political aspect of the system is not tackled.

It doesn't matter if the tax rate is 1%, 15%, 30%, or 95%, the end effect is the same: bankers get near guaranteed returns with little to no risk. They can borrow at near nothing and re-loan it out at a premium.

It does matter, politically and morally. When you have a society where income inequality is getting worse and worse, then you move closer and closer to social upheaval and problems and maybe even revolution. And that is exactly what is happening in the US today.

But yes as long as the system takes out any risk for the bankers and especially speculators, then we have a problem. That a speculator can lend billions in assets to play with at next to no risk or cost is just wrong.. especially if they manipulate the markets to generate that profit. Greece comes to mind... JP Morgan or Morgan Stanley... selling debt to Greece on the down low.. helping hiding it, and at the same time taking out insurance incase of default, and the while doing all this.. actively pushing for a default behind the scenes by advising its clients and pressing rumours that Greece was in trouble. It is that kind of double dealing we have to combat with regulation and frankly prison time.

The solution is regulation, transparency, accountability and harsh punishments.. but the right regulation with a totally independent regulator and massive fines and punishments if regulations are broken. These regulations should do one thing.. protect the consumer at all cost. That is why I support the EU stance of creating a banker funded rescue fund to bail out banks in the future. That not one banker has been thrown in jail for the sub-prime predatory lending crap in the US... is mind-boggling.
 
What businesses? Banks, perhaps? By law banks have to keep a certain amount of reserves with the Federal Reserve and any excess reserves the Feds pay an interest on. So the banks figure they can make more money just from the interest on their excess reserves than they would lending it out at say 4% interest to small businesses and home buyers. The excess reserves are the corporation's cash deposits so they are making money just letting their trillions earn interest as well. There is no incentive for either the banks or the corporations to start loaning and investing back into the economy to create jobs or anything else because the Feds are paying them not to.

Fiat money has no intrinsic value, so banks seek something that contains intrinsic value to exchange it for...real property. Yep, Land with it's attendant natural resource and infrastructure. What bank cares about interest rate accrual from the Fed, especially when they borrow at extremely low ones from the Fed in order to get higher ones from corporate and personal loans?

Consider the common worker; there is no incentive to invest in a savings account because of the extremely low interest rates offered. What's the best interest rate a common citizen can get today? Isn't it something like .03%, but on average about .015%? Back in 1973 it was 7.5%! I know this because I had a bank savings account back then at such a rate and it was NOT unusual. Now? Inflation outpaces any interest rate offered by any bank so that at the very best money in a personal savings would barely maintain the value it had when you first put it in. You definitely don't earn anything so you are forced to spend it as fast as you earn it. Even banks "saving" in the Fed realize this, so they get as much money out and into play controlling as much real property as possible while using loan interest rates to cover Fed interest repayments.

Corporations pay accountants to figure out how to finagle costs of loans into tax breaks. Meanwhile they cut production costs and invest capital in ventures offering larger returns in order to gain sufficient profits to both minimize the effects of inflation and please their investors.

As for the Feds paying them? WTF?? The Fed serves them, not the other way around. It's a massive private "personal" banker for banking interests and thus their customers...Corporations. The government serves as their bailout partner with OUR taxes.
 
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In a sense the government or in this case the FED are always responsible for what happens. Private individuals and companies are like a swarm with certain behavioral attributes but pretty much unruly and non coordinating and without a formal plan. They are quite chaotic. We employ government to make rules and other adjustments to our societal environment that allow all these people to work and play together without or at least with a minimum of hitches. Where major bad things happen, the guys and girls we employed to keep the track clear failed. There is more to it than that, but in essence?

Yes, but you dont employ government.. the bankers/1% employ government and that is the problem. In Europe there is a clear political wall between the National Bank, the banking sector and the political elite. The National Bank is "government owned" per say, but totally independent of the political aspect of government, very transparent and most importantly.. the police/parent overseer of the banking and financial sectors.

In the US, it is very different. I would claim that the political independence exists some what, but that the influence from the sectors involved is massive since their is no transparency or accountability and certainly a very incestuous relationship between the Fed and the major financial institutions. So the Fed has turned into the financial sectors personal money printer, instead of being the peoples bank so to say. And like it or not the financial sector does not have the same motivations or goals that the average Joe aka the people have.. in fact in some cases they are directly in conflict.

That is why the Fed favours big banking over main street even today and does not push for fixing main street because their main client.. the financial sector, is doing just fine with unlimited money and the ability to manipulate markets for profit and doing so with very little risk.

Take the 1990s. The economy was roaring ahead and expanding with asset class prices exploding. The Chairman of the FED mused about irrational exuberance and watched, while pouring more money into the booming economy running hot. It boomed and boomed and boomed and pop went the dot.com bubble. We are still recovering.

And that is because the Fed and the ones creating the asset bubble.. those earning trillions... were "good friends" at best, or at worst working together. And with this we are back to the idea of a government owned National Bank that is independent of everyone and has clear goals to for-fill.. low inflation, low unemployment, secure the financial sectors and so on.
 
No no, I dont want to maintain the arrangement.. I want the Federal in the Federal Reserve to actually mean that it is Federal and the link between the banks and the national bank to be purely professional and not incestious as it is now.

You can not run a country without a national bank.. someone has to print the money, and in my opinion it should be the government in an independent organisation... independent of political meddling.



No, I have never said that. I want the government to be reformed so it is by the people for the people again and not for the 1%. That is the point. You can not "dump the fed" if you do not reform the overall system in the process. And to reform the system, then you need to tackle the money in politics first since that is what ultimately creates the problem. That elected officials have to collect millions if not hundreds of millions of dollars to just get elected .. is a massive problem.



Government can manage a budget.. it is the politicians who cant.. and they are the ones giving government the orders.

Yes I actively split Government from elected officials.. because I respect the people working in government because they get blamed for everything and their political leaders get none of the blame, despite it being 100% their fault.

Take waste in government.. every piece of pork and waste is due to elected politicians wanting some sort of handout for him or his friends in his constituency. Everything from the bridge to no where, to airplanes and helicopters that the military does not want or need, to funding libraries where family members get a job..



Government is not the problem, it is the political leaders of government that is the problem. Cutting "government" wont do jack**** if the political aspect of the system is not tackled.



It does matter, politically and morally. When you have a society where income inequality is getting worse and worse, then you move closer and closer to social upheaval and problems and maybe even revolution. And that is exactly what is happening in the US today.

But yes as long as the system takes out any risk for the bankers and especially speculators, then we have a problem. That a speculator can lend billions in assets to play with at next to no risk or cost is just wrong.. especially if they manipulate the markets to generate that profit. Greece comes to mind... JP Morgan or Morgan Stanley... selling debt to Greece on the down low.. helping hiding it, and at the same time taking out insurance incase of default, and the while doing all this.. actively pushing for a default behind the scenes by advising its clients and pressing rumours that Greece was in trouble. It is that kind of double dealing we have to combat with regulation and frankly prison time.

The solution is regulation, transparency, accountability and harsh punishments.. but the right regulation with a totally independent regulator and massive fines and punishments if regulations are broken. These regulations should do one thing.. protect the consumer at all cost. That is why I support the EU stance of creating a banker funded rescue fund to bail out banks in the future. That not one banker has been thrown in jail for the sub-prime predatory lending crap in the US... is mind-boggling.

Well we agree on most things. I think the fed should in its current form be completely obliterated, replaced by, like you suggested, a fully federal agency. I think this agency should be highly regulated and controlled. It should be their job to print money to only keep up with economic growth, not to try to spur it or lend to the mega rich. It is not the government's job to be master market manipulator, it is their job to be an impartial regulator.

Where we disagree is where you split the government from elected officials. It's no different. I was in the military for 8 years, and I saw the same exact crap our politicians pull. If our unit was underbudget, we'd have to spend the money real quick at the end of the fiscal year to avoid getting a smaller budget next time. The entire system is set up to spend money indiscriminately. Inter-agency squabbling and bickering is the same thing we see in congress.

Yes, you are saying the government and politicians should get a raise, because the higher our taxes are, the more that is swallowed up by the government, not used by the people. How the hell does it help the average citizen if the government gets more money from the rich?

The government has shown they can't even handle a simpler budget, so why give them more money and make the budget more complicated? The way to income equality isn't through taxation. A good start would be to cut off the advantages the government gives the rich, such as the fed, or the laws mandating that only rich people can invest in start-up companies.

Fiat money has no intrinsic value, so banks seek something that contains intrinsic value to exchange it for...real property. Yep, Land with it's attendant natural resource and infrastructure. What bank cares about interest rate accrual from the Fed, especially when they borrow at extremely low ones from the Fed in order to get higher ones from corporate and personal loans?

Consider the common worker; there is no incentive to invest in a savings account because of the extremely low interest rates offered. What's the best interest rate a common citizen can get today? Isn't it something like .03%, but on average about .015%? Back in 1973 it was 7.5%! I know this because I had a bank savings account back then at such a rate and it was NOT unusual. Now? Inflation outpaces any interest rate offered by any bank so that at the very best money in a personal savings would barely maintain the value it had when you first put it in. You definitely don't earn anything so you are forced to spend it as fast as you earn it. Even banks "saving" in the Fed realize this, so they get as much money out and into play controlling as much real property as possible while using loan interest rates to cover Fed interest repayments.

Corporations pay accountants to figure out how to finagle costs of loans into tax breaks. Meanwhile they cut production costs and invest capital in ventures offering larger returns in order to gain sufficient profits to both minimize the effects of inflation and please their investors.

As for the Feds paying them? WTF?? The Fed serves them, not the other way around. It's a massive private "personal" banker for banking interests and thus their customers...Corporations. The government serves as their bailout partner with OUR taxes.

You're absolutely right, this is the core of the problem. Why would any bank or institution pay the average Joe any respectable interest rate if they can just borrow money from the fed for a near zero interest rate? Sadly enough that's still borrowing from Joe, but Joe doesn't benefit.

It's near impossible for the layman to find a stable investment that provides returns greater than inflation.
 
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