Over 90% of our money is "magically" created by banks loaning money to us... Issues Beyond Palo Alto, posted by You Won't Believe It, a resident of the Green Acres neighborhood, on Jun 6, 2007 at 2:42 pm
Want to delve into the specific mechanics of money creation in the USA? Here's a 47-minute video explains our perverse money system:
Posted by George, a resident of the Professorville neighborhood, on Jun 6, 2007 at 10:39 pm
A cute little piece that ignores supply and demand, especially of trust. It was a real zero summer. It equates increased human desires with diminishing natural resources ( a real croc!). Above all, it is a paean to government control. It is the basic Soviet Union model. How many millions need to be slaughtered unitl the basic lesson that command economies create commanders that command death?! I will take the free market of credit and money any time over this egregious model of death. Sorry I wasted my time - I was expecting something real.
Posted by George, a resident of the Professorville neighborhood, on Jun 7, 2007 at 12:18 am
As a starter, start with Adam Smith, then go to Max Eastman. You might then want to cruise through the Paul Ehrlich vs. Julius Simon debate about resource depletion. Before you get too tired, read some accounts of the mass murder that the socialists have committed (Lenin, Stalin, Hitler, Mao, Pol Pot, Ho...).
Assuming you support this little film clip, please explain why supply and demand was barely mentioned? Why the emphasis on the demise of the gold standard, without mentioning that real goods and services are much more valuable to a modern economy? Why no mention of the consolidation of power by government contollers of the economy?
This puppy died a long time ago. It is cannot be resusitated.
Many millions of people, today, could attribue their histories of financial and economic success, along with a better life style, one that does not use as many resources as would be expected on a static basis, to the availability of private debt. The modern industrial and post-industrail state thrives on the opportunities provided by such debt.
Posted by You Won\'t Believe It, a resident of the Green Acres neighborhood, on Jun 7, 2007 at 5:27 am
If you're really eager to return to gold-backed currency, you might wish to consider the candidacy of Congressman Ron Paul. He's written an entire book endorsing gold-backed currency. He's a former Libertarian running as a Republican, he's anti-war, anti-choice (i.e., let the states decide), and he has a documented history of bold public displays of good-ole-boy racism.
Something for nearly everyone it seems.
I won't be voting for him, however, I've had it up to here with political nobodies arising out of Texas.
Posted by George, a resident of the Professorville neighborhood, on Jun 7, 2007 at 10:07 am
The clip is a socialist tract, pure and simple. That is why it does not factor in supply and demand. Its 'answer' to the charging of interest and private banking, if one wants to call it an answer, is government control of the economy. It was this belief in state power that created the Stalins and Hitlers of our world.
Modern economies are enhanced by credit. If a young Steve Jobs told a banker that he had an idea for a personal computer, and the banker felt confident about him, the banker would make the loan (with interest). Jobs had something better than gold, an IDEA. He also had the freedom to pursue private credit, unlike in a socialist system.
Supply and demand are at work at all levels of a modern economy, from the level of natural resources and labor to confidence, money supply, credit availabity, interest rates, etc. In the end, it is the level of confidence in markets that creates available credit. Gold and other tangible assets are not necessary, except as a psychological prop. That is why the amount of gold in Ft. Knox his little bearing on the size of the U.S. economy.
Read Milton Friedman's "Capitalism and Freedom". It's a good place to start.
Posted by George, a resident of the Professorville neighborhood, on Jun 7, 2007 at 3:46 pm
The Fed was a political compromise in the early part of the 20th century to try to avoid financial 'panics'. It was, and is, a cobbled together thing, but many people believe in it, so it does contribute to stability in the financial markets. I would not get rid of it, at this point, but I would support alternative markets (free markets), where the loan/deposit ratio is determined by the free market. Essentially, that is what the stock market is, so I suppose we have about as much as can be expected.
The fundamental point, from my perspective, is that confidence runs up or down according to productivity and demand in the various markets. There are winners and losers. It is called freedom. The Fed responds to these trends, but it is slow to do so. Many people like it that way (9:1 ratio set in place); I prefer to let the ratio float according to supply and demand. I am in the minority, I can assure you.
Posted by R Wray, a resident of the Palo Verde neighborhood, on Jun 7, 2007 at 6:34 pm
How can you say that the Fed contributes to stability? Bernake twitches and the market drops 400 points. The Fed was probably the greatest cause of the '29 crash. (Other government regulations were also important.)
The Fed affects the complete market and thereby causes wild swings. Without the Fed, some market sectors might have ups and downs, but not necessarily at the same time. Large swings would be unusual.
In my opinion, markets would be able to plan better and more long range if they didn't have to worry about the arbitrary actions of the Fed.
Posted by George, a resident of the Professorville neighborhood, on Jun 7, 2007 at 6:55 pm
If enough people believe in the Fed, then it is a stabililizng factor. You don't mentions all the panics that didn't happen, because of the Fed.
The Fed is a concoction of populists/capitalist bankers/politicians pork barrel, influence peddling, etc. It is what it is, and from a political point of view, it is likely to stay that way.
People who try to read the tea leaves on Fed chairmen, are delusional. Nevertheless, they are out there. More serious investors look deeper into the trends. Really serious investors look at the fundmentals of the long term market, and ignore the current trends.
There are many markets out there (a very good thing!), so pick and choose your favorite flavor. The Fed is not an 800 lb gorilla, unless you choose to make it one.
Posted by George, a resident of the Professorville neighborhood, on Jun 7, 2007 at 7:33 pm
This is from Bernanke about three weeks ago:
"Credit market innovations have expanded opportunities for many households. Markets can overshoot, but, ultimately, market forces also work to rein in excesses. For some, the self-correcting pullback may seem too late and too severe. But I believe that, in the long run, markets are better than regulators at allocating credit."