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Post by turbonium on Aug 30, 2005 21:57:03 GMT -4
I am completely opposed to your position. I am opposed to the centralization, nationalization, or socialization of economic functions and that includes banking and the money supply. You recommend that the Fed take that last step towards full socialization. I think that is the wrong direction to move. I argue for a private, non-central banking system in which the money supply is constrained by reserves of specie. No, I recommend that the Fed be abolished. And the system already is centralized to the hilt. The Fed is the sole group mandated with the issuance and control of currency. It's 12 regional banks are private, but act as one in all their policies, not as independent entities. I assumed you were opposed to the Fed - do you support their continued existence?
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Post by turbonium on Aug 30, 2005 22:22:15 GMT -4
The 260+ million ounces of monetary gold supply is still owned by the U.S. Treasury. If we moved back to a gold standard, these gold assets would become the possession of the private banking system. Banks would be obligated once again to redeem currency and deposits in gold. In effect, if you held a dollar bill, or if you had a dollar in a bank account, you would have rights to a particular weight of gold.Do we really have that much gold in the Treasury? www.gata.org/gold_reserves.html This link is to an article regarding the gold reserves. Below is a quote from it... "Hard as it is to fathom, it appears that much of America's gold is essentially gone or in severe jeopardy," says Gold Anti-Trust Action Committee Chairman Bill Murphy.The Special Drawing Rights (SDR's) are Gold Certificates which are issued by the Treasury against the actual gold reserves. But the Exchange Security Fund (ESF) was given the rights to issuing SDR's. The SDR certificates on the books of the U.S. Treasury Department's Exchange Stabilization Fund, by the end of 2000, had dwindled from 9,200 millions to 2,200 millions. Given that there are 35 SDR's per ounce of gold, this reduction in the SDR certificate account equates to 227.7 million ounces, or 87 percent of the U.S. Gold Reserve...."
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Post by turbonium on Aug 30, 2005 22:51:09 GMT -4
You have yet to describe how a central planning committee could effectively monitor and regulate the money supply. If you could solve that problem, a Nobel prize in economics awaits you. I don't see this as an impossible task to establish. The key to any independent monitoring body is its transparency and accountability to the public. The Government, historically, has constantly meddled in matters of the economy and most other societal institutions. Our system can only be as efficient as the public remains steadfast and vigilant towards ensuring no interference and manipulations by its elected representatives. There is no secret as to the reasons for the spiralling increase of the national debt. But a majority of the people don't know about it, nor that it can be fixed. The solutions most espoused in the main media attempt to treat the symptoms of the disease, not the actual cause of it.
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Post by turbonium on Aug 30, 2005 23:01:18 GMT -4
When it comes to economic functions, don't you think it is better to implement a free system over a non-free one? Why force everybody to use a single banking system when we can have a system where we consumers decide which banks get our business? Yes, I do - in principle. The current system is not a free system. The question remains - how we can establish a specie currency when the precious metals do not seem to be in adequate public (Gov't) control of supply to support it? I would definitely advocate this system over a fiat currency, if there were a method of eliminating the current problem of monopolistic control of precious metals. That would at least be a start in the right direction toward solving our current dilemma.
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Post by Joe Durnavich on Aug 31, 2005 22:12:09 GMT -4
No, I recommend that the Fed be abolished. And the system already is centralized to the hilt.
But why carry over one of its problem areas--centralization--into your replacement system? Or, are you saying the structure of the Fed is sound, and that the problem is with the people who run it and their operating in secrecy?
Our system can only be as efficient as the public remains steadfast and vigilant towards ensuring no interference and manipulations by its elected representatives.
There is no way the public could maintain actual vigilance in your system because the average person has no knowledge of how to run a national banking system that must serve the needs of this vast country. I personally would have no idea how much the money supply should be increased or decreased on any given day, so I couldn't tell if your Central Banking Committee was making the right decisions or not. With zero-interest rates, the demand to borrow money from your banking system will be intense, to say the least. The money will run out quick and many, many people will have to be turned away. I would have no way of knowing if the Committee was lending money to the right people.
But the average person does know a good interest rate when he or she sees one. The average person can find out which banks in the community are financially successful and have good reputations, etc. The average person will seek out the best bank in the area to save with or borrow from. The combined actions of these thousands or millions of individuals put pressure on competing banks to act in the community's or the nation's best financial interests. This is how the private marketplace maintains vigilance.
The question remains - how we can establish a specie currency when the precious metals do not seem to be in adequate public (Gov't) control of supply to support it?
We don't want public control of the gold supply. The idea behind gold standards is that however imperfect they are and however much gold fluctuates, it is still less than the fluctuation that occurs under pure political control of the money supply.
I would definitely advocate this system over a fiat currency, if there were a method of eliminating the current problem of monopolistic control of precious metals.
With the 260 million ounces (or whatever) of gold back in our hands, in a fractional manner of speaking, there might not be any effective monopolistic control of gold.
Note that gold is only one possibility. I chose it because it has historical precedent. (And let's be honest: I'm just a computer programmer. Nobody in their right mind would let me re-engineer the country's monetary system.) With truly free banks, the market would decide what commodities to use, if any.
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Post by turbonium on Sept 1, 2005 0:22:35 GMT -4
There is no way the public could maintain actual vigilance in your system because the average person has no knowledge of how to run a national banking system that must serve the needs of this vast country. I personally would have no idea how much the money supply should be increased or decreased on any given day, so I couldn't tell if your Central Banking Committee was making the right decisions or not. There are certainly indicators that could be published in the daily papers and on the TV news, that would show the direction of the economy. Inflation is already monitored, as an indicator of money supply. The national debt hurts us and the public needs to know that it is through the interest the Fed charges on loans that our taxes are ever skyrocketing - to pay this massive interest on the debt.
With zero-interest rates, the demand to borrow money from your banking system will be intense, to say the least. The money will run out quick and many, many people will have to be turned away. I would have no way of knowing if the Committee was lending money to the right people.
With a progressive elimination of the tax burden, people and businesses will decrease in their need for loans, and also be able to repay any loans they do require.much more expeditiously. It won't happen overnight, but a gradual process can be implemented to avoid the possibility of sudden money supply shortages.
But the average person does know a good interest rate when he or she sees one. The average person can find out which banks in the community are financially successful and have good reputations, etc. The average person will seek out the best bank in the area to save with or borrow from. The combined actions of these thousands or millions of individuals put pressure on competing banks to act in the community's or the nation's best financial interests. This is how the private marketplace maintains vigilance. I don't see money as a commodity to be shopped for. I see it as a tool of commerce, best used for its original function - an entity of convenience for exchange of goods. Investments, of course, are the best method of making money work to your benefit - that would still exist in the system I advocate.
Shopping for the lowest interest rate is like being in a room with 20 guys holding hammers, and you can't leave until one of them hits you on the head with one. You try and find the guy with the smallest hammer.
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Post by turbonium on Sept 1, 2005 0:34:50 GMT -4
But why carry over one of its problem areas--centralization--into your replacement system? Or, are you saying the structure of the Fed is sound, and that the problem is with the people who run it and their operating in secrecy? No, it's the system I oppose, not who runs it. The stupidity of paying interest on our own money to some group that does nothing but print it and loan it to us drives me crazy. Allowing it to continue unabated infuriates me to no end. I am no fan of centralization by any means, and I would not be opposed at all to regionalized banking, if it can be efficiently operated. I am also not a fan of Gov't running the system, but if it is privately run, the public has fewer avenues to not only monitor policies but also to any responses to requests for any changes to the system.
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Post by turbonium on Sept 1, 2005 0:36:56 GMT -4
With the 260 million ounces (or whatever) of gold back in our hands, in a fractional manner of speaking, there might not be any effective monopolistic control of gold. Now that you know we really don't have the gold that it has been claimed we have, how do you propose we get it back in our hands?
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Post by Joe Durnavich on Sept 1, 2005 15:54:38 GMT -4
Now that you know we really don't have the gold that it has been claimed we have, how do you propose we get it back in our hands?"Really don't"? It looks like you have been fooled by a conspiracy theorist once again. The guy who did that "research" about the ESF and about SDRs being gold certificates doesn't know what he is talking about. Neither have anything to do with gold: US Treasury FAQ on Gold and SilverA quick check of the Fed shows them holding $11.041 billion in gold certificates and the US Treasury holding $10.924 billion in gold reserves. Those are close enough that I am not going to expend the effort to track down the difference. (In ounces, the Treasury holds 258+ million ounces of gold.)
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Post by Joe Durnavich on Sept 1, 2005 21:13:22 GMT -4
Regarding how the public vigilance can be effective in Turbonium's socialized banking system:
There are certainly indicators that could be published in the daily papers and on the TV news, that would show the direction of the economy. Inflation is already monitored, as an indicator of money supply.
How do a hundred million people make their wishes known to the Central Planning Committee? A hundred million faxes and e-mails every few months or so?
With a progressive elimination of the tax burden, people and businesses will decrease in their need for loans,
Printing up tax money does not eliminate tax burden. This is what the Massachusetts colony tried. The government printed up bills of credit and bought goods with them. Each good that was handed to the government was a tax payment.
My point, though, was that you have a zero interest rate. People will always borrow when the rates are low enough, and zero is always low enough. If you don't believe me, let me give your phone number to some of my relatives and I'll tell them you will loan them money for no interest.
and also be able to repay any loans they do require.much more expeditiously.
With your zero interest rate scheme, people will simply borrow more to make their loan payments. They would be crazy not to.
It won't happen overnight, but a gradual process can be implemented to avoid the possibility of sudden money supply shortages.
Sure, by printing up more money.
I don't see money as a commodity to be shopped for. I see it as a tool of commerce, best used for its original function, an entity of convenience for exchange of goods.
Tools of commerce and entities of convenience are commodities too. Money has value to producers and consumers and this value can be expressed in interest rates. People do "shop" for money.
Investments, of course, are the best method of making money work to your benefit - that would still exist in the system I advocate.
Aren't you arguing for the abolishment of profits made off of other people's money? If so, how will one earn by investing?
Shopping for the lowest interest rate is like being in a room with 20 guys holding hammers, and you can't leave until one of them hits you on the head with one. You try and find the guy with the smallest hammer.
You take too much of the good life capitalism offers you for granted. When you walk into the supermarket and you see 6 different brands of toilet paper, that is not a case of 6 toilet paper manufacturers out to hit you on the head with a hammer. You should be thankful there is such a ready supply of toilet paper. That is not the natural state of affairs. Because the suppliers have a chance to earn profit from you the consumer, they are motivated to produce the product. Likewise, the chance to earn profit from interest is what motivates bankers to pool savings and investments and make it available for lending.
I am also not a fan of Gov't running the system, but if it is privately run, the public has fewer avenues to not only monitor policies but also to any responses to requests for any changes to the system.
This is not the case at all. Just look at any of the financial markets. There are all sorts of avenues available to monitor the company performance. Change requests are made in the form of lower profits, falling stocks, etc. In the private market, you have the option of taking your business elsewhere. That sends signals that are expressed eventually on balance sheets and income statements.
How will the requests from a hundred million people (or whatever) be conveyed to and acted upon by a Central Committee?
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Post by turbonium on Sept 2, 2005 21:39:13 GMT -4
How do a hundred million people make their wishes known to the Central Planning Committee? A hundred million faxes and e-mails every few months or so? No - it could be done through regional representation, much like Congress, but independent and given the sole mandate of monitoring economic policies and acting on public referenda of the region.
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Post by turbonium on Sept 2, 2005 21:41:44 GMT -4
Printing up tax money does not eliminate tax burden No - but eliminating the payment of needless interest towards the national debt will eliminate the greatest portion of the tax burden.
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Post by turbonium on Sept 2, 2005 21:45:15 GMT -4
With your zero interest rate scheme, people will simply borrow more to make their loan payments. I don't advocate a free-for-all money grab by every John Q. Public that comes in for a loan. There still have to be restrictions on loans and requirements for repayments on primary loans before allowing secondary loans.
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Post by turbonium on Sept 2, 2005 22:00:52 GMT -4
Aren't you arguing for the abolishment of profits made off of other people's money? If so, how will one earn by investing? No, it's the punishing of people who need money that I abhor. A loan made with interest is made to those who need money. An investment as a venture capitalist would make is using money one already has in hopes of a return on that investment. Say I invest $50,000 to help finance a business that I see as successful in 5-7 years. That is my money being "loaned" to the business - but not with a requirement for repayment of principle with interest. If the company becomes profitable, the investment can return dividends to me and I can make money as a result. But if the company goes under, I have lost my money. That's the nature and risk of private investment. Nothing wrong with that, as the investor I wilfullly risked my money knowing I may lose it in the end. And, as opposed to the business owner possibly having his house taken by the bank (as he had to put it up as collateral for his loan) if he defaulted, he is only obligated to liquidate his business assets to pay any vendors for outstanding payables, and then he is back at square one, but still owning his home. His assets from a bank sale may cover a portion of his bank loan, but likely would not.
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Post by turbonium on Sept 2, 2005 22:11:45 GMT -4
You take too much of the good life capitalism offers you for granted. When you walk into the supermarket and you see 6 different brands of toilet paper, that is not a case of 6 toilet paper manufacturers out to hit you on the head with a hammer. You should be thankful there is such a ready supply of toilet paper. That is not the natural state of affairs. Because the suppliers have a chance to earn profit from you the consumer, they are motivated to produce the product. Likewise, the chance to earn profit from interest is what motivates bankers to pool savings and investments and make it available for lending. A free market economy gives us the choice to find the best price for goods. Absolutely as it should be. But banks take advantage of the public - they all profit enormously from the public need. If there were a true free enterprise banking system, you would see interest rates on loans much lower than exist today. And there would be some that are successful, some that are not and go under. That only happens to the small banks which are bought out by the large monopolist banks as they grow in power and control of the market, further eliminating choice for the public. That is the stark reality of today, with larger and larger bank mergers, and less choice for all of us.
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