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Post by turbonium on Jul 15, 2005 23:26:05 GMT -4
OK, but what is the financial mechanism you recommend for creating this money that you issue gradually into the system? Are you recommending just firing up the printing presses? Yes, but first the Fed notes have to gradually replaced in the whole system at a stable rate, to avoid the problems I mentioned (inflation, etc.). It has been calculated that it can be fully implemented withing 1-2 years (my source for the estimate is the economists in the video). But yes, it's not that difficult or complicated to do - that is another myth spouted off by Fed advocates. Again, the video details it quite nicely, as well. I've read other sources for achieving this - I'll link them for you.
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Post by turbonium on Jul 15, 2005 23:42:30 GMT -4
G. Edward Griffin wrote a book called "The Creature From Jekyll Island" which explains what the Fed does to create confusion among the public. I don't agree with his answer to a new system of gold-backed currency though, as that is a limited commodity already controlled by the people who own the big banks. But his analysis regarding the current problems are very good. Below is a review of the book..
Griffin explains that these Federal Reserve checks are endorsed by the government, deposited in a Federal Reserve bank, and used to pay government expenses by checks which create the first wave of fiat (unbacked paper) money that floods into. the economy.
Recipients deposit these checks into commercial banks that are part of the Fed system. Here is where the real inflationary action is. (The Federal Reserve holds "only" seven percent of the national debt of almost $5 trillion. The 12 percent held by foreigners and the 56 percent held by Americans are not inflationary because the money used for purchase already existed.)
Commercial banks, like the Federal Reserve, also create money out of nothing -- and collect interest on it -- by multiplying every dollar deposited nine times. This amazing feat is accomplished through the device of fractional reserves, whereby the Fed allows 90 percent of deposits to be loaned out. As deposits become loans and loans become deposits, this process repeats with smaller numbers each time around. For instance, $1 million in government money (first wave) gives birth to $900,000 (second wave), which gives birth to $810,000 (third wave), etc., until the process plays itself out. Thus, the banking cartel creates an amount of money that is nine times the amount of the original government debt that made the process possible.
Griffin shows that when the original debt is added in, the Federal Reserve and the commercial banks together have created approximately ten times the amount of the underlying government debt. Since this newly created money causes the purchasing power of all money to decline, the resulting rise in prices is, in reality, a hidden tax. As Griffin puts it:
Without realizing it, Americans have paid over the years, in addition to their federal income taxes and excise taxes, a completely hidden tax equal to approximately ten times the national debt!
Griffin is atonished at the public's indiference to this fleecing; he blames it on ignorance based on disinformation.
Nothing could prove him more right than the current deception that inflation is higher prices caused by full employment-and a strong economy; therefore, letting the "steam" out of the economy and slowing growth (and thereby employment) is "good." This talk is madness. Alan Greenspan, chairman of the Federal Reserve (who has the temerity to say he is "worried about inflation"), is repeating this claptrap as he pretends to control inflation by increasing interest rates that merely devastated the bond market, clobbered the stock market, and helped only the bankers. Thus the Insiders are perfectly protected and the scam rolls on.
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Post by martin on Jul 16, 2005 1:21:49 GMT -4
You can continue to try supporting this system with your deception. So far, I do not support federal reserve system at all in this forum. I point out only when you post false information. But I will continue to expose the harsh reality of the system. And the numbers support my view. And the numbers don't lie. The truth cannot be hidden by your red herrings and disinformation. Here is some harsh reality for you: First, the Fed needs to be abolished. We have a system controlled by 12 privately owned banks who have more wealth than the rest of the country combined. They didn't get that way by "returning all profits into the government coffers", as the myth that martin likes to propagate. No numbers, like in many turbonium posts, but numbers do not lie. But numbers are not like turbonium, who here creates a quote for me which which I never said. Are your other quotes always lies also? I do not support or criticise federal reserve system here. Some one likes to abolish federal reserve system, maybe I can agree, or maybe I can not. This is an opinion. I point out only when others are lying. And you are making me very busy... Martin
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Post by turbonium on Jul 16, 2005 3:22:14 GMT -4
First, the Fed needs to be abolished. We have a system controlled by 12 privately owned banks who have more wealth than the rest of the country combined. They didn't get that way by "returning all profits into the government coffers", as the myth that martin likes to propagate. Look again at what I actually say at the top of my post. I don't quote you, I put quotations around a general description of your opinion. If I wanted to actually quote you, I'll use the quote button for posts, as usual. Anyway, your actual quotes are below. I can see why you are so upset, that you resort to accusations towards me of lying - they are so radically different than what I said!! Quote 1 Quote 2 Fact is, I'm wasting time having to clear up your false accusations, martin. Over trivial points that don't even affect the larger issue. And if you do look at it with an open mind, without this sort of nitpicking, then the topic can become a positive discussion.
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Post by Joe Durnavich on Jul 16, 2005 9:57:08 GMT -4
First, let me apologize to the board for continuing to drag you all through a discussion of banking policy. That has to be the last thing space buffs want to read about!
Turbonium writes:
Yes, but first the Fed notes have to gradually replaced in the whole system at a stable rate, to avoid the problems I mentioned (inflation, etc.).
OK. You recommend a system with no fractional reserves and its credit-extending capability, with no interest charges, and fully based on or backed by currency.
Inflation: Your posts and the articles you have been citing seem to recommend vastly increasing the money supply--enough to cover the debt. Yet, you are also complaining about inflation. As the Griffin piece points out, in general the Fed has inflated the money supply for its entire existence. Inflation is the result of too many dollars chasing too few goods, that is, there is too much money in the system. What I don't understand is that you are pushing to increase the money supply even more in hopes of solving the banking system's problems, including inflation.
Interest Charges: You think interest is detrimental. If interest rates are high enough, I may choose to put money into a savings account in a bank. I could also invest directly in a bank by purchasing its bonds, etc. Under your recommended system, there is no interest. What incentive is there, then, for people to save money in the bank or to invest in it?
The bank has its own bills it has to pay to stay in business. It has to pay for its building and property, it has to pay the electric, and so on. It also has to pay its employees. Currently, banks pay for all this from the income they earn from interest. Without interest, how does the bank meet its operating expenses?
On a related note, how do you know how much money to print or to take out of circulation? With interest rates, a rising interest rate can serve as information to the market that money is becoming in short supply. An interest rate is, in effect, the price of money. Prices--think of them as numbers that reflect the current value of a commodity--arise from the interplay of supply and demand. They are handy signals or information for how the market should correct itself. Does your system have a mechanism for determining the money supply required by society at any given time?
Credit: The fractional reserve concept allows banks to leverage reserves and extend credit to businesses so that they can build factories, purchase machinery, renovate production lines, and so on, with the expectation of getting a greater return from the increased productive capacity than the interest charged by the bank. How does credit work under your system?
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Post by turbonium on Jul 16, 2005 11:11:08 GMT -4
First, let me apologize to the board for continuing to drag you all through a discussion of banking policy. That has to be the last thing space buffs want to read about! Turbonium writes: Yes, but first the Fed notes have to gradually replaced in the whole system at a stable rate, to avoid the problems I mentioned (inflation, etc.). OK. You recommend a system with no fractional reserves and its credit-extending capability, with no interest charges, and fully based on or backed by currency. Inflation: Your posts and the articles you have been citing seem to recommend vastly increasing the money supply--enough to cover the debt. Yet, you are also complaining about inflation. As the Griffin piece points out, in general the Fed has inflated the money supply for its entire existence. Inflation is the result of too many dollars chasing too few goods, that is, there is too much money in the system. What I don't understand is that you are pushing to increase the money supply even more in hopes of solving the banking system's problems, including inflation. No, as I stated above, the replacement takes place gradually, so a stability is maintained. To maintain a smooth transition supply of the new money proportionally replaces the Fed notes. That's why it's key to have a monitoring system to process the transition phase. The initial transition stage will be the slowest part of the overall process, as we have a market flood of Fed notes to contend with. Remember, though, that the actual physical currency in distribution is only a fraction of the "book value" that is not Fed notes at all, just data entries at the banks. The new money issued can be put into circulation in a number of ways. Probably the first should be to pay off the national debt and save billions in interest charges which continue to soar. This alone would have an immediate economic benefit, and reduce the inflation spiral. Of course, the Fed would have no choice but to accept the decree of Congress as the first step towards its dismantling. Secondly, the money could be spent into circulation by giving government services without taxation. For example, if the money spent on building schools, hospitals, government buildings and on providing pensions and family allowances were spent into circulation rather than borrowed by the government (as it is now), it would stay in circulation, until it was worn out and then it could be replaced at a very small expense. Money is borrowed by the government into circulation and withdrawn leaving the principal of the loan unpaid to be compounded by interest. If, however, the money were spent into circulation, the people receiving this money would own it and when they used it to buy things, the money would keep circulating. In a few years, the money in circulation would all be debt and interest free. Once the governments, the corporations, and the small businesses, as well as individuals, would all be free of debt, the saving to the people would be in the hundreds of billions of dollars.
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Post by turbonium on Jul 16, 2005 11:31:52 GMT -4
The money in your pocket, as cash, will be much greater as taxation is purged from the system. Income tax, sales tax, fees, etc will shrink. - the disposable income and "purchasing power" will be effective immediately.
Investments are dependent on, once again, the banks and their financial companies deciding what your rate of return will be over a certain time period. They only return, as I'm sure you know, a percentage below that of the actual return on the investment. They are the middleman, in effect, making money on the money you invest.
So, you have extra cash on hand, you invest it yourself, as an entrepreneur of today does. Start a business, build a cattle ranch, or just build equity in small steps. Plan out a retirement fund through investing in that woodworking shop you always wanted. Or, there will still be market investments you can make that now will operate out of the big banking loop, and may charge a single up front fee for their services.
The options only increase with more disposable income on hand.
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Post by turbonium on Jul 16, 2005 12:00:47 GMT -4
The bank has its own bills it has to pay to stay in business. It has to pay for its building and property, it has to pay the electric, and so on. It also has to pay its employees. Currently, banks pay for all this from the income they earn from interest. Without interest, how does the bank meet its operating expenses? Standard service charges in fair compensation to the type of service provided will support a banking service within a community. They worked like that before the big banks ate themall up, similar to the postal services, etc. Before 1913 free market banking was used, with interlocking support amongst them to safeguard against losses and for contibgencies.
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Post by turbonium on Jul 16, 2005 12:17:43 GMT -4
On a related note, how do you know how much money to print or to take out of circulation? With interest rates, a rising interest rate can serve as information to the market that money is becoming in short supply. An interest rate is, in effect, the price of money. Prices--think of them as numbers that reflect the current value of a commodity--arise from the interplay of supply and demand. They are handy signals or information for how the market should correct itself. Does your system have a mechanism for determining the money supply required by society at any given time? Absolutely - supply and demand interactions and resultant price variations for goods and services, become more accurate as true economic indicators than before. The ability to directly monitor sales and prices without interest and tax adjustments gives you the bare bones true market conditions. Much less interpretation and no guesswork is needed. Increases or decreases of money supply will be put in effect faster and more precisely as a result.
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Post by turbonium on Jul 16, 2005 12:40:07 GMT -4
Credit: The fractional reserve concept allows banks to leverage reserves and extend credit to businesses so that they can build factories, purchase machinery, renovate production lines, and so on, with the expectation of getting a greater return from the increased productive capacity than the interest charged by the bank. How does credit work under your system? A standard one-time fee system. with terms for repaying the principle only (as there would be no interest charges). Insurance on defaulted loans (both parties) and penalties that aren't prohibitive or extremely time-restrictive to anyone recovering from their failed venture investments. With the banks now being the ones at greater risk, community incentive plans could possibly be implemented as a means of support for venture crediting by the banks
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Post by martin on Jul 16, 2005 20:19:29 GMT -4
And if you do look at it with an open mind, without this sort of nitpicking, then the topic can become a positive discussion. I can have positive discussion any time I like with highly intelligent people of different views on these things. I have no need of lying rascists who falsify quotes. Martin
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Post by turbonium on Jul 16, 2005 23:17:54 GMT -4
And if you do look at it with an open mind, without this sort of nitpicking, then the topic can become a positive discussion. I can have positive discussion any time I like with highly intelligent people of different views on these things. I have no need of lying rascists who falsify quotes. Martin What a crock! That whole statement is garbage - "lying" - look below for how many times you slander me with that accusation... "racist" - because I replied about your lack of proficiency in English after you kept calling me a liar with an "agenda"? Please, cut that crap out, it's inflammatory nonsense. "falsifiy quotes" - you didn't reply to my post which clearly shows it was NOT your quote! OK - Joe has had honest questions, which I have been trying to help him with. I'm not forcing anybody to agree with me.If he has an opposing opinion, he asks me what I think in response. Then I try my best to find an answer and reply. If he still doubts me, he will say so without accusations. It's called "respect"
But you, martin and all these accusations towards me, are blatantly rude and unsubstantiated. A so-called agenda you make up and continue to imply I have, and repeatedly calling me a liar, is FLAMING, pure and simple. You've been insulting enough to easily warrant retaliatory replies - but I won't go in the gutter with you.
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Post by Joe Durnavich on Jul 17, 2005 11:01:09 GMT -4
A standard one-time fee system. with terms for repaying the principle only (as there would be no interest charges).
Can you provide some details on why the “standard one-time fee” is not just an interest charge in disguise with all the same problems alleged by your Debt Virus Hypothesis?
Also, would you be opposed to free banks running in competition with your system? That is, if the market wanted to create banks that could issue their own currency backed by precious metal or equivalent specie, should that be legal?
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Post by turbonium on Jul 18, 2005 3:36:20 GMT -4
A standard one-time fee system. with terms for repaying the principle only (as there would be no interest charges).Can you provide some details on why the “standard one-time fee” is not just an interest charge in disguise with all the same problems alleged by your Debt Virus Hypothesis? Also, would you be opposed to free banks running in competition with your system? That is, if the market wanted to create banks that could issue their own currency backed by precious metal or equivalent specie, should that be legal? HAH! I like that - Debt Virus Hypothesis! It's quite true. The standard fee is an equitable trade for the service provided. It does not unfairly place a burden on either party involved. The fee can be set to properly compensate the lender for expenses involved in performing the service. And the borrower knows exactly how much extra money needs to be paid back. The problem with interest is that it is usually charged with the prupose of making a profit (usury). The lenders exorbitant interest rates serve to unduly punish the borrower by placing huge burdens on ability to pay back the "extra" money loaned out. Right now, we know how much profit is made on a car loan or a mortgage - often more than the principle of the loan!! That is usury, plain and simple. Monthly mortgage payments are almost paying only on the interest charges for many months before any dent is made in paying down the principle. And of course, defaulting on your payments and you lose your home (or car). They are clearly raking in profits on all these loans, making the borrower a slave to the payments. And no, the banks backed by gold, etc. should not be allowed because there is too great a risk of repeating what has been done to get to the point we are at right now. The gold merchant bankers gobbled up the smaller banks and then when they had an effective monoploy used their wealth and influence on the Gov't to change the laws regarding loans and interest. It has to be carefully monitiored and regulated because it's such a dangerous animal if let loose in the free market.
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Post by Joe Durnavich on Jul 18, 2005 16:08:39 GMT -4
HAH! I like that - Debt Virus Hypothesis! It's quite true.
It's not, really. The hypothesis was put forward by a Dr. Jacques Jaikaran in a book, "Debt Virus: A Compelling Solution to the World's Debt Problems". Apparently, his MD training did not cover economics and banking practice well enough such that he could see the fallacy in his thinking.
Real economists explain that he overlooked the fact that when a bank pays its expenses, dividends, etc., from its interest revenues, it creates new money. The bank writes checks, which creates money in much the same way loans do. The solution to the dilemma you presented was there all along: If the interest money was not created during the loan, then it was created in the accounting act of the bank transferring the interest funds to its own checking account. A similar scenario applies to the Fed, who, as Martin keeps pointing out, gives its interest earnings back to the Treasury, who just can't wait to spend it.
The problem with interest is that it is usually charged with the purpose of making a profit (usury). The lenders exorbitant interest rates serve to unduly punish the borrower by placing huge burdens on ability to pay back the "extra" money loaned out.
Profit is such a great incentive to our material well-being. Let's say we were neighbors, and that you owned a good set of woodworking tools, and that I was good at building cabinets. One day I strike a deal with you: Let me borrow your tools so that I can build a number of cabinets, and in return I will give you your tools back plus one of the cabinets I build.
As long as a new cabinet is of more utility to you than the use of your tools for a short period, than this is a win-win situation. Together we have made both ourselves wealthier. The "interest" you charged me was for temporary command of your resources, in this case your tools. My interest payment compensates you for any loss of revenue or utility you incurred while I had your tools.
Right now, we know how much profit is made on a car loan or a mortgage - often more than the principle of the loan!!
This is why I am a free-marketer. I want a system that is reasonably voluntary and not forced on us by the government. If interest rates are too high, than save your money until either rates our lower, or you have enough money to buy the car without requiring a loan. That's what I do. I see no sense in paying interest on a car if I can save for it.
I was talking earlier about prices and how they serve as information to consumers. Here, a high interest rate is a signal to us to borrow less and save more. That creates an influx of savings and investments, while loans are being retired. Bank reserves start to replenish and become able to loan at lower interest rates again.
(Note: I realize that the central banking system we have today does not work quite like that, and that I am really, really old-school in my economics!)
Monthly mortgage payments are almost paying only on the interest charges for many months before any dent is made in paying down the principle.
That just reveals the cost of taking temporary command of someone else's resources for a very long time.
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