amp244 said:
But congress has always had the right to create and circulate its own currency! All of this money that they are borrowing from the Fed at interest could have all been created Debt free. The exact same benefits you say the Fed allows, were easily obtainable in house, debt free!
And Congress still has the right to have the Fed to sell back it's Government bonds at the original purchase price; the Fed is the Government's bank and they can do what they want with it. Ron Paul and Alan Grayson even want the Fed to forgive the entire $3 trillion in debt the Government owes it. And Congress can do that. The problem with that is if the debt was cancelled, the Fed couldn't sell those bonds and retire the money anymore, so the economy would be left with an extra $3 trillion that would lead to inflation problems.
The preferred method for the Government to take on debt is to sell bonds on the open market. That way, money doesn't have to be created out of thin air, and they don't have to worry about inflation risks. They could even set the discount rate to 0%, but of course that would mean the bonds are worthless (unless we had negative inflation) and the only way to sell them would be for the Government to create money out of thin air, leading once again to the inflation problem.
amp244 said:
Yes the Fed gives its profits back to the Treasury, but lets not forget about those 6% dividends (typical sp 500 dividends are from 2-4%).
I'm not clear on your point. The average return of an S&P 500 stock is about 10% per year (dividends plus stock gain). So 6% isn't that great relative to the S&P. And yes, all the rest of that interest the Government pays the Fed goes right back to the Treasury.
amp244 said:
The Federal Reserve is just another way for private bankers to control the government through the issuance of credit, and even worse, the monopoly of its currency. By masquerading as a "quasi-government entity" and calling it the "Federal" Reserve, it gives you the impression that it is part of the government, when in fact it receives no funding appropriated by congress and its decisions do not have to be approved by anyone in the Executive or Legislative branches. All they have to do is attempt to satisfy their subjective mission statement.
Debt is the choice of Congress, not the Fed. If Congress had the balls to raise enough taxes and cut enough spending to pay down the debt, we would be debt free, whether the Fed liked it or not (though the Fed couldn't care less).
amp244 said:
Lets look at their duties as described in said mission statement and assess how good of a job they have been doing:
1.) Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
Hmm. Employment not at all in good shape, prices stable alright - stably rising, interest-rates lower than ever.
Maybe the Fed should have let the economy slip into a Great Depression, so we can see how great that would be in comparison.
amp244 said:
I can see how someone could make the argument that prices have been more stable from year to year since the Fed, although that certainly wasn't the case for the first 40 years or so. You may find it interesting that $1 in 1800 was worth roughly the same as $1 in 1945. How did we manage the back end of the industrial revolution and WWI without our beloved inflation? Also note that ever since we went off the gold standard in 1933 the value of the dollar has been destroyed. As we have all seen in the most recent increases to the money supply, the new dollars disproportionately go to the rich, meaning the working class's purchasing power has greatly diminished.
Real wages have always gone up faster than inflation, until Reagan took office, when they roughly stayed even with inflation:
Yes, the rich are doing a lot better than ever before, but that's because Congress helps those who get them elected.
amp244 said:
According to the U.S. Census Bureau there are now more people on some form of government relief (TANF, Food Stamps, Medicaid) than there are full-time year round workers. I'm by no means a Republican, but I can't ignore that fact. But hey, if you like big government, ballooning welfare, income inequality, destruction of currency, and diminishing purchasing power, than I suppose the Fed is doing a great job!
Please stop with the straw man arguments - they really aren't helping you make your point.
The Fed has nothing to do with any of the above. As the graph I just presented shows, there's more real wages out there than ever before; it's the fault of Congress for helping those all go to Wall Street rather than Main St.
amp244 said:
2.) Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
Sure could have used some of that supervision 8 years ago. Im glad they are there to "ensure the safety and soundness" of our capital.
3.) Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
Sure could have used that risk assessment 8 years ago when banks were leveraged to the gills with risky derivatives.
I actually agree with you 100% on these two. Alan Greenspan was in charge of Fed when the bubble went up exponentially. He apologized after he stepped down for not doing his job:
Greenspan Concedes Error on Regulation
Quote:
a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.
In Greenspan's defense, he's exactly the kind of free market chairman Ronald Reagan wanted in charge of the Fed, and still another reason Reagan failed America.
amp244 said:
4.) Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
I guess 1 out of 4 ain't bad.
Yes the businesses are doing surprisingly well because they are being bolstered by Keynesian pseudo-demand. None of this is a natural market reaction. You can't just keep employing tactics to circumvent correction periods forever. Eventually the world will stop taking your dollar. Otherwise we could all stop working and have the FED just print us money.
You don't seem to get Keynesianism. The idea is prevent both the bust AND the boom cycles. If done correctly, you pump money into the bust cycles, and take it back during the boom cycles, keeping things relatively stable. If you only pump money in during the bust cycles and let the boom cycles happen (which is what Greenspan allowed), then you might have a problem.
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I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them. I also attack my side if I think they're wrong. People here get very confused by that and think it means I prefer the other side.
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