News Audit the Fed: Good or Bad Idea?

[CAC1001]

Also the FED was not "created" by Congress: ratification regarded its powers where given by Congress, but the actual creation of the FED far preceded that actual ratification. You should check out what happened at Jekyl Island and what preceded those events.

You have to be really careful there as there is a lot of conspiracy theory regarding the creation of the Fed that isn't based in fact.

Also you say gold is valued on tradition and faith (I agree), but so are those precious paper dollars. Fiat money systems have a bad rap for how long they have lasted, but gold doesn't. If history is anything to go buy, gold is in the lead.

Yes, but paper money is tied to something measureable, the strength and resiliency of the U.S. economy. So the dollar as a currency isn't just about faith.

Also its a little bit misrepresentative to say that we don't assume things in science: we do. We make assumptions all the time, and without any kind of constraint at all, science and analysis of anything would be impossible.

I've heard you comment about the nature of the Fed with relation to congress, but please answer this: Do you think, in your own opinion (i.e. not with what is currently going on now) if the FED should take some responsibility of averting irresponsible debt situations from arising if it is given the power to do so? You have established what the existing policy is and what has happened already, but I am asking you now what you think and what your own argument is on the matter.

I don't know. The could be giving the Fed too much power as now you have an entity with unelected people in it controlling fiscal policy. Fiscal policy isn't as complicated as monetary policy though. You don't need a Ph.D or even a degree in economics to know the basics of fiscal policy, i.e. don't spend more then you take in, or if you do over-spend, only do it by a little.

Also you say a depression should "not happen". Why? If the system has major flaws that make this more probable then it should, then why should this not happen? Why should we try and keep a system alive that has obvious faults?

We should try to avert a depression and then make the necessary reforms in order to fix the faults. A depression should never be allowed if it can be avoided as it entails economic devastation for many. A depression will always cost something, but I'd ask the population this: do they want to pay for the depression in the form of a whole lot of destroyed businesses and jobs and lives, or would they rather pay with a large sum of taxpayer money to bailout the institutions to prevent the depression from kicking in? Everyone rails about the billions given to the financial institutions, but had that not been the payment, we'd be paying for it with a much worse economy. I'd rather pay for it with the billions and then enact the proper reforms.

The levels of not only the debt, but the amount of money in the system are absolutely unfathomable: this idea of having a central bank that has created not billions, but trillions of dollars in the space of years is absolutely crazy. I have no idea how anybody can support this kind of credit creation policy and this is what the FED has demonstrated already.

They are the institution in charge of controlling monetary policy for the world's most advanced, complex economy. Why is it surprising?

The responsibility of managing the money supply means stopping ridiculous instances like this from occurring. Do you agree or not? This is kind of the main purpose is it not for having a central bank controlling monetary policy with regard to your comments above?

Also you do know that after the great depression, gold was confiscated and the purchasing power was immediately downgraded 40%. Can you explain why you think this was, if paper money was in any way better? Also you must realize that this confiscation wasn't voluntary: it was forced.

The decisions of monetary policy are complex. Lower interest rates or keep them low, and you could help fuel bubbles. Raise interest rates and you might tank the economy which depending could even cause a crash. I am not very knowledgeable about the gold confiscation after the Great Depression, however paper money is something that has to exist, unless you want people to carry around gold coins everywhere. So paper money is always better.

Some think that paper money must be backed up by a precious metal, such as gold, or else that the paper money is "not backed up by anything" and is thus worthless, whereas it has real value if it has a precious metal representing it. But that's an old-fashioned economic view that doesn't really hold water, as a paper currency's strength depends on the economy that it serves as the medium of exchange in. So long as the economy is strong and healthy, and producing lots of goods and services (which is the real wealth of the economy which the paper money facilitates the exchange of), then the paper money will always have value. It doesn't need a precious metal backing it.

If the economy collapses, paper money backed by a precious metal will still be worthless unless you could maybe get your hands directly on the precious metal, and good luck with that. For example, a person in Kentucky's paper money isn't going to magically retain its value in the event of an economic collapse just because its backed up by gold stored in a vault somewhere.

 

[chiro]

Look: the idea that something like a central bank just "magically appears" is really delusional: things like this are planned well in advance. The ratification was a formality. Also I didn't discuss the specifics of how it was founded, and the nature of a conspiracy is something that is done in secret.

I didn't use the term, but don't try and taint the argument by using a word that not many people alone really understand anyway.

You keep saying about the strength and resiliency of the US economy. It is based on faith is it not? Just like the gold you so easily are able to take shots at? As you said before, everything is based on faith. The US economy (and in fact every economy) as a basis of faith. Also the economy is not completely measurable: the figures that are produced are also "taken on faith".

You keep backing up this US economy like it's something that could never possibly falter. How are you able to support this? Where is the synchronicity between your arguments of "faith for gold and 'real' assets" vs "faith for the US dollar?"

Also you keep talking about fiscal policy but you never give specifics: Give real, tangible, examples with language that is not broad and to encapsulate something that is not vague enough to be useful.

The trillions of dollars is "surprising" because of the "rate of increase of the money supply after the first trillion dollars" and because the world GDP is around 80 trillion dollars.

Having many dozens of GDP's in circulation is dangerous and utmost irresponsible. How can you possibly advocate something like this?

Again you haven't my question before: How it is in any way good "monetary policy" to keep so much money in circulation?

 

[chiro]

Also you talk about gold being worthless: central banks are buying up the stuff.

I have no clue how you can possibly say that something is worthless, especially if out of all entities, central banks (not one but many) are buying it up.

These people do this kind of thing for a living. Do you think that they are naive?

These are the facts: they are happening right now. You keep going on about monetary and fiscal policy without giving any specifics or any original arguments.

You say things like (and I quote here) "No it can't" and "It can't be done" without going into any real detail whatsoever.

You talk about gold being based on faith, yet you are not even aware that gold was confiscated by people after the great depression and then the paper which you so "preciously" put your faith in lost 40% of its value when things were re-pegged.

All those people that needed "faith" didn't get it. This really happened and not that long ago in history.

You seem to forget these kind of details when you are making your arguments about how the so called "faith" of paper currency can remain strong. You point out that somehow the US economic experiment is somewhat "special" in comparison to the others. You have also been pointed out that every fiat currency known throughout history has failed.

You also talk about the currency being in circulation for a long time. But according to http://www.dailyreckoning.com.au/bretton-woods-agreement/2006/11/29 we have:

In 1971, experiencing accelerating depletion of its gold reserves, the United States removed its currency from the gold standard, and the Bretton Woods Agreement was no longer workable.

Which means that the US has only been off the gold standard for roughly 40 years. This means that you have only had a "real" fiat currency for 40 years.

The other thing you also neglect is that the US dollar has "tremendous value" in terms of being the reserve currency for oil and energy transactions (amongst other things). You do know how you benefit from this right?

As mentioned before, there are agreements happening right now that do trade in these "real assets" (ohh wait you said they don't exist) that is done in other currencies. But I guess these are based on faith right?

But you still tell yourself that your economy is so strong, even when the international markets are "reacting" by dumping treasuries, creating bi-lateral trade agreements of their own (including Indian trade agreements with Iran in terms of, you guess it, gold), and contributing to the demise of the petro-dollar and the US dollar.

An economy can be measured on how many people "trade" in that currency. You currency is still strong now, but the examples above show that it is declining. How in your own specific opinion, is this is a sign the economy is not shrinking when entire nations are deciding to trade in other currencies?

 

[chiro]

Here is an interview with Dr. Paul Craig Roberts (who is an economist), and supports the kind of points I have been making in this thread:

www.youtube.com/watch?v=NHgcsu7G_4I

 

[CAC1001]

Look: the idea that something like a central bank just "magically appears" is really delusional: things like this are planned well in advance. The ratification was a formality. Also I didn't discuss the specifics of how it was founded, and the nature of a conspiracy is something that is done in secret.

I never said it "magically appeared," but there is a whole lot of conspiratorial conjecture surrounding the Fed, and one has to separate the fact from the fiction. According to the fiction, it was created as a banking cartel to allow a secret elite to essentially control the world. According to the fact, it was created to stop what at the time had been a long problem in banking (runs on the banks due to financial crises).

I didn't use the term, but don't try and taint the argument by using a word that not many people alone really understand anyway.

You keep saying about the strength and resiliency of the US economy. It is based on faith is it not? Just like the gold you so easily are able to take shots at? As you said before, everything is based on faith. The US economy (and in fact every economy) as a basis of faith. Also the economy is not completely measurable: the figures that are produced are also "taken on faith".

I wouldn't say the strength of the U.S. economy is based on faith alone, it's a visible, measurable thing. We have seen it withstand crises and despite troubles, we are not a Third World country and should be able ot make a solid recovery if we could end hte uncertainy and bring some sanity to the budget.

You keep backing up this US economy like it's something that could never possibly falter. How are you able to support this? Where is the synchronicity between your arguments of "faith for gold and 'real' assets" vs "faith for the US dollar?"

There's nothing about gold to entrust it with value except that people tend to think it has value. And of course ithe economy could falter. But if it falters to the point that dollars become worthless, that would mean basically a total societal collapse.

Also you keep talking about fiscal policy but you never give specifics: Give real, tangible, examples with language that is not broad and to encapsulate something that is not vague enough to be useful.

Not sure what you mean here...? Fiscal policy is the government's raising revenues through taxes and debt if necessary, and then spending the money via budgets. While it can get technical, the basic idea of raise money and then don't spend more then you bring in isn't that hard to understand. Monetary policy however can be very confusing. Look at it this way, brilliant people in economics can screw up monetary policy simply because it's so complex. But only idiots or politics really screw up fiscal policy because much of it is common sense.

The trillions of dollars is "surprising" because of the "rate of increase of the money supply after the first trillion dollars" and because the world GDP is around 80 trillion dollars.

Having many dozens of GDP's in circulation is dangerous and utmost irresponsible. How can you possibly advocate something like this?

The Federal Reserve flooded the economy with liquidity to counter the serious deflation that was occurring, which can be worse then inflation. The liquidity countered the deflation to a good degree, and that is why we don't have any serious inflation right now.

Again you haven't my question before: How it is in any way good "monetary policy" to keep so much money in circulation?

It probably isn't, but it's seen as necessary right now. Inflation is a lot more understood today then it was before. But that said, economists can be guilty of thinking that they understand it better then they really do, which may not be the case. One major assumption right now is that inflation is controllable, that the Federal Reserve can act to prevent any serious inflation from starting up. That may be the case, but they might also be wrong and find out that they are not as in control of inflation as they thought if it occurs. At the same time though, they can't just stand on the side lines and let major deflation occur. I'd say those are some examples of how monetary policy gets complex.

 

[CAC1001]

Also you talk about gold being worthless: central banks are buying up the stuff.

By "worthless" I mean it serves no purpose in society. It DOES have value, I mean if you have a stack of bars of gold, you've got some serious money there, but it's only valuable because people say its valuable. There's no real use for it.

These are the facts: they are happening right now. You keep going on about monetary and fiscal policy without giving any specifics or any original arguments.

See my previous post.

You talk about gold being based on faith, yet you are not even aware that gold was confiscated by people after the great depression and then the paper which you so "preciously" put your faith in lost 40% of its value when things were re-pegged.

I don't put my faith in paper, I put it into the economy. Historically, in times of real economic collapse, high-quality jewelry has shown itself to be very valuable, but gold, not necessarilly. Gold didn't do the Chinese families in China much good when the Japanese invaded. High-quality jewelry, however, was tradeable.

You seem to forget these kind of details when you are making your arguments about how the so called "faith" of paper currency can remain strong. You point out that somehow the US economic experiment is somewhat "special" in comparison to the others. You have also been pointed out that every fiat currency known throughout history has failed.

Every fiat currency throughout history has not failed. A lot have, and that's because a lot less was known about economics at the time. A modern economy canot function without a fiat currency.

You also talk about the currency being in circulation for a long time.

Which means that the US has only been off the gold standard for roughly 40 years. This means that you have only had a "real" fiat currency for 40 years.

Yes.

The other thing you also neglect is that the US dollar has "tremendous value" in terms of being the reserve currency for oil and energy transactions (amongst other things). You do know how you benefit from this right?

Yep.

As mentioned before, there are agreements happening right now that do trade in these "real assets" (ohh wait you said they don't exist) that is done in other currencies. But I guess these are based on faith right?

Oil and energy are real assets because people don't just "trust" that they have value, they have value because people really NEED them. It's like valuing food versus valuing gold. Both can be valuable, but the one is something required to solve a need, the other isn't. Now if gold has a lot of value based solely on pure supply and demand, where it is demanded because it solves some type of need, then fine, but it's value, unlike oil or food, is not based on filling a need. If oil was no longer needed for the industrial economy, it would be worthless. Gold is not needed for the economy, and only has a minor need for use by rich people for their homes and jewelry, so it is basically the equivalent of a worthless metal that is given enormous value anyway. Gold could have a lot more value if it wasn't so rare as then it could be used widely in industry.

But you still tell yourself that your economy is so strong, even when the international markets are "reacting" by dumping treasuries, creating bi-lateral trade agreements of their own (including Indian trade agreements with Iran in terms of, you guess it, gold), and contributing to the demise of the petro-dollar and the US dollar.

An economy can be measured on how many people "trade" in that currency. You currency is still strong now, but the examples above show that it is declining. How in your own specific opinion, is this is a sign the economy is not shrinking when entire nations are deciding to trade in other currencies?

The U.S. economy isn't shrinking and while those are concerns, they are because of the current idiocy in government and can be fixed.

 

[chiro]

There are some slight contradictions here: I mentioned that for example an electricity utility is an asset in which you went on a tirade about the so called "value" argument, but now you are saying that oil is an asset because it's something people need. You have changed your stance 180 degrees from only a few posts ago.

You also talk about gold serving no purpose in society. Gold does have limited uses industrially (one specific one is in electronics), but the point of gold was to be a medium of exchange and a store of value, not an actual asset that has any kind of industrial or otherwise similar use.

This is important to realize because you keep making the same mistake with regarding gold: it is not meant to be an asset in an industrialized sense or a natural resource in a typical sense like food, energy, and so on. Gold was meant to be a store of value and a medium of exchange, just like paper.

Also the point of gold was that it was able to with-stand "irresponsible printing" of currency by a single entity. In currency 101, one of the most important elements of a currency is the ability for that currency to withstand counterfeiting, since the ability to counterfeit removes the trust aspect of the currency and therefore makes it worthless since the whole point of a currency is to be a medium of exchange that people can agree on.

Do you know the properties that a good currency and medium of exchange should have? If you do, you'll see why gold was chosen to fit this role. This is why central banks buy it up, because they know how its use in terms of a real currency and unit of exchange is valuable.

Your paper money is exactly the same as gold and you fail to acknowledge it: you can't eat paper either, or put it in your car, but as a medium of exchange, it is used. Paper is backed completely by faith, and this idea of measurability is a facade because first of all: not all the information is available and secondly the tendency to hide information that would be otherwise detrimental to a particular party is hidden by that party if it is in their interests.

Even if we generously leave the last assumption out, you can't rule out the first.

You also say you put your faith in the economy and not the paper: well the paper is the measure of the economy. It is the units that are used to represent the state of the actual economy. The faith in economy is directly realizeable by how many units of exchange are not only in circulation, but also the nature of such circulation.

 

[CAC1001]

There are some slight contradictions here: I mentioned that for example an electricity utility is an asset in which you went on a tirade about the so called "value" argument, but now you are saying that oil is an asset because it's something people need. You have changed your stance 180 degrees from only a few posts ago.

Not at all. Oil and electricity people need. If I argued that electricity is worthless or if that's how you interpreted it, then I must have typed wrong, if so sorry.

You also talk about gold serving no purpose in society. Gold does have limited uses industrially (one specific one is in electronics), but the point of gold was to be a medium of exchange and a store of value, not an actual asset that has any kind of industrial or otherwise similar use.

This is important to realize because you keep making the same mistake with regarding gold: it is not meant to be an asset in an industrialized sense or a natural resource in a typical sense like food, energy, and so on. Gold was meant to be a store of value and a medium of exchange, just like paper.

Yes, but that means that it is mostly worthless and just has value because people say it has value. Lots of things can become a medium of exchange if it is valued by people. In prisons, low-quality cigarettes tend to serve as the medium of exchange for example.

Also the point of gold was that it was able to with-stand "irresponsible printing" of currency by a single entity. In currency 101, one of the most important elements of a currency is the ability for that currency to withstand counterfeiting, since the ability to counterfeit removes the trust aspect of the currency and therefore makes it worthless since the whole point of a currency is to be a medium of exchange that people can agree on.

Do you know the properties that a good currency and medium of exchange should have? If you do, you'll see why gold was chosen to fit this role. This is why central banks buy it up, because they know how its use in terms of a real currency and unit of exchange is valuable.

Your paper money is exactly the same as gold and you fail to acknowledge it: you can't eat paper either, or put it in your car, but as a medium of exchange, it is used. Paper is backed completely by faith, and this idea of measurability is a facade because first of all: not all the information is available and secondly the tendency to hide information that would be otherwise detrimental to a particular party is hidden by that party if it is in their interests.

Even if we generously leave the last assumption out, you can't rule out the first.

You also say you put your faith in the economy and not the paper: well the paper is the measure of the economy. It is the units that are used to represent the state of the actual economy. The faith in economy is directly realizeable by how many units of exchange are not only in circulation, but also the nature of such circulation.

I agree that paper money becomes worthless if the economy completely dissolves. But gold doesn't necessarilly retain any value in such a situation either, and gold-backed paper money won't do much good in such a situation. Paper money is backed by more then faith though. We don't just use paper money because of some blind assumption that it has value. It is a trusted currency because it is the medium of exchange for the most powerful economy in the world.

 

[chiro]

Absolutely agree about the cigarette example (as this kind of thing is forced to happen when currencies collapse in normal societies let alone one like a prison). But there is a big difference between a medium of exchange (like a currency) and an actual exchange of goods and services.

The paper money is more of a place-holder or in some ways a "receipt" rather than something tangible or useful. In the prison example, this is closer to a "barter" system than an actual currency and there are important distinctions between the two. The way that paper money was created was to avert the need to carry around a lot of gold and the bankers created these receipts out of convenience. Mediums of exchange are not the same as the exchange itself and although you can do exchange without having a medium like a receipt with its own trust, the receipt is never the same as the actual good or service itself.

Having said that there are some real fuzzy boundaries going on, but it is important to separate the idea of a receipt and an actual good or service in the same way that barter economies are differentiated from non-barter economies.

 

[Artus]

Gold standard is just a reference. Money could be backed bu Gold, Silver, or any other standard than debt.

 

[chiro]

Gold standard is just a reference. Money could be backed bu Gold, Silver, or any other standard than debt.

Agreed.

One thing about silver is that there has been this historical parity value between silver and gold which means that if gold price has an agreed value then the silver will implicitly also have a value as well.

It's not some kind of law or anything like that, but it has been useful throughout history to have a metal for divisions of lower value currencies.

 

[SixNein]

Gold standard is just a reference. Money could be backed bu Gold, Silver, or any other standard than debt.

Money is backed by trust and trust alone.

 

[Dotini]

Romney has now endorsed an audit of the Fed. Dr Paul's ideas are slowly co-opted into the official Republican platform.

http://www.washingtontimes.com/blog/inside-politics/2012/aug/20/romney-supports-audit-fed/

Respectfully submitted,
Steve

 

[lisab]

Money is backed by trust and trust alone.

Yep. Probably the most fascinating thing about money, IMO.

 

[Ryan_m_b]

The paper money is more of a place-holder or in some ways a "receipt" rather than something tangible or useful. In the prison example, this is closer to a "barter" system than an actual currency and there are important distinctions between the two. The way that paper money was created was to avert the need to carry around a lot of gold and the bankers created these receipts out of convenience. Mediums of exchange are not the same as the exchange itself and although you can do exchange without having a medium like a receipt with its own trust, the receipt is never the same as the actual good or service itself.

As an aside societies that function on barter economies have never existed. The first currencies were systems of credit, mediums of exchange were developed as standardised units but for a long time in history were never traded themselves. So person A may have traded item X for 10 silver at the local temple but 10 silver wouldn't go anywhere, in fact 10 silver doesn't even have to exist.

Money is just a form of debt, a way of transfering goods and services between individuals. It doesn't have to be tied to a phyiscal commodity anymore than an I.O.U does.

 

[chiro]

As an aside societies that function on barter economies have never existed. The first currencies were systems of credit, mediums of exchange were developed as standardised units but for a long time in history were never traded themselves. So person A may have traded item X for 10 silver at the local temple but 10 silver wouldn't go anywhere, in fact 10 silver doesn't even have to exist.

Money is just a form of debt, a way of transfering goods and services between individuals. It doesn't have to be tied to a phyiscal commodity anymore than an I.O.U does.

Absolutely agree that it doesn't and according to the book "Debt: The first 5000 years" there were instances of systems where no real unit of exchange was used as the whole thing was based on a benevolant society where people just gave others what they needed and didn't worry about being "paid" or being "reimbursed".

There are of course ideologies that say that you should do exactly this to your family, your friends, and yes, even your religious buddies in some cases but for everyone else, whip out the contracts, and the money and never ever be indebted to someone and make sure you are owed what you give.

But really the thing about silver is not the silver itself: it's as you say what the silver means in the context of a currency. Silver (and to some extent gold but not as much) has a lot of industrial uses and most silver is used for that very purpose in all kinds of things, but the thing of silver (and gold) was that it met some of the criteria of a good currency being that it could be divided, it was really hard to counterfeit, and so on.

People used (and still do) these currencies because of the above, not because it's shiny or something along those lines.

The thing though is that not all currencies are equal and this is what this thread was partially about.

You might be interested that China is going to bring online a gold exchange where they store all the physical (PANAM) and now the commodities markets are taking gold as a form of collateral.

Remember the thing is that as you pointed out, it's about the trust and when the printing press gets abused, thing's revert back to a situation where some kind of trust can be established, and in a lot of cases that translates to using metal based currencies.

 

[Tosh5457]

What do people think of the Audit the Fed bill which overwhelmingly passed in the House last week? Good idea or bad idea? Why or why not?

The Fed has many connections with top bankers, so its potential to do corruption is very high. Besides, as others have pointed out already, it's a private institution that has a huge influence in the economy, so the public should at least be assured that it's being well managed according to its objectives. But I want to know who's going to do the audit...

 

[ApplePion]

What are the Ron Paul people expecting to find by auditing the Fed? The Fed is *allowed* to create money out of nothing. Their books do not have to balance.

I note that Ron Paul had been ranting that he was kicking Romney's behind because it is delegates that mattered, and most of the delegates (except perhaps those that were secretly members of the Fed?) were really Ron Paul supporters. Ron Paul has also claimed that he is the only candidate who supports the Constitution. There really needs to be some sort of "audit" of Ron Paul.

P.S. Will Donald Trump demand to see the Fed's birth certificate?

 

[mheslep]

What are the Ron Paul people expecting to find by auditing the Fed? The Fed is *allowed* to create money out of nothing. Their books do not have to balance.

...

The Fed was created mainly to set monetary policy and provide financial stability. They have stepped far beyond that role now into fiscal policy and, arguably, social policy by way of mortgage rebates, buying up debt and the like. I agree in its role of money printer the Fed should be independent of political oversight as a hint of political control of currency value would be disastrous. Fiscal policy however is traditionally executed by the Congress and the Executive. Those institutions are, and should be, subject to scrutiny by the voters. As the Fed takes on those roles it should suffer the same scrutiny.

Apropos:
John Cochrane: The Federal Reserve: From Central Bank to Central Planner

 

[ApplePion]

<<The Fed was created mainly to set monetary policy and provide financial stability. They have stepped far beyond that role now into fiscal policy and, arguably, social policy by way of mortgage rebates, buying up debt and the like.>>

The intent was always that they would buy debt. Indeed, when you hear that they are loweing the Fed Funds rate target, they are actually buying debt to skew the market. Perhaps though you can argue that mortgages are a social form of debt. But on the other hand, the goal of buying up mortgages really does fall into the category of attempting to achieve fiscal stability.

But why would Ron Paul need to go auditing the Fed to find these things out? If they have been buying motgages, is it a secret? What does he expect to find?

I should point out that I actually do not think there should be a federal Reserve. But even though Ron Paul and I actually agree on that, his views are strange conspiratorial views.

P.S. I note your link to John Cochrane's article. JC and I lived in the same dormatory many years ago back when we were undergrads at MIT. He is now in finance, but actually was a physics major back then.

 

[mheslep]

<<The Fed was created mainly to set monetary policy and provide financial stability. They have stepped far beyond that role now into fiscal policy and, arguably, social policy by way of mortgage rebates, buying up debt and the like.>>

The intent was always that they would buy debt. Indeed, when you hear that they are loweing the Fed Funds rate target, they are actually buying debt to skew the market.

Yes, but bank debt over is the traditional way the Fed pushes money into economy (or draws it down), not US government debt and mortgages.

Perhaps though you can argue that mortgages are a social form of debt. But on the other hand, the goal of buying up mortgages really does fall into the category of attempting to achieve fiscal stability.

Sure, and social policy, a step too far.

But why would Ron Paul need to go auditing the Fed to find these things out? If they have been buying motgages, is it a secret? What does he expect to find?

I should point out that I actually do not think there should be a federal Reserve. But even though Ron Paul and I actually agree on that, his views are strange conspiratorial views.

I agree w/ your criticism of Paul the elder. Like many cranks, he has latched on to a valid but complex idea and attached to it the baggage of naivety and conspiracy.

P.S. I note your link to John Cochrane's article. JC and I lived in the same dormatory many years ago back when we were undergrads at MIT. He is now in finance, but actually was a physics major back then.

Yes I was aware of Cochrane's science background and as an engineer myself I'm all the more interested in his views.

 

[ApplePion]

<<Yes I was aware of Cochrane's science background and as an engineer myself I'm all the more interested in his views.>>

Apparently JC has gone off the deep end--he is affiliated with the Cato Institute. Back at MIT he was actually very liberal and I was very conservative, and we had some political discussions.

But the problem with Cato is not that they are conservative. It is that they are dishonest and irrational.

 

[mheslep]

<<Yes I was aware of Cochrane's science background and as an engineer myself I'm all the more interested in his views.>>

Apparently JC has gone off the deep end--he is affiliated with the Cato Institute. Back at MIT he was actually very liberal and I was very conservative, and we had some political discussions.

But the problem with Cato is not that they are conservative. It is that they are dishonest and irrational.

That sounds ridiculous. Cochrane has a large body of scholarship to his name and continues to publish, but you state here he as gone 'off the deep end' not because of anything he's said or written but because of someone with whom he's affiliated? BTW Cato has a libertarian viewpoint, not conservative.

 

[ApplePion]

<<That sounds ridiculous. Cochrane has a large body of scholarship to his name and continues to publish, but you state here he as gone 'off the deep end' not because of anything he's said or written but because of someone with whom he's affiliated?>>

Yes, I do think that who someone choses to affiliate themselves with is reflective of them. If someone chose to be an official economist for the American Nazi Party, would that not make such a person suspect to you? Yes, I realize that the Cato Institute is not nearly as bad as the Nazi Party, but my point was qualitative.

The Cato Institute really does lie a lot--as a person with a science background you should know that, and they try to distort reality to always fit their ideological prejudices.

<<BTW Cato has a libertarian viewpoint, not conservative.>>

That's true, but nevertheless his views when he was a liberal would still be quite different from libertarian views. It was so long ago that it is a bit difficult to remember, but I still am pretty sure he strongly favored redistribution of wealth.