Notable People's Thoughts on the Federal Reserve System

[Jonny_trigonometry]

Oh yeah, and Fed employees are not considered government employees.

"Are Federal Reserve Bank employees considered government employees?

No. Employees of the Federal Reserve Banks are not government employees. They are paid as part of the expenses of their employing Reserve Bank."

That is taken from the Fed's webiste:
http://www.federalreserve.gov/generalinfo/faq/faqfrbanks.htm

 

[Jonny_trigonometry]

Really? Since when are prices not controlled by the basic laws of supply and demand? I have had extensive training as an undergraduate in economics, but your posts simply do not contain economic facts, only political arguments which I am not here to discuss. I guess now would be a great time to explain the neutrality of money in the dynamic competitive equilibrium model of the economy . Any respectable economist will tell you this-- GDP influences the supply of money, the supply of money does not move to stimulate the growth of GDP. This is what the majority of the public confuses...

Prices are controlled by the basic laws of supply and demand, that's what the Fed counts on. If the Fed restricts loans it causes inflation. It can cause deflation conversely. If the Fed restrics and loosens unequally between all different banks, then it can influence price changes in more specific ways.

 

[Skyhunter]

One point that is being missed in this discussion is that modern income tax laws and the creation of the Federal Reserve Bank were nearly simultaneous.

Are the two connected?

http://www.mises.org/etexts/rootofevil.asp

 

[Art]

Believe what you will...but politics and economics do not mix. I am here only to discuss economics, not politics.

I suggest you check out the name of this forum you are posting in.

Really? Since when are prices not controlled by the basic laws of supply and demand? I have had extensive training as an undergraduate in economics, but your posts simply do not contain economic facts, only political arguments which I am not here to discuss. I guess now would be a great time to explain the neutrality of money in the dynamic competitive equilibrium model of the economy . Any respectable economist will tell you this-- GDP influences the supply of money, the supply of money does not move to stimulate the growth of GDP. This is what the majority of the public confuses...

I guess supply side economics isn't covered in whatever extensive training you received?

 

[Jonny_trigonometry]

yes, the 16th amendment established congress's right to impose a federal income tax. It was passed by congress in 1909, and ratified in 1913. This started as part of a high tariff bill, but a clincher to its ratification was the need to pay the Fed's interest. I've heard that there is controversy as to wether or not the 16th amendment was properly ratified. Some say, and I tend to agree, that there would be no need for an income tax if the Gov didn't have to pay for the use of it's money... I would think that tax would be much less if the Gov issued its own money, but I don't think it would disappear.

 

[Jonny_trigonometry]

Prices are controlled by the basic laws of supply and demand, that's what the Fed counts on. If the Fed restricts loans it causes inflation. It can cause deflation conversely. If the Fed restrics and loosens unequally between all different banks, then it can influence price changes in more specific ways.

well, I looked more into that last statement I made, and I'm not so sure of how that can be done other than buying and selling treasury securities in a timly fashion that influences the banks to make transactions between themselves so as to restirict loans in banks that can't get money from another bank before the end of the day. So the FOMC would have to act fast, and know much about the operations, clients, trends, reserves, and etc. of the other banks in order to make restrictions and loosenings of loans unequal throughout the nation.

I am very confident on the first statement I made though, that the Fed can restrict or loosen the money base in the nation, thus causing inflation or deflation. To better understand how this works, think of how the banks set the interest rates of their loans, they must do so in a way that is profitable, and if they must pay a larger than normal prime rate, or federal funds rate, they will charge a higher interest rate for their loans. If they then charge higher interest rates for their loans, then some business will not be able to get started, and some will lose profit, causing higher prices of their products while their employees make the same wage, and some get layed off, and so on and so forth. The opposite occurs when rates are loosened, loans are cheaper to get, so new businesses get started, providing more jobs, and more people spend money, causing more demand, thus more competitive prices and so on and so forth.

 

[gravenewworld]

Oh yeah, and Fed employees are not considered government employees.

"Are Federal Reserve Bank employees considered government employees?

No. Employees of the Federal Reserve Banks are not government employees. They are paid as part of the expenses of their employing Reserve Bank."

That is taken from the Fed's webiste:
http://www.federalreserve.gov/genera...faqfrbanks.htm

True, but I clearly stated that the board of Governors is succinctly different. The board of governors are elected by the President an the Senate. They are employees of the government. The employees of the individual banks are another story.

Prices are controlled by the basic laws of supply and demand, that's what the Fed counts on. If the Fed restricts loans it causes inflation. It can cause deflation conversely. If the Fed restrics and loosens unequally between all different banks, then it can influence price changes in more specific ways.

Yes, however one of the major components of inflation is expected inflation. The majority of the time most people know what the fed is going to do and how their actions will affect future prices etc. and can take this into account. The only problem with inflation is unexpected inflation.

Originally Posted by art
I suggest you check out the name of this forum you are posting in.

Wow you really got me there.

Originally Posted by art
I guess supply side economics isn't covered in whatever extensive training you received?

What in the bloody hell are you talking about? Supply side economics has no relevance to this discussion at all. We are discussing the structure of the money and banking system of the US. The important point i was trying to make was that the FED adjusts supplies of money in response to changes in the economy, not the other way around.

 

[Jonny_trigonometry]

The important point I was trying to make was that the FED adjusts supplies of money in response to changes in the economy, not the other way around.

So you're saying the fed doesn't do anything? You mean to say that the adjustments it makes don't affect the economy? Then why is there a fed? Surely you can't be serious, if the Fed makes adjustments to the economy, it must in fact perturb the economy in some way. You can't say that the fed doesn't cause a change in the economy. If "the FED adjusts supplies of money in response to changes in the economy, not the other way around." then it fundamentally must influence the economy, and it is supposed to react to the economy. A worker at Denny's is also supposed to never spit in your food, but if they want to, they can get away with it and you will never know. Title does not dictate behavior.

 

[Jonny_trigonometry]

Yes, however one of the major components of inflation is expected inflation. The majority of the time most people know what the fed is going to do and how their actions will affect future prices etc. and can take this into account. The only problem with inflation is unexpected inflation.

There is also another factor of inflation. Wages don't go up at the same time prices do, they always follow by an amount of time, even with "regular" inflation.

 

[gravenewworld]

So you're saying the fed doesn't do anything?

As Keynes put it himself, "money doesn't matter." I urge you to look up the concept of the neutrality of money and the superneutrality of money-i.e. money has NO effect on real variables in the economy. Also reverse causality. Now no economist will entirely believe that money has no impact on the economy depending on what time frame you are talking about, but the neutrality of money does play role to an extent. THEORETICALLY if the fed increases or decreases the supply of money, prices and wages should just adjust so no real terms change. long run Neutrality is at the heart of macroeconomics, and is constantly being tested.

 

[Art]

Wow you really got me there.
What in the bloody hell are you talking about? Supply side economics has no relevance to this discussion at all. We are discussing the structure of the money and banking system of the US. The important point i was trying to make was that the FED adjusts supplies of money in response to changes in the economy, not the other way around.

I know what you are saying and I'm saying you're wrong. Supply side economic theory is based on the principle that GDP growth can be stimulated by putting more money into the economy; and who controls the money supply? - The fed. Even if you look only at demand for money as you seem to wish to; who controls demand for money by adjusting interest rates? - The fed.

 

[EngineeredVision]

Slavery?... Yes!

Thus far, it seems that Art is the only one here who has read my attachment so I thought I would cite a section of my paper that illustrated the intentions of international banking institutions and their advocates to establish a modern-day invisible feudalistic society among the civilized world. As quoted in Dr. Carroll Quigley’s (Professor at Georgetown University) book Tragedy and Hope, he stated, “…the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.”

It would seem like such a statement could easily be dismissed as the ravings of a paranoid opponent to a world economy, but strangely, Dr. Quigley is actually a supporter of the New World Order movement being advocated by international banking interests. Carroll Quigley is basically a supporter of elitists views and has had close contact with many members of the banking community and the Council on Foreign Relations for years.

Debt through inflation and unpayable interest is a new type of slavery that is invisible to most of society because it doesn’t immediately threaten individuals physically, mentally, or emotionally, but works on much more subtle levels over a longer period of time that can span several generations. As already mentioned, we may be able to choose our professions and choose where we live, but if our property is constantly depreciating and the ability to repay our debt is nonexistent forcing us to continue the vicious cycle of borrowing with interest from those who actually own and manage the economy and credit system then we are subject to a financial slavery. True, this is not slavery as society would classically consider it, but it is still a system that oppresses almost all of society.

If anyone is still interested in reading my summary covering the history of fractional reserve banking and the Federal Reserve it can be found on page four in this thread under one of my posts.

 

[Jonny_trigonometry]

well put EV.

 

[Burnsys]

Ev, that is a great paper, it has no waste...

a quote from it:

Regarding the issue of a secure currency Lincoln stated, “No duty is more imperative on the Government than the duty it owes the people to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchanges so that labor will be protected from a vicious currency, and commerce will be facilitated by cheap and safe exchanges.” Lincoln also addressed the issue with the statement, “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be the master and become the servant of humanity.” Lincoln realized that if the government ever allowed the issuance of a private currency and control of the credit system that the nation would be manipulated by self-interests profiteering groups. For Abraham Lincoln, the issue of a fair and just currency was even more important than the war. In a letter to William Elkin after the passage of the National Banking Act He distressed, “I see in the near future a crisis approaching. It unnerves me and causes me to tremble for the safety of my country…the Money Power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.”