The Federal Reserve

[Avernus]

uh, the Fed is not part of the federal government

 

And, believe it or not, economists do generally have a pretty good idea about how monetary policy works (edit to add: which is one of the reasons we aren't in a second Great Depression right now)

 

 

but if we allowed the depression to happen, we may well be on our way to the real recovery at this point and not prolonging the inevitable...it would be more like the depression of 1920 (the one that few seem to recall in history) rather than what took place in the 30's....which is where we seem to be headed...

[Avernus]

Some more for SEC

 

 

good info in this post...

[SEC=UGA]

SEC,

 

The slave states were not concerned with the abolition of slavery at all, the US congress passed a constitutional amendment that would protect their right to slaver, and it was sent to the sates for ratification. Had the states stayed in the union, there would have been enough states supporting it that slavery would still be legal today.

 

The reason it is spoken about so much in the articles of secession is that the North was not abiding by federal law concerning slaves. The north was also harboring what amounted to terrorists against the South. The abolition movement of the day was a fringe group of terrorists, that is why slavery mentioned so much.

 

No concer n over slavery at all:

 

Letter from an appointee of the Gov. of MD to the Gov of MD prior to Lincoln's Innauguration - The action of the two committees in the Senate and House of Congress shows an unalterable purpose on the part of the Republicans to reap the fruits of their recent victory, and to abate not a jot or tittle of their Abolition principles. They refuse to recognize our rights of property in slaves, to make a division of the territory, to deprive themselves of their assumed constitutional power to abolish slavery in the Territories or District of Columbia, to increase the efficiency of the fugitive slave law, or make provision for the compensation of the owners of runaway or stolen slaves, or place in the hands of the South any protection against the rapacity of an unscrupulous majority

 

Letter from Steven Hale Commissioner to Alabama from KY to the Gov of KY - Upon the principles then announced by Mr. Lincoln and his leading friends, we are bound to expect his administration to be conducted. Hence it is, that in high places, among the Republican party, the election of Mr. Lincoln is hailed, not simply as a change of Administration, but as the inauguration of new principles, and a new theory of Government, and even as the downfall of slavery. Therefore it is that the election of Mr. Lincoln cannot be regarded otherwise than a solemn declaration, on the part of a great majority of the Northern people, of hostility to the South, her property and her institutions --- nothing less than an open declaration of war --- for the triumph of this new theory of Government destroys the property of the South, lays waste her fields, and inaugurates all the horrors of a San Domingo servile insurrection, consigning her citizens to assassinations, and her wives and daughters to pollution and violation, to gratify the lust of half-civilized Africans. Especially is this true in the cotton-growing States, where, in many localities, the slave outnumbers the white population ten to one.

 

Letter from John Shorter of AL to Gov Brown of GA - Whereas, the election of Abraham Lincoln, a Black Republican, to the Presidency of the United States by a purely sectional vote and by a party whose leading and publicly avowed object is the destruction of the institution of slavery as it exists in the slave-holding States; and whereas, the success of said party and the power which it now has and soon will acquire greatly endanger the peace, interests, security, and honor of the slave-holding States, and make it necessary that prompt and effective measures should be adopted to avoid the evils which must result from a Republican administration of the Federal Government, and as the interests and destiny of the slave-holding States are the same, they must naturally sympathize with each other, they therefore, so far as may be practicable, should consult and advise together as to what is best to be done to protect their mutual interests and honor

 

Speech Made in the GA State House to it's members- They have demanded, and now demand, equality between the white and negro races, under our Constitution; equality in representation, equality in the right of suffrage, equality in the honors and emoluments of office, equality in the social circle, equality in the rights of matrimony. The cry has been, and now is, "that slavery must cease, or American liberty must perish," that "the success of Black Republicanism is the triumph of anti-slavery," "a revolution in the tendencies of the government that must be carried out."... This new administration comes into power, under the solemn pledge to overturn and strike down this great feature of our Union, without which it would never have been formed, and to substitute in its stead their new theory of the universal equality of the black and white races.

 

 

All fo these communications took place in 1859 and early 1860 prior to the innauguration of Lincoln.

 

Look, at one time I was of the same mindset as you. Being a native of GA I was steeped in the notion that slavery was not the primary driver of secession, that rather it was opressive taxes and other slights against the south. Upon reading numerous speecehs by reps from the south and letters between governors and US reps it became apparent that the force behind the final decision to seceed revolved around the fear of abolition of slavery and the northern states failure to recognize slave holders rights to their property.

 

Tariffs on southern goods and taxes levied were a point of consternation, as is evident in Pres Jackson threatening to send the military into SC in the late 1820's. However, not until the congressional and presidential races of 1859 had the vitriolic push to abandon the south's rights to slavery had the secessionist movement carried such weight. And ultimately this point of consternation was the final straw that spun us into the civil war.

 

In reagrd to the Corwin amendment, this amendment was offered up as a last ditch effort to stall the civil war. A large number of the southern/slave states had already seceeded at this point and were dead set in forming their own Union. The wheels were already in motion, this amendment wasn't going to stop what had already started.

Edited April 17, 2010 by SEC=UGA

[bushwacked]

but if we allowed the depression to happen, we may well be on our way to the real recovery at this point and not prolonging the inevitable...it would be more like the depression of 1920 (the one that few seem to recall in history) rather than what took place in the 30's....which is where we seem to be headed...

 

Maybe, but those are bold maybe's to be shooting from the hip.

 

If we spent a trillion more on the stimulus, maybe every family would have enough money to buy a unicorn, their houses would be appreciating, and the Dow would be over 20K for the next 3000 years.

[Ursa Majoris]

No concern over slavery at all:

<snip>

Not a thing in the world to do with the fear of the abolition of slavery.

Nice try, well researched but you are wasting your time. Lots of us have tried to demonstrate that the Civil War was entirely a result of the divisions over slavery and, like you, we've succeeded with facts and data but Perch always holds fast to his arguments about tariffs and whatnot.

[SEC=UGA]

Nice try, well researched but you are wasting your time. Lots of us have tried to demonstrate that the Civil War was entirely a result of the divisions over slavery and, like you, we've succeeded with facts and data but Perch always holds fast to his arguments about tariffs and whatnot.

 

Well, that is my last post on the subject, it is mainly for my edification and to help inform others that might still have an open mind about the subject. I know that I was somewhat misled while growing up as to the reasons surrounding the civil war, but upon digging in more found that some of what I had been told was not entirely factual or the ultimate causation.

 

I do agree with Perch in the fact that the South's protests were multi pronged, but feel that the ultiamte cause was the fear of slavery ultimatley being abolished.

[Avernus]

Maybe, but those are bold maybe's to be shooting from the hip.

 

If we spent a trillion more on the stimulus, maybe every family would have enough money to buy a unicorn, their houses would be appreciating, and the Dow would be over 20K for the next 3000 years.

 

but what good is a unicorn if everyone has to take turns sharing it?....I would want the unicorn all to myself....

[Brentastic]

The Fed's primary job is to serve as a "lender of last resort" for the financial system so as to help avert and mitigate financial panics.

 

Another key job of the Fed is to conduct monetary policy with the intent to:

--Promote price stability

--Promote high employment

--Promote economic growth

--Foster interest rate stability

--Foster foreign-exchange market stability

 

The Fed also helps to maintain financial market and institution stability via regulation and oversight.

 

(I do not feel that the Fed is "necessary" for economic survival and growth, but I do believe that it is very very helpful in doing so and the economy would be significantly worse off without the Fed.)

If we're still around in 3-5 years and all my forecasts come to fruition (stock market tank, a rising dollar and deflation), will you finally start searching for the truth instead of believing only your text books? I sincerely feel sorry for you and most Americans for refusing to seek out the truth and only accepted what's given by text books.

 

The earliest version of the Fed was in 1791 when the First Bank of the United States was created with a 20 year charter. When the charter expired 20 years later in 1812, congress voted to eliminate the central bank entirely. Then in 1816, congress permitted another central bank called the Second Bank of the United States, again with a 20 year charter. FFWD to 1832 - Andrew Jackson runs for president vowing to take back control of the American finance system. Because of the imminent threat , the central bank, still being in control of the financial system, contracts the money supply intentionally, causing a depression. After a failed assasination attempt on President Jackson a year before the 20 year charter expires (Jackson claims it was the central bank founders who attempted the assasination), Jackson successfully eliminated this 2nd central bank when the 20 year charter expired in 1836. That was the last central bank until the creation of the Federal Reserve in 1913

 

The Federal Reserve Bank, established in 1913, is 'private' agency with 2 functions. Firstly (but not mostly), the FED colluded with the US government to transfer wealth from 'dollar savers' (taxpayers) to primarily the US Treasury through a complex scheme. Here's the jist of the scheme:

-US Treasury borrows money by selling Treasury bonds in the open market

-The FED buys the majority of these bonds from banks and financial institutions. BUT, there is no actual buying. The FED, by law, is allowed to fabricate a new checking account for the seller where the bonds (now owned/held by the FED) serve as assets or backing for this new, printed money.

-The seller (banks, financial institutions) of these bonds is now even, the FED owns the US backed bonds and the US Treasury has the 'new' money.

 

So to summarize the above process (which is primary function 1 of the FED) - the government essentially created it's own bank account from nothing by monetizing debt. Each time this transaction occurs, new money is created. However, the new money does not create new value. The new money has value but only at the expense of a decrease in the value of 'older' dollars. So all older dollar holders have the same number of dollars but since there are more dollars in circulation, the older dollars have less purchasing power. It is important to realize this process legally shifts wealth from the dollar savers (earners) to the Fed and the Treasury without the permission of the savers/earners.

 

Function 2 of the FED (and the primary function) is the encourage the expansion of credit. On top of creating money, our government has authorized the FED to control the economy (make the bumps and bruises less severe) by manipulating credit. Under the fractional reserve system we have in place (banks are only required to carry x% of deposited money on hand at any given time), it was quickly realized that the new money created through method 1 stated above, could be used as reserves and therefore used to create new loans. When this process began, banks were only required to keep 10% of their deposits as reserves, meaning 90% of the new money could be loaned out. These new loans would make their way into other banks via deposits - and those banks could lend 90% of these new deposits and this process continues on and on and on.....

 

The snowball effect of this credit expansion has led to a current economy with a HUGH amount of credit that far surpasses the actual money supply. And of course none of this even touches on the fact that the government out-lawed gold (which was the free-market's choice of currency) back in 1933 and made Federal Reserve notes the legal tender in the US (the government and FED understood the implications of this new law and planned to abuse it). Today the dollar is backed by nothing tangible at all - but that's sort of like the 'so what' part of the equation, sadly.

[bushwacked]

If we're still around in 3-5 years and all my forecasts come to fruition (stock market tank, a rising dollar and deflation), will you finally start searching for the truth instead of believing only your text books? I sincerely feel sorry for you and most Americans for refusing to seek out the truth and only accepted what's given by text books.

 

You might win more friends and influence more people if you don't belittle a large segment of your audience in the opening paragraph. Again, you sure use an awful lot of bravado for some dude living in an apartment, preaching your Elliot Wave genius to other dudes on a football message board. Serious question, when you say "if we're still around in 3-5 years," what exactly are you talking about?

Edited April 17, 2010 by bushwacked

[Jimmy Neutron]

I don't feel like searching for it, but I heard the Federal Reserve was enacted on shadier grounds than the recent Healthcare Bill. It was some late night, last-minute, under-the-table, right-before-Christmas-break legislation back in the day. You know when you have to pass it like that, you aren't getting anything good out of it.

 

"I am a most unhappy man. I have unwittingly ruined my country.

A great industrial nation is controlled by its system of credit.

Our system of credit is concentrated. The growth of the nation,

therefore, and all our activities are in the hands of a few men.

We have come to be one of the worst ruled, one of the most completely

controlled and dominated governments in the civilized world.

No longer a government by free opinion, no longer a government by

conviction and the vote of the majority, but a government by

the opinion and duress of a small group of dominant men." - Woodrow Wilson

[Brentastic]

You might win more friends and influence more people if you don't belittle a large segment of your audience in the opening paragraph. Again, you sure use an awful lot of bravado for some dude living in an apartment, preaching your Elliot Wave genius to other dudes on a football message board. Serious question, when you say "if we're still around in 3-5 years," what exactly are you talking about?

Nah, I don't worry about 'feelings' at this stage in the game - to me it's imperative that more Americans start thinking for themselves and see our country (economy) for what it is. If I hurt some feelings along the way, meh. If I didn't strongly believe in what I'm preaching, then I shouldn't be preaching it, therefore my confidence. What you perceive as arrogance, is really my astonishment that such a large majority of people have been essentially brain-washed into certain beliefs without even realizing it. I realize how that can come accross as arrogance but sometimes having your pride disrupted can cause deeper reflection and hence new ideas.

 

The 3-5 year thing meant if Weige and/or I are still around on the huddle as the market is bottoming, will he finally consider a different approach to analyzing the economy.

 

Oh, and how does me renting an apartment have any relevance?

 

E2A: I forgot to ask you - does my view make any sense to you or are you dellusional too? Since you're not an economist, I presume there's hope for you yet.

Edited April 17, 2010 by Brentastic

[muck]

I think GTB has it right...

[tbimm]

Nah, I don't worry about 'feelings' at this stage in the game - to me it's imperative that more Americans start thinking for themselves and see our country (economy) for what it is. If I hurt some feelings along the way, meh. If I didn't strongly believe in what I'm preaching, then I shouldn't be preaching it, therefore my confidence. What you perceive as arrogance, is really my astonishment that such a large majority of people have been essentially brain-washed into certain beliefs without even realizing it. I realize how that can come accross as arrogance but sometimes having your pride disrupted can cause deeper reflection and hence new ideas.

 

The 3-5 year thing meant if Weige and/or I are still around on the huddle as the market is bottoming, will he finally consider a different approach to analyzing the economy.

 

Oh, and how does me renting an apartment have any relevance?

 

E2A: I forgot to ask you - does my view make any sense to you or are you dellusional too? Since you're not an economist, I presume there's hope for you yet.

Wow.

[Brentastic]

I think GTB has it right...

I don't see any posts by GTB

[BillyBalata]

to me it's imperative that more Americans start thinking for themselves and see our country (economy) for what it is.

 

 

Brentastic for President!

[Perchoutofwater]

In reagrd to the Corwin amendment, this amendment was offered up as a last ditch effort to stall the civil war. A large number of the southern/slave states had already seceeded at this point and were dead set in forming their own Union. The wheels were already in motion, this amendment wasn't going to stop what had already started.

 

I've never said slavery wasn't an issue, I just don't buy that it was the major issue based on the Corwin amendment, the fact that a few of the Northern states and the District of Columbia had slaves at the start of the war, and throughout most if not all of it depending on the state, the fact that the Emancipation Proclamation only freed Southern slaves (and then was a extreme measure aimed at weakening the South which had won several victories, Lincoln was hoping for a slave revolt), and based on Lincolns inaugural address. Yes slavery is riddled in the states articles of secession but in most cases it is talking about the Northern states not upholding and ignoring federal law, as well as acts of domestic terrorism going unpunished and in many cases the domestic terrorists being protected, as indicated by some of your very own quotes. Yes there would have been some that even based on the above might have thought the North would try to end slavery, but frankly based on what we know, the chances of that were about the same as Obama taking away our guns. Sure it makes for good rabble rousing for those that don't like Obama or his policies, but the likelihood of it happening are very, very, remote. Yes slavery was an isssue but it was more of an issue of several states flat out ignoring federal laws (which happened to be slave laws). It was much more about the federal government not doing what it was supposed to do in enforcing our laws, unfair taxation on one group of people (rural agrarian), and lack of protection from indians, Mexicans, and outlaws, abuses of power in Washington, and the formation of yet another central bank. Wow that last sentence actually sounds a lot like today, and interestingly enough you have some people talking of secession today based on the very same things, typically people from the same freedom loving Southern states, and yet there hasn't been any slavery for 100 years.

 

Just saying people trying to make the North morally superior to the South over the civil war are sadly ignorant of history and what really happened.

[wiegie]

The 24 years preceding the civil war were known as the free banking period.

I'm not sure at all that you know what "free banking" is (because if you did, I don't think you would have included this sentence in your post).

[wiegie]

If we're still around in 3-5 years and all my forecasts come to fruition (stock market tank, a rising dollar and deflation), will you finally start searching for the truth instead of believing only your text books? I sincerely feel sorry for you and most Americans for refusing to seek out the truth and only accepted what's given by text books.

Thanks for your sympathy. Because of your compassion, I will gladly offer to send to you one of the spare Money and Banking textbooks I have laying around so that you can have what will seemingly be your first opportunity to read one.

Edited April 17, 2010 by wiegie

[Duchess Jack]

Well, that is my last post on the subject, it is mainly for my edification and to help inform others that might still have an open mind about the subject. I know that I was somewhat misled while growing up as to the reasons surrounding the civil war, but upon digging in more found that some of what I had been told was not entirely factual or the ultimate causation.

 

I do agree with Perch in the fact that the South's protests were multi pronged, but feel that the ultiamte cause was the fear of slavery ultimatley being abolished.

out of curiosity, what do you do? its rare to find someone so knowlegable about the Civil War that doesn't have a Rebel Flag hanging in the garage. that is to say - you don't seem like you'd have a rebel flag in your garage.

[Duchess Jack]

If we're still around in 3-5 years and all my forecasts come to fruition (stock market tank, a rising dollar and deflation), will you finally start searching for the truth instead of believing only your text books? I sincerely feel sorry for you and most Americans for refusing to seek out the truth and only accepted what's given by text books.

 

do we have a ladyhawk graemlin?

[BillyBalata]

I will gladly offer to send to you one of the spare Money and Banking textbooks I have laying around so that you can have what will seemingly be your first opportunity to read one.

 

 

 

[Brentastic]

Thanks for your sympathy. Because of your compassion, I will gladly offer to send to you one of the spare Money and Banking textbooks I have laying around so that you can have what will seemingly be your first opportunity to read one.

I'm not saying truth can't be found in text books. But often they certainly don't reveal the full truth and there's always more to be learned, usually in the form of just, thinking.

 

E2A: So, I'm assuming you disagree with my assesment of the Fed? As usual with you, trying to get an educated rebuttal is like pulling teeth. Please, if you have facts that dispute my claims, indulge us.

Edited April 18, 2010 by Brentastic

[BillyBalata]

I'm not saying truth can't be found in text books. But often they certainly don't reveal the full truth and there's always more to be learned, usually in the form of just, thinking.

 

E2A: So, I'm assuming you disagree with my assesment of the Fed? As usual with you, trying to get an educated rebuttal is like pulling teeth. Please, if you have facts that dispute my claims, indulge us.

 

 

So....you didn't accept or decline wiegies offer to send you the text book. Have you or have you not, read the text book wiegie referred too?

Edited April 18, 2010 by BillyBalata

[Brentastic]

So....you didn't accept or decline wiegies offer to send you the text book. Have you or have you not, read the text book wiegie referred too?

I'd have to see the exact book to know. I'm sure I've read something close enough while in undergrad. But, yeah, I'd take a free book - it may or may not be useful and if it's free, so sure.

[wiegie]

I'd have to see the exact book to know. I'm sure I've read something close enough while in undergrad. But, yeah, I'd take a free book - it may or may not be useful and if it's free, so sure.

PM an address and I'll send you something. I normally use Hubbard as my base text, but I only have one copy of the most recent edition of that book. I have a few other ones that would be similar (as you noted, most are pretty much the same), so later on this week, I will try to send you something.

 

Now, as for you thinking that I only (or even primarily) get from my information from textbooks, I'm not sure where you get off with that assumption.

 

And as for your assessment of the Fed, yes indeed, I do disagree with you in some aspects. In your historical narrative, you somehow overlook the fact that there were mutliple financial panics between the end of the 2nd Bank of the US and the creation of the Fed (1857, 1873, 1893 & 1907 to be specific). The Fed was actually set up in response to the Panic of 1907. You also seem to suggest that the Fed precipitated fractional reserve banking, but that is just plain wrong. Fractional reserve banking has been around for centuries. As for the Fed being set up to monetize the national debt, it's just not true either.