[davep]

$this->bbcode_second_pass_quote('', 'I')nstead of the Fed Board (appointed by the POTUS and approved by congress to 14 year term (in the US)) influencing how tight or loose the supply is via interest rates, some bureaucrat working directly for the POTUS decides who gets what, when.

[Pops]

I don't think you are going to get rid of the business cycle. As long as there is a profit motive people will over invest (the up) and the excess investment will be need to be trimmed (the down).

I think the big problem currently is too much free money leading to over-investment. That is on top of the nonperforming debt from bad investments last time around. IOW, too much government control not too little.

Even now low short term rates are preventing the haircuts from happening that the cycle requires. And, rather than having no effect on the cycle, I think QE and bailouts have had a big effect on the economy—after allowing "irrational exuberance" to flourish under Greenspan's easy money, they turned around and replaced it with free money.

$this->bbcode_second_pass_quote('', 'I') would see it as the state using new money to finance state activities while decreasing taxation

[radon1]

$this->bbcode_second_pass_quote('davep', '
')
How does the separation of money creation and lending affect international trade? The same processes can continue. Why would a world using non-debt based money need an external entity more than the current system?

[onlooker]

Dave, I think ultimately the problem Pops has is with this system stems from a lack of trust and a clinging to the notion of the State non interference with capitalism. I would counter that by saying is a person willing to trust more private financial entities than the State who ideally in a democracy would be beholden to the people. As for State involvement in capitalism everything that has gone wrong with capitalism in the 20th and 21st century arises from the greed of private monied interests ie. corporations, banks and wealthy stock holders. In the end something needs to be done and this issue ultimately is a political one of having a society regulated not be regulators (who can be easily corrupted as can any organization or group) but by the mass populace that in turn is beholden to a defined and clear Constitution/Charter which defines broadly the objectives, creed and philosophy of the Society in question. Meaning for example not too much greed and always a sanctimonious relation with Nature. Anyway that is a conversation for another topic at another time.

[Pops]

Actually no, I'm pretty sure I said no where (here or in any of those other umpteen thousand posts) that "non interference with capitalism" was the "notion I was clinging to." Yep right here I said just the opposite a few minutes ago:
$this->bbcode_second_pass_quote('', 'T')he fix is to hire lawmakers willing to make laws to protect the public rather than the deep pockets and regulators willing to enforce the laws

[Outcast_Searcher]

$this->bbcode_second_pass_quote('davep', '
')Note that historically, equity-based systems have been far more stable than debt-based systems. So ranting on about "based on history, I strongly suspect the results could be FAR worse" is based on nothing but hot air and dogma. The old English system of split tally sticks issued by the Government for lending is a good case in point. As they were good for taxes, they had value. And they lasted for many hundreds of years, even after the creation of the Bank of England. Another example was the US Civil War greenback https://en.wikipedia.org/wiki/Greenback_%28money%29#Civil_War

[Pops]

$this->bbcode_second_pass_quote('Outcast_Searcher', 'E')ven the article you cite says these "demand notes" were unbacked paper money, and the suggestion was to "just let congress print it" and worry about paying the money back later.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('Outcast_Searcher', 'E')ven the article you cite says these "demand notes" were unbacked paper money, and the suggestion was to "just let congress print it" and worry about paying the money back later.

[onlooker]

I think Pops, government ultimately can be better because the government consists of elected officials supposedly beholden to the people. Banks are private corporations beholden to stock holders/bottom line. My sometimes I marvel how far we have distanced ourselves from the notion of "A government of the people for the people and by the people." Problem is now we have a plutocracy or to say a rule of "Money". Pops I have noticed you grounded me in reality a few times which is good. Yet also good is to be idealistic to venture and strive to create a better world. I fully understand that people are jaded and cynical of the world because the manner it has evolved has dashed the hopes of many but that does not mean that mean we should abandon hope to create a better society.

[Pops]

I think markets are better at allocating resources and sniffing out inefficiencies that .gov could be in the best case. It is not a matter of good intentions. There is simply no bureaucracy that can know the entirety of the marketplace and shift to meet its needs like the spiderweb of consumers and providers of the market. The fact that most democracies have market based economies to one extent or another (and vice versa for that matter) is indicative of the advantage compared to a command economy.

If .gov were as altruistic and capable as you say, we would see a much more stringent regulatory system than we have and would have no need to try to find some magic bullet to fix it. You are arguing the Peter Principle, .gov has failed to regulate banking so we should allow it to control banking outright.

I think government has a big role to play in economics. Once we remove the taint of bribery in the political system and, as you say, make officials responsive to the voting public, there is no way I'd think of handing over total economic power.

[davep]

$this->bbcode_second_pass_quote('', 'I') don't think you are going to get rid of the business cycle. As long as there is a profit motive people will over invest (the up) and the excess investment will be need to be trimmed (the down).

[davep]

$this->bbcode_second_pass_quote('', 'I') think markets are better at allocating resources and sniffing out inefficiencies that .gov could be in the best case. It is not a matter of good intentions. There is simply no bureaucracy that can know the entirety of the marketplace and shift to meet its needs like the spiderweb of consumers and providers of the market. The fact that most democracies have market based economies to one extent or another (and vice versa for that matter) is indicative of the advantage compared to a command economy.

[davep]

$this->bbcode_second_pass_quote('', 'B')ased on your US Civil War Greenback example, your idea seems more about semantics than substance. You're still talking about DEBT instruments. You're still talking about fiat currency. And speaking of civil war currencies, the Confederate dollar wasn't exactly a model of lasting value, now was it?

[Pops]

cycles have been around a long time:



$this->bbcode_second_pass_quote('', 'L')eaving money creation in the hands of private banks who have their own interests is crazy for the economy as a whole, as we saw with QE.

[davep]

$this->bbcode_second_pass_quote('', 'H')mm, pretty sure QE is when central banks — the government iow, creates money from nothing...

[davep]

But to be honest, the odd status of the Fed is irrelevant. What is important is that the banks were considered so important to the economy that they got bailed out. They do not operate under the same bankruptcy rules as other companies (despite the odd less well-connected sacrificial lamb) because their ongoing operation is so crucial to the economy. So the dubious public/private status of the Fed can be extended to the banks. They can socialise the losses and privatise the profits because they have engineered a scenario where they are the only means of money creation. And we pay for the pleasure when they create money and when they should go bust.

Iceland appears to be the only country that went after the bankers rather than bailing them out. They had a tough time for a while, but are doing a lot better now. And that context explains their exploration of alternative money creation systems.

[Pops]

The fed is quasi governmental. The board is appointed and confirmed in DC and subject to oversight if the congress were not paid via their campaigns for overlook rather than for oversight.

The regional banks enact fed policy and member banks do as they are told. It is non-profit, earns money on bonds and money printing but pays the excess along to the Treasury, almost $100 billion last year:
http://www.latimes.com/business/la-fi-f ... story.html

Not sure what happens when they raise rates and start losing money on all the crap they bought from the banks...

-- but
The reason they don't work directly for the POTUS is the same reason to not have government control the presses. Politics. The whole point of having an independent agency is to keep politicians out of the cookie jar.

--

And yeah, no argument that banks and corporate persons in general have politicians in their pocket. again, that is the reason some scheme that turns over control to the pols who are in said pockets is just a panacea to placate weary conspiracy theorists. Wolves in the Henhouse and all that ....

Human citizens have been shouted down by corporate persons with unlimited speechifying ability. The only logical options now really are a narcissistic billionaire who we might hope is a closet liberal bent on a personhood amendment and election reform; ... and a trust buster/reformer like Lizzy... maybe Sanders but I doubt it, he's a redistributionist where she is a progressive reformer — I think.

[davep]

Corporate personhood is a shocking imposition by corporations on a bill of rights that was meant to be for genuine people. But that's nothing compared to the special niche banks have carved for themselves.

President Woodrow Wilson, who brought in the Federal Reserve Act thanks to machinations by a small group of bankers said the following before its introduction after a first attempt had failed (in https://www.gutenberg.org/files/14811/14811-h/14811-h.htm#VIII):

$this->bbcode_second_pass_quote('', 'T')here is another matter to which we must direct our attention, whether we like or not. I do not take these things into my mouth because they please my palate; I do not talk about them because I want to attack anybody or upset anything; I talk about them because only by open speech about them among ourselves shall we learn what the facts are.

You will notice from a recent investigation that things like this take place: A certain bank invests in certain securities. It appears from evidence that the handling of these securities was very intimately connected with the maintenance of the price of a particular commodity. Nobody ought, and in normal circumstances nobody would, for a moment think of suspecting the managers of a great bank of making such an investment in order to help those who were conducting a particular business in the United States maintain the price of their commodity; but the circumstances are not normal. It is beginning to be believed that in the big business of this country nothing is disconnected from anything else. I do not mean in this particular instance to which I have referred, and I do not have in mind to draw any inference at all, for that would be unjust; but take any investment of an industrial character by a great bank. It is known that the directorate of that bank interlaces in personnel with ten, twenty, thirty, forty, fifty, sixty boards of directors of all sorts, of railroads which handle commodities, of great groups of manufacturers which manufacture commodities, and of great merchants who distribute commodities; and the result is that every great bank is under suspicion with regard to the motive of its investments. It is at least considered possible that it is playing the game of somebody who has nothing to do with banking, but with whom some of its directors are connected and joined in interest. The ground of unrest and uneasiness, in short, on the part of the public at large, is the growing knowledge that many large undertakings are interlaced with one another, are indistinguishable from one another in personnel.

Therefore, when a small group of men approach Congress in order to induce the committee concerned to concur in certain legislation, nobody knows the ramifications of the interests which those men represent; there seems no frank and open action of public opinion in public counsel, but every man is suspected of representing some other man and it is not known where his connections begin or end.

I am one of those who have been so fortunately circumstanced that I have had the opportunity to study the way in which these things come about in complete disconnection from them, and I do not suspect that any man has deliberately planned the system. I am not so uninstructed and misinformed as to suppose that there is a deliberate and malevolent combination somewhere to dominate the government of the United States. I merely say that, by certain processes, now well known, and perhaps natural in themselves, there has come about an extraordinary and very sinister concentration in the control of business in the country.

However it has come about, it is more important still that the control of credit also has become dangerously centralized. It is the mere truth to say that the financial resources of the country are not at the command of those who do not submit to the direction and domination of small groups of capitalists who wish to keep the economic development of the country under their own eye and guidance. The great monopoly in this country is the monopoly of big credits. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men.

This money trust, or, as it should be more properly called, this credit trust, of which Congress has begun an investigation, is no myth; it is no imaginary thing. It is not an ordinary trust like another. It doesn't do business every day. It does business only when there is occasion to do business. You can sometimes do something large when it isn't watching, but when it is watching, you can't do much. And I have seen men squeezed by it; I have seen men who, as they themselves expressed it, were put "out of business by Wall Street," because Wall Street found them inconvenient and didn't want their competition.

Let me say again that I am not impugning the motives of the men in Wall Street. They may think that that is the best way to create prosperity for the country. When you have got the market in your hand, does honesty oblige you to turn the palm upside down and empty it? If you have got the market in your hand and believe that you understand the interest of the country better than anybody else, is it patriotic to let it go? I can imagine them using this argument to themselves

[onlooker]

https://www.youtube.com/watch?v=RhkjYJA ... Ey63Duidsw
I put this link because it is pertinent to this discussion. John Kennedy speaking about what he saw as a "monolithic and ruthless conspiracy". What is very obvious is the complete concentration of monied interests into the control by a very few. I encourage any interested to do a search to see how corporations and banks are intertwined and how that ultimately leads to a pyramid hierarchy structure in which a few families control vast assets and money. I speak of Rothchilds and the British Royal family among others. Even a cursory search reveals how vast wealth is concentrated in a few hands. We are seeing the results of this in the worldwide agenda of maintaining the status quo particularly in regards to the Banks prominence via lending in economic affairs.

[Oneaboveall]

I find myself repeating my posts a lot, but I have to post this again:

Whenever they start talking about how this or that is going bankrupt, just remember that they somehow found 23 trillion to bail out the banks a few years back. Hell, during the Great Depression, the US was broke for 13 years after 1929, but somehow found the money to fight WWII.

Have we not realized yet that money is BS?