by firestarter » Wed 04 Oct 2006, 17:53:28
$this->bbcode_second_pass_quote('GoIllini', '')$this->bbcode_second_pass_quote('bdmarti', '
')Rule number one of constitutional interpritation is that things written in the consitution have meaning.
The enumerated powers of congress include the ability to TAX and BORROW money. These specifically enumerated powers lose all meaning when it is interprested that the government also has the authority to CREATE (out of thin air) as much currency as it wants for as long as it wants.
ok...
back to your regularly scheduled debate...
It also has the power to:
"To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; "
-Article 1, Section 8; U.S. ConstitutionThus, the federal government has the power to create money and regulate its value. Please review the documents you cite before making posts. If this clause doesn't contradict your post, at the very least, this clause was too relevant to your point for you to just ignore it while making your claim.
Article 1, Section 8; of the U.S. Constitution does not
necessarily make the Federal Reserve Act of 1913 constitutional, however. Activist courts work via omission as well as commission.
On the other hand, with the "organic" Derridaeske method of judicial interpretation (especially in vogue the last fifty years or so, but always in play to some degree since the founding) it's easy to see virtually any constitutional clause being used to support the private banking cartel.
Nevertheless, inspite of all the judicial machinations, or lack thereof, out there, there is such a thing as settled law, and I'd say that 90 plus years in existence pretty well enshrines in stone that the Federal Reserve is here to stay for good, or until the next revolution.
As for the idea that we operate in a "free market", I'd merely remind everyone out there that it's only nominally free using the loosest of interpretations. Laissez-Faire, libertarian types would consume anyone for lunch who tried to argue free market and government/Federal Reserve control of the economic system in the same breath. They are mutually exclusive.
If you can find them, G. Edward Griffin’s treatise
The Creature From Jekyll Island and Murray N. Rothbard’s short work
The Case Against the Fed are excellent reads for incisive arguments why a genuinely free economy does not need a central bank.
by MrBill » Thu 05 Oct 2006, 03:48:40
bdmarti wrote:
$this->bbcode_second_pass_quote('', 'I')t's difficult to say how much effect the FED had on wealth disparity, but the fact of the matter is wealth disparity reached it's lowest point while we had gold backed currency. And the Fact of the matter is wealth disparity is approaching (and may have passed) it's highest levels ever while the FED is the entity controling currency.
I do not think you will find anything in my post about the FED creating prosperity? If you do, let me know, and then I apologize.
I think in general, central bank independence free of polical interference in many countries not just the good ol' USA has resulted in better monetary policies on the whole. In the past 20-years certainly more central banks have been set free of their political masters and given price and stability targets instead. The results have generally been positive.
You may or may not be a big fan of Greenspan, Benanke or Volcker for that matter. However, keep in mind that an independent central bank is still victim to the political process that allows prolific fiscal policies and then is charged with cleaning up the mess with only monetary policy at its control. Having elected officials and their bureacratic minions in charge of both fiscal and monetary policy is surely worse?
I think in general I was trying to point out that growing populations and higher wealth expectations were putting pressure on land, labor, capital and intangibles to keep productivity and therefore standards of living improving.
You cannot run a 21st century economy with 6.5 billion people using the same land, labor and capital as in the 19th century with less than one billion. It really has nothing to do per se with a gold standard. I can have just as stable a system, but infinitely more efficient, by running a balanced fiscal budget and limiting money supply growth to only growth in the real economy, while keeping interest rates neutral. But that is the trick. Only enough and never too much.
However, like sustainable development that is a very fine point to find and to stay at, and a gold standard, or a fiat currency system backed by gold or even energy for that matter, still does not guarantee you will not have booms and busts as well as economic dislocations caused by shifts in the real economy caused by technology, population increases, droughts, floods or whatever.
The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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by bdmarti » Thu 05 Oct 2006, 11:54:05
$this->bbcode_second_pass_quote('GoIllini', '
')Was the "gold standard" a cause of the growing prosperity of the middle class, a result, or a result of something else that also caused that prosperity?
I already stated that I think outside factors like WWI and WWII had large impacts on our prosperity.
When the rest of the world needs food and goods and your country is by far the best able to produce both for years it bodes well for your economy.
We had a strong industrial economy that grew largly in size because of woman's lib and war demands. We had lot's of skilled workers and lots of factories and we still had a monsterous agricultural powerhouse of a country. With the new tractors and combines being relativly cheaper after the war and the ramped up production, more returning men could enter alternative fields of work.
I think factors like these far outweigh any benefits the FED or gold standard could be said to have had on our economy at the time.
I think the gold standard is rather neutral when it comes to growing prosperity.
I do however find that governments constantly debasing a currency will lead to economic ruin in the long run.
I find the 3000 plus years of evidence where all debased currencies and fiat currencies failed to far outweigh the 35 to 75 years that our modern fiat system has managed to not fail.
$this->bbcode_second_pass_quote('', '
')Also, many gold bugs claim that the USD became a fiat currency in 1935, rather than 1971. Do you agree that the system we had from the '30's through the '70s served us well?
I think the partial gold standard we had during this period was still enough of a check against government to prevent the type of negligent overspending we have today.
It still seems to me that we would have done relativly well economically during this period if A) the fed had not existed at all and B) we still had a full gold standard.
However, we can only speculate really.
We'll never know how we would have done under a different economic system during a particular time.
Although it may be a poor substitute due to changing technology and markets, the best we can do is evaluate currency systems during periods they actually exist and try not to repeat the mistakes of old.
by bdmarti » Thu 05 Oct 2006, 12:16:02
$this->bbcode_second_pass_quote('MrBill', 'b')dmarti wrote:
$this->bbcode_second_pass_quote('', 'I')t's difficult to say how much effect the FED had on wealth disparity, but the fact of the matter is wealth disparity reached it's lowest point while we had gold backed currency. And the Fact of the matter is wealth disparity is approaching (and may have passed) it's highest levels ever while the FED is the entity controling currency.
I do not think you will find anything in my post about the FED creating prosperity? If you do, let me know, and then I apologize.
.
No, you certainly didn't say that the FED in particular created prosperity. On that point, you are immune to criticism.
On a more gerneral note, and more of what I was getting at with the passage you quote of mine, you did say the following:
$this->bbcode_second_pass_quote('', ' ')I think you may find that innovations in capital markets have been very democratic and opened up opportunities for far more people than you think. I think you will find that the concentration in wealth, by the Rothschilds for example, was a lot more than today where any dumbass with a 4-year general arts degree who is willing to work 40-hours a week can afford their own detached house and an auto.
You said that wealth concentration was worse 100 years ago. In the US, that is not the case. I haven't looked into how things were in other countries, so for the UK or Europe in general it may be the case that wealth disparity has dropped from 100 years ago.
Further, it seemed to me that endorsement of the way "capital markets" are run has an implied endorsement of the currency systmes behind those markets.
If you simply endorse the changes to capital markets, independant of currency, and believe that modern capital markets would be equally democratic and such even if we changed the currency system...then you would again be immune to my critism on this area and you have my appologies. Though if that were the case, I must admit to not understanding your stance.
by GoIllini » Thu 05 Oct 2006, 19:28:58
$this->bbcode_second_pass_quote('bdmarti', 'T')hus nothing. I've reviewed the constitution quite enough thank you. I didn't ignore the clause, I simply pointed out that in order to interpret it as you claim, one needs to ignore TWO other clauses.
It is obvious that "to coin", in this context, means to take a commodity metal (like gold or silver as mentioned elsewhere in the constitution) and produce standard sized coins that could be used in all the states rather than have each state produce different sized coins that would then need conversions and such.
OK; why does the federal government then also have the power to "regulate the value of money?" More importantly, the federal government isn't charged with the power to "measure gold into 1-oz coins and regulate them like weights and measures"; it's charged with the power to make, or "coin" money.
Also, the presence of the other two clauses is irrelevant. If I buy a ticket to Disneyland that lets me go to Epcot and the Magic Kingdom for a day, the guard at Disney isn't going to say "Sorry; your pass says you're also allowed to go to Epcot, so we won't let you into the Magic Kingdom". If you really want to get into propositional logic, we can do that, but the point is the fact that the federal government has one power does not mean that it has other
enumerated powers.
At the very least, you're either calling 99.5% of the country blind fools- including dozens of Supreme Court justices and other legal scholars.
$this->bbcode_second_pass_quote('', 'W')hat's more important, is that when you so boldly present the "coinage" clause and take it to mean the government can "create" money, you promptly ignore the existance of the Taxing and Borrowing clauses, which are rendered pointless when the government is claimed to have the power to create money.
Has the federal government stopped borrowing money or taxing people now that it can print its own money? Obviously, those clauses are still needed under our new system. Why is that?
Let's face it: there are much deeper, more important, and more frightening questions that are getting asked about the constitution right now (like whether the Federal gov't has the power to detain people without a warrant, whether torture is "cruel and unusual punishment", or whether the government can wiretap us without a warrant.) Why waste energy on questions about currency when the Bill of Rights is going up in smoke?
by MrBill » Fri 06 Oct 2006, 03:14:54
bdmarti wrote:
$this->bbcode_second_pass_quote('', 'Y')ou said that wealth concentration was worse 100 years ago. In the US, that is not the case. I haven't looked into how things were in other countries, so for the UK or Europe in general it may be the case that wealth disparity has dropped from 100 years ago.
I think there is a danger to make the argument too US centric and lose sight of broader patterns. 100 years ago give or take is also arbitrary as the migration to the USA started much sooner. Obviously many people from Europe, especially Eastern Europe, which was really still very feudal, fled the Old Country to start life fresh in the USA. If you were not the oldest son to inherit the farm then you had to learn a trade. The Church still owned a lot of land and was very powerful over individual's lives. Private landowners with large estates still enjoyed many special privileges. Leaving was a way to wipe the slate clean, so the effect was a leveling on the wage gap when all these immigrants landed in the New World (Canada, Australia and S. America as well).
However, in the case of the USA, due to an abundance of cheap, open land, the wage gap also stayed compressed for a long time as there was little incentive to work for wages, while a man could own and farm his own quarter section, perhaps working off the farm in the off-season. The wealth concentration and therefore restrictive access to capital in Europe would have been greater than in the USA at similar times 100+ or 200+ years ago.
Last edited by
MrBill on Fri 06 Oct 2006, 03:43:31, edited 1 time in total.
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by MrBill » Fri 06 Oct 2006, 03:41:40
$this->bbcode_second_pass_quote('firestarter', '')$this->bbcode_second_pass_quote('MrBill', ' ')
I think in general, central bank independence free of polical interference in many countries not just the good ol' USA has resulted in better monetary policies on the whole. In the past 20-years certainly more central banks have been set free of their political masters and given price and stability targets instead. The results have generally been positive.
.
MrBill, Would you please elaborate more relative to the qualitative assertions above?
In many countries the central bank used to be subservient to the Federal government. This meant that monetary policy was slave to the political cycle as well. The government for better or worse, mainly for worse, controlled fiscal and monetary policy. Especially, as Keynesian theories took hold of many governments in the 1960's and 70's and this triggered inflation as governments dabbled in cradle to grave welfare states and nationalization of key industries without worrying how to pay for such luxuries. Tax and spend government.
Even worse some governments found it simply irresistable not to raid the coffers of the central bank for their government funding. This lead to many currency crises that were perhaps later blamed on external factors or the IMF and others, but were at their roots government incompetence, mismanagement and plain old corruption.
Central bank independence based on price and stability targets or inflation targeting allowed many of these countries to self-right in the 1980's and 90's. The Bank of Canada, Bank of England, Bundesbank, etc. free of their political pay masters could concentrate on bringing down inflation via high real interest rates. As did Paul Volcker at the Federal Reserve in 1979 with his Saturday Night Special as it came to be known. And if you look at bond yields as well as inflation data you will see that USTs for example fell from 18% to 4% as these policies proved very successful.
$this->bbcode_second_pass_quote('', 'A')nnual inflation rates that reached 6,800 percent in Brazil in 1990 have fallen to 3.7 percent in the 12 months through mid September. Inflation in Mexico, which surpassed 180 percent in 1988, was 3.5 percent last month. It is the first time both of the countries have recorded lower inflation rates than the United States, where consumer prices rose 3.8 percent in August.
"The phenomenon of inflation is not the boogeyman it used to be," said Luiz Fernando Figueiredo, a former monetary policy director of Brazil's central bank who is a partner at Maua Investimentos, a hedge fund based in Sao Paulo. When you know inflation will be under control and you can trust inflation forecasts, you know the value of your investment won't be eroded
Latin America taming inflation boogeyman
Fed funds eventually fell to 1% because the Fed was not worried about inflation, but this in itself was very stimulative given global GDP growth was a healthy 4% per annum. And they were very slow to reign in these expansionary policies. But to be fair so were the BOJ and others as well.
The problem is that economies are dynamic not static and there is always a reaction to every action. The mandates of the central banks are very narrow. Either they target inflation or they strive to acheive price stability. Some have argued that central banks were fighting yesterday's wars, while ignoring asset price bubbles. In other words, they were using interest rates as a blunt policy weapon, while ignoring money supply growth that was seeping into asset prices like emerging markets, commodities and real-estate.
And still other Asian central banks for example have used currency management through their external foreign exchange reserves to keep their local currencies undervalued to protect their export sectors.
So therefore the Maastricht Treaty, on public debt and annual deficits as a percentage of GDP as well as price stability targets given to the ECB, the EU is trying to remove temptation by replacing opaque fiscal and monetary policies that are very subjective to ones that are rules based. This keeps federal governments on a short leash, while making sure the ECB is free of political interference from EU national governments.
Unfortunately, they have not gone far enough, so that even though Italy at the moment is bound by the euro and has no control over the ECB or interest rates, they are still free to issue sovereign debt. And if they issue too much as they have they weaken the fabric of the Maastricht Treaty. This forces the Bundesbank and other EU central banks to step in and take countervailing measures to balance Italy's prolifigy. By being too restrictive in Germany for example. I can imagine they are not exactly thrilled about exporting German jobs to Italy either, but those are private not public squabbles!
However, governments always want faster growth and will gladly trade higher inflation for more jobs. While even good monetary policy by itself, say stable, low inflation and non-expansionary money supply, are not enough to remove the red tape and inertia from the real economy that are caused by over regulation and protecting those with jobs from competition, while leaving those without jobs to fend for themselves. Therefore, you will always find politicians willing to criticize central bank policy as being too restrictive, while in reality the central bank is often just responding to fiscal policies that are too expansionary, instead of politicians tackling structural problems in the economy.
As one EU politician said, "we all know what to do, we just do not know how to get re-elected if we do it." 'Nuff said! ; - )
The organized state is a wonderful invention whereby everyone can live at someone else's expense.
by dr_doom » Fri 06 Oct 2006, 08:54:08
$this->bbcode_second_pass_quote('', '
')Perhaps as you are such a good student you may wish to do your homework and tell me for example about capital markets 100 years ago? Who had access to capital? How much did capital cost to borrow? Under what conditions? Who financed the ships of commerce?
My understanding is that a lot of businesses were self-financing around the end of the 18th century. Nowadays, the corporations which succeed in bringing resources, human or otherwise under their wing, are the ones which have support from the banking cartel.
Success does not favor those who can get the job done using the least resources, i.e. efficiently. It favours those corporations with the right connections. This is why we end up with these huge corporations full of people who generally couldn't give a fuck about what they are actually producing.
$this->bbcode_second_pass_quote('', '
')How many people owned their own homes?
I'm not saying that distribution of wealth was perfect under a gold-standard, but it was a damn site better than what it is now. Where the masses generally own nothing, less than nothing, a trend which is set to get even worse when real-estate crashes, and the bottom falls out of the dollar. But obviously bankers are not responsible for any of this.
$this->bbcode_second_pass_quote('', '
')Are we all expected to become gold miners or farmers?
I should have pointed out, I'm not saying the world doesn't need banks. They could charge whatever people are willing to pay to safeguard their assets. What we don't need is bankers being given a monopoly on the creation of our money, out of thin air.
$this->bbcode_second_pass_quote('', '
')Three. Those who succeed have convinced their clients or at least their boss that they are worth the money they earn. It is a free market. That bankers are generally well-paid attracts the best and brightest including those maths geniuses that run the structured trading books that mere mortals like me do not really understand. But there is also a role for good sales people as well.
Dr.Doom insinuated that bankers earned obscene profits for doing little more than creating paper out of thin air, and although GoIllini did a good job of correcting this misconception, our friend was having none of the truth, instead calling anyone that sees any value in the current system as being tainted by the corruption. As for me, that is fine. Those who do not understand the system will always be on the outside looking in. At least that means I will have a job!
by GoIllini » Fri 06 Oct 2006, 15:41:05
$this->bbcode_second_pass_quote('dr_doom', 'M')y understanding is that a lot of businesses were self-financing around the end of the 18th century. Nowadays, the corporations which succeed in bringing resources, human or otherwise under their wing, are the ones which have support from the banking cartel.
Businesses have almost always needed investment banks to structure bond offers. If anything, the trend in borrowing among large companies is moving away from commercial banking and toward bonds.
$this->bbcode_second_pass_quote('', 'S')uccess does not favor those who can get the job done using the least resources, i.e. efficiently. It favours those corporations with the right connections. This is why we end up with these huge corporations full of people who generally couldn't give a fuck about what they are actually producing.
Success, short-term, favors vested interests. The good news is that long-term, if I can do something better than someone else, I can succeed. IMHO, I could be smarter at trading than many of the Ivy League kids I supported this summer. The good news is that if I save up enough money, and I'm as good at trading as I think I am, I'll be able to trade on my own in a few years.
$this->bbcode_second_pass_quote('', 'I')'m not saying that distribution of wealth was perfect under a gold-standard, but it was a damn site better than what it is now. Where the masses generally own nothing, less than nothing, a trend which is set to get even worse when real-estate crashes, and the bottom falls out of the dollar. But obviously bankers are not responsible for any of this.
Last I checked, while the number of Option ARMs issued was in the double digits, the percentage of houses in the country under Option ARMs was in the single digits. Most people are not upside down on the mortgages.
$this->bbcode_second_pass_quote('', '
')I should have pointed out, I'm not saying the world doesn't need banks. They could charge whatever people are willing to pay to safeguard their assets. What we don't need is bankers being given a monopoly on the creation of our money, out of thin air.
by dr_doom » Fri 06 Oct 2006, 18:20:04
$this->bbcode_second_pass_quote('', 'B')usinesses have almost always needed investment banks to structure bond offers. If anything, the trend in borrowing among large companies is moving away from commercial banking and toward bonds.
The keyword here is almost. Commercial banking vs bonds, are pretty much the same thing. Both represent lending originating from the banking cartel.
$this->bbcode_second_pass_quote('', '
')Most people are not upside down on the mortgages.
Not yet they aren't. The most worrying trend I've noticed in this country, is the middle-class piling into BTL (buy to let) which has in effect kept the bubble going several years beyond where it might have petered out.
It doesn't take a genius to figure out that these people (and there are a lot of them), have simply scaled up their financial exposure several-fold to any down-turn in housing, which is coming. People seem blind to any risk with these "investments".
$this->bbcode_second_pass_quote('', '
')In order to survive as a trader, you simply can't be arrogant. MrBill survived as one- in the grain market no less- for a long time. I think that MrBill's concern was that you figured you knew the system when it seemed to him you really didn't, and it seemed to me he was explaining the evidence that showed you were wrong.
I don't think you can argue the statement he made was anything but arrogant.
I'm not sure what specifically he has showed me wrong about. His posts seem to be mainly made up of, anecdotals, attacks on my credibility and person, and diatribes on issues completely unrelated to the topic at hand.
by bdmarti » Mon 09 Oct 2006, 12:42:34
$this->bbcode_second_pass_quote('GoIllini', '
')OK; why does the federal government then also have the power to "regulate the value of money?"
If you wish to have a unit of money called a "dollar" and you grant the government the ability to "coin" dollars, then it is also a rather useful tool for the government to have the authority to declare what exactly is a "dollar" in terms of something like gold or silver. Thus, a dollar could be 1oz of silver. The government would have the authority to coin such dollars out of silver.
Other banks or entities would be free to make all the silver coins they wanted, and they could possibly even call them dollars if they had an oz of silver, but they most certainly could not call them dollars if they were not what the government defined a dollar to be.
$this->bbcode_second_pass_quote('', '
')More importantly, the federal government isn't charged with the power to "measure gold into 1-oz coins and regulate them like weights and measures"; it's charged with the power to make, or "coin" money.
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
Isn't it interesting how the ability to regulate "weights and measures" is right there with the ability to coin money? Could it be better that we all use the same definitions of OZ an LB when measuring money commodities, and thus a standard, legaly binding definition of such measures is a good thing? Or maybe they just lumped these things together arbitrarily...
$this->bbcode_second_pass_quote('', '
')Also, the presence of the other two clauses is irrelevant.
No. Mosty certianly not when one is discussing a legal document such as the constitution. All clauses in the document are relevant.
Your disneyland analogy is hopelessly off the mark.
$this->bbcode_second_pass_quote('', ' ') If you really want to get into propositional logic, we can do that,
