haha, well said
They are the monopoly. Government is private to begin with. What’s “public” about it? What make the US government more “public” than the banks?
Yet Congress could pass a law abolishing the Fed this week. The President could order an airstrike on the NY Fed building, etc.
You quote a politician saying the real battle is between the people and the banks. Nice out for him[:D]
Hi Jonathan,
I agree there are some benefits to the government using the Fed as you have stated. They know they may borrow whatever they want while only paying interest. For years, they assumed that the problem of a growing national debt would be someone else’s problem - further down the road.
Larry
Tough questions…I’ll try to respond to all of your points. First, I am not suggesting a central bank or plan - I don’t think we need or want one. Lincoln didn’t have one and neither did Jackson (after he fired them). During the “national banking era” we did not have a central bank.
Q) Do you think our monetary system was much better under Lincoln’s central bank (lead to extreme inflation)
Yes (but as mentioned above, there was no central bank). Lincoln was offered loans at 25-30+% to fund the war. The debt would have bankrupted the nation, or at a minimum, caused massive stagflation. Lincoln’s “greenbacks” (debt free money spent into circulation) won the financial war of attrition as the north’s economy grew while the south lurched toward bankruptcy. The army of the north was well supplied and growing in strength while the southern armies were starving and wanting in most capacities.
War inevitably leads to severe shortages of goods and the result is prices go up - many consider this to be “inflation.” Historian J.G. Randall wrote that “The threat of inflation was more effectively curbed after the Civil War than the First World War.” - The Civil War and Reconstruction (1937) John K. Galbraith said “it is remarkable that without rationing, price controls or central banking, [Treasury Secretary] Chase could have managed the federal economy so well during the Civil War.”
Greenback power was noted and feared by the English banking interests as evidenced by an article that ran in The London Times in 1865:
"If that mischievous financial policy, which had its origin in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost.
It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe." (Link)
Q) …the first and second banks of the United States (Struck down by Jackson)
Yes, Jackson eliminated the national debt (I don’t think any other President accomplished this) and restored our financial sovereignty. “The First Bank of the United States was given a 20 year charter. In the first 5 years of operation, the American government borrowed $8.2 million and prices rose by 72%. After the 20 year charter expired the government voted against renewing it and the bank closed its doors on March 31, 1811.” (Link)
On July 10, 1832 President Jackson vetoed Congress’ decision to renew the charter of The Second Bank of the United States. He said;
"It is not our own citizens only who are to receive the bounty of our government. More than 8 millions of the stock of this bank are held by foreigners … is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence would be more formidable and dangerous than a military power of the enemy.
Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the stockholders of the existing bank must come directly or indirectly out of the earnings of the American people." (Link)
Hi Dave,
Sorry I’m just getting back to you…we seem to agree on the constitutional part.
Larry
Ooooopps…you’re right. I misspoke.
I should have been more careful in my wording. What I meant was that as it stands now, banks can use deposits to create new money as a ratio - though it is not often followed. They are free to use reserves to borrow money for their own account. They often create money to invest on their own - not a bad deal - money for free.
The deposits are not their money and the depositors may withdraw at any time.
By reserves, I mean an actual account maintained by the bank - their money to provide a cushion against losses.
Thanks Matgre!
Larry
You’ve seen Bill Still’s The Money Masters, now read No Treason. Bill Still is a fiat money advocate. The Money Masters has a lot of very interesting history, but it doesn’t correctly ascertain the problem. It looks like a lot of conspiracy until you realize that the government itself is just a private company, no different than the banks - except it has a whole lot better PR. (All these links are to literature outside mises.org, just so you could get a second opinion not affiliated with “us.”)
You’re going to quote John K. Galbraith? He’s the biggest statist economist since JM Keynes himself. He once proclaimed that if NYC increased its spending three-fold, it would eliminate all of its problems; of course, they spent four times more, and the problems only magnified. Galbraith doesn’t believe printing money causes inflation, he believes money is entirely endogenously determined.
Ah, so the Jew banking conspiracy predates the federal reserve. What about hyper-inflation in Rome? Where they responsible for that as well?
Andrew Jackson considered fiat money to be “the instrument of the swindler and the cheat.” For Andrew Jackson, hard money, gold, was the only real money; anything else was “a fraud to steal from the honest man.” Abraham Lincoln, on the other hand, was a Whig, and as such, favored heavy protectionism and central banks. He also despised hard money (specie). Lincoln claimed that the gold and silver standard would mean “all would suffer, and very many will lose what renders life meaningful.”
The greenbacks quickly depreciated in value, by 1862 they were worth a mere 35 cents of gold. Lincoln and Jackson were diametric opposites when it came to monetary policy. Fiat money was not something untried in U.S History; the revolutionary war meant that the United States would have to get off of the metallic standard and run deficits. They issued fiat money called “continental dollars” which were hyper-inflated as well. This is where the phrase “not worth a continental” comes from. All fiat currencies, throughout time, have always fallen to zero value.
Do you get all of your information from youtube videos? You praise Andrew Jackson but don’t even understand his positions; you praise fiat money but you don’t understand fiat money; you criticize commodity money but you don’t understand commodity money; you criticize credit transactions, but you don’t understand credit transactions. Why are you so impressionable?
So if the people that run an agency are government employees, nominated by the President and confirmed by the Senate (like cabinet heads and Supreme Court justices), draw government salaries (like all government employees), and are required to report to Congress (like the President), and all of its profits generated by that agency go to the government (like the post office), somehow that agency is not a government agency? That’s quite a stretch. The Federal Reserve is 100% owned and controlled by the Federal government.
Did you see my post critiquing your proposed alternative monetary system? I would like to know your thoughts having read my criticism.
-David
By simply creating the money and spending it into society for things that benifit all of society, instead of having a private banking system who creates all the money and only loans it into circulation, and when that principle is paid back, it’s extinguished, and removed from circulation, yet the borrower can only pay his interest when someone else goes to the bank and gets another interest bearing loan.
Permanant, always growing debt created by the banking system for the benifit of the banking system, or we can have debt free money created and spent into circulation for the benifit of society.
So you’ve changed your position from a fascist monetary solution to a socialist one. Either way the currency will be debased, business cycles will occur, and there is no such thing as an omniscient socialist government that will be able to unilaterally build/produce/please individuals as a market naturally does.
The only difference between the first solution and the second is ‘Private’ and ‘Public’. Other than that they are essentially identicle. The fed is not a typical ‘private’ firm, it is a coercive monopoly, and a ‘public’ solution is naturally the same. So you havn’t really addressed the issue at all, you’ve just re-arranged the coercive monopoly from one set of hands to another, all we will see is a change in errors, but continued errors to be sure. Instead of mal-investment in the private sector we will have huge public projects squelching the wealth of the nation building things no one needs or wants.
Its not dept that hurts us specifically. It’s the mis-representation of the savings money-stock. With our current method we make the savings stock appear high, under a socialist solutions the savings stock will perpetually appear low as public funding will not come from taxes but from a monetary solution which will simply cause inflation. What you have now is people spending more than they should, in your solution people will be saving lumps of gold under their bed.
You haven’t offered a real solution, you have demonstrated that you have a bit more reading to do on money and credit. Best of luck~
Oh no, it’s back.
I thought I’d give it a shot before you intellectual heavy weights got started. [:P]