The Great Depression, economics professor debunks libertarian myths. I'm in a bad mood.

Economics Economics Questions
1

I haven’t taken an economics class, but I’m not sure how to refute the popular theory that nobody trusted Banks because of the lack of regulation and fractional reserve banking.

So I was debating with my egotistical friend, who came to me about it because his economics professor tore apart Ron Paul’s book in class, and debunked all the libertarian myths about the Depression. FUCK I am pissed.

What, in detail was it that caused it?

Him: you’re only against the fed bank rev because Rob Paul is

Me: you really need to get overyourself

Me: -_-

Hi: is that man said sex & reproducing is bad you’d be promoting cloning as an alternative

Him: if*

Him: try thinking for yourself

terrabahamut101: I’ve done my own research, on the federal bank

Him his book is a load of crap my economic professors tore it apart in lecture

Him: the federal bank needs better leadership & oversight

terrabahamut101: lol @ economic professors

Him: but it’s an integeral part of the capitalist system

terrabahamut101: and biased

Him: not really

terrabahamut101: Ron Paul was the first to introduce me to the idea

Him: see there’s your ingorance & racism again

Him: you want ron paul

terrabahamut101: But I did my own research on it

Him: so that’s what you want

Him: but you’ve never even taken an economics class

Him: explain to me how the federal reserve works

terrabahamut101: Its too complex

terrabahamut101: But

Him: no it’s not

Him: it’s quite simple

terrabahamut101: If you let a privately owned investor own the entire economy, they easily become corrupt

terrabahamut101: The Federal Reserve prints money respond to commercial demand

Him: & the fed bank got congress’s permission to rescue those companies

terrabahamut101: since fiat currency expands with the economy

Him: so if you’re against them blame congress

terrabahamut101: OF course, but it doesn’t mean it was a good decision

Him: it wasn’t

Him but it wasn’t the fed’s fault

terrabahamut101: A transfer of wealth through bailouts to incompetent companie

terrabahamut101: companies*

Him: congress shoulda blew a whistle

Him: i agree it’s a free system so they should have been free to fail

Him: that’s congress’s fuck up

terrabahamut101: Dude, congress doesn’t have to, The Federal Reserve was made private so taht it isn’t involved in politics

Him: the reserve did what any bank does

Him: it loans money

terrabahamut101: so taht politics don’t interfere with it

Him: when you were actually working

Him: did you have a savings account

Him: or a checking account

terrabahamut101: Lends money to what? theres shitloads of private banks

terrabahamut101: yeah

Him: you realize

Him: they don’t keep your money

terrabahamut101: The fed also lends money to the Government.

Him: the banks invest & spend it

Him: no it doesn’t our government prints & borrows money

Him: without the fed

Him: the fed requires banks to keep X amount of dollars are all times

Him: to make sure if you want your money back

terrabahamut101: Yeah fractional reserve banking

Him: you can go get it

Him: and the fed INSURES your money

Him: so when fucking dumb banks lose all that money they invested

Him: it comes out of their profits

Him: & you are still GARUNTEED

Him: to get the money back

Him: that you gave them for a saving/checking account

Him: i can give you 100% assurance

Him: if you get rid of the FED

Him: we’ll be worse off than in the 1940’s

no one will trust banks & we’ll be in one hell of a depression

terrabahamut101: God

terrabahamut101: We had the fed in the 1940

terrabahamut101: The fed was the fucking reason the depression happened, as well as Hoover’s intervention policies

Him: yeah i know

Him: no it wasn’t lol

terrabahamut101: Hoover raised tariffs on imports

Him: the fed didn’t regulate banks then

terrabahamut101: cut the interest rates too low

terrabahamut101: That has nothing to do with it, the theory is that becuase of the gold standard

Him: would you put money in savings account or buy CD investments

Him: if there was a good chance you’ll never see that money again

terrabahamut101: the fed wouldn’t expand the credit to fight deflation

terrabahamut101: But in truth, they had access to an excess of gold to do it

terrabahamut101: they just simply didn

terrabahamut101: t

terrabahamut101: Which is what caused the depression

Him: right because it had nothing to do with the stock market collapse

: you’re fucking amazing

: you’re so ignorant & endoctrinated it’s unbelievable

terrabahamut101: the stock market collapsed because the interest rates were too low

Him:try reading a textbook

terrabahamut101: A lot of textbooks are biased

2

My irony-o-meter was pegged by that guy.

3

Elaborate on that more, is that aimed at me or him?

4

Sorry, but where’s the argument? All I see is a condescending prick.

5

He’s like that with me all the time. No idea why, he doesn’t regard me as an intellectual at all.

6

He isn’t much of one either. If he can’t talk to you without being derogatory ignore him. Not worth your time.

7

Him: the fed requires banks to keep X amount of dollars are all times

Him: to make sure if you want your money back

terrabahamut101 (9:38:38 PM): Yeah fractional reserve banking

Him: you can go get it

Him: and the fed INSURES your money

Him: so when fucking dumb banks lose all that money they invested

Him: it comes out of their profits

Him: & you are still GARUNTEED

Him: to get the money back

Him: that you gave them for a saving/checking account

Him: i can give you 100% assurance

Him: if you get rid of the FED

Him: we’ll be worse off than in the 1940’s

no one will trust banks & we’ll be in one hell of a depression

8

Why would you bother to associate with such a fellow? Also, for such an ‘intellectual’ his spelling is quite poor.

Anyway, if there were any kind of consistent argument here we could respond. There isn’t. For example, he states that banks should be free to fail but then later asserts that if the Fed didn’t bail out banks we would be worse off than we were in the Depression.

9

How is he wrong about that? Other then that the banks were allowed to act on their own during the depression, its just the low interest rates, raising of tariffs, and inflation of the dollar were the reason for their bad investments.

10

He didn’t say anything about bailing out the banks, he said the Fed is necessary to make sure the banks keep money, so that it doesn’t turn into a situation where nobody trusts banks like in the Stock Market Crash.

11

Him…especially the part about you being brainwashed.

12

You are correct, I misread.

These are just a couple of problems I noted during my cursory read…

Him: the fed requires banks to keep X amount of dollars are all times
Him: to make sure if you want your money back

The Fed obviously does not require banks to keep full reserves, this point is wrong.

Him: no it doesn’t our government prints & borrows money
Him: without the fed

The Fed does buy treasury bonds…it does lend to the federal government.

Of course the biggest problem with his argument is that he doesn’t actually make one. He seems to assert that without the Fed to “garuntee” deposits no one will trust banks => we will be in “one hell of a depression.” I would love to see the actual logic there.
Of course, banks existed long before the Federal reserve. Without an external agent “insuring” deposits banks must act with greater caution and demonstrate their trustworthiness. People would not blindly trust banks because they are “insured”–this is actually a good thing.

13

Then why didn’t people trust banks in The Great Depression? Why did the banks spend all of their customer’s money?

14

More

terrabahamut101: YOu seem to be only taking word from your professor, most colleges are liberal biased btw

Him: it’s not liberal

Him: and btw

terrabahamut101:
“It concentrated the nation’s financial strength in a single institution.
It exposed the government to control by foreign interests.
It served mainly to make the rich richer.
It exercised too much control over members of Congress.
It favored northeastern states over southern and western states.”.

Him: our current fed system

terrabahamut101: Thats why the second central bank was abolished

Him: was established in 1944

terrabahamut101: WRONG

terrabahamut101: 1913

terrabahamut101: omg dont even argue with me

Him: okay whatever

terrabahamut101: he Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913 by the enactment of the Federal Reserve Act, l

Him: the current monetary policy & fed reserve were over hauled in & completely changed in 1944 & then in the 70’s we went to fiat systen

Him: yeah it started then

Him: but it changed a lot

Him: anyway go fuck yourself

Him: you’re ridiculous

Him: go vote for ron paul & eat up everything he says

he’ll never be president anyway

: & no one takes him seriously

let me know when his book is a best seller

15

Really? I had no idea the FDIC was the Federal Reserve. Gee whiz.

And the FDIC(Fed???) comes in to save the day and takes the banks profits when they lose to cover your deposit. And I can’t believe I used to think that the FDIC money was already there from taxes on bank transactions.

These banking panics started in the 40’s???

16

Why can’t we chat with this dude? =D Would be way easier.

17

Because he will get really pissed at me for giving away his sn, especially on a public forum. I know him, he’ll give my SN out to spambots and stuff.

18

However, feel free to IM me.

19

So let me get this straight… Your “friend” takes a class, where the professor spews one-sided vitriol that arouses an emotional response from him, and he suddenly thinks that he’s the unfalsifiable master of economics and the universe?

I’m guessing he does this every time he looks at a Wikipedia page.

20

Your not asking the right questions.

Origins of the Federal Reserve

Case Against the Fed

What has government done to our money?

Lecture on Banking and the Business Cycle

Lecture on Money and Prices

The following material can easily crush your friend’s view and he will have to delve into irrational arguments to sustain his delusion.