Will there be a Presidential election this fall?

[chud]

The "bank holiday" was a hoax and a quick search found the source.

I knew about one of the rumors being a hoax, but the idea of a bank holiday was floated prior to that. I am still convinced that it is a possibility, but I hope I'm wrong. I got a little freaked out this weekend when I saw that new ready.gov commercial warning people to prepare for a financial crisis. Sounded like gov't CYA propaganda.

[Steve James]

There is clearly a moral aspect to the monetary system .... When a monetary system benefits a tiny minority at the expense of the majority, the system is immoral.

Is capitalism a monetary system?

[Michael]

If you want to say there is a moral aspect to capitalism, go right ahead because that's a good topic that deserves constant attention.

Fractional reserve banking is immoral by design, whereas capitalism is really just an example of imperfect people trying to establish a fair and equitable system of trade while constantly battling to keep it from becoming a system of exploitation of the many poor by the few rich. Economics are complicated so there's lots of room for human error, and also room for hiding unfair practices within multi-faceted calculus problems.

[Teazer]

There is clearly a moral aspect to the monetary system because fractional reserve banking steals wealth from old money and gives it to new money, benefiting the lendee at the expense of everyone else in the economy, and also benefiting the bankers who created the system by giving them interest on money they created from thin air. The bankers and the recipient of the new money are a tiny minority in a system that steals from the majority. When a monetary system benefits a tiny minority at the expense of the majority, the system is immoral.

1. Fractional reserve banking does not need to have a decrease in the value of money. Just set the growth of money supply equal to the growth in gdp.
2. If inflation is predictable then rational people factor it into their valuations and calculations so they don't lose out. Old money benefits from earned interest which more than offsets inflation on average. (See thread on the old board)
3. If inflation is unpredictable, lenders generally build in an additional cost on lending so it's more often borrowers that lose out.
4. The moral argument would come about when there are changes in government policy which cause far greater redistributions of wealth. This is one reason government is elected - so it represents the welfare of everyone and provides a forum for moral arguments to be included. Federal Reserve leaders are also appointed by elected government.

[Steve James]

If you want to say there is a moral aspect to capitalism, go right ahead because that's a good topic that deserves constant attention.

I think you're throwing around the term moral too easily, and essentially misusing it.
I don't know any instance where profit is shared among the majority. Do you have some examples of financial systems where there occurs. If not, then you seem to be complaining that a particular minority is manipulating the system so that "they" profit. that seems like how the system works, no? So, is it immoral because of the intention to profit? or is it immoral because the result is not to your liking (or mine, but that's not relevant)?
If the majority were making a profit and the minority were getting screwed, would it be moral then?
That's why it's not a moral issue. You haven't made it one. It's just a matter of self-interest --unless you are one of the profit-makers.

[Michael]

1. Fractional reserve banking does not need to have a decrease in the value of money. Just set the growth of money supply equal to the growth in gdp.

That's terse enough for a six year-old to understand. Seriously, that's concise and easy to savvy.
Not just to Teazer, but for anyone: what are the various ways to add money to the economy besides mining precious metals and fractional reserve banking?

2. If inflation is predictable then rational people factor it into their valuations and calculations so they don't lose out. Old money benefits from earned interest which more than offsets inflation on average. (See thread on the old board)

You can look at it over a long period of time and find a reasonable figure depending on the stats you use, but last we spoke you were talking about 4-5% inflation. Everyone I read is saying 12-14% right now, and 10% for the past five or six years prior to 2008. The damage of inflation is done in short periods of time like a few years or a decade or less, so averaging that back out with the rest of the normal times or a deflationary depression is not so meaningful in regards to the redistribution of wealth because it's in relatively short bursts of time that people lose 100% of their homes, businesses and other assets, and not just 3%.

4. The moral argument would come about when there are changes in government policy which cause far greater redistributions of wealth. This is one reason government is elected - so it represents the welfare of everyone and provides a forum for moral arguments to be included. Federal Reserve leaders are also appointed by elected government.

Thanks for responding to this. What you said is accurate within the confines of the written rules, but look at the recent legislation: it is completely outside of the rules and the US Constitution. I associate this with an inherent flaw in FRB and say it was predictable and has happened many times before, perhaps most recently in Argentina.

Cheers,
Michael

[Michael]

I think you're throwing around the term moral too easily, and essentially misusing it.

I'm not the only one. Three quotes below from the 1996 film, The Money Masters.

"The financial system...has been turned over to...the Federal Reserve Board. That board administers the finance system by authority of...a purely profiteering group. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money."
Rep. Charles A. Lindbergh (R-MN) circa 1930

"We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board...This evil institution has impoverished...the people of the United States...and has practically bankrupted our Government. It has done this through...the corrupt practices of the moneyed vultures who control it."
Former Chairman of House Banking and Currency Committee, 1932

"Most Americans have no real understanding of the international moneylenders. The accounts of the Federal Reserve have never been audited. It operates outside the control of Congress and manipulates the credit of the United States."
Sen. Barry Goldwater (R-AZ)

I don't know any instance where profit is shared among the majority. Do you have some examples of financial systems where there occurs. If not, then you seem to be complaining that a particular minority is manipulating the system so that "they" profit. that seems like how the system works, no?

I've never suggested profit sharing among the majority. I am questioning the fundamental premise of our monetary system.

That's why it's not a moral issue. You haven't made it one. It's just a matter of self-interest --unless you are one of the profit-makers.

I don't quite follow you here. Would you elaborate or try and perhaps re-state it? No offense, but in general I couldn't really get a hold of your post.

[Steve James]

Morality has nothing to do with outcomes ... [edit] or intent.

[Teazer]

You can look at it over a long period of time and find a reasonable figure depending on the stats you use, but last we spoke you were talking about 4-5% inflation. Everyone I read is saying 12-14% right now, and 10% for the past five or six years prior to 2008.

I'd need to see where those numbers come from - they seem high, or are you saying 10% for the entire 5 years, rather than annually?

[Teazer]

"The financial system...has been turned over to...the Federal Reserve Board. That board administers the finance system by authority of...a purely profiteering group.

The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money."
Rep. Charles A. Lindbergh (R-MN) circa 1930

"We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board...This evil institution has impoverished...the people of the United States...and has practically bankrupted our Government. It has done this through...the corrupt practices of the moneyed vultures who control it."
Former Chairman of House Banking and Currency Committee, 1932

All currently incorrect as discussed before. All these quotes came from prior to the 1935 Banking Act which fundamentally changed the Fed governance.

"Most Americans have no real understanding of the international moneylenders. The accounts of the Federal Reserve have never been audited. It operates outside the control of Congress and manipulates the credit of the United States."
Sen. Barry Goldwater (R-AZ)

The first part is incorrect as mentioned on the old board + see link
http://www.federalreserve.gov/boarddocs/rptcongress/annual07/sec6/c1.htm
The second part is correct, but not necessarily a bad thing considering how badly Congress deals with money.

[Darth Rock&Roll]

Bailing out insolvent companies with tax payers money is NOT capitalism. It is socialism and it disheartens me to see that there is no actual free market that is allowed to correct itself.
These are marxist solutions and there will be a higher price to pay sooner than later.

[Steve James]

Well, the fact that one guy, Lund, went to Congress for money to bail out his company while at the same time pocketing $300 million himself just might be considered immoral. Otoh, to me, Marxism would be something like giving all the people a share of the profit, not the debt --or, at least both.
Hmm, the "free market"? What is that? Guy X (or Ed McMahon) can't pay the note on his house? Is that because of marxism? I dunno. Personally, when people talk about "social" security or "socialized" medicine or "free" clinics", all of those are "marxist" if they want to see them that way. I have to say that I don't really care about the name one puts on a system. Greedy people are everywhere. What'zis name in the movie "Wall Street" said "Greed is gooed." Yeah, sounds very Adam Smith's "enlightened self interest." Seems to me that, whatever the system, "that" is the core problem.

[Michael]

Didn't John Nash's work pretty much overshadow Adam Smith's major economic principles?

[Michael]

You can look at it over a long period of time and find a reasonable figure depending on the stats you use, but last we spoke you were talking about 4-5% inflation. Everyone I read is saying 12-14% right now, and 10% for the past five or six years prior to 2008.

I'd need to see where those numbers come from - they seem high, or are you saying 10% for the entire 5 years, rather than annually?

I'm saying 10% compounded annually during the past 5-6 years and the other higher figures are being reported by economists or former stock brokers like Bob Chapman.

The baked-in inflation rate for the US will run from its current 12.625% to as high as 18% over the next 12 to 18 months, even if the Fed totally cuts off all money and credit tomorrow and then throws rate hikes in for good measure! Our current actual (as opposed to official) rate of inflation of 12.625% is running at a lag of about one year from the time M3 had reached the 12.625% level, and that is why we see 12 to 18 more months of 12.625% to 18% inflation. We have extended our projection out to 18 months because we do not see M3 going below 12% any time soon.

A couple of weeks ago, I posted that former Asst. Treasury Secretary under Reagan, Dr. Paul Craig Roberts, said that if you took the current govt. stats on the economy and used the algorithm from the 80's to calculate inflation and unemployment, it would be 9.4% annual inflation and 14% unemployment.

[Steve James]

Dunno, but I do know that "enlightened self-interest" is just a euphemism for greed.
Besides, I do humanities, not economics. So, I'd have to google John Nash and pretend I knew what you were talking about.

Otoh, I have no contradictions about why people are selfish or what greed is. I just see that the richest people (generally in the world) are the ones complaining about the system that they benefit from more than anyone else. One could argue that it is "immoral" for one country to use 1/4 of the world's resources.

But, I was responding to the point made about "marxism." Sure, if you think of it as "redistribution of the wealth", who would want that? Especially, if you have something to begin with. But, Marx was in London when he wrote about capital. Now, the UK is far more socialized than the US. Of course, here the conservatives will argue that we have a better system --and that there's no need to burden taxpayers with the responsibility for caring for those who need it. That's good business, and is considered quite moral.

Anyway, as I'm not an economist, and I haven't even tried to be one, all this reminds me of George Orwell.
Well, like I been saying for years, be happy if you have a job and can pay your bills. All the rest is gravy. I'd gladly pay 50% in taxes if I knew that I'd keep my job, have a place to live, and be cared for if I got ill. I don't care what you'd call the system. The name wouldn's scare me away, only the ideals. I.e., if it means that I'd benefit at the expense of others who need the same thing, then it'd be unfair.