CNBC Poll: Should the Fed be Abolished?

And some on this board who have econ. degrees, remember the days before Greenshits and Bernanke hijacked the Fed. It has gotten progressively worse since Paul Volcker.

 

I'm sincerely impressed. Given that, you should then know how many fiat currencies have failed.

On another note, can you tell us why after their formation and given their mandate, when gold was pouring into the country, did the Great Depression occur? These guys are bankers who do not care about the middle class, let alone the lower class. It is obvious they operate as part of the power base among the politically and financially elite and look out for their own.

 

No, the Fed isn't a political party and yes, they are economists but they were also created by the banking cartel to police the banking cartel. They have an incredible conflict of interest -- they are a profit-based corporation that makes its money based on the prevailing rate of interest. Now think about this for just a fleeting minute....they control the interest rate and they profit from the interest rate as do the member banks of the Federal Reserve. No, they aren't a political party, yes they are economists and yes, they are the biggest crooks on the planet. They are a self-serving group of leeches.

 

Absolutely! He was "shocked" that a bank such as BSC or LEH would "risk their equity" by driving up their leverage to the nosebleed section. If Greenspan was unaware the leverage of these banks were as high as 75:1 then he was the most incompetent Chairman the Fed has ever seen. Or he is lying. Which is it?

 

It's called the Smoot Hawley Tariff. The Fed had nothing to do with it. Politics caused the Great Depression, exactly the kind of policies that must be made by economists, not politicians. The crash of 29 had more to do with excessive leverage, IE:30:1 leverage was commonplace, just as we have it in 09, where excessive leverage collapsed our biggest financial instiutions. The Crash of 29 was caused by leverage, when investors were forced to sell, sometimes days late, the losses would be total and would dip into the prinicpal of the loaning institution. Selling begets selling, as instiutions that loaned their clientele money lost on these bets by just as big a margin.

 

Just stop right there and research why it was created. It had nothing to do with banking cartels.

 

The great depression was caused by a massive and reckless increase in the supply of money during the roaring 20's. The Fed then withdrew that supply of money and blamed the great depression on their decision to tighten credit. If they hadn't expanded the supply of money so quickly there would have been no need to tighten credit. Fast forward to the 90's and they did the exact same thing <i>again.</i>

 

Go back and study the period again. Smoot Hawley is the cause, guaranteed.

Show me a chart that shows that. By any metric you want, the 20's were one of our great economic periods, and I see no evidence of simply increasing the money supply as the reason for such a boom. You can go and look up M1, chart it, then tell me what it shows, because there is no evidence of any large increases in the money supply, then and now, because they still control both fiscal and monetary policy.

<b>There's no debate over what <i>caused</i> the Great Depression. It was the Smoot Hawley Tarrif. What exacerbated it, is also not debateable, on that I agree the Fed acted late, but ultimately was not the cause and their policies would have worked absent a decimating global tradewar.</b>

Now, do me a favor, and look up the Wiki on Smoot Hawley Tariff. It's what allowed Hitler to rise to power, and fascism to overcome most of Europe.

 

The supply of money went stratospheric right after 1995. Something happened during that year but I can't recall off the top of my head what it was. I don't have any data offhand for the 20's and it's too late to start a research project.

There was no single one cause for the Great Depression. It was a number of things including excess leverage, tightening by the Fed, Smoot Hawley, and a parabolic supply of money.

http://en.wikipedia.org/wiki/Money_supply

 

"The Federal Reserve should be abolished," writes Ron Paul, "because it is immoral, unconstitutional, impractical, promotes bad economics, and undermines liberty."

This is the thesis of Paul's End the Fed (Grand Central Publishing, $21.99, 224 pages), the Texas congressman's case against the Federal Reserve. The title was taken from a slogan that Paul heard chanted at various rallies and conventions, filling him with hope that monetary policy has become a subject worthy of popular protest.

Many people consider the Fed an "indispensable institution," but few know what the central bank actually does. For example, the Fed "can create trillions of dollars and distribute them to its cronies without congressional oversight," writes Paul, a former GOP presidential candidate.

Creating an endless supply of money is the worst offense of the Fed, an institution that Paul believes is the root of many of the nation's problems, including:

•A monetary policy that benefits bankers, rather than the common man. The 1910 meeting where the idea for the Federal Reserve was drafted involved bankers and government officials working in secrecy on Jekyll Island off the Georgia coast.

•Giving too-big-to-fail banks little reason to pursue efforts toward efficiency because the Fed is there to save them in a crisis.

•Giving government a blank check with which to wage war. When governments have to finance wars without central bank cash infusions, they're forced to economize on resources and end the conflict as soon as possible. Instead, Paul argues, our government, backed by the Fed, is like "an irresponsible teenager with an unlimited line of credit."

•Interfering with the ability of the free market to give accurate feedback to borrowers and lenders. Artificially low interest rates can distort signals that borrowers use to assess risk, which can lead to false confidence in the economy and excessive use of capital.

•Creating "moral hazard" through market rescue of companies. The sense of responsibility for one's own actions is removed, conditioning business people to believe they can enjoy the rewards of the market, yet pass on the penalties to others.

•Fueling inflation by increasing the money supply without regard to the pace of economic growth, thus debasing the currency in much the same way that counterfeiting steals value from every dollar.

http://www.usatoday.com/money/books/reviews/2009-09-21-end-the-fed-review_N.htm