IN MY POLL: "SHOULD THE FED BE ABOLISHED" I GOT AN 80% IN FAVOR OF THE FED ABOLISHMENT. WELL, HOW SHOULD MONETARY POLICY BE CONDUCTED WITHOUT THE FED???
Legalize competing currencies. Reaffirm gold and silver-backed notes as legal tender. Outlaw fractional reserve banking. Allow market forces to determine rates. Bankers and Wallstreet are quick to vilify any laizze-fair monetary system as certain death to our "modern" economy. What they don't tell you is the United States (and World) thrived long before fiat currencies and fractional reserve banking were used. Also unwelcome is any talk about the Founders disdain for Central Banks and their presumptive power to issue credit out of thin air. They foretold, as we are witnessing now, the ruinous affects wild business cycles have on not only the economy, but on the middle class to check-and-balance spiraling political power. The real issue at stake for Bankers - their legal monopoly to counterfeit money. And therefore, massive profits. Wallstreet owns ringside seats to Fed money market operations and as a consequence, position themselves accordingly for every Bull and Bear run. The absolute pinnacle of insider information. Now, we're seeing the Fed publicly merged with private Banking interests to serve as underwriter of last resort. The ultimate moral hazard. Given that private bankers own the ENTIRE Federal Reserve to begin with, the "public" Fed - a limitless printing press - has been severed of any regulatory ties with its Bureaucratic Masters, and has now been handed over to Wallstreet and Private Bankers for their sole use. We have been under Corporatism, or a clandestine-type of Fascism, for a long time. Its only now the Government publicly announced the privatization of its Money Making POWER into the hands of private Bankers. Fiat power, remember, Congress was never endowed to begin with! The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power ---Franklin D. Roosevelt in an April 29, 1938 message to Congress
Under a precious metal standard, the economy would become net deflationary - goods and wages drop over time. Over-extended consumption would switch to net savings. Consumers would be forced to defer and save for big capital purchases - zero-down home or car loans would be unmanageable long term. The plus side - deflationary systems encourage huge entrepreneurship and business investment. Both industry and consumers realize a dollar invested today is conservatively DOUBLED in 10 years. Not a bad return, eh? The average spendthrift person works less years, and retires with A LOT MORE. No need for Government pension and SS crap. Estates left by hardworking families last and provide for lifetimes. For Corporations and business - retained earnings compound over time. Shareholders and owners are rewarded with more $$$ -- or business have much more money to invest in capital and RESEARCH AND DEVELOPMENT (Remember that??!) Accelerated R&D investment is hugely important as technological innovation and breakthrough is the true driver of staggering economic growth. The Government looses its power to spend beyond its means. No more wars of retribution or conquest. Corporate largess doesn't exist because there isn't a Fed watering hole to bucket money from. The Military-Industrial complex shrivels back to its appropriate size - no blank checks to fear monger and bribe for. Lots of benefits. The only problem is massive wealth accumulation. A private, hugely successful startup - like a Microsoft - would leave massive, compounding wealth for its inheritors. So instead of the current sack of military-industrial-financial parasites sucking off the Feds dirty tit, we'd have a few Neo-Industrial Dynasties that would fill their shoes bribing and pocketing Congress with their extreme, compounding wealth - exactly the same as the Rockefeller's and Carnegie's did. Maybe I'm wrong about this. In an inflationary system, both sides are dealt the same cards, but with opposite effects. Consumers lose wealth and so do business. Under a deflationary system, both sides compound wealth over time. Is the Rockefeller/Carnegie monopoly primarily the result of compounded deflationary wealth, or something else?
It occurs to me that if we rely purely on gold and silver our economy will be limited on how much it can growth. Princes are inflexible in the short run, and to rely in a deflationary monetary policy could have huge loss in people confidence. HOW THE HELL DO YOU TELL MOST PEOPLE THAT THEIR "REAL" PURCHASING POWER WOULD INCREASE IF THEY ARE PAID LESS, CHARGE LESS FOR THEIR PRODUCT AND ALL THAT????? FIAT CURRENCY is not bad. It has just been misused. The only purpose of money is that we need it to be right the amount so we dont have inflation or deflation. A CONSTANT gentlemen is what we need. How to best achieve this I dont know, but I know it is not hard if we have the will to do it. Also our present system favor the inyection of money into the system from top-bottom. We could change that from the bottom-top, that way with almost no inflation the consumers witch accounts for 70% of GDP are the first ones to VOTE and also fractional reserve backing is gone. You can not tie your monetary policy to metal or mining industry.
You can not tie your monetary policy to metal or mining industry. [/B][/QUOTE] Gee, how did free markets exist for 1000s of years if you can't use metal as money? Fact is, we no longer have a "free market" as long as banks can counterfiet currency and the Fed can manipulate rates. There are plenty of options for replacement of our fiat currency system. To me, the simplest is to return to some type of metal backed currency as was always used in the past and worked well. A second option would be for the US Govt to be the only entity allowed to print money for public projects. This was done at various times in the Colonies/Republic before the Fed. This would greatly reduce taxes but still give us inflation (for all the people who feel for whatever reason that inflation is necessary). Right now, however, we have the worse possible system. It is the banks that create money and thus profit at everyone's expense.
It seems you didn't read a word I wrote. Gold-backed economies existed and thrived for millennia. Where was the "loss of confidence" then? Switching from inflation to deflation is a simple paradigm shift. Your money becomes more valuable as time passes. There is nothing hard about that. Wages are more inelastic ("Sticky") than prices. Inflationary systems hurt wage earners because they get raises last (if at all). In fact, thats how the whole inflationary scam works. If every time the Government spent free money wages went up (by the same amount), the Government would get a lot LESS value for every dollar they pulled outta their ass. This is part of the giant scam. All the CPI reports prove this. The Government lowballs inflation stats to suppress wage hikes that key off CPI. This ensures their inflationary dollars go that extra mile when it comes time to exchange them for goods and services. Who picks up the tab? You do. The long-winded point here - under deflation, prices drop quicker than wages. So arguing no gain in purchasing power (wages drop as quick as prices) is bogus. In fact, thats the system we have right now. Just the opposite. Prices go up WAY FASTER than wages. And you prefer that?
A fair-based fiat system is a pipe dream. Think of a truly magnanimous, selfless dictator - for example, an Angel of God - who ran the Country. Everything is great! Government is incorruptible. Justice is swift. Economy is roaring. Bureaucracy is expedient and streamlined. Now what happens when humans take over? Corruption. That absolute dictator is accosted at all sides from Corporate Conglomerates and Financial Syndicates willing to pay billions in 'contracts', kickbacks and palm-greasing to have the system bend and lean in their favor. Where does Congress get this endless stream of honey that attracts Corporations faster than flies on shit? Fiat currency! Thats exactly what happens under a fiat system. And thats exactly why a fair-based fiat system would never work. Its a sitting duck, waiting to get hijacked by Special Interests. The only viable solution is a currency that cannot be readily conjured. A commodity or metal-backed currency is fine. Its not the best solution. But its the only solution im aware of that eliminates Government and Corporate cockroaches from raping the Country.