Jim Cramer discusses the Fed on Mad Money.

Discussion in 'Chit Chat' started by TheDudeofLife, Dec 14, 2007.

  1. I did my own research. I went straight to the source, Ron Paul's book himself.

    #31     Dec 15, 2007
  2. zdreg


    this thread is somewhat lamentable.
    #32     Dec 15, 2007
  3. not a problem

    as people worldwide wake up to the cancerous influence of central banking, the banks will fall off like a scab. seems impossible, but that's change for you

    central banking and fiat money inhibit the potential of humanity too greatly to survive evolution. a throwback from feudalism. we're all above that
    #33     Dec 15, 2007
  4. explain to me how you envision how the world of finance would *realistically* function and react without monetary supply regulation ? It makes a fascinating exploration.

    How in *real* terms (not notional) would things change?

    I imagine the entire developed world (not just the US) would go into debt reduction mode as a reaction to this policy. Yields would probably skyrocket; any countries with debt to maintain and service would be royally screwed (err Japan). All free cash would go to paying off debt. Investment and savings would cease. Thus innovation (technological, medical, etc) would likely get wiped out. Then commodity prices would fall out of bed due to economic slowdown. Investment in commodity exploration and technological innovation would likely get derailed. etc. etc.

    Sounds like a plan to stone age regression.
    #34     Dec 15, 2007
  5. I wouldn't consider him the source, but that's a good start. Jefferson, Jackson, Kennedy, and others understood.

    Google Greenspan's "confiscation by inflation" paper from 1966.

    Creature from Jekyll Island

    Manias, Panics, and Crashes (written in the early 1800s)

    Go watch the Wizard of Oz. Her slippers were made of silver not rubies.

    "Give me control of a nation's money and I care not who makes the laws."
    Mayer Amschel Rothschild


    "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
    Henry Ford
    #35     Dec 15, 2007
  6. debt based currency is an asymmetrical, unsustainable privilege to existing wealth

    maybe money supply can be regulated with the explicit goal of perfectly constant purchasing power

    we could also discontinue national debt, begin printing to finance the budget directly, removing the unnecessary burden of taxpayer financing. we create money by fiat - there's no reason for taxpayers to finance a national debt

    banking could be a non-profit service. our government has the ability to issue currency, there's no reason for the citizenry to pay finance on their own budget

    institutional access to leverage distorts the 'real' economy
    #36     Dec 15, 2007
  7. zdreg


    "Manias, Panics, and Crashes (written in the early 1800s)"

    what makes you think this book was not written in the 20th century?
    #37     Dec 15, 2007
  8. Because you still do not understand the difference between supply/demand & inflation/deflation. What has happened to commodities is mostly inflation, with a significant supply/demand component.

    If operations are being moved offshore to China, why would the demand for oil go up so much? It's the same operations, scaled up some amount, but not that much. The real increasing demand component on crude comes from US transport & distribution & autos in China & India. I'll throw in some for population growth and increased driving by US people, but still, it's not enough to justify such high oil prices.
    Demand on copper & steel came from construction in US & China, however, it was nowhere near high enough to justify such huge gains in price.

    Look up how much a loaf of bread cost 50 years ago and how much it costs now. Now consider that the old loaf of bread had quality & nutrition 10 times above today's and that it took more labor and time to make. Now plug in population growth and try to explain the price difference. You can't. Unless you look at money supply figures, which will explain it all.

    P.S. To call the foreign exchange market a "free market" is silly. Almost every major government & central bank is involved in the trading of its currency, as it should. It is nowhere near a free market. China even admits holding their currency down.
    #38     Dec 15, 2007

  9. I won't argue that fed policy of increasing monetary supply and 'inflation targeting' has put an inflationary bias into the dollar the past 100 yrs. It'd be foolish to take the opposing argument. And certainly over time a portion of the price ascent of commodities can be attributed to broad inflation.

    But the severity of this commodity price runup has more to do with structural differences in the world economy from the 1950s. My point is additionally that most of the upward price bias on commodities lately comes from political mismanagement (er, lack of planning) of our resources rather than merely fed liquidity injections.

    The fact that you don't agree that s/d economics support $90 crude (and that instead most of this move is inflationary, reflective of the dollar) is just as argueably ungrounded and arbitrary as my assumption that the fundamentals in many of these commodity markets *are* actually different this time. World wheat inventories at 25-30 yr historic lows, corn ethanol subsidies, reactive underplantings, and feed replacements are just the picture of the soft ag complex going through actual supply worries. And this would not be happening if there were not very real supply issues in the energy complex, nor if world demand for these crops were not actually there.

    You may argue this is all a response to years of wreckless liquidity pumping of the US govt, and the use of a flawed fractional reserve banking system.

    I take the middle ground and say that this may account for a smaller proportion of this price move up (lets say 20-30%) - the rest (70-80%) is the fault of shitty US policy run by non-business savvy constituent concerned politicians, in combination with *political* changes to the world stage: globalization of trade, productivity increases from technological progress, and economic equalization of the masses due to dissolution of capitilalistically repressive political systems.

    But I do agree with the whole argument that fed policy is inflationary, dollar devaluing. If you double the money supply (half the value of a notional unit in real terms) across the same population, you enable prices of everything to double.

    Booms and busts do occur, and a loaf of bread may be $12 in another twenty years, but thats the price of progress. There's a reason the gold standard is abandoned every time a country needs to raise $$$ for war - its not flexible enough to fund events outside the normal scope of fiscal maintenance.

    Just imagine how the tech boom in the last 15 yrs may not have happened if the capital did not exist to fund it. Sure we have paid a price, but the reality is that we have infinitely gained. Lifespans are expanded from health care progress (from free cash in the system); and more people now enjoy a level of living that *IS* without a doubt better than it was 100 years ago because of that.

    We may be unhappier, richer, and live longer in our more modernized lives than the simpler ag based societies without technology or innovation, but that is I think more due to cultural characteristics in our society (the American dream/capitalism is founded on being unhappy with what you have).

    The dollar may have been worth more in gold terms 100 yrs ago, but the middle class today lives more comfortably than Rockefeller did during that same time period.
    #39     Dec 15, 2007

  10. I read the book. As I remember, the original copyright was somewhere around 1832.
    #40     Dec 16, 2007