without the federal reserve?

Discussion in 'Politics' started by Shipwreck, Mar 21, 2012.

  1. #1 Shipwreck, Mar 21, 2012
    Last edited by a moderator: Mar 21, 2012
    What would happen to corporations and society?
    I had a notion that if the fed were to close superstores wouldn't be able to keep prices low and would mean that their profits would plummet.
    What would America be like without it?

    I also forgot to mention war would be impossible to maintain.
  2. Why wouldn't they be able to keep their prices low? What would happen if the Fed were eliminated is actually hyper deflation, which is the natural economic reaction needed to correct things.

    Interest rates would soar, consumers would borrow less, demand would decrease and prices would plummet.
    • Winner Winner x 1
  3. How would these stores for example be able to keep up with the demands of what is needed to survive?
    If demand decreases then wouldn't that mean that it would fail?
  4. America would be far, far more prosperous without a banking monopoly. You seem to be under the notion that the Fed has some positive impact on the economy, it doesn't.
  5. A real conversation I had yesterday:

    Tweedle D) The Fed was created to help end and guard against further great depressions moron!

    Me) Wasn't the Fed made in 1913 and the Great depression was in the 20s?

    Tweedle D) Your word play won't fool me.


    There is no hope for some.
  6. Giving a private company permission to print money and coin, which I thought could only be done by Congress, was one of the dumbest mistakes we have ever made. Thanks Mr. Wilson! Another president to deface the constitution. How long until our current constitution begins to no longer resemble the original one, I wonder...
  7. You should know me better than that.
    I'm wondering the consequences and the outcome.
    I know that it will be better without the Fed destroying our money.

    My question is what will America be like?
    Not "will America be better?"
  8. Depends on what happens when the Fed is gone. Most of the things they do could simply be taken over by the government. So instead of the Fed creating money, it could just be the Treasury inflating the money supply directly. That wouldn't be any better.

    Interest rates could also be controlled by the government directly, etc.

    It depends on a lot more than just ending the Fed.
  9. Depends upon the course of action taken. If the US moves towards a freer money system not involving legal tender laws (monopoly on issuance of currency), the country will have a much brighter future. As it stands now with our fiat currency, all money is political money. With no actual restraints as to how much money is in circulation, this facilitates corporatism because it allows anyone and everyone with political clout to excise their will on the political process, as there is no physical limit to the amount of money that can be spent, the consequences always fall onto the middle and lower classes after the fact.

    If, on the other hand, the US moves towards a global or regional central banking system, the entire world stands to plunge itself into 3rd world nation status.

    Bankers serve only themselves, why anyone expects them to do more to help the common man by giving them more power over currency issuance is beyond me.
  10. #10 sudo toke, Mar 22, 2012
    Last edited by a moderator: Mar 22, 2012
    I'm not sure I'm hot on opening up currencies. I'm on board with Hayek on most things, and he certainly makes good arguments as to why, but for some reason I just haven't heard anything convincing enough to get be behind that, yet, and I think it is more due to my moral/societal perceptions rather than economic.

    It seems to me providing a medium of exchange is exactly the sort of general structure in which society can function which the government is around to provide. Now, I certainly don't think they should have power over the money aside from responsibility for its printing... I think sound money is necessary. If the dollar bill I hold doesn't mean anything, and our society revolves around money, I've essentially surrendered my freedom to government. Money is nothing but politics, as someone said. They get complete control. So, I'd be OK with a single government tender, but I think that must be a simple placeholder for an actual resource (I'd like to see this as a Constitutional Amendment, actually. I think it's one of the few things the founding fathers overlooked, and I'm not sure if it's because they were less economically inclined, not much was known about economics, or if they never could have dreamed up what we turned into). The person must own something that can't be altered on a whim because of a need to get a free loan via staying ahead of the inflation curve...

    I'd like to hear more arguments in its favor though. The idea is interesting, I just haven't drifted that far in anarcho-libertarianism.

    Oh, as far as the Fed, it depends on how far they go. If they simply stopped setting interest rates and let the free market dictate, I think we'd see a more stable economy in the long run. Lack of malinvestments due to an interest rate fixed outside of what the market would dictate means fewer bubbles and busts, and with more shallow ones as well. Fewer big recessions, and more gradual growth and gradual slack. Stability. Interest rates would rise, loans would probably be handed out more reasonably (fewer bad loans), people would borrow less. That's assuming they don't just transfer that interest-setting ability to another power...

    DISCLAIMER: The readjustment is really gonna blow, but it buys us long-term stability after the market corrects.
  11. fuck em, let the money burn. Melt the coin and make some skyscraper's, I'm not in the mood too get much more detailed... I don't have the answer's, but the system of paper and digit's equaling the physical labor of everyone is fucked up. Unless they get too dictate the value of their labor, directly and proportionally and ask the low-caste of India, or Mexico, China, Taiwan, Philipeans if THAT's happening with our monetary system....

    It's just a mean's too direct the taking of labor, (and the value of that labor) away from you....... So the masses don't see, how the rice/corn/bread is still being demanded from them. For their very right too participate in the system, wtf is this bs... Now they are bailing out private companies??? What's next...

  12. Yeah that's worked out very well so far...

    Money is exactly the type of thing the government should NOT be allowed to have any part in. It's too important to be left to government.

    Then you shouldn't want government to be involved at all. It's the natural tendency of the state (all states) to inflate the money supply. It's a way to tax the people without their knowledge. It's the dream of all rulers and governments, a way to take money from the population without their knowledge or consent. To voluntarily give the state this power is insanity imo.

    It's already in the Constitution, we just don't follow it anymore. The founding fathers knew very well the effects and evils of inflation, having just witnessed the hyperinflation of the Continental Currency. That's why they specifically stated that only gold and silver shall be legal tender.

    For more info on that.

    [ame=http://www.youtube.com/watch?v=40MBdt1BQgE]Is Ron Paul Wrong on Money and the Constitution? - YouTube[/ame]

    Interest rates could still be very low at times in a free market. It just depends on the savings rate and people's time preferences.

    I also don't like when people say we will have "gradual" growth under a gold standard, as if a fiat currency provides explosive growth. Under our current system we have had almost no growth at all in the last couple decades. Under a hard money standard the fastest growth possible occurs, yet this is termed "gradual" growth. I just don't get it.

  13. I suggest learning economics from Ludwig Von Mises instead of Karl Marx.
  14. #14 sudo toke, Mar 22, 2012
    Last edited by a moderator: Mar 22, 2012

    It worked well for years. The real problems occurred when we left sound money.

    I disagree. Just the printing of money is not that big of a deal providing the money is tied to something real. The problem occurs when they get the ability to print it out of thin air because it doesn't mean anything anyway.

    Now, I suppose you could make the argument of the slippery slope, that we shouldn't because they'll do... well, what they did. But I don't think that had anything to do with it... the government always tries to grab more power, and it is up to the people to ensure their Constitution is being followed.

    I understand, which is why I made the comment about them getting free loans via staying ahead of the inflation curve. But they can't really do that when the money is tied to a real resource, such as gold. The whole reason we left the gold-standard was because they wanted to do just that because we couldn't pay our bills. So I think tying it to gold or another resource is sufficient protection.

    Where? I'd like to see a more explicit protection of money....

    On my way out the door, but I'll watch this later.

    Absolutely, didn't mean to imply otherwise. They would just be quite high for the short-term, until the market corrects, is what I meant.

    I disagree. Hayek also makes the point that under fiat money and fixed interest rates you do in fact see explosive growth, but that is a looming omen of the coming crash. Yes, you can still see fast economic growth under gold, but it is actual growth, not bubbles, so naturally you are going to see that less often. Most of the economic booms we've seen have been fake. Cut out the crap and get only the real booms and you aren't going to see them very often, leaving mostly stable growth and slack, which I think is the real goal: stability.

    EDIT: Just wanted to be clear, I'm completely open to the idea, I just haven't heard arguments yet that quite convince me to back the position of opening up currency.
  15. Our currency would probably start gaining value if the Fed didn't exist.

    It would be awesome if the market were opened up to competing currency in America, but that's another dream.

  16. And we left because government was in control...

    It was tied to something real, then the government decided to end it...


    It was already tied to gold, it didn't help. The government simply untied it.

    That's why I provided the video.

    Exactly. Bubbles are not real growth. They don't factor into growth at all. Real growth is never faster under a fiat currency than would otherwise be under a hard money standard.

    Explosive bubbles =/= explosive growth.

  17. I think you are conflating two separate issues. You missed an important part of my phrase: Government always tried to grab power. Even if we opened up currency, there would be a push by government to unite it under their control. If we have government control, government is going to try to remove restrictions (resource tie/gold). So I don't think it is a sound argument to say that because government will try for more power grabs we must not allow them to print money. That is a slippery slope fallacy and will always happen regardless of our monetary issues. The only cure for making sure they don't succeed at their power grab is vigilance.

    And if it were not united government would not try to unite it? Does that mean we should have no currency at all because they may try? Why then does it follow we should not have a single currency because they may try to remove their restrictions? See where I'm coming from here?

    Thank you, and I'll be sure to watch once classes are over. I'd still like to see an explicit amendment, but I'm truly interested in seeing the explanation.

    I think we're mostly arguing semantics. I would argue explosive bubbles are explosive growth, they are just always followed by devastating recession/depression. The growth hasn't disappeared, it has just become more extreme and volatile. But again, I think we are in agreement here and are just discussing semantics.

  18. There's no fallacy. If government will always tend to corrupt and exploit the issuance of money, then logically the best way to prevent that would be to keep government as far away from the process as possible. And to keep government as far away as possible would be to separate them from the process completely. You call that a fallacy, but I contend it's clearly the most logical solution.

    Yeah I guess we disagree on what real growth is. Any growth during a bubble that then disappears during the following recession is not real growth imo. I look at it like an equation. All growth during a bubble phase - losses in the ensuing recession = net growth or loss. If at the end of that there was real growth, it wasn't because of the bubble, but rather in spite of it.
  19. #19 sudo toke, Mar 22, 2012
    Last edited by a moderator: Mar 22, 2012

    Firstly, it is a recognized fallacy. Secondly, my point is not that it is or isn't a fallacy, but that you are conflating two different problems.

    No, I'm not arguing booms/busts provide real growth, I am just saying that removing the booms/busts that occur because of the Fed and how we steer the economy will result in more stable, but fewer growths. If x is real growth and y is short-term booms, obviously if you remove y, x<x+y. That, to me, defines gradual, which is why I used that term. Not less growth, just more gradual stability. Removing the short-term booms and deep recessions makes it all more gradual, resulting in overall gain in the economy.

    It's like looking at a chart showing spikes in growth and crashes or a chart showing smoother hills.

    Again, I think this is pure semantics we are discussing.

  20. Missed this paragraph.

    If you take my position to its extreme the outcome isn't abolishing money, but rather abolishing the government, thus the reason I'm an anarcho-capitalist. :smoke:

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