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Fed-biggest Corporate Welfare scam since Great Depression
telegraph.co.uk — The Federal Reserve has taken its "boldest" action since the 1930s, accepting $200bn of worthless housing debt as collateral to bail out Wall Street's mortgage industry loan sharks. This really just a Corporate Welfare scam. The Fed has "legally" circumvented a ban on purchase of MBS's outright, by instead accepting them as collateral for loans.
unlawflcombatnt- 1868 diggs
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- Heysal, on 03/17/2008, -35/+234The FED IS the biggest scam ever perpetrated on a people. Time to take it back and go with gold backed currency again so we can stop this hostile corporation before many of us die of them.
- brad3378, on 03/17/2008, -21/+95There's just no way we could go back to a Gold Standard now.
Our government is already $9,400,000,000,000 in debt (today we crossed the $31,000 per citizen mark) and we don't have the resources to acquire enough gold to support a fractional reserve system with a mere 1% Gold backing for all of the cash in circulation........let alone 10%
Add that to the fact that gold prices would rise even higher if the government introduced a buy-back program to buy back thousands of tons of gold. It's a no win situation at this point. We never should have abandoned the gold standard to begin with.
In summary, we're *****. Amero here we come.- aliengoods, on 03/17/2008, -8/+11Do you care to cite reasons why? No one is saying it would be easy, or that there wouldn't be quite a few people who would get wiped out in the process, but it could be done. And in terms of getting wiped out that happens right now every time we have a recession or depression. Even if you save your money there's just no real value to it.
- FrostedFlame, on 03/17/2008, -4/+10If by value you refer to use value, you are absolutely right. But Gold doesn't solve that problem either because it's value is almost entirely exchange value as well.
- brad3378, on 03/17/2008, -1/+8There is about $820 billion of US currency in circulation
source: http://www.newyorkfed.org/aboutthefed/fedpoint/fed ...
Yet our National Debt is $9,400 billion ($9.4 Trillion)
Do you propose printing more money to purchase for the gold?
How do you go about purchasing all of that gold? Do you pass around a hat and ask for people to toss in millions of ear rings and watches?
I'm afraid that there just isn't that much gold in one place to purchase.
Trust me - I'm on your side - I'd love to see a gold standard bring faith back to our currency, but I just don't think that it is realistic.
- blindhammer, on 03/17/2008, -2/+7The Amero won't solve anything. 70% of the US GNP is derived from consumer spending. I can't fathom how a new currency would do anything to change this pattern, other than instill greater consumer confidence.
But, really, do you think US consumers would have increased confidence if the dollar was dropped? Do you think world markets would?
The Amero is out there, but perhaps this next recession is a roadblock rather than a catalyst.- dkern, on 03/18/2008, -0/+5The Amero will not solve anything- but it is being sold as a solution- and a gullible public will buy anything for a moment of hope.
- grrrrrrrrrrrrrr, on 03/18/2008, -0/+4The Amero will be imposed on North America if not the entire Western Hemisphere by the same private banking criminals that perpetrated this debacle in the first place...EVERYONE has to be made aware of this so that they are stopped from achieving their neo-feudal plantation agenda.
- McHaleR, on 03/18/2008, -1/+1lol GNP, who uses gross national product anymore. I think most economists agree that GDP is a much better indicator
- dkern, on 03/18/2008, -0/+5The Amero will not solve anything- but it is being sold as a solution- and a gullible public will buy anything for a moment of hope.
- MindStalker, on 03/17/2008, -4/+4Well you simply introduce a new currency, call it XYZ or whatever. This currency can be backed by gold, and be legally recognized as currency except its separate and its exchange rate can vary against the dollar. We then allow the Fed to continue as is. All preexisting debt would continue to be in the dollar unless both parties agree to convert to the new system. This means that things that hold value like stocks where the company doesn't want its stocks to be worthless as much as the people who own the stocks don't want their stocks to be worthless would be converted. This would force mortgage holders to renegotiate their mortgages at decent ratesbecause while the bank still owns the mortgage, it doesn't want the debt behind the mortgage to default or for the cost of paying off the mortgage to become insignificant.
etc etc etc. Everyone would have to go back to the table. - wissler, on 03/17/2008, -7/+5If a gold standard wouldn't work, then why have they made it illegal? If it won't work then they should let people use silver and gold as currency if they want to, no skin off the Fed's nose when it "doesn't work".
In fact it work a lot better than printing presses and they know it and that's why it's illegal.- divrekku, on 03/17/2008, -3/+3Its not illegal. We just don't do it anymore.
- PeppermintPig, on 03/17/2008, -2/+8Use and possession was legal, then illegal, and now legal again. Gold and Silver is what Congress should be using, but they don't bother to provide a currency solution for the US. For the Fed to issue something that the government recognizes as 'Legal Tender' is another part of the scam. Consider that Lincoln first issued the greenback, and it was value-backed: The Fed is going after the Liberty Dollar for the very same thing it's doing to the REAL USD that we used to have. They're printing a fiat note that looks virtually the same as its value-backed antecedent, and they're not very forthcoming about that. Deception and lies...
And alternatives like Liberty Dollar who offer gold and silver solutions are being harassed by the Fed and the Secret Service. They intend to auction off Liberty Dollar's seized reserves that they used to back their certificates, even though this confiscated material is SUPPOSED to be EVIDENCE for a trial that hasn't even happened yet. Miscarriage of justice? You tell me.
I don't expect or trust the government to provide a gold-backed solution, even though gold DOES work, which is why we're seeing crackdowns here and there.
It only takes a few court cases to set precedent and further erode our liberties. - sgiffy, on 03/17/2008, -5/+2They were raided and are being tried for committing crimes beyond simply printing liberty dollars. In fact it looks like they might have been running a scam.
- PeppermintPig, on 03/17/2008, -1/+6Explain the scam.
And could you explain why it is that the government intends to auction off evidence before it is actually used in a trial? Whatever happened to innocent until proven guilty?
There is not a single private individual calling for criminal charges in this case. If there is a crime, explain the crime, and show me who the actual victims are? Nobody at Liberty Dollar was arrested. What justifies the confiscation of gold held by a third party vault, which represents the value of the certificates which LD customers hold? That gold belongs to the certificate holders. - NSResponder, on 03/18/2008, -0/+4"In fact it looks like they might have been running a scam."
Bull *****.
They made no attempt to pretend that the Liberty dollars were US government-issued currency, they didn't resemble US coinage in any way, and they contained the full weight of gold that they promised. The only scam here is the federal government lying about them.
-jcr
- PeppermintPig, on 03/17/2008, -2/+8Use and possession was legal, then illegal, and now legal again. Gold and Silver is what Congress should be using, but they don't bother to provide a currency solution for the US. For the Fed to issue something that the government recognizes as 'Legal Tender' is another part of the scam. Consider that Lincoln first issued the greenback, and it was value-backed: The Fed is going after the Liberty Dollar for the very same thing it's doing to the REAL USD that we used to have. They're printing a fiat note that looks virtually the same as its value-backed antecedent, and they're not very forthcoming about that. Deception and lies...
- divrekku, on 03/17/2008, -3/+3Its not illegal. We just don't do it anymore.
- Dush, on 03/17/2008, -3/+2Yeah, everyone get's one Amero for every 1,340 USD they turn in.
A loaf of bread will only be .8 Amero. - groverblue, on 03/17/2008, -0/+5Actually, you can. Introduce a competing domestic currency and phase out the dollar.
- lordno, on 03/18/2008, -0/+2Point for originality.
- zdwade, on 03/18/2008, -2/+4the solution isnt the gold standard b/c the money supply doesnt increase with population and economic growth and would cause deflation. i think a asset backed currency is the answer, but wat asset. i think public infrastructure is the answer. cant jus print money you would have to build infrastructure to back it. check it out its a pretty good idea.
- NSResponder, on 03/18/2008, -2/+2"There's just no way we could go back to a Gold Standard now."
Nonsense. We've already reverted from paper money to real coinage twice in this country. We will move off the federal reserve notes, the only question is whether we do it in an orderly fashion (like the retirement of the civil war greenbacks), or in a hyperinflationary collapse (like the end of the continental dollar).
-jcr
- aliengoods, on 03/17/2008, -8/+11Do you care to cite reasons why? No one is saying it would be easy, or that there wouldn't be quite a few people who would get wiped out in the process, but it could be done. And in terms of getting wiped out that happens right now every time we have a recession or depression. Even if you save your money there's just no real value to it.
- timbofirstblood, on 03/17/2008, -3/+16How? We don't have enough gold to do that, and no one is going to let us buy gold with dollars if we're going to use it to replace dollars; that would be like them giving it away. What is going to happen to all of my dollars when we switch over? I don't get it.
- suzywang3000, on 03/17/2008, -12/+15i find it astonishing when I hear people say "we don't have enough gold...". If you want to argue about the idea of a gold standard, try reading some literature on the subject... say... "The Case for A Geniune Gold Dollar" by Murray Rothbard whuch can be downloaded for free off the net.
- FrostedFlame, on 03/17/2008, -13/+9And if you want to understand a case against a gold standard, read some history books, particularly the sections involving the world wars.
- suzywang3000, on 03/17/2008, -1/+7like Antony Sutton's "Wall Street and the Rise of Hitler"?
- DonTazeMeBro, on 03/17/2008, -8/+1Why did you pricks digg down suzywang3000? I wish Digg had a feature that would let you see who dugg comments.
- DonTazeMeBro, on 03/17/2008, -4/+1*****
- timbofirstblood, on 03/17/2008, -0/+2I have read that. I don't recall that it answered the question.
- diggduggjoe, on 03/17/2008, -1/+6It is true that we do not have enough gold. Current US gold reserves (if we have them) will not cover M0. The US M0 is somewhere less than $1Trillion with M1 at about $1.5T. That is the minimum amount of gold you would need for a true gold standard without fractional reserve methodology. The total US gold reserve is about $260B. So, without buying gold we would need a fractional reserve system from the start. http://www.financialsense.com/fsu/editorials/tusta ...
This shows the presumed total amount of gold on the planet. Do the math and we will need a huge portion of that to back fully the US M1, which should be the mininum expectation of a gold standard. Cash and on demand deposits must be capable to being converted.- suzywang3000, on 03/18/2008, -2/+0are you kidding? just allow the gold price to rise. not enough gold, lol...
- FrostedFlame, on 03/17/2008, -13/+9And if you want to understand a case against a gold standard, read some history books, particularly the sections involving the world wars.
- mike17032, on 03/17/2008, -9/+4Of course it wont work, and even if it would its a stupid idea.
Like most diggots, he didnt think about his master plan for more than 2 seconds. - NSResponder, on 03/18/2008, -1/+3Read up on the history of how we took the civil war greenbacks out of circulation. You retire a fiat currency in a straightforward process: 1) you quit issuing more of it. 2) you establish a fixed exchange rate to real money, and 3), you buy back the fiat notes for real money at the rate you promised.
-jcr
- suzywang3000, on 03/17/2008, -12/+15i find it astonishing when I hear people say "we don't have enough gold...". If you want to argue about the idea of a gold standard, try reading some literature on the subject... say... "The Case for A Geniune Gold Dollar" by Murray Rothbard whuch can be downloaded for free off the net.
- sgiffy, on 03/17/2008, -16/+19How about a shiny shell standard. Gold based economies only work when your financial system is rather primitive.
- jbettineski, on 03/17/2008, -12/+5So let's make it primitive.
Tear it down and start over.- sgiffy, on 03/17/2008, -7/+13No thanks. I like the health care, technology, safety, and comfort of the modern economy. If you don't there are plenty of areas you can go to and enjoy all the wonders of primitive living. May I suggest the Congo, rural Columbia, or Siberia. I am sure you will find them all quite nice and your gold will get you far. Until someone shoots you for it.
- MisterNoMoniker, on 03/17/2008, -3/+7Right, right.
The new Digg: scratchings on tree bark thrown at you from passing ox carts.
- wissler, on 03/17/2008, -7/+10Honest money is "primitive"? If you consider trading worthless paper backed by nothing but a gun "advanced" then you need to do more reading. The Founders fought to abolish their paper currency because it didn't work. Read some Thomas Paine please. And grow some semblance of morality: backing every trade by a government gun is clearly a bad idea.
- Spytap, on 03/17/2008, -2/+5Shiny metal is no more or less worthless than colorful paper. The only thing granting it any worth whatsoever is the governments and citizens who accept it as valued.
- satanswetnipple, on 03/17/2008, -3/+4Actually Spytap, Platinum is rare enough and is in enough industrial demand, that it is doubtful that Platinum will ever reduce in value. The only problem is that the only source of Platinum is in Asia, so USA cannot mine its own.
- mike17032, on 03/17/2008, -4/+7I will trade you 3 rocks and 2 sticks for your shiny shell!
- diggduggjoe, on 03/17/2008, -2/+4I figure a better commodity would be some composite of brick, lumber, fuel, food and water. These items will sustain life which is the whole goal of money in the first place. An asteroid hit upon the earth would make gold worthless, for it will not provide shelter, warmth nor sustenance. The other benefit of a monetary system backed by life sustaining materials is that in the case of an asteroid catastrophe we would have tremendous amounts of materials to assist people.
If, your dog would not need it, it is probably worthless.
- jbettineski, on 03/17/2008, -12/+5So let's make it primitive.
- LukasSmith, on 03/17/2008, -6/+6Our federal government would have to go into hibernation for 3 years to pay off the debt. 3 trillion is the budget this year. SO 3 years x 3 trillion = no debt. Sounds like a good Idea to me. Nobody would feel bad about the government disappearing. And when they return maybe we will appreciate them more.
- pianomahnn, on 03/17/2008, -3/+4Yea, that would almost work as a reasonable solution.
- Abomonog, on 03/18/2008, -1/+2Nah. You know how our government thinks. If it sounds reasonable it can't possibly work.
- vulapine, on 03/17/2008, -2/+5The problem is that without government funding there would be no tax collection. A fatal flaw in your plan.
Not to mention problems with not paying for social security, military, highway maintenance and the like,- ithasacarb, on 03/17/2008, -5/+4You need to find out how taxes are paid in and what the individual taxes pay for, then you won't makes comments like this that make you look silly.
- vulapine, on 03/18/2008, -0/+3State and local taxes will be unchanged. Duh. Social security and medicare are collected by the employer and sent to the federal government... Oh wait! Nobody is working at the federal government. Well, we can still pay income taxes. Oh crap! Those also go to the federal government. Please explain what I am missing here. If you have nobody there to collect the taxes, how will you collect taxes? I'm clearly utterly confused. School me!
- Abomonog, on 03/18/2008, -0/+1He's got a point. Without money who is going to pay fare for the collectors? :)
- ithasacarb, on 03/17/2008, -5/+4You need to find out how taxes are paid in and what the individual taxes pay for, then you won't makes comments like this that make you look silly.
- LukasSmith, on 03/17/2008, -8/+2You can still collect taxes. And stop paying for everything else. We don't really need social security highway maintenance or anything.
- Gerz1219, on 03/17/2008, -2/+6Unless instead of being a 24 year old IT worker, you were a 77 year old blind retiree. Then you might need your Social Security payments to, um, eat.
- LukasSmith, on 03/17/2008, -5/+2Get a job geezer! This idea of being old and sitting on your ass until your dead otherwise known as retirement is an American creation. In other countries old people are hard working and useful.
- Gerz1219, on 03/17/2008, -3/+2Why is it that when a person writes "your" instead of "you're," their arguments are invariably baseless and easily refuted? It seems that this is an easy mistake to make, so there should be some intelligent people who confuse "your" and "you're". There aren't.
- LukasSmith, on 03/17/2008, -4/+2Why is it that when a person gives a crap about spelling on digg.com they aren't automatically considered fags for bringing the dictionary to a lowly blog? This isn't The New York Times. This is digg.com. Do weez understands wot im saaying?
- Dasickninja, on 03/24/2008, -0/+1Yes we do, but your argument is still *****.
- NSResponder, on 03/18/2008, -0/+2"Our federal government would have to go into hibernation for 3 years to pay off the debt"
You say that like it's a bad thing.
When you overspend on credit, you have to tighten your belt if you ever want to pay it off.
-jcr
- pianomahnn, on 03/17/2008, -3/+4Yea, that would almost work as a reasonable solution.
- oxdeltaxo, on 03/17/2008, -7/+6We need something similar to the gold standard, but Gold is currently way too expensive. What we need to do is make the jump from wealth as currency to wealth as energy. Put E=mc2 to good use.
- obliviousfool, on 03/18/2008, -1/+1That's not too far a leap. We're practically on the oil standard right now.
- Latimer, on 03/17/2008, -15/+6Thats quite a statement to make without having any sort of argument to back it up. Not saying the Fed is a good thing.... but "biggest scam ever perpetrated on a people" seems a little excessive. But I guess thats what you get when you come to Digg.
- spheenik, on 03/17/2008, -1/+3Must not be gold based to work. Read about what worked remarkably well before the american revolution, and, according to Benjamin Franklin, was the real cause of the revolution:
http://en.wikipedia.org/wiki/Colonial_Scrip- sgiffy, on 03/17/2008, -1/+4Yeah, I am just going to say, right of the bat, that maybe what worked well for a small agrarian society might not work so well in our fancy modern world.
- spheenik, on 03/17/2008, -3/+2I am pretty sure that it would work as well in small as in large modern worlds, AS LONG AS THE COMMITEE or whatever it is, that decides how much money will be in circulation, IS SOUND. And remember: The FED was founded under the premise, that it was a non governmental agency whose purpose was to guarantee stability of the dollar. And since it was founded, the dollar's purchasing power has really gotten down the dump, with hyperinflation following now.
I think the other way around: The current system, for all to see, threatens to destroy the planet. The planets last resources are literally sold out, and generations to come will find themselves on a hot polluted ball that men with unlimited greed destroyed. Modern, but definitely not fancy :(- sgiffy, on 03/17/2008, -2/+3No the Fed exists to prevent deflation and keep inflation under control. And it has succeeded at both ends. While we have some bumps, overall inflation has risen by about as much as the interest paid on a savings account.
- spheenik, on 03/17/2008, -3/+2I am pretty sure that it would work as well in small as in large modern worlds, AS LONG AS THE COMMITEE or whatever it is, that decides how much money will be in circulation, IS SOUND. And remember: The FED was founded under the premise, that it was a non governmental agency whose purpose was to guarantee stability of the dollar. And since it was founded, the dollar's purchasing power has really gotten down the dump, with hyperinflation following now.
- sgiffy, on 03/17/2008, -1/+4Yeah, I am just going to say, right of the bat, that maybe what worked well for a small agrarian society might not work so well in our fancy modern world.
- ralphthemagi, on 03/17/2008, -11/+15FIRST, there isn't enough gold IN THE WORLD to back the US.
SECOND, even if, theoretically, we had a gold backed currency, nothing would *really* change. The value of gold would simply be less, because in order to back the US dollar, there'd have to be a tremendous amount of gold in the world.
Debt is debt. It doens't matter if it's in dollars, gold, rocks, or rubies. The only real advantage to such as system, is that it limits the amount of money you can print (in theory). But you can do that in a purely fiat system as well.
Some of you Ronulans think that just because Ron Paul said we need to go back to the Gold Standard, he meant it or it's a good idea. The reason he says things like that is to get the point across that we need to stop printing money, not that he actually thinks it's a good idea. It's not even possible.- reedatschool, on 03/17/2008, -4/+5We have abolished the Federal Reserve several times in our history. It is possible and useful when it gets out of whack like it has over the past 30 years. Abolishing the Federal Reserve has nothing to do with Rony boy, but I guess you really like those ad hominem arguments eh?
- mciampa1214, on 03/17/2008, -0/+1When was the Fed abolished several times?
- reedatschool, on 03/18/2008, -0/+2The central banking scheme has been abolished and re-instated in our history many times. Here is the link if you are interested
http://en.wikipedia.org/wiki/History_of_central_ba ...
- reedatschool, on 03/18/2008, -0/+2The central banking scheme has been abolished and re-instated in our history many times. Here is the link if you are interested
- mciampa1214, on 03/17/2008, -0/+1When was the Fed abolished several times?
- TLAKABM, on 03/18/2008, -0/+2People like to belive in magical fixes.
- reedatschool, on 03/17/2008, -4/+5We have abolished the Federal Reserve several times in our history. It is possible and useful when it gets out of whack like it has over the past 30 years. Abolishing the Federal Reserve has nothing to do with Rony boy, but I guess you really like those ad hominem arguments eh?
- bc289, on 03/17/2008, -9/+3gotta agree with ralph. Even then though, printing money is not the problem. Everyone must have watched that movie and must now think that printing money = increasing debt and scary inflation. That ain't the problem here guys.
- PeppermintPig, on 03/17/2008, -1/+4Oh, is it opposite day? Print more money and we'll be filthy rich? Why aren't we printing more money and giving it away??? Then we'll all be billionaires!!!
- bc289, on 03/17/2008, -4/+1printing money prevents the economy from experiencing deflation. Deflation is much worse than inflation.
- diggrnumber1, on 03/19/2008, -0/+0milton friedman disagrees with you, peppermintpig
- PeppermintPig, on 03/17/2008, -1/+4Oh, is it opposite day? Print more money and we'll be filthy rich? Why aren't we printing more money and giving it away??? Then we'll all be billionaires!!!
- Donwangugi, on 03/17/2008, -12/+21Okay, I really, really, really wish people would take a history lesson and read the article. The Fed here is trying to fix the problem, by doing the opposite of what they did during the Great Depression. When the Great Depression rolled around the same scenario was present. Money was in short supply because banks made loans to people and could not pay it back (because they all blew it on the stock market, which crashed. Similar to the present situation as arm's push up their mortgage payments and banks do not get their money back). When the Fed decided, initially, "hey we'll let you guys figure this one out." Money supply shrunk by a third. And deflation actually occurred, because no one had money. Everyone went to the banks and asked for money, so many banks fell. By the time the Fed stepped in it was too late. The Fed is trying to prevent this, by buying up bank debt and flooding the market with money. As a result, there WILL be inflation. Now this combined with high gas prices and fewer jobs may actually be a problem. But that part is NOT the Fed's fault. They are trying to fix the problem in the only way they know. They want to contain the debt and prevent a Depression, perhaps allowing a small recession. If anyone can contain bank debt, it is the central bank. You act as if this is silly, but other country's central banks are doing the same for their corporate banks who were sold American debt during the boom of the housing market.
The gold standard is silly, especially now as the dollar falls and gold becomes increasingly valuable as an investment tool. (Because gold never looses its values, even if a country fails.) Our dollars would never buy enough gold to support our currency.- blindhammer, on 03/17/2008, -5/+15That's your analysis. The Austrian School of economics thinks that Great Depression was caused by rabid credit spending and inflation.
- sgiffy, on 03/17/2008, -2/+4They are partly right, but were they fail is in thinking that is always a bad thing. Another word for that is economic growth and investment. In order to have a growing economy you need to have growing supply of currency to enable transactions. Tieing a currency to a commodity makes it more difficult to keep things liquid and that is what causes the disasters, not the growth or the credit in its self.
Had we been able to keep cash in the system in the run up to the depression we still would have had a recession, its just part of the business cycle, but we probably could have avoided a depression.- PeppermintPig, on 03/17/2008, -3/+2You speak as if a scarcity in hard currency causes economic decline. It does not.
Besides, most people moving large amounts of capital are essentially bartering on what the money can buy and don't necessarily need to make physical exchanges of currency. Having your money just sit in an account is not a good financial strategy the vast majority of the time.
You take it for granted that there needs to be a centralized organization matching pace with the economy in providing physical currency.
Tieing a currency to a commodity makes it difficult for the money makers to scam people. Even so, fractional reserve banking activities have arisen out of a hard-backed system... this, frankly, is an act of fraud which would be rejected if people understood and had independent transparency and auditing of their choice of money.
The Fed has not saved us from anything. The Dollar has constantly declined. - sgiffy, on 03/17/2008, -3/+1So if we don;t have a fractional reserve system, how can one do the trading you are taking about? It is not essentially bartering, its exchanging things in Dollars representing value. I don't tell someone I'll give them 1000 shares of Microsoft in exchange for 30 10k T-bills. I sell one and buy the other. In your system with no fractional reserve banking and gold backed currency this would be impossible unless the parties had big cash reserves. If no money is available on credit and the total amount of available funds is very limited noon of this can happen.
And of course just sitting on your money is not a good thing, unless we had the kind of deflationary economy your system would give us. Then it becomes a great idea. The result is negative growth and financial ruin. Really jsut look ot the 1800's and the Great Depression to see how this works. In both cases it was mostly poor farmers who really took the hits. - PeppermintPig, on 03/18/2008, -1/+2Well, having a medium of exchange can help people determine the comparative worth of goods when they're not very experienced with certain services/products, but it's not necessary for others who can better estimate the direct barter value. That's not to say people do not want currency to store value between exchanges. That doesn't mean we should assume that the Fed's implementation of currency is above scrutiny either.
What system did I propose?? What I did was identify certain assumptions you made about the current system.
Money isn't the same thing as wealth. Wealth is not a limited commodity. So long as people understand how to prosper, by creating value for others, they can safely loan money, build credit, either with institutions or with individuals, and the economy as a whole will flourish.
Before you accuse me of supporting a bad system, you'll have to identify what I do support. If you can debate with fewer assumptions, you can make more informative points.
Given the steady stream of fuel and technological advancement, it would be quite difficult to convince me that people in the US in the past 100 years have suffered primarily for reasons other than government manipulation: Advent of the income tax, growth of federal agencies leading to anti-competitive regulation in farming, and industry in general... and these are merely economic factors.
Fiat money and fractional reserve banking allow the government to wage war and spend beyond their means, which contributes to inflation. The 1800's is a long period of time. You might want to identify something more specific. As for the Great Depression, the Federal Reserve started up in 1913, and in the following years we saw an expansion of the money supply, something which you seem to advocate. It's more than a mere coincidence that the economy took a crash as the markets were being tampered with. By the time the central economic planners applied the 'corrections' to what they foresaw as "market instability", typically a full year down the road, economic factors made such 'corrections' inappropriate.
- PeppermintPig, on 03/17/2008, -3/+2You speak as if a scarcity in hard currency causes economic decline. It does not.
- Donwangugi, on 03/17/2008, -0/+3Yes. We know this. But we are past the point where we can do anything about it. Inflation occurred when the banks loaned out lots money. And when people could not pay it back, due to rapid credit spending, things went to crap. Now, banks are already losing money. And if the Fed tried to tighten money, like it did in 1929, it would be too late. the best choice would be to eat some of the debt, and put some more money out to keep things afloat, until we can sort things out. The banks, corporations and the people need credit and money to survive the recession.
I'll digg you for your knowledge of economic history though, nice point.- PeppermintPig, on 03/17/2008, -0/+3So we're too far gone to change anything and we should just give up?
If you're not tying your wealth to things besides the USD, why not?
We are not past the point as individuals to do something about our situation. We are not all passive passengers, slaves to the good ship lollipop captained by Bernanke. Sink, swim, go down with the ship, but use your freedom of choice. :P - bjornski, on 03/17/2008, -2/+2@PeppermintPig
Now I've got that song stuck in my head.....
I love Devo
- PeppermintPig, on 03/17/2008, -0/+3So we're too far gone to change anything and we should just give up?
- reedatschool, on 03/17/2008, -1/+2And the point is fractional banking is what produces the booms and busts.
- sgiffy, on 03/17/2008, -1/+3Sort of. I prefer to think they let them happen. And there a good thing, because the busts are not as serve as the booms, resulting in net progress. Plus the bests help make it easier for new companies and investors to enter the system preventing dynasties.
- sgiffy, on 03/17/2008, -1/+1Damn, pretty sure I fixed the typos in that, but whatever .Here it is in a more correct form: Sort of. I prefer to think they let them happen. And their a good thing, because the busts are not as severe as the booms, resulting in net progress. Plus the busts help make it easier for new companies and investors to enter the system preventing dynasties.
- Abomonog, on 03/18/2008, -1/+2People here seem to be looking at this at the wrong angle.
We can't use the gold standard simply because gold is now an industrial commodity.
The Feds can't help us because the 3 major factors that caused the great depression are happening again.
They are 1: Massive government obsession. In the 20 and early 30's it was alcohol. Today it's Iraq, the war on terrorism, and drugs.
2: Major inflation due to disruption to supply of required goods. The dust bowl years kicked off in the summer before the depression hit and today the Iraq war, our bitch with Chavez, and our other various pet peeves that we've scratched have made those who hold the oil rather angry at us lately. This has inflated oil prices beyond the means of mere corporate corruption.
3: Wanton credit. A big factor of the onslaught of the depression is that banks habitually lent out huge percentages of their assets. Basically they lend out your money. But the story above is true. People ran out of money and went to the banks to withdraw their savings. But most of the money was on loan to people who were by now also broke. And the dominoes fell.
Today it's the housing scandal. this is breaking a very large portion of our society financially.
Illegals and outsourcing have driven down wages and robbed jobs and the corporate world just keeps finding ways to pay us less money.
Indeed the Fed have very little control over the economy. The fact is that when the rich and poor get too far apart financially and numerically the economy is going to crash.
Are you wearing your seatbelt?
- sgiffy, on 03/17/2008, -2/+4They are partly right, but were they fail is in thinking that is always a bad thing. Another word for that is economic growth and investment. In order to have a growing economy you need to have growing supply of currency to enable transactions. Tieing a currency to a commodity makes it more difficult to keep things liquid and that is what causes the disasters, not the growth or the credit in its self.
- sgiffy, on 03/17/2008, -3/+5Not to mention that the fact that we still required a partial gold backing prevented the Feds from injecting the necessary liquidity. Going to the gold standard is a bad idea, but right now would be suicide.
- ralphthemagi, on 03/17/2008, -4/+3Today gold is a speculator's market, tied to the notion that "gold never loses it's value." Gold is pretty useless in an industrial society. Today it's traded like a paper commodity, but as an actual currency—useless, unless you live in sub-Saharan Africa.
Try to buy a hotdog in NYC with a gold coin. Can't do it. People would look at you like you were crazy.
The only purpose investing in gold serves is that it allows you to transfer your dollars to gold, but then you have to transfer it back into some other currency. You might as well just trasfer it into another currency in the first place.
If the American economy completely collpases, having a bunch of certificates that are good for gold isn't going to do you any good.
An in real terms, gold isn't worth much more today than it was 100 years ago.- barfooz, on 03/17/2008, -2/+4If I were a hotdog vendor on the streets of New York and someone handed me a gold coin, you bet your ass I'd take it. Are you kidding? Gold's probably the one thing besides the dollar that could get you what you want everywhere on this planet.
Gold and diamonds will always be worth something because humans (especially female ones) appreciate and therefore assign worth to pretty shiny things. It's really quite simple.- litkaj, on 03/17/2008, -1/+3I've got a bag of shiny marbles for anyone who wants to trade for a bag of gold or diamonds.
- PeppermintPig, on 03/18/2008, -0/+2Diamonds = Compressed Carbon
Gold = Rare Element
Gold > Diamonds
Generally speaking. :) - rholland356, on 03/18/2008, -0/+1So, you'll take that gold coin for a hot dog. Now, how are you gonna make change, chucklehead?
- sgiffy, on 03/17/2008, -3/+2Exactly. Its historically just been a safe place to inflation proof your investments when you think the economy is getting shaky. Though when the bubble finally pops on gold I think its going to be a while before people look at it that way again.
- barfooz, on 03/17/2008, -2/+4If I were a hotdog vendor on the streets of New York and someone handed me a gold coin, you bet your ass I'd take it. Are you kidding? Gold's probably the one thing besides the dollar that could get you what you want everywhere on this planet.
- blindhammer, on 03/17/2008, -5/+15That's your analysis. The Austrian School of economics thinks that Great Depression was caused by rabid credit spending and inflation.
- rholland356, on 03/17/2008, -7/+19Gold standard talk is utter troglodyte rubbish. The source of the problem today, as it has ALWAYS been in financial crises past (and fallen empires as well) is human greed. This time the greed of the wealthy schemed with the greed of those hoping to beat the odds and buy a home of their own, and the greed of homeowners looking to make a quick buck on overpriced real estate.
Until the day that people are excluded from making the rules they live by, greed will continue to drive periods of fiscal disaster. - Angostura, on 03/17/2008, -1/+4Great, so you link the dollar to a metal whose value fluctuates depending on who is mining what.
By the way - guess who is the biggest miner of gold at the moment, and who would, therefore have the biggest influence on the value of the dollar. That's right - China.
http://www.ft.com/cms/s/0/fc29dd94-c52d-11dc-811a- ... - anillop, on 03/17/2008, -6/+8Anyone who believes that we can go back to a Gold based economy obviously has no understanding of economics and just how large the US economy is.
- Hangly, on 03/17/2008, -4/+2No one said it would be easy or smooth, just that it can prevent a *complete* currency collapse.
- nickthedude, on 03/18/2008, -3/+1i like tin foil hats
- kronicade, on 03/18/2008, -0/+2NO DIGG,, wake up, it's perceptions like all those above, not our banking system
- brad3378, on 03/17/2008, -21/+95There's just no way we could go back to a Gold Standard now.
- sotopheavy, on 03/17/2008, -19/+105Down with Fed, Up with mini-skirts!
***** You FRank (Federal Reserve Bank)!- Sherman901, on 03/17/2008, -11/+5that whole FRank thing is lame. but i'll digg you up for the right cause. but seriously, that FRank thing... yeah...
- stonklit, on 03/17/2008, -0/+6Yeah but... mini-skirts, dude. Mini-skirts.
- jabberwolf, on 03/17/2008, -0/+2Um do the people that took the short arm, interest only loans take ANY responsibility?
Or are they just SMART when taking the loans and then unknowing victims that were taken advantage of, when betting on the wrong horse? - sarixe, on 03/18/2008, -1/+1+69 diggs when i dugg you
- Sherman901, on 03/17/2008, -11/+5that whole FRank thing is lame. but i'll digg you up for the right cause. but seriously, that FRank thing... yeah...
- TheRealToma, on 03/17/2008, -19/+121While were at it, lets get rid of K-Fed too. Hes such a douche.
- roosterjack, on 03/17/2008, -2/+9Agree!!!
- slvrbullet87, on 03/17/2008, -0/+5Motion carried!
- Sherman901, on 03/17/2008, -2/+9that guy ***** my sister in the ass. what a jerk.
- joshhan, on 03/17/2008, -1/+7WTF?
- DonTazeMeBro, on 03/17/2008, -0/+4My condolences to you.
- Akronos, on 03/18/2008, -0/+1So Jamie, how's teen pregnancy working out for you?
- phazon88, on 03/18/2008, -0/+1Okay I guess K-Fed's not too bad then.
- lewhich, on 03/17/2008, -2/+9I thought he was already Fed-Exed
- kfed2, on 03/17/2008, -0/+7have we met?
- Mustard911, on 03/17/2008, -6/+4People had a chance to vote Ron Paul but couldn't see the importance to make sure their vote counted or to even vote for him. Not sure anyone else will help America before UN gets what it wants by destroying the US dollar and making Americans want the EU game in merging with Canada and Mexico.
How to destroy America with Israel at the helm! Who isn't an duel citizen with Israel in the US government, That's the difficult puzzle for the day!- btdub, on 03/18/2008, -0/+1Ron Paul ≠ K-Fed
- roosterjack, on 03/17/2008, -2/+9Agree!!!
- ThunkDifferent, on 03/17/2008, -9/+4Rarr! I hear the figurehead is Sooo mad at the stern bears! http://sternbears.blogspot.com
- Peko, on 03/17/2008, -3/+29Ok, actual serious question. I know a little about the entire "Let's get back to the gold standard" thing. What's an actual plan to implement a return to the gold standard? There are serious obstacles and "political hurdles" to overcome in any achievement like returning to the gold standard and I'd be curious if there are some semi-intelligent diggers who might have some ideas.
(And when I say "return to the gold standard" you can insert any methodology of non fiat currency as you see fit, just let me know what you're up to)- EyeSurgery, on 03/17/2008, -19/+10First, materialize enough gold to back our rather sizable economy. After that, we're only supposed to print as many bills as we have gold. That's never going to happen because it's infeasible at this point.
- PeppermintPig, on 03/17/2008, -1/+2You can't have it both ways. One can't say Gold is either 'too expensive for us to buy', or 'too physically scarce to carry this economy'. There are other metals to consider as well.
- sarixe, on 03/18/2008, -0/+1you butt... how do you suppose we get that much gold?
- suzywang3000, on 03/17/2008, -6/+32ignore what eyesurgery says - read "The Case Against the Fed" by Murray Rothbard to answer your question.
- GhostyBoy, on 03/17/2008, -8/+45Liberty dollar attempted to create a gold backed currency, but just before they could send their first shipment they were raided by the FBI.
The money changers don't take *any* chances on control of the money supply, so trying to take it back from them is risky business. It would have to be an independent move, because the government will *never* give permission for such an endevour, and the gold would likely have to be seriously defended, because the FBI, CIA and IRS will likely come heavy in order to take it down.
This is serious business. Presidents get shot over this.- sgiffy, on 03/17/2008, -21/+6Yup, the government does look poorly on people who break the law.
- kfed2, on 03/17/2008, -4/+6Remember those terrible people who worked the underground railroad?
- Rednik2011, on 03/17/2008, -17/+8JFK wasn't shot over this. Do some actual research and shove your conspiracy theories up your ass.
- thechitowncubs, on 03/17/2008, -8/+1A True Voice of Reason
TVR - GhostyBoy, on 03/17/2008, -2/+5I could have just as easily been talking about Lincoln, or Andrew Jackson (failed attempt).
- yodaj007, on 03/17/2008, -2/+5It is entirely possible that JFK was shot over Executive Order 11110. I'm going to provide you with only one link, which I expect you to promptly shove up your own ass.
http://www.apfn.net/Doc-100_bankruptcy31.htm- sgiffy, on 03/17/2008, -0/+4So much wrong with that article, but the biggest, and this is important, is that the President already had the authority to issue these certificates and there were many in circulation. This order merely delegated that authority back to the Secretary of the Treasury. Even in 1960 issuing certificates against all uncertificated silver would have not had a major effect o the global economy. Oh and you know how those certificates were purchased once issued? In dollars.
- thechitowncubs, on 03/17/2008, -8/+1A True Voice of Reason
- sohlemac, on 03/17/2008, -16/+4Wow, sounds like some vaguely disguised anti-Semitic BS.
- bromac, on 03/17/2008, -1/+14Anti-semetic? WTF? There's no mention at all of Jews or Israel.
It's Anti-fed, which I'm for. I have no clue if the executives of the Fed are jewish, and I really don't care. What they're doing is wrong if they were hindu, christian or Pastafarian. - GhostyBoy, on 03/17/2008, -1/+8Funny, my family is Jewish.
I'm pretty sure you just reached for that conclusion. Nothing I said implied Judaism in the slightest. - JFitzpatrick, on 03/17/2008, -2/+7He says money changer and you hear "Jew!", whose the racist one now?
- bromac, on 03/17/2008, -1/+14Anti-semetic? WTF? There's no mention at all of Jews or Israel.
- sgiffy, on 03/17/2008, -21/+6Yup, the government does look poorly on people who break the law.
- forgiste, on 03/17/2008, -5/+3why don't we just invest what little money we have left into figuring out how to end jobs and the economy outright. I thought in the future robots were supposed to do all the work for you? If you let robots build and improve each other, and mine resources and deliver them to society as they are needed, you'd dissolve this game of monopoly you call an economy and at the same time completely end diet related health problems. Besides that you could set a website up that lets everyone play dictator and vote on all the issues, this way no man has power over another man. This would in turn solve the problem of government. So then you've solved power and money as sources of corruption and global crises.
- popfrogs, on 03/17/2008, -2/+4You must have missed the memo on the future. WE are the robots.
- bjornski, on 03/17/2008, -0/+1Another fan of Buckminster Fuller, I see.
I am too.
- ralphthemagi, on 03/17/2008, -16/+10All you need to know about "Let's get back to the gold standard," is that it's impossible, because there isn't enough gold in the world to back the US dollar. Even if we aquired ever piece of gold that exists, it wouldn't even cover half.
And let's say that, hypothetically, there was enough gold. Then it also wouldn't matter, because there'd be so much if it, its value would be only a fraction of what it is today, and since we'd have to have every single last piece, all we would manage to do is ***** up the value of gold and no one would want it.- imightbewrong, on 03/17/2008, -4/+5thank you
- orxor, on 03/17/2008, -2/+4How about a competing gold backed currency? This is what they proposed in mexico, accomplished in brazil to stabilize their fiat currency and ron paul suggested here. That way the fed and whoever else can use the fiat currency and others can use the gold backed stuff or even actual gold if they want to.
- ralphthemagi, on 03/17/2008, -7/+2Try to buy a hot dog in NYC with a gold coin. Try it. People will look at you like you are crazy, probably because they think it's fake, but even if it was real they still might not want it. What are they going to do with it? They can't pay their bills in gold coins. Not only does it have no real value in an industrial society, it has no legitimacy as a currency in the Western world.
- sgiffy, on 03/17/2008, -3/+1Well if the coin was pure gold, and they did not expect change, I would take it. A gold coin has gotta be worth like a couple grand. Though I would quickly exchange it for real money.
- ralphthemagi, on 03/17/2008, -2/+2And how are you going to know it's a pure gold coin? Take his word for it? It doesn't work in our society today. We advanced past that... like 100 years ago.
- sgiffy, on 03/17/2008, -4/+0Can't you tell by biting it or something? No, I know, I was just being mildly snarky. :) I do agree that gold is not, nor should it be, a currency.
- bjornski, on 03/17/2008, -1/+2Hey, you can get gold cheap from Ethiopia! It's legit, I swear!
- ralphthemagi, on 03/17/2008, -7/+2Try to buy a hot dog in NYC with a gold coin. Try it. People will look at you like you are crazy, probably because they think it's fake, but even if it was real they still might not want it. What are they going to do with it? They can't pay their bills in gold coins. Not only does it have no real value in an industrial society, it has no legitimacy as a currency in the Western world.
- thechitowncubs, on 03/17/2008, -6/+2You ser arre an idiot
- 7yler, on 03/17/2008, -17/+11So, there's a trillion dollars in gold bullion sitting in a vault. The value of every dollar in circulation is tied directly to that bullion. One night the earth shakes, a fissure opens up beneath the vault in an area no one could have expected swallowing the entire vault and every last bar into a fiery pit of molten magma forever destroying all the gold. Now our money is worthless, great job fellas, way to take us back to the gold standard. The bottom line is our currency is more stable today than it has ever been in recorded history. Criticize the lending standards of the Fed all you want, in the grand scheme of things it's done an exemplary job. For christ sake, the 5th largest bank in the US effectively failed today and the market is only down ~2%. We all need to take a minute and get some perspective on the situation and stop trying to take us back to the "good ol days" when gold was king and robber barrons protected us from the curse of capital and the trappings of wealth.
- sgiffy, on 03/17/2008, -11/+5Well said! I think, for some reason, people, when looking back to the past, tend to assume everyone lived like the wealthy.
- bromac, on 03/17/2008, -3/+5I'm not for going back to the gold standard.
I'm for your government printing its own currency. There's no reason for them to pay interest on paper money they could issue themselves.- sgiffy, on 03/17/2008, -5/+0They don't. The Fed refunds the interest paid by the goverment.
- bendru, on 03/17/2008, -2/+9So what you're saying is that once the thing of real value (gold in your example) disappears then the money is worthless? Isn't that what we've got today?
- sgiffy, on 03/17/2008, -4/+3No, our money is based on the assets and economy of the US. Now if that were to disappear, then yes.
- liquidpele, on 03/17/2008, -4/+2Not to mention having a Gold standard meant artificially setting the price of Gold so that it remained stable. Gold now costs over 3 times what it did (accounting for inflation obviously) when we were on the Gold Standard. It sucked because you were tied to a market that would fluctuate, and one that other countries could effect by dumping Gold onto the world market.
- 955701, on 03/17/2008, -0/+5Over 3 times what it did when we were on the Gold Standard? Heck in March of 2001 Gold was a third of today's price. It's got nothing to do w/ the gold standard it has to do with the US economy and the perceived value of the US currency.
- PeppermintPig, on 03/17/2008, -1/+4Artificially setting the price of gold? LOL
You'll get for gold only what the market will bear. That's why cartels tend to fail. Where cartels and monopolies do exist, you can likely blame government and anti-competitive regulation. - bluesnowmonkey, on 03/17/2008, -1/+6Gold costs (in US$) about 50 times what it did when we were on the gold standard. Look it up, $20/oz then to $1000/oz today. With close to 4% inflation over the past 100 years, the dollar is worth almost 50 times less. What does that mean? Gold is stable. But then that's common sense.
- 955701, on 03/17/2008, -0/+5Over 3 times what it did when we were on the Gold Standard? Heck in March of 2001 Gold was a third of today's price. It's got nothing to do w/ the gold standard it has to do with the US economy and the perceived value of the US currency.
- kfed2, on 03/17/2008, -0/+12"The bottom line is our currency is more stable today than it has ever been in recorded history. " Not true. Inflation is proof that our currency is not stable. Have you looked at the price of gas, housing, food, anything made out of commodities (ignore the offset caused by the falling cost of labor due to outsourcing) lately?
- sgiffy, on 03/17/2008, -7/+0Most of those are not due to currency inflation. Oil and food especially are increasing due to our old friend supply and demand. Oil because of big demand form developing countries and OPEC not increasing supply, and food due in part to oil and in part to biofuels. We could be on a full gold standard and the same thing would be happening, assuming that a gold based economy could actually create the growth necessary, but that's another issue.
- kfed2, on 03/17/2008, -0/+5I agree that supply and demand have some influence on the price of oil, of course, but if you look at the long term trend, you cannot say that gas gong from 0.03/gallon to today's prices is due to increased demand/decreased supply. Supply and demand cause short term fluctuations throughout most of recent history.
Look at the recent change in the value of gold - the same thing would not be happening. If anything, the price of gas would have gone down because of the surge in the price of gold.
- kfed2, on 03/17/2008, -0/+5I agree that supply and demand have some influence on the price of oil, of course, but if you look at the long term trend, you cannot say that gas gong from 0.03/gallon to today's prices is due to increased demand/decreased supply. Supply and demand cause short term fluctuations throughout most of recent history.
- sgiffy, on 03/17/2008, -7/+0Most of those are not due to currency inflation. Oil and food especially are increasing due to our old friend supply and demand. Oil because of big demand form developing countries and OPEC not increasing supply, and food due in part to oil and in part to biofuels. We could be on a full gold standard and the same thing would be happening, assuming that a gold based economy could actually create the growth necessary, but that's another issue.
- oxdeltaxo, on 03/17/2008, -12/+2I've always thought that Einstein had the right idea with e=mc2. Simply put we can derive the actually energy value of something based on its mass at the speed of light squared. Using this equation we can build a new economic system based not on currency but on energy. No need to re-instate the gold standard or any material backed standard.
- oxdeltaxo, on 03/17/2008, -5/+1Nobody even cares to debate me on this?
- sgiffy, on 03/17/2008, -0/+7Probably because you seem to lack an understanding of both physics and economics.
- PeppermintPig, on 03/17/2008, -0/+2Not to say it isn't possible or not somewhat reflective of our current society, but energy as a currency has been explored in science fiction before I believe.
- apc3161, on 03/17/2008, -0/+5I'll take a shot at it.
Basically one pound of useful food would be equal to 1 pound of useless dirt. They have the same weight, and therefore mass, and therefore the same inherent energy. Then there is the issue that you can't really get that energy from the material.
Basically, that equation would say that stuff is only as valuable as its weight. Which makes no sense.
Now, you can base stuff on how much energy you can extract. We already do that. Look at the recent price of oil.- oxdeltaxo, on 03/18/2008, -0/+1What kind of retarded merchant would exchange a pound of rocks for a pound of chicken?
I'm not saying that it doesn't require some common sense, just that it is far more standardized than a fluctuating currency.
- oxdeltaxo, on 03/18/2008, -0/+1What kind of retarded merchant would exchange a pound of rocks for a pound of chicken?
- oxdeltaxo, on 03/17/2008, -5/+1Nobody even cares to debate me on this?
- XanderDee, on 03/17/2008, -2/+12JFK did it before he died but it was reversed... Executive order 11110, look it up.
- sgiffy, on 03/17/2008, -1/+3http://en.wikipedia.org/wiki/Executive_Order_11110
Hardly what many tinfoilers think it was.- JCPahl, on 03/18/2008, -1/+1Tinfoilers? Are you aware that E. Howard Hunt (whom the main character in Mission Impossible is named for) issued a deathbed confession of involvement in the JFK assassination? Sure, it was only covered by Rolling Stone, but his son released the tapes and they're up on Youtube. Tinfoilers indeed!
- sgiffy, on 03/17/2008, -1/+3http://en.wikipedia.org/wiki/Executive_Order_11110
- apc3161, on 03/17/2008, -4/+29There was a famous Nobel winning economist named Friedrich Hayek who talked about how to best implement this. He came up with the idea of dual currencies.
http://en.wikipedia.org/wiki/Friedrich_Hayek
The idea being that if you had a fiat currency and a competing currency. People would slowly adopt the stronger currency. In this case, that currency would be a gold backed currency. People would slowly choose to convert their savings into this currency and ask to be paid in that currency. It's the basic free market principle, when everyone is inherently looking out for their own well being, society as a whole will benefit. The weaker currency will slowly phase itself out of existence.
This is actually a very simple system for the government to implement. Just get rid of the laws that say only U.S dollars can be used as currency in this country. People will slowly start using other forms of currency. Gold backed, Euros, Silver backed, British Pounds, who knows. But eventually a consensus will be reached as to what the alternative currency will be. It will be the currency that people believe best suits them by retaining its value. The government wouldn't even need to regulate it theoretically. Just get rid of the laws that currently make this illegal, and I can promise people will take actions that best suit them.
If the government wants us to continue using dollars, they can do so simply, they would only need to stop deflating the value of the dollar on purpose.
Competition in almost all sectors of life is good, why doesn't this apply to currencies as well? Of course the very wealthy already know this. Hence they majority of their savings are in stocks, bonds, commodities, real estate etc. They don't invest by holding dollars. However, those who don't have as much spare cash or who don't know better, don't have this privilege. Dual currencies would put them in a better position as it would quickly become common knowledge which currency is stronger and which currency will retain its value. So the poor and those trying to save whatever they can would really benefit.
This was one of the things that made me start to like Ron Paul. I heard someone on the TV say, "Have you ever heard of Friedrich Hayek?" and RP responded with, "Freedom to Serfdom is one of my favorite books"- dracostimpy, on 03/17/2008, -3/+5I agree with all of that, but in fact there aren't any laws that make alternative monies illegal; we can use whatever we want as currency so long as it's agreed upon by the parties exchanging it. The only thing the law states is that the dollar is the government's mandated form of money for settlement of all debts public and private, but it does not expressly forbid competing currencies. Sellers have the discretion to accept or refuse any other form of money, but I doubt many would turn down someone buying with gold or silver if the dollar were in free-fall at the time. We'll find that out soon enough.
The raid on the NORFED headquarters was a complete farce; it's been months now, but has anyone heard of any charges being filed? Don't count on it. The only crime they committed was proving to many people that PMs as money is a far better store of wealth than the USD, since the buying power of Liberty dollars was climbing rapidly thanks to the Fed's recklessness with the USD. The FBI says that proves the Liberty dollar is some sort of pyramid scheme, when the reality is the Liberty dollar was a mirror reflection of the true Ponzi scheme that is our fiat dollar. It only went up because the dollar went down, and that's exactly why gold or silver as a true competitor would drive the dollar into oblivion, which the moneychangers will not allow by any means necessary, even outright theft as they committed against NORFED.
Hayek is right on the money here (no pun intended), but the only way we'll ever have that happen is if the people collectively start using alternative money en masse. The government may be powerful enough to stomp on NORFED, but as we've seen with the RIAA demise, some popular movements are just too big to stop. When enough people have been driven into the poorhouse courtesy of the plummeting dollar, it will eventually dawn on them that a currency of unlimited supply is probably not the best long-term store of wealth and they'll hop on board the gold money train. Until then, the best people can do is store their wealth in something that's inflation-proof, be it gold or land or oil or even Spam, and brace for the monetary implosion that Bernanke is purposefully engineering to purge our massive deficits and trade imbalances.- bluesnowmonkey, on 03/17/2008, -0/+7The people have been taught a lesson: if you try to create an alternative currency, you will be raided and your possessions seized. There may as well be a law. Whether it is actually on the books is irrelevant from an individual's point of view.
Someone well-known proposed a law to eliminate the discrepancy. It's a good law, so there is no chance in hell they'll pass it.
http://www.house.gov/paul/congrec/congrec2007/cr12 ...
- bluesnowmonkey, on 03/17/2008, -0/+7The people have been taught a lesson: if you try to create an alternative currency, you will be raided and your possessions seized. There may as well be a law. Whether it is actually on the books is irrelevant from an individual's point of view.
- webs05, on 03/18/2008, -0/+1There's another problem with your statement, apc... it assumes people are rationale.
- dracostimpy, on 03/17/2008, -3/+5I agree with all of that, but in fact there aren't any laws that make alternative monies illegal; we can use whatever we want as currency so long as it's agreed upon by the parties exchanging it. The only thing the law states is that the dollar is the government's mandated form of money for settlement of all debts public and private, but it does not expressly forbid competing currencies. Sellers have the discretion to accept or refuse any other form of money, but I doubt many would turn down someone buying with gold or silver if the dollar were in free-fall at the time. We'll find that out soon enough.
- mike17032, on 03/17/2008, -16/+5#1 Proclaim LORD and MASTER Ron Paul King.
#2 Destroy 300 years of progress.
#3 ???????????
#4 Profit!
Ya these plans are all about as well thought out as the Underpants Gnomes. - kfed2, on 03/17/2008, -1/+10You don't go back to the gold standard overnight. You allow competing currencies in the banking system and let people choose which ones they want to work for or spend. If I had to choose between 2 jobs, and only 1 offered to pay me in silver or gold, that employer would have a serious advantage.
- Hangly, on 03/17/2008, -1/+2Unfortunately if we're going to return to any stable monetary system the credit bubble has to be completely deflated first. Can't have both.
- EyeSurgery, on 03/17/2008, -19/+10First, materialize enough gold to back our rather sizable economy. After that, we're only supposed to print as many bills as we have gold. That's never going to happen because it's infeasible at this point.
- TubeDigger, on 03/17/2008, -17/+3So you think its possible for every american to convert their savings to gold nuggets... Gold cant be printed like money.
- suzywang3000, on 03/17/2008, -2/+4relevance? - as demand for gold rises, so too will it's price until every Federal Reserve note is accounted for.
- TubeDigger, on 03/17/2008, -1/+2ok i bought one ounce of gold today ($1000) and the same ounce when i need it for retirement could equal $300. how am i winning?
- PeppermintPig, on 03/18/2008, -0/+1Who's to say USD will be around when you retire? If you're not sure, then you're gambling by purchasing that gold.
I'm pretty sure, given the history of the market, that buying an ounce of gold is a good investment... then again, you might be better off purchasing a few ounces of silver instead. :) - synapz, on 03/18/2008, -0/+2Your thinking is backwards. If you keep 1000 dollars in the bank, then you will be able to buy less with it in ten years. If you buy 1000$ worth of gold and keep it in the bank, in ten years you will be able to buy 1000$ worth of goods at uninflated prices. This is because the value of gold is stable, and the value of the dollar has been decreasing 4% (or more) a year for the last nearly 100 years. Do you get it? The value of gold relative to the value of other goods is stable (or increasing as the production costs are lowered through improved technology) while the value of the dollar is progressively shrinking.
- TubeDigger, on 03/18/2008, -0/+1Gold is stable because you cant split gold and say these two 1oz pieces are really only worth this 1 piece of 1oz but i will still use them as 1 ounce a piece, you just cant to it, you cant make gold or split it so that gold is worth less that is why it is stable. but gold will fluctuate against currency's from around the world and everyday the price is adjusted twice from London. and if they decide to make gold worth half as much what are you or your bank of your political rep going to do about it... not much. Gold is on a huge upswing and it is not going to be worth 1000 is 5 years even so how is it going to provide retirement security?
- synapz, on 03/19/2008, -0/+1That's so phenomenally stupid, I can't fathom how you manage to feed yourself. How in the flying ***** can they "make gold worth half as much"?! They can't, you tiny-minded ***** simpleton! The value of gold is determined by the market, it doesn't matter what some big-wigs try to tell you it's worth, what matters is what you can buy with it!
Your brain is so ***** rotten and putrid, it makes me want to puke. ***** off.
- PeppermintPig, on 03/18/2008, -0/+1Who's to say USD will be around when you retire? If you're not sure, then you're gambling by purchasing that gold.
- TubeDigger, on 03/17/2008, -1/+2ok i bought one ounce of gold today ($1000) and the same ounce when i need it for retirement could equal $300. how am i winning?
- MemeWarrior, on 03/17/2008, -3/+13Don't be an idiot. It would be a gold backed currency, not a currency made of gold.
- TubeDigger, on 03/17/2008, -2/+2history lesson... The dollar WAS backed by gold. don't be an idiot and think another piece of paper or substitute is what will fix this problem.
- synapz, on 03/18/2008, -0/+1You just made... no point.
- TubeDigger, on 03/18/2008, -2/+1you...have...no...clue
- synapz, on 03/18/2008, -0/+1You just made... no point.
- TubeDigger, on 03/17/2008, -2/+2history lesson... The dollar WAS backed by gold. don't be an idiot and think another piece of paper or substitute is what will fix this problem.
- doctechnical, on 03/17/2008, -0/+6"Will work for Gold"
- Chassit, on 03/17/2008, -1/+6That's the point. The way it is, nobody has any real savings at all...
- TubeDigger, on 03/17/2008, -0/+3True that
- suzywang3000, on 03/17/2008, -2/+4relevance? - as demand for gold rises, so too will it's price until every Federal Reserve note is accounted for.
- timla, on 03/17/2008, -9/+72If the federal government is bailing out a corporation, then there ought to be someone going to jail.
- Peko, on 03/17/2008, -12/+9Not all bailouts are bad. Having the gov step in to ensure the solvency of some industries can be a good thing, sometimes.
I'm not saying that this particular "bailout" is a good thing. The details and intricacies are way over my head. Do I think there's some grease involved in this particular bailout, or any other bailout? Sure. Very confident. But making a blanket statement about all bailouts is completely ridiculous. If you want to get all litigious, go after the most obvious pork laden fruit first. The coast guard station in Idaho. That bridge in Alaska. Spitzer's expense sheet for after meeting "dessert".- swrostmore, on 03/17/2008, -1/+11Spitzer's hotel takeout check was written out of his own pocket - the mortgage bailout is taken out of ours.
- synapz, on 03/18/2008, -0/+1Insofar as his taxpayer provided paycheck is "his own pocket".
- TLAKABM, on 03/18/2008, -0/+1And what would you say if your employer told you what you could do with your paycheck?
You can denounce what he is paid, but not what he spends it on.
- riceklown, on 03/17/2008, -1/+1LOL, love the way he put it though! "dessert" I knew there was a sinful delight not on my menu! Guess you have to be rich to see THAT menu :)
- thechitowncubs, on 03/17/2008, -0/+1True, the bailout of Chrysler back in the day is an example of a bailout done right. If possible.
In my world there would be no linkage whatsoever between economy and state, thus risk is considered as it should be. - 4degrees, on 03/17/2008, -0/+1you're right, a bail out is not always bad. but a bail out always happens when something bad happens. Cant have a bail out when nothing has gone wrong.
- Nth3nSum, on 03/18/2008, -0/+1All bailouts are government interference in capitalism. It perverts the economy, hurts the little guy. It's what guarantees the class status quo. The only interference that should be allowed is trade tariffs which prop up the economy as a whole.
There is no justification ever for giving money to failed business. They failed let them die, let the next guy do it right or not at all.
- swrostmore, on 03/17/2008, -1/+11Spitzer's hotel takeout check was written out of his own pocket - the mortgage bailout is taken out of ours.
- suzywang3000, on 03/17/2008, -1/+6but they run the prisons...
- Ouze, on 03/17/2008, -4/+12silly you. Jail is for poor brown people who sell tiny bags of crack cocaine worth less then a medium latte, not for the miillionaires who bilk millions of investors out of their savings and pensions. Remember, priorities!
- PeppermintPig, on 03/17/2008, -0/+2When people invest as if they are gambling, that's a serious problem. One should be looking for warning signs in an investor's track record before using their services... anyways, my main point is that it is possible for an investor to have good intentions, do their personal best, and still lose money for those who chose to invest with them. Losing money is not itself a crime.
But government bailouts are criminal in nature. Favortism. Welfare, corporate or otherwise... it's disastrous accounting.
- PeppermintPig, on 03/17/2008, -0/+2When people invest as if they are gambling, that's a serious problem. One should be looking for warning signs in an investor's track record before using their services... anyways, my main point is that it is possible for an investor to have good intentions, do their personal best, and still lose money for those who chose to invest with them. Losing money is not itself a crime.
- BECoole, on 03/17/2008, -1/+2Do you say that when the Gov't gives subsidies to ethanol and windmills too?
- PeppermintPig, on 03/17/2008, -1/+4Peko, should we outlaw failure and let the Government bail everyone out? Or only certain kinds of failure, like gargantuan corporate *****-ups?
- Hangly, on 03/17/2008, -0/+2The Fed isn't the federal government.
- DBNKR, on 03/18/2008, -0/+1Thanks, now I did not have to write that. But I can further explain that The Federal Reserve is privately owned. Google it, its a fact. Epic fact!
- Peko, on 03/17/2008, -12/+9Not all bailouts are bad. Having the gov step in to ensure the solvency of some industries can be a good thing, sometimes.
- Dumbledorito, on 03/17/2008, -11/+49Ah, the "invisible hand" at work, again.
Corporations ensure there's no such thing as a free market, and they get their gov't cronies to pick up the pieces when their houses of cards collapse.- imightbewrong, on 03/17/2008, -6/+1yeah cause every American citizen with a loan is under the collapsing house
- Jexie, on 03/17/2008, -1/+6No, just enough of them to collapse your entire economy.
- PeppermintPig, on 03/17/2008, -1/+2Dorito, your point on corporate bailout is spot on, but you seem to be disparaging the concept of the invisible hand by confusing it with the activities of corporations and government. Government intervention and corporate anti-competition are in contradiction with the concept of the invisible hand.
I agree, we don't have a free market, therefore we don't have accountability and natural market corrections (invisible hand).
- PeppermintPig, on 03/17/2008, -1/+2Dorito, your point on corporate bailout is spot on, but you seem to be disparaging the concept of the invisible hand by confusing it with the activities of corporations and government. Government intervention and corporate anti-competition are in contradiction with the concept of the invisible hand.
- Jexie, on 03/17/2008, -1/+6No, just enough of them to collapse your entire economy.
- domokunt, on 03/17/2008, -1/+11privatize the profits, socialize the losses.
- imightbewrong, on 03/17/2008, -6/+1yeah cause every American citizen with a loan is under the collapsing house
- brokenspatula, on 03/17/2008, -21/+12Obviously none of you ***** understand why this was done. What do you think will happen if the banks fail?
Say happy anniversary to the great depression
There is not a lot of options. This was done to prevent a run-on-the-banks (a panic)- suzywang3000, on 03/17/2008, -3/+2thanks sir!
- Latimer, on 03/17/2008, -10/+6He's right.... Bear Stearns was bailed out for the common good but nobody here seems to be even remotely interested into thinking rationally about this. If the govt had allowed Bear Stearns to go under the market could have been in a free fall. This is not just a corporation being bailed out by the government. This is the government trying to protect its financial system. Sheesh, conspiracy theorists on Digg need to start thinking before flipping the eff out at everything.
- thechitowncubs, on 03/17/2008, -1/+11Screw the common good, let the mother f'ers burn who leveraged their money WAY TOO FAR.
- BECoole, on 03/17/2008, -0/+8Bear got burnt by bad paper.
Loans made to subprime borrowers (i.e., people with bad credit ratings due to poor payment histories) were bundled up into paper that was represented as collections of loans made to people with good credit. This was fraudulent.
- BECoole, on 03/17/2008, -0/+8Bear got burnt by bad paper.
- rsefer, on 03/18/2008, -0/+2I agree completely. We had a lecture today about this very idea. Had The Fed not gauranteed the 30 billion to JP Morgan Chase, Chase would not have bailed out Bear Stearns, which would have then gone bankrupt today. Had they gone bankrupt, suddenly all the other I-Banks that are struggling with the subprime debacle (namely Lehman) would have also had a run-on-the-bank. This may seem farfetched, but it is not completely out of the question that this could have crippled the US financial system. Just my two cents and the two cents of a very respected professor.
PS. In 1998, during the Long Term Capital debacle, in which nearly all bulge bracket I-Banks helped back LTC in order to save everyone's investments, the only bulge bracket to not "man up" and help out was Bear Stearns. :-) Ironic - synapz, on 03/18/2008, -0/+1You have a funny conception of what the common good is.
Me, I think it's best when companies that perform poorly bite the dust and go under. I don't want an economy built out of shady practices and whimsical ideas like printing money to solve solvency issues. I'd like an economy based on the tried-and-true free market principle of, "if you ***** up, you have to suck it up."
But hey, it doesn't matter. The market will eventually have its way, no matter how many banks you, your professor, and the fed wants bails out.
Who is you professor and which school?
- thechitowncubs, on 03/17/2008, -1/+11Screw the common good, let the mother f'ers burn who leveraged their money WAY TOO FAR.
- swrostmore, on 03/17/2008, -2/+17This is from BBC news -
"The irony of CCC's problems is that the measures brought in to help ease the global credit crunch, may actually have exacerbated the situation.
Earlier this week, the US Federal Reserve, the Bank of England, the European Central Bank and other central banks said they would pump $200bn into financial markets to stimulate lending.
As part of their plan, they would allow lenders to put up the problematic mortgage-backed securities as collateral for the new central bank-backed loans they were offering.
However, instead of underpinning the mortgage-backed securities market, it seems to have had the opposite effect, giving lenders an opportunity to dump the risky asset.
**"The Fed's new lending emergency lending facility allows the banks to swap mortgage-backed debt for Treasury Bills in a way that Carlyle could not do," said the BBC's business editor.**
"So it would be rational for the banks to take Carlyle's assets and exchange them for top-quality, liquid US government bonds, rather than leave loans in place to a business, Carlyle, whose assets remained highly illiquid."" - XmenArt, on 03/17/2008, -3/+23Nice to see that the desperate banks and investment groups losing their homes are finally getting the bailout they need...wait what?
- ColonelJessup, on 03/17/2008, -31/+15Here we go again with the Digg.com federal reserve experts, the Digg.com economy professors, and the Digg.com financial sector know-it-alls......................................................
- mediaspree, on 03/17/2008, -8/+16They seem to know more than those running the show. All Bush can say is the FED is doing a heckuva job.
- wolferz, on 03/17/2008, -11/+5And what evidence do you have for them knowing more? The fact that they agree with you?
Not sure that any of these people on digg have ever made policy. I highly doubt, even if they had, that you would be able to connect them to specific success stories. So all you have to back up your claim is that they agree with you. Sheep much?
- wolferz, on 03/17/2008, -11/+5And what evidence do you have for them knowing more? The fact that they agree with you?
- Picaroon, on 03/17/2008, -12/+9Most of them got their economics knowledge from Ron Paul blogs. Then it spreads around, and next thing you know, you have all of the comments like the ones above yours. You called it like it is, Jessup, and will probably get dugg down for it.
- Akronos, on 03/18/2008, -0/+3And interestingly enough, most of us (Ronulans or Ronbots as we are so cleverly called) knew this was going to happen nearly a year ago. I remember many people on these blogs were posting how banks were going to collapse and then merge to form larger banks a year ago or more. We knew this would happen when inflation is ignored by the Fed.
Oh, and we were not only right about the economy, but foreign policy as well. Anyway, good day sir.
- Akronos, on 03/18/2008, -0/+3And interestingly enough, most of us (Ronulans or Ronbots as we are so cleverly called) knew this was going to happen nearly a year ago. I remember many people on these blogs were posting how banks were going to collapse and then merge to form larger banks a year ago or more. We knew this would happen when inflation is ignored by the Fed.
- sgiffy, on 03/17/2008, -6/+9You mean watching some lame Youtube 'documentaries' does not make one an expert. GET OFF MY DIGG
- Hangly, on 03/17/2008, -4/+3And here come the digg.com professional autistics, bitching publicly about whatever annoys them personally.
- PolishLogic, on 03/17/2008, -3/+3Does that pay well? I wouldn't mind sitting quietly in a corner and rocking back and forth for 8 hours a day if the pay is 6 figures.
- mediaspree, on 03/17/2008, -8/+16They seem to know more than those running the show. All Bush can say is the FED is doing a heckuva job.
- GeorgeClayton, on 03/17/2008, -9/+45When an individual has poor financial planning, they lose their car.
When small businesses don't plan properly or just plain "***** happens" they die.
When BANKS have poor business practices, we just bail them out.
why? No risk business?- tc1415, on 03/17/2008, -9/+6The risk to everyone else, if a major bank fails then all those small businesses will need bailing out anyway
- Nth3nSum, on 03/18/2008, -0/+1Why, I have paying customers? I see no reason why I should care about what happens to an investment bank.
I own stocks though and they would be effected, but not my business.
- Nth3nSum, on 03/18/2008, -0/+1Why, I have paying customers? I see no reason why I should care about what happens to an investment bank.
- Latimer, on 03/17/2008, -7/+12Yeah you're right. The individuals behind the hundreds of thousands of defaulted mortgages have no part in what happened here..... The Banks aren't innocent in this, but its the individuals not paying their mortgages that have caused this whole mess. Its called personal responsibility. People should read contracts and think things through before signing on the dotted line.
- 4degrees, on 03/17/2008, -2/+12not banks taking the time to not loan money to people they KNOW are unable to pay? Why is predatory lending being ignored here?
- FrostedFlame, on 03/17/2008, -3/+4As mind blowing as this may sound, it's the overly optimistic outlook of all parties involved which created these issues. While the real estate market was doing well it made sense for many people to take out these sub-prime loans based on the assumtion that the assets they would use the money to purchase would quickly appreciate. At that point, they would have the collateral to refinance and switch to a 'prime' morgage with managable interest rates. Many people purchasing these morgages were under this assumtion which, we shouldn't forget, was true for a little while. As long as housing prices were going up, many people used them quite successfully to get into houses and switch to prime mortgages and the banks made money and the bond rating agencies rated the securities which incorporated these morgages as good and everybody was happy. Once the housing market started to falter is where the problem arose. And it is EVERYBODY's fault for having the wrong EXPECTATIONS. There was some predatory lending and there were some irresponsible decisions on the part of individual home-owners/purchasers but nobody was going to get hurt as long as the market continued the way it was going.
It's like a bunch of little kids playing roughly. It's all fun and games until someone looses an eye.
- FrostedFlame, on 03/17/2008, -3/+4As mind blowing as this may sound, it's the overly optimistic outlook of all parties involved which created these issues. While the real estate market was doing well it made sense for many people to take out these sub-prime loans based on the assumtion that the assets they would use the money to purchase would quickly appreciate. At that point, they would have the collateral to refinance and switch to a 'prime' morgage with managable interest rates. Many people purchasing these morgages were under this assumtion which, we shouldn't forget, was true for a little while. As long as housing prices were going up, many people used them quite successfully to get into houses and switch to prime mortgages and the banks made money and the bond rating agencies rated the securities which incorporated these morgages as good and everybody was happy. Once the housing market started to falter is where the problem arose. And it is EVERYBODY's fault for having the wrong EXPECTATIONS. There was some predatory lending and there were some irresponsible decisions on the part of individual home-owners/purchasers but nobody was going to get hurt as long as the market continued the way it was going.
- loggia, on 03/18/2008, -1/+9Hmmm... let's see. Is it the fault of 20 or so major financial institutions that have billions of dollars, hundreds of thousands of employees, decades of experience in finance, massive amounts of statistical data and computer models on loans and defaults, market experts and lavishly rewarded CEOs...
Or a guy named Bud who never had a mortgage and had crappy credit?
Hmm.... gee, who should we blame???- Nth3nSum, on 03/18/2008, -0/+1Yeah, I don't see Bud getting bailed out. He lost his home. I'm not shedding a tear for him.
I do see the investment banks being bailed out.
- Nth3nSum, on 03/18/2008, -0/+1Yeah, I don't see Bud getting bailed out. He lost his home. I'm not shedding a tear for him.
- 4degrees, on 03/17/2008, -2/+12not banks taking the time to not loan money to people they KNOW are unable to pay? Why is predatory lending being ignored here?
- dagoonmaster, on 03/17/2008, -6/+4the government prevents banks from failing because then everyone who had money in the bank would lose it >_>
- bjornski, on 03/17/2008, -1/+7It would be better for the FDIC to just pay off the people that lost money in that "insured" account and let the bank fail, than to bail out the bank and let the trend continue.
- sgiffy, on 03/17/2008, -3/+1This is more like providing a breathing machine to a terminally ill person so they can die in peace as opposed to flaying around and breaking ***** as they choke to death.
- tc1415, on 03/17/2008, -9/+6The risk to everyone else, if a major bank fails then all those small businesses will need bailing out anyway
- Homerr, on 03/17/2008, -5/+27I thought Republicans hated big government bailouts...
- whatthehell9, on 03/17/2008, -2/+9Republicans/Democrats, when it comes to "bail outs", its all the same difference. We all are getting screwed, but the majority doesn't seem to care... and keeps voting for the same incompetence. maybe one say we will remember... “Every generation needs a new revolution.” - Thomas Jefferson
- loggia, on 03/18/2008, -0/+4Not when it's their money!
- dkern, on 03/18/2008, -0/+5Not when its their own kind they are bailing out.
- muchachoburacho, on 03/18/2008, -2/+1OK well just go by what the financial experts on digg say. We'll end the federal reserve and go back to the gold standard tomorrow. That will obviously solve all of the world's problems overnight. Oh and the fact that the government will never be able to borrow any money it doesn't already actually have in it's possession won't affect us at all. The ability to borrow is what allowed america to become as financially powerful as it is. I agree that these banks need to feel consequences for their actions, but seriously, nobody here knows that much about economic policy and how a banking system actually helps them, so stop acting like you do.
- MaikuSan, on 03/18/2008, -0/+0Woah, hey now. It's the completely autonomous central bank. Not the republicans.
- whatthehell9, on 03/17/2008, -2/+9Republicans/Democrats, when it comes to "bail outs", its all the same difference. We all are getting screwed, but the majority doesn't seem to care... and keeps voting for the same incompetence. maybe one say we will remember... “Every generation needs a new revolution.” - Thomas Jefferson
- sgiffy, on 03/17/2008, -17/+78This is not really a bailout. The company is done. It was bought up by JPM. What the Fed did is exactly what they are there to do. They lent Bear money through JP so that it would not collapse. In essence, they provided liquidity. Remember it was a lack of liquidity in financial institutions that helped give us the Great Depression.
Bear had to put up collateral, with a pretty big haircut. Meaning that the collateral is much more valuable then the amount being lent. The money lent sprung into existence when it was lent, it did not come form taxes, and when it is repaid, likely by whoever buys bear, the money will disappear.
The problem was not that Bear was worthless, but that it had no cash. This makes it impossible for them to honor their contracts with others and do what companies like them do. Had nothing been done and they had defaulted, many more would follow, and countless people would lose their jobs, retirement, and savings. That's a recipe for pretty severe financial disaster. Not to mention that because deposits in brokerage accounts are insured, the government would have to replace the lost value and that would cost the taxpayers a lot.- delirium, on 03/17/2008, -11/+17Man, I wish more people who criticize the Fed and modern economics actually study some of it before opening their mouths. Digg Parent up for actually grasping the situation!
- j0ew00ds, on 03/17/2008, -0/+7perhaps they have.. http://en.wikipedia.org/wiki/Great_Depression#Aust ...
- StaticThunder, on 03/17/2008, -4/+4And not too many people take Austrian economics seriously anymore, as it doesn't test any of its predictions, instead relying on "you gotta believe me"ism. http://www.gmu.edu/departments/economics/bcaplan/w ...
- sgiffy, on 03/17/2008, -2/+1Nice article. Thanks!
- sloppychris, on 03/17/2008, -2/+1Tell me you read the whole thing.
- StaticThunder, on 03/17/2008, -4/+4And not too many people take Austrian economics seriously anymore, as it doesn't test any of its predictions, instead relying on "you gotta believe me"ism. http://www.gmu.edu/departments/economics/bcaplan/w ...
- j0ew00ds, on 03/17/2008, -0/+7perhaps they have.. http://en.wikipedia.org/wiki/Great_Depression#Aust ...
- thbt, on 03/17/2008, -3/+7Best explanation I've read of what "injecting liquidity" and "haircut" means. Dugg up!
- VitriolAndAngst, on 03/17/2008, -11/+8Wait -- foreclosed low income housing that nobody is buying is worth more than the $200 Billion "traded" for the useless property? Interesting that such valuable collateral is forfeit a week after it is backed by our Tax money.
"Bear" the COMPANY took a haircut -- which means the Stock Holders. The executives, and some privileged folks, took home a lot of cash and bonuses. How can a company with this much profit and is otherwise sound -- except for a few bad loans, only worth $2 per share? Let's look at the oversight agencies that should have either known that Bear Sterns had no value -- or they let them loot the damn company. Hey, where is Hoover and Moodys in all of this? Good thing the one guy prosecuting these regulators is dealing with a prostitute scandal. I heard they cheered on Wall Street when the FBI agents leaked the information on the Eliot Spitzer case. I'm sure they cheered on Wall Street when the worthless loans were traded for $200 Billion. Where did THAT money go, I wonder? Is there ANY money sitting in a vault to back all this nonsense besides yours, mine and our taxes?
Are you really this fiscally clueless or do you think everyone else is this dumb? Maybe you are still in the process of waking up from the nonsense that passes for Financial News on the TV. You know all those people have skin in the game when they recommend that you buy shares of a certain company, right? And, you might like to know that the "Insurance" on bank deposits is negative -- meaning that the Fed has allowed banks to "borrow" money to meet their Federal Reserve Requirements. Excuse me if I'm not buying your "Nothing to see, move along" comment here.
Apologies if you really do believe what you are saying.- sgiffy, on 03/17/2008, -3/+4Not all MBS are worthless, in fact most aren't. In a couple months we are going to be through the worst of the resets and with enough ability for people to renegotiate to a sane interest rate, the foreclosure rate will fall. Housing prices are nearing bottom and with more available credit on the horizon, as limits have been upped for Fannie Mae and Freddie Mac, and construction has slowed. That will trigger, as it always does people moving in to buy these securities and things will get better. I dont know for sure but I be they put up securities with a much higher face value then 200b.
As for the companies assets. Remember what it was, an investment bank. It held a lot of assets that it did not own. As part of its activities it would trade those in various ways and enter int market transactions with other players. The problem was not that it did not have assets, but that it had no cash, so if say it had an obligation to buy 100k shares of IBM on Monday, it would not be able to do that. Hence people stop trading wit them, and the whole thing spirals.
As to were its market cap went. Well it just disappeared. It happens. And I can't say I have ever really watched financial tv. :)- nicktx, on 03/18/2008, -0/+3Do you really think that we're a couple months away from the bottom? Prices are going to keep falling for at least another year and with the latest events they can keep falling for 2-3 more years. They kept going up for nearly a decade at a frantic pace, far above income growth. We're not going to avoid a recession and if it is a severe one, with high unemployment and high inflation, that's going to be the killing blow to the real estate market.
- sgiffy, on 03/17/2008, -3/+4Not all MBS are worthless, in fact most aren't. In a couple months we are going to be through the worst of the resets and with enough ability for people to renegotiate to a sane interest rate, the foreclosure rate will fall. Housing prices are nearing bottom and with more available credit on the horizon, as limits have been upped for Fannie Mae and Freddie Mac, and construction has slowed. That will trigger, as it always does people moving in to buy these securities and things will get better. I dont know for sure but I be they put up securities with a much higher face value then 200b.
- LordKaT, on 03/17/2008, -1/+3One of the biggest factors of the great depression was the movement of gold reserves - by the newly created federal reserve - to the British.
- Hangly, on 03/17/2008, -0/+7Yes, we all get that. But "injecting liquidity" here is just a euphemism for "creating 200 billion dollars out of thin air." That doesn't solve anything, it just moves the liability around. This way the dollar will be taking the hit. (i.e. us.)
There is no such thing as a free lunch, no matter what hocus pocus equations economists try to throw at you. Shell games like this don't create stability or wealth, they only postpone the inevitable and will probably make things worse. - loggia, on 03/18/2008, -1/+4'What the Fed did is exactly what they are there to do."
Sounds good but you're wrong. This is a finger in the dike compared to what the Fed will need to do in the next year. They are just forestalling disaster right now by propping a large bank where had a reputation for poor business practices.- bubbalicious26, on 03/26/2008, -0/+0exactly. The Fed is not there to bailout banks. In fact, what they did with Bear and JPM is illegal. There is nothing in Federal Reserve Act that gives them the right to do what they did. Congress would have had to grant them the authority
Sign this petition to make them responsible!
http://financialpetition.org/petition-impeach.shtm ...
- bubbalicious26, on 03/26/2008, -0/+0exactly. The Fed is not there to bailout banks. In fact, what they did with Bear and JPM is illegal. There is nothing in Federal Reserve Act that gives them the right to do what they did. Congress would have had to grant them the authority
- kapsar, on 03/18/2008, -0/+1It's not just Bears that is getting bailed out. It's the whole industry. Sadly this bail out is going to have some serious repricusions in the future. i refuse to believe that the Fed is going to just sit there and take all this bad debt without eventually getting compesnated for it, or whoever they are getting the money from to pay for it will want it's money back. If it's just making free money then the value of the dollar will go down even farther and homes are going to drop in value. People will have debt worth more than the place they live in....
- diggingaround, on 03/18/2008, -0/+1...and you obviously can't smell a scam that privately owned corporation so called "FED" just pulled off and gobbled a big bank for a penny on a dollar... http://www.youtube.com/watch?v=uwbiRNSSDTc&feature ...
- delirium, on 03/17/2008, -11/+17Man, I wish more people who criticize the Fed and modern economics actually study some of it before opening their mouths. Digg Parent up for actually grasping the situation!
- PolishLogic, on 03/17/2008, -2/+21I wonder if Bear Stearns wishes it could get back the $165 million dollar exit package they gave to Warren Spector for leaving in Aug. '07?
- nycmac247, on 03/17/2008, -3/+1Phil Spector!!!
- verbose, on 03/18/2008, -0/+1Warren Spector is the game developer behind Deus Ex. This is what happens when you know too many Spectors.
- bentaisan, on 03/17/2008, -13/+6Bailing out the Fed is going to save your job (or your neighbors). The Fed cannot make loans to businesses required for economic expansion. This move creates liquidity (i.e. gives banks money), so they can make loans. These loans can be used to make income which can cover the bad mortgage paper. The other alternative is that the banks have no money to loan, which means business and individuals cannot get loans. This is an excellent move by the Fed.
- VitriolAndAngst, on 03/17/2008, -5/+6In other words; "Quack Quack Quack!"
Another person well schooled by business.
You know, in the Founding Father's day, the banks were part of the Government -- makes sense since it is the Government (us) that always bails out these damn "mistake" ridden crooks. How can these things be mistakes when people make so much money making them? The ALTERNATIVE to the Federal Reserve, is to damn well Federalize it, and actually reserve money. The interest of the Commons that people "have economic expansion" makes it make sense that the American government, loan money to individuals and corporations that need it. Although, all this "progress" and year over year expansion, is probably not making people happier, our air cleaner, or our lives more fulfilled -- it seems to be something many people think they want to do. So let's back it with the government and manage it their -- since the PEOPLE ultimately take all the risk.
Don't tell me the private banks have done anything right. That would not be historically true, and it doesn't reflect how profitable it is to be a bank. You get to MAKE money. And eventually, you lobby the government to let you get around all the rules that were set up to "prevent this sort of thing."
Hopefully, after this Gilded age leading to the SECOND Republican Economic Great Depression, people will remember this lesson in un-regulated Capitalism.
What ultimately creates a "liquidity crisis" is that you can't PAY the banks to keep their skin in a market that has no value. The dollar has lost about 40% of its value in about a year. So who can actually make money in this stock market when the world is their oyster? The liquidity crunch is going to happen as soon as the smart money heads for the doors (um, it already has, when George Bush and Dick Cheney moved their assets to Dubai). $200 Billion this week -- how much more will it take to keep the banks happy? If the dollar loses credibility because they keep printing them -- the banks will take their money and go. And guess who's money will be in the vault? Your's. Mine. and a lot of IOUs.- BECoole, on 03/17/2008, -6/+1The dollar loses credibility because you keep spending it too.
- Hangly, on 03/17/2008, -0/+4Liquidity through inflation, in other words.
Man the reactionaries are out in force today.
- VitriolAndAngst, on 03/17/2008, -5/+6In other words; "Quack Quack Quack!"
- rick02840, on 03/17/2008, -11/+21This is another clear example of the hypocracy of Republicans/Conservatives. They are happy to do bailouts as needed, even though government bailouts are non-free-market. Yet talk about government regulation that might have prevented the catastrophe to begin with? No way, that would anti-free-market.
- bentaisan, on 03/17/2008, -3/+10The Fed is not a government agency.
- bentaisan, on 03/17/2008, -1/+5Technically, it is quasi-governmental (and has been since 1913). It is doing the job for which it was created.
- multimed, on 03/18/2008, -0/+0Not true at all - conservatives are not remotely happy to do this. It' a big bitter damn pill that we swallow because for all that is really distasteful about "too big to fail," history has provided some pretty good support of it's necessity at times.
- bentaisan, on 03/17/2008, -3/+10The Fed is not a government agency.
- vwvan, on 03/17/2008, -9/+1sorry, but I only take Euros or vDollars...
see wdv.com - beerncheese, on 03/17/2008, -2/+2Don't you mean, "cirsumvrented"?
- JCPahl, on 03/18/2008, -0/+1I'm almost positive (s)he didn't.
- GhostyBoy, on 03/17/2008, -4/+18If anyone is interested in protecting their assets you could always just buy your own gold and silver coins. Even if the dollar is inflated to absolute worthlessness gold will still have value. You don't need the governments permission to return *yourself* to the gold standard.
- Chux0r, on 03/17/2008, -5/+4Except it would be illegal for you to exchange your gold and silver coins for anything other than dollars. It was Ron Paul's proposal to allow people to legally