Holy hell this is not good v.moregovernment!!!!1 v.economy v.bushsucksdick

[Fed Up]

Originally Posted by A_C_E

So Murray Sabrin thinks that giving the Fed the exact same control over Investment Banks that it ALREADY HAS over commercial banks is "socializing the economy"?

Sounds like Sabrin and Ron LOL are going to be riding the failboat together this election season.

No, he/they want to do away with the non-governmental entity (The Fed) that is at the root cause of boom and bust cycles through failed monetary polices and now they want to meddle in free markets (Investment Banks) and regulate (help out their rich friends) them. All the while they are destroying the purchasing power of the dollar and the standard of living we in America have grown accustomed to.

Jesse's Café Américain: Dr. Blinder, the Fed Cannot, and Should Not, Do it Alone

Interfluidity :: Repurchase agreements and covert nationalization

As Keynes said, not one in a million would understand it. But it's as blatant as hell to me.

Sabrin will be the Republican candidate as the neocons can't come up with a viable opponent. He'll be facing off against democrat 84 year old Frank Lautenberg.

Fed Up

[WickedLou9]

Originally Posted by Fed Up

No, he/they want to do away with the non-governmental entity (The Fed) that is at the root cause of boom and bust cycles through failed monetary polices and now they want to meddle in free markets (Investment Banks) and regulate (help out their rich friends) them. All the while they are destroying the purchasing power of the dollar and the standard of living we in America have grown accustomed to.

Jesse's Café Américain: Dr. Blinder, the Fed Cannot, and Should Not, Do it Alone

Interfluidity :: Repurchase agreements and covert nationalization

As Keynes said, not one in a million would understand it. But it's as blatant as hell to me.

Sabrin will be the Republican candidate as the neocons can't come up with a viable opponent. He'll be facing off against democrat 84 year old Frank Lautenberg.

Fed Up

You are vastly oversimplying the problem as being simply caused by the fed and thier interest rate policies. It's much more complex than that and the Fed only plays a small role. The market itself playes a much bigger role than the Fed does. You can't have boom and bust cycles without people blindly hurling thier money at certain investments. The tech bubble was not caused by the Fed, it was caused by this great new technology called the internet and people just stupidly pouring money into anything with ".com" in thier name. That was the markets own stupid fault. The real estate bubble had just as much if not more to do with people taking insanely stupid risks as it did with the Fed's interest rate policies.

[thewise1]

Originally Posted by WickedLou9

You are vastly oversimplying the problem as being simply caused by the fed and thier interest rate policies. It's much more complex than that and the Fed only plays a small role. The market itself playes a much bigger role than the Fed does. You can't have boom and bust cycles without people blindly hurling thier money at certain investments. The tech bubble was not caused by the Fed, it was caused by this great new technology called the internet and people just stupidly pouring money into anything with ".com" in thier name. That was the markets own stupid fault. The real estate bubble had just as much if not more to do with people taking insanely stupid risks as it did with the Fed's interest rate policies.

So it's the market's fault for biting when the fed puts out the bait?

From a personal responsibility viewpoint, I agree. But from a cause of the problem standpoint... I can't agree.

[WickedLou9]

Originally Posted by thewise1

So it's the market's fault for biting when the fed puts out the bait?

From a personal responsibility viewpoint, I agree. But from a cause of the problem standpoint... I can't agree.

The fed didn't help when it came to the real-estate bubble, but it's not THE cause.

What did the Fed do to cause the tech bubble?

[Fed Up]

Originally Posted by WickedLou9

You are vastly oversimplying the problem as being simply caused by the fed and thier interest rate policies. It's much more complex than that and the Fed only plays a small role. The market itself playes a much bigger role than the Fed does. You can't have boom and bust cycles without people blindly hurling thier money at certain investments. The tech bubble was not caused by the Fed, it was caused by this great new technology called the internet and people just stupidly pouring money into anything with ".com" in thier name. That was the markets own stupid fault. The real estate bubble had just as much if not more to do with people taking insanely stupid risks as it did with the Fed's interest rate policies.

I'll admit that the individual has to take some responsibility, sure. There are many examples of this in the book, "Popular Delusions and the Madness of Crowds." Tulipmania comes to mind.

The real question to ask is how would markets react if the Fed wasn't involved at all?

IMO, the problem lies in the difference between the "quality" and "quantity" of money as well as interest rate manipulation. The Fed thinks it can solve the nations problems by expanding and contracting the money supply when their job is supposed to be protecting the purchasing power of the dollar.

It is through their artificial manipulation and eventual failure that causes the bust cycle that the dollar is currently experiencing. We are at a critical juncture historically with the dollar. It's due for a bounce, but I believe it will be short lived (like through the election - unless we get another bank bailout needed, an investment firm in trouble, or a derivatives meltdown).

Personally I'd keep a close eye on J.P. Morgan Chase as they have over 50% of all over the counter, unregulated derivatives. As many know, they're also one of the owners of the Federal Reserve (and just so happened to be a main player in the bailout of Bear Stearns). Nepotism at its finest! What many don't know is that Bear Stearns had 13 trillion of derivatives on the books and if they went down, it could have had a domino effect. So who steps in to "rescue" them, the company that had the most to lose! All my own speculation of course.

I found the following a good explanation of what has been happening in the last couple of decades. Again, I agree with you, the individual has some responsibility.

Fed Up

During the dot.com era, "huge amounts of investment capital, particularly from abroad, went into building the technology firms that were leading the microcomputer and internet revolutions. But with the recession triggered by the crash of the stock market in 2000, this presumed prosperity was exposed as an illusion. Today we find ourselves again in a serious stage of economic stagnation, marked by rising un- and under-employment and massive increases in consumer, business, and government debt. And inflation marches on."


Faced with such circumstances, the Federal Reserve does not seem to know what to do. By its own admission, it lacks measures and targets by which to regulate the currency. During the early 1980s, the Fed went through a period where it tried to set interest rates based on quantitative monetary targets. Under the influence of the monetarists, the Fed tried to gauge the amount or money needed in the economy from such measures as M1, M2, and M3. This policy failed, so that today, no one, including leading economists, pays any serious attention to the “Ms” as a guide to monetary policy.

A major reason for this failure was the proliferation of different types of financial accounts resulting from financial institution deregulation. This proliferation was made possible by the growth in electronic funds transfer, where money became a mere electronic blip, rather than a check, cash, or some other paper instrument. Using computer processing, the money supply changes abruptly every night through the use of cash management tools such as “repos,” or repurchase agreements.

The growth in complexity through electronics has also made possible many new types of crime, including electronic theft, diversion of funds, and money-laundering. Also complicating the situation was the widespread use of corporate stock as money through such actions as mergers, leveraged buyouts, and payment of compensation with stock options.

While the Federal Reserve has a general sense that the money supply must be kept sufficient to meet the needs of the economy, it finds it difficult to compare the growth of the two or define how they relate to each other. So rather than watching monetary targets, the Fed says it is steering by what it calls an interest rate “smoothing” policy. It says it chooses a currency level consistent with economic growth with the intent of supplying enough money to fuel the economy. Thus the Fed claims that it wants to get the price of money right for the economy at any given time, though the target is elusive.
In other words, the Fed doesn’t know what it is doing. What it mainly seems to do is to watch the same economic indicators everyone else does, and if it thinks the economy is “overheating” it raises interest rates. When liquidity contractions appear to be too destructive and the screams from individuals and businesses get too loud, it will then lower them. Unless of course foreign investors start screaming, when the Fed will raise rates again or leave them steady.

Unable to quantify either the money supply or actual economic activity, the Fed supposedly uses inflation as a surrogate. Unable even to gauge inflation accurately, it uses worker wages as a surrogate for that. So if individual earnings go up, the lid on the economy comes crashing down, as though people who work for a living have been caught with their hands in the cookie jar.

After starting to raise interest rates around 1994 to slow down the economy during the dot.com boom which had been engendered by a “strong dollar” policy by the U.S. Treasury to attract foreign investment, the Fed later began to lower them in an attempt to revive the economy when recession began in 2001. But this never really produced the hoped-for recovery.

In particular, housing mortgage rates were lowered to the lowest rates in four decades, thereby increasing available cash to consumers through refinancing of existing mortgages and through new home equity loans. These actions maintained activity in an economy which now relies for three-quarters of the value of its transactions on consumer spending. Of course such an economy is highly susceptible to variations in consumer confidence, which was why, after the stock market plunge following the terrorist attacks of September 11, 2001, President George W. Bush told the public to go shopping.

As the deflating housing bubble has made clear, even this rare bright spot in the declining U.S. economy scarcely improved the employment picture except through low-paying service jobs. Meanwhile, the ability of consumers to support the economy has been weakened by the further decline of manufacturing due to NAFTA, free trade policies, and the globalization of industry. The strong dollar of the 1990s led to massive increases in the trade deficit and even more reliance on foreign purchase in the U.S. bond, stock, and Treasury markets. Now with the value of the dollar falling, purchase by foreigners of securities is also slipping.

But again, inflation when gauged by the long-term CPI is not low—its cumulative effect since 1965 has been devastating. Yet by trying to target inflation as its chief measure of success, the Fed is clinging to what can only be described as a fetish of “price stability.” Nor is Congress taking any action to challenge this interpretation of the proper goals of monetary policy. Indeed, Congress seems totally passive in the face of the Fed’s own confusion.

Congress’s commitment to so-called price stability was shown by a series of analyses produced in the late 1990s by the staff of its Joint Economic Committee (JEC) and by the absence of any attempt by anyone in Congress to challenge the Fed’s policies. What Congress should be addressing is that in order to achieve price stability, un- and under-employment has become the tool of choice both of the money managers at the Fed and of their supporters in Congress. Price stability is in fact a tool of “class warfare” directed by the moneyed interests from the nation’s banks, as well as by the Fed itself, against the workers, farmers, and responsible businesspeople of the nation. The dichotomy between price stability and unemployment is another relic of the Dark Ages out of which our system of central banking has emerged.

These points show that the goal of monetary policy should be neitherprice stability nor full employment. Not only are the two goals contradictory, but they both postulate a static state of the economy where change simply does not occur. Such a state, however, can never be truly realized, except perhaps in death. As said by Heraclitus, “There is nothing constant but change.” Nothing alive is without change, as everyone knows. And a nation’s economy is undoubtedly alive.

This leads in turn to an assessment of what really should be the goal of monetary policy. Given the irrefutable presence in life of ceaseless change, price stability as an anchor which by itself can remove uncertainty is an illusion. Of course, price stability is only a surrogate for what the Fed is really trying to achieve, which is stable profits for those who lend money at interest, whether institutions or individuals. As stated earlier, money itself is thus viewed as a commodity and a mathematical constant. This philosophy of rigidity raises money to the status of a heathen idol to which all other economic values, and all human beings as well, should be sacrificed."


Inflation and the Federal Reserve

Fed Up