Let's Correct People Who are Too Lazy to Understand the FED

[rdubwiley]

[AtheistCrusader]

1. Nice takedown.

Prior to the Fed, there were much shorter boom and bust cycles. On the flipside, the busts were much smaller, but they happened a LOT. After the Fed was created, we smoothed that cycle out a lot. We still have busts, and they are BIG when they happen, but they are MUCH more rare, post-Fed. Stability has been shown to be good for the economy. Inflation, within certain bounds, also has been shown to be good for the economy. Austrian Econ folks tend to assume ALL inflation is bad/unjust/theft, but they don't really do anything to establish that claim.

Which begs a question, that she doesn't address, and rather assumes: Does the fed CAUSE the remaining busts, or does it simply fail to prevent them?

One is an argument for getting rid of the Fed perhaps, but the other is NOT an argument for getting rid of it, but rather for altering it, perhaps. Obviously she assumes the fed CAUSES these busts, but does nothing to substantiate that claim.

Arguably, the Congress caused the 'great recession' by way of repealing Glass-Steagall and a couple other regulations.

[AAO]

2. The key to her argument is what you mentioned

"Obviously she .... does nothing to substantiate that claim."

She never once points to any reference of any kind that would substantiate her claims.

[AtheistCrusader]

3. Yes, she is obviously intending this info to be transmitted to an echo chamber.

And she is apparently USED to speaking in this manner, without anyone ever calling her on the assertions, for evidence or sources. Which says a lot about her target audience.

[AAO]

4. That's what these conservobots do.

They have been brainwashed mainly by the spoken word, on right wing talk radio, or the FUX newZ channel, with no facts or references to back anything up (mainly because they're all lies). And so that is the way they parrot that drivel back, with no real understanding of WTF they're talking about.

[rdubwiley]

5. Yup

I wish this was like Reddit so I could upvote your post.

[merleson]

6. I'm not so sure

I listened to your criticism of this young lady and I was inspired, for the first time ever in my life, to post a reply. I am not an economist but I am a professional with over 36 years experience. I consider myself to be a Progressive and my involvement in left politics goes all the way back to the Democratic Convention in 1968. I must admit that for most of that time I knew next to nothing about the Federal Reserve or banking or the money supply, but I have made an significant effort to educate myself lately. What I have been learning has greatly expanded my understanding, and it has been very disturbing. I still believe that I have a great deal more to learn before I can make any kind of definitive statements or express an opinion, but I found many of the things you said in your post - as well as the comments to your post- to be troubling. I am looking for clarification.

That said, here are my comments.

First, a couple of minor points. The fact that Ron Paul, or anyone else for that matter, believes something or doesn't believe something is irrelevant. If it makes sense to me I will acknowledge and accept it unless and until I learn something to change that opinion. Even though I definitely do not like Libertarianism as whole, I nevertheless agree with Ron Paul's opinions on some issues. This may be one of them. Trying to disparage someone because of who else holds the same opinion is a cheap shot, not worthy of you.

Second, you and other commentors criticized this young lady for making assertions without any support for her assertions. I couldn't help but notice that you all did the same thing. In fact, a goodly part of your original post, including the title, was to insult her. I understand that in this type of forum it is difficult if not impossible to provide citations to authority to back up one's opinion. Best not to criticize someone else for something you do yourself.

Now to the specifics of my response to the substance of your post.

I was especially surprised that you would defend the Federal Reserve. Perhaps I am mistaken, but I assumed that you were also a Progressive, or at least more in alignment with that perspective. As I understand it, the Federal Reserve is a private bank that is owned and controlled by a small group of private individuals, and it's activities are entirely private. It's purpose is ultimately to make money for its owners and investors. We, the citizens of the US, through our representatives, have given it control over our money supply. That is an awful lot of power to give to anyone. One only has to look at the income disparity in this country, in fact, in the world, to see that this type of control is not advantageous to most of the people. One would have to be deaf and blind to not see how the wealthy use their power and their money to get more money and more power. This includes buying our elected representatives, instigating wars and the arms race, supporting exploitative trade agreements, monetizing everything, destroying our commons, polluting our world, etc. Having control over the money supply gives them that ability.

I recently came upon a three hour documentary on the internet that changed my perspective significantly. It was called The Masters of Money, and was made in 1996. [There is apparently another documentary with the same name made by the BBC, which I did not watch.] It traced the history of the central banks back many hundreds of years, but focused on their history in the United States. I'm smart enough to know that I have to listen to such things with a good deal of skepticism until I have an opportunity to get other perspectives - which is why I am writing this comment- but it was really mind boggling. It completely upset my entire understanding of history. If what they said in that documentary, which included many quotes by people such as George Washington, Benjamin Franklin, Abraham Lincoln, etc., is true, then I cannot see why anyone would consider a central bank, such as the Federal Reserve, to be a good thing. The fact that it does some things to regulate the economy, or the fact that it employs lots of people with PhDs does not mitigate the damage that it is doing. I would like to know if you, or anyone else, have seen that documentary and what your thoughts are. I have read other books and viewed other documentaries that were consistent with what I saw in that one, so that gives it some credibility.

Basically, I think there is a lot more to this story than what appears from the comments you made in your post. I, for one, would like to know more about that story. What say you?

Thanks for your consideration.

[AdHocSolver]

8. Well reasoned and accurate commentary on the OP.

It is very difficult to get people to pay attention to any posts that explain how the "real" economy works.

Too many people dwell on academic drivel about economics, and post large amounts of meaningless charts and graphs that don't really explain anything, but rather obfuscate economic issues, and drive people away.

The main concepts to know to understand how economies work are supply and demand and their relationship to prices and output. Whoever controls supply and/or demand controls trade and, therefore, an economy, and whoever controls an economy has political power.

Welcome to DU.

[AdHocSolver]

7. The Fed is a tool operated by the largest banks and Wall Street...

...to transfer the assets earned by the middle class from the middle class to the aforementioned banks and Wall Street.

For example, interest rates are kept low on bank deposits such as savings accounts and CDs, but can reach comparatively usurious rates on loans to bank customers, for example, credit card balances.

If a bank pays 0.1 percent interest on a CD and collects 8 percent interest on a loan, it earns a return of 80 times on those funds (0.08/0.001).

The Fed keeps interest rates low to encourage people to borrow "cheap" money, for example" to buy a more expensive house than they could afford ("your payments will be low and you can "flip" the house in a few years and buy an even bigger house).

The Fed adjusts the interest rates to produce the "boom and bust" economy because it is good for profits.

It also keeps interest rates low to help hide the significant amount of inflation that the US economy is experiencing.

Most economists whitewash the Fed's role in the pillaging of the middle class because most of them work for banks, Wall Street, or academia, which profit from how the Fed actually works. It's equivalent to how chemists, doctors, and pharmacists who work for pharmaceutical companies defend drug companies and their products.

The guy's defense of the Fed is on a par with "global climate change" deniers.

I understand the Fed perfectly well. I have a degree in Economics.