Comment: Hope this helps...

(See in situ)


Hope this helps...

1) What caused bank runs and panics prior to the creation of the Federal Reserve?

Money creation. There were two central banks prior to the Fed which engaged in the same money creation as the Fed does now. And even in the periods where there was no central bank, there were laws in place which (in various ways) allowed private banks to create money on a far larger scale than they otherwise could have, in a free market.

Did the Federal Reserve solve the problems of preventing future bank runs?

No, considering that the worst rash of bank runs in American history occurred in the early 30s (Fed was created in 1913). That said, bank runs are only a symptom of the problem, not the problem itself. Bank runs occur when banks have created too much money. The problem is the money creation, which the Fed enables.

Was there fractional reserve banking when the US was on the gold standard, prior to the creation of the Federal Reserve?

Yes, there has always been FRB.

Can fractional reserve banking be sustainable or is full reserve banking the best option for a sound monetary policy?

FRB in a free market is fine. The problem is government intervention in the banking industry which shields banks from the risks of creating too much money. This includes the Fed (as lender of last resort to banks that get into trouble), FDIC (which makes depositors indifferent to risk and therefore allows banks to take more risk), et al.

If the Federal Reserve is really a private bank ran stockbrokers and private bankers

It's misleading to call it a private bank. The Federal Reserve System is a cartel of private banks supported by the government.

aren't they aware of the inflation caused by their policies? Aren't they hurting their own agenda?

For various technical reasons that I won;t get into right now (ask me for details if you want), banks make more money if they can all create money at approximately the same rate. The purpose of the Fed is to coordinate the inflation among banks so they all inflate at the same rate -- and to insulate them from the consequences of their risk-taking, as by bailouts, etc. So, no, this system is extremely profitable for them. They don;t care about the costs to society.

If our currency is considered fiat does that mean our 17 trillion dollar debt is fake and shouldn't exist?

I'm not sure what you mean by "fake." It exists in the sense that millions of people own it and expect to be paid capital and interest, and failure to make those payments would have serious consequences. Should it exist? No, the government should not be allowed to borrow money IMO. But it does.

What is the purpose of keeping track of the debt and deficits if our money is "worthless" anyway?

The dollar is not worthless. Saying that it will eventually become worthless as a result of inflation and saying it is already worthless are entirely different claims.

Should Americans be concerned about the estimated 100 trillion dollars it will cost for future entitlement programs such as Social Security & Medicare?

Of course. to meet those obligations, the government will have to either tax the hell out of us or (more likely) print like crazy, which will cause a massive decline in the value of the currency and all kinds of real economic problems.

What if President Obama does an executive order or Congress passes a law requiring the Treasury Department to reset the national debt to zero? Will there be any negative consequences to the economy if that ever happened?

Most of the banks would collapse. Pension funds and a great many private retirement accounts would take a massive hit. It's the same as if Walmart defaults on its bonds -- the holders of those bonds eat it.

Could the Federal Reserve create an 17 trillion dollars worth of money out of thin air to "pay off" the debt?

Certainly, but then the currency would completely collapse.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."