I have dumb questions about the Fed.
Posted March 26th, 2008 by spacehabitats
output
Every time the Fed does something inflationary like lowering the prime interest rate, the reporters, economists, and business commentators always say something like, "Wall Street responded favorably to the Fed's economic stimulus plan as stocks went up blah blah points."
Here's my dumb question. If you lower the value of money (by printing more of it) doesn't that tend to make people anxious to get their money turned over into something tangible, say, like real estate, gold, or STOCKS before it loses more of its value? In other words, couldn't these reporters just as accurately be saying, "Investors on Wall Street responded in a panic buying spree to get rid of their fiat money today, in response to the Fed's announcement that they are going to print more of it."?
Or am I missing something?
Oh, and this thing about "economic stimulus" has me confused too.
When the economists say, "Consumer confidence remains high as orders for durable goods and retail sales continue to bolster earnings reports." Couldn't they just as easily be saying, "People continue to spend money like there's no tomorrow because the way the Fed is devaluing the dollar only an idiot would put money in a passbook savings account because it won't be worth squat when you pull it out whereas if you go and buy a new flat screen TV right away while your money is still worth something well at least you'll end up with a flat screen TV."?
I know I must be oversimplifying somewhere.
But where?
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The Fed
My view is that the current monetary system is nothing more than a series of mathematical formulas with rules governing compound interest, payments, future and present value of money. The value of the money is created from legal tender laws that allow us to pay taxes with federal reserve notes. Without the force of law there is no value.
The current system is not money but is instead currency. Money is a store of value, medium of exchange, and unit of account. We have only a medium of exchange and unit of account. There is no real store of value.
Banks get to create money through the fractional reserve system and charge interest on the newly created money. The rest of us have to work and produce in order to earn money. The banks have a vested interest in keeping the whole thing going but must continue to create more and more debt to keep the system afloat.
The Federal Reserve sits atop the banking system to be the lender of last resort. They can create new money into existence to save individual banks, but can't save everything if the dollar fails.
At some point the system will reset with a new currency, return to gold, or combination of cures. Meanwhile the cheerleaders on Wall Street will cheer for more liquidity so the game can continue for a while longer.
Here is a simple video that explains
what is taking place with our money.
http://video.google.com/v...
The Fed is the biggest scam in the history of mankind!
I recently watched "Money Masters" in its entirety and must say I am still flabbergasted. What Republicae says below is correct, it is imaginary money that only becomes real when you borrow it and then work to pay it back.
After watching 'Money Masters" I now finally understand why RP considers this to be the most pressing financial problem. Believe me, more and more people on wall street are beginnig to see what a rip off it is. Most are afraid to take a position and expose it, but the pressure is building.
I use to think I understood history, but after watching Money Master's now realize there is no way to understand the last 2000 years without understanding the Masters of Money and how they are trying to control the world through debt.
It is my understanding
that the complexities of the Fed's gyrations
are not even understood by the Fed.
I think the laws of unintended consequences
are in play.Economic chaos appears to the
end that justifies their means or vice or versa.
The zeroes in their enumerations seem endless
and incomprehensible.
I think the participants know the Big ship
is sinking and they are fighting amongst themselves
for a berth on too few lifeboats.
Our job is not to get sucked into the giant swirling
whirlpools as they go under.
"Liberty and Freedom for our Grandkids"
Don't kid yourself
The Money Masters are only afraid of being exposed and the consequeces that could follow.
And what if
they called the Patriot Act, the "Snoop on citizens for no reason" Act. Our government/media hasn't told the truth in a while. Why start now?
You would think that was the
You would think that was the case however, the general public and even many within the world of finance are woefully ignorant of monetary functionalities. Most have placed so much blind, absolutely blind faith in the system that they simply can't believe that anything is outside of the control of the Federal Reserve.
The problem is that few also realize that every single Fiat Monetary System in history shared the same fate: collapse! What is different about our current system is that it is so extremely complex and inner-connected globally with a multitude of various instruments that it will not take much for a domino effect to take the entire system of global economics down.
Every Fiat Monetary System has an inherent maximum possible life-span, as I have said before on this forum, and eventually the debt upon which the system is created and with which it is maintained will consume all economic viability.
Since every "dollar" or Federal Reserve Note must be borrowed into existence, the massive, unseen and irreversible debt is multiplied exponentially to the point that the economy can no longer tolerate the burden of the debt load. There are recognizable traits of a Fiat System reaching its maximum possible life-span; one of which is that the underlying debt upon which the economy depends drains the ability of the economy from tolerating even minor interest increases without suffering dislocations. While the economy will continue to experience business cycles, those cycles will become more and more shallow at the same time they will become less and less profitable since the underlying pressure from the debt consumes more and more of economic viability.
Eventually, more and more businesses will experience the pressure placed upon them by vast ocean of debt upon which all economic growth floats upon, the ability to continue expanding will become constricted and the result is insoluble debt, this will eventually consume the entire economy.
Basically, the entire system rest upon a mirage, created for our consumption.