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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-25-10 09:23 AM
Original message
Ron Paul mumbo jumbo

RP can talk about the Fed all he wants but it's Reaganomics that destroyed the economy. When Reagan took office we were the world's largest creditor. When Bush 1 left office we were the world's largest debtor. RP can talk about the gold standard Richard Nixon took us off of all he wants but even if that hadn't have happened we still would have gotten fucked by Reaganomics.

When the wealthy decided that inflation was only caused by working people getting paid too much we switched to the "wealth creation" model. This was a transfer of wealth from the workers to the rich. I remember the first round of robberies. When during the Reagan induced recession of 1982 the big corporations started forcing mom and pop factories all over the country to sell with hostile takeovers. The Republicans don't believe the little people should own businesses so they stole them right out from under their feet. They didn't even want them. They just forced them to sell then chained up the gates. This centralized production into the hands of big corporations and they moved on to the next step that was to build factories overseas.

But if Republicans wanted to keep winning elections they had to give the little guy a way to build wealth too so they started creating bubbles. Stock market bubbles and real estate bubbles. But with every bubble pop they just take the wealth away. So what now?

Every single penny of debt has been created by conservatives and THEIR monetary policy. If they haven't of centralized production, stripped the people of business ownership and pulled a bait and switch with faux wealth creation the people wouldn't be so far in debt.

Not to mention the endless tax cuts for the rich and the endless military spending that has been defending nothing but a sham economic policy around the world. This created the federal debt. Republicans don't care about debt, they only care about who has to pay it off. They been stealing money by running up debt with the help of Wall Street for over thirty years. They have been planning ALL ALONG to pay it off by canceling so-called entitlements. If the voters think that we can solve this problem by putting Republicans back in power they need their heads examined.

If all the Republicans had died in mass thirty years ago the country would be just fine and that's a FACT!

I'm very suspicious of Ron Paul's real motives for attacking the Fed. I think he's up to something else. He LIES about how we got here. Also he never mentions our phony GDP numbers which are just as important as the dollar.

The GDP doesn't grow when the wealth is being taken from the middle class and given to the wealthy. It only looks like it's growing due to market tricks, inflation, globalization and the growing financial sector. Thirteen trillion dollar GDP yeah right. Just like the 550 trillion dollar outstanding derivative bubble. Nothing but air. Of course it's the Republicans who took us off of a brick and mortar economy to a fake paper economy. It was their idea.

I found it interesting that a Republican told the Chinese last year to NOT believe our GDP numbers. They should know. They've been the bookkeepers for the last 30 years.

And this baloney that the Republicans hate the Fed. Hogwash. The Republicans love the Fed. The Republicans have ALWAYS loved the Fed. The Fed has helped them loot the country.

I see this Fed fight Sanders vs Paul. Sanders want the Fed to concentrate on lowering unemployment. Paul seems to want the Fed to crush the remaining citizens who are still above water. Paul also seems to want to create death panels by canceling "entitlements" aka social security and medicare. Let's face it, there is no money of any size left to draw from except those two programs. And nobody's going to cut the empire budget. They need the military to keep looting other countries with. I think Sanders wants to help the middle class and Paul wants to build fiefdoms. Paul is still a supply sider and we know what that's brings. Nothing but rich people, debt and misery.

I'd also like to know how much gold Paul has. Is he just a gold bug screaming about inflation so he can drive the price up?

Whatever people think about the debt situation it was caused by the Reagan conservatives. As people's wages went down for the last thirty years the only way to stay at the same level was to take on debt. The faux wealth creation Reaganites gave the little people so they wouldn't revolt kept the middle class quiet until the next recession and another round of theft from above.

Now all we have it debt and there's no amount of voo doo left to patch it up. Federal debt, state debt and household debt it all adds up to we're screwed. Noticed how the wealthy are now investing in debt bonds. They think they're going to live the high life for generations as we struggled to pay it off.

We need a revolution and NOT one that's coming from the right. They're liars and they created this mess. Nothing they say can be believed.

People need an old fashion economy. Something that pays for food, housing and health care. Like we used to have before Reagan and the thieves stole it.

It's time to throw the magical growing pie theory out the window. The pie didn't grow it just got redistributed to the top.

We need to reverse the flow of money DOWN not up. And we need to tell the bondholders we're NOT paying our debts. If they want money they can collect it from the Republican scum who stole it!

One of the most important things we have to do is decentralize the economy. Notice how Republicans work to decentralize government with their "states rights' mantra. This only weakens the state while they strengthen the corporations by centralizing business.

We need to cancel small business federal taxes for five years to rebuild from the bottom. The Republicans will fight this OF COURSE because they only want the big corporations to own anything.

I wish the Senate Democrats would call the Republicans bluff and vote no on Bernanke. The Republicans would have to vote yes to save him. And they will because they love the Fed they're full of shit.
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AGMONEY Donating Member (15 posts) Send PM | Profile | Ignore Mon Jan-25-10 09:48 AM
Response to Original message
1. Gold and Economic Freedom
Gold and Economic Freedom

by Alan Greenspan

Published in Ayn Rand's "Objectivist" newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense perhaps more clearly and subtly than many consistent defenders of laissez-faire that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline argued economic interventionists why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely it was claimed there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form from a growing number of welfare-state advocates was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which through a complex series of steps the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

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AtheistCrusader Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-12-10 12:28 PM
Response to Reply #1
7. Ron Paul probably is a gold bug.
Edited on Fri Feb-12-10 12:29 PM by AtheistCrusader
But that doesn't necessarily mean he is wrong.

He also wants to massively trim the defense budget, a bloated drain on federal revenue that is at LEAST as responsible for getting us into this debt, as republican tax cuts are.

He's goofy, but he's got a few good ideas for sure. It's more his Social policies that make him unpalatable to us. (anti-abortion for instance)

Edit: Damn it, this was supposed to be in response to the OP.
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OHdem10 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-25-10 09:50 AM
Response to Original message
2. Bernanke only carries out policiy. Changing Bernanke changes
nothing and only leads to instability in the market which
hurts everyone.

The Democrats we have now are not risk takers, there employment
is out of the range of the Fed.

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angryfirelord Donating Member (248 posts) Send PM | Profile | Ignore Mon Jan-25-10 09:51 AM
Response to Original message
3. Well, transparency is a good thing
Even though I'm not a fan of Paul's conspiracy theories, the Federal Reserve has made some shady dealing that need to be exposed. HR 1207 also has over 300 co-sponsors, Republican and Democrat, so it's clear that people see the problems of one organization controlling the entire monetary system and not being transparent about it. I agree that ending the fed won't fix the problems, but some work needs to be done.

Alan Grayson has been a supporter of auditing the fed. Here he is asking Bernanke about what happened to all the money we gave to foreign banks:
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Turbineguy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-25-10 09:53 AM
Response to Original message
4. Repubs like people to have businesses
but they must be modeled on the Amway scheme where you work for nothing for a long time while others get rich. Then eventually you move up the pyramid and motivate others to work for free for you so you can get rich. Many get discouraged and quit and therefore never have to be paid for their labor. You maintain a nearly unlimited flow of free labor by painting them rosy pictures of untold wealth.

I've seen people give up good and useful careers for this.

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angryfirelord Donating Member (248 posts) Send PM | Profile | Ignore Tue Jan-26-10 11:42 AM
Response to Original message
5. Here's a new article about the Fed and AIG

Federal Reserve Bank of New York officials scrambled to do damage control in the days after their $180 billion rescue of American International Group in September 2008, including an effort to control information by asking AIG to run significant outside communications through the Fed's outside counsel.

The damage control effort is revealed in e-mail between an in-house New York Fed lawyer, its outside counsel, a partner in charge of the restructuring practice at Davis Polk Wardwell, and other New York Fed and Treasury officials.

On Sept. 19, 2008, two days after the rescue, e-mail messages between the Fed's outside counsel, Davis Polk partner Marshall Huebner, and New York Fed lawyer Richard Charlton, said "almost everything" was wrong with a securities filing AIG's ( AIG - news - people ) internal lawyers had prepared and that the AIG lawyers had been told future filings, "press releases and other significant communications should be run by" Davis Polk first.

A message the same day, referencing corrections were going to be made to the filing, was forwarded by the Fed lawyer to other Fed lawyers and two Treasury Department employees, including one who was a former Goldman Sachs ( GS - news - people ) banker.

The e-mail messages contradict earlier statements by the New York Fed that it was merely counseling AIG about its disclosures related to the bailout, not dictating, according to Darrell Issa, the House Oversight Committee's ranking member, who is pushing for a full review of the relationship between the Fed and AIG.

They are among 250,000 documents the New York Fed turned over to the House Committee on Oversight and Government Reform in response to a subpoena. The committee scheduled a hearing on the Fed's role in the AIG bailout for this Wednesday.
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sailingawayca Donating Member (2 posts) Send PM | Profile | Ignore Thu Feb-11-10 06:42 PM
Response to Original message
6. Ron Paul was against the fed before Reaganomics
If it matters to you, it was the reason he got into politics in the 1970's.

Here is a youtube link to part of a debate between him and a then Fed governor in 1983.
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Kalun D Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-13-10 09:39 PM
Response to Original message
8. Seriously
Edited on Sat Feb-13-10 09:41 PM by Kalun D
people need to stop falling for the false dichotomy of right versus left. It's only a distraction from the real war which is corporate class verses working class. It's a strategy of divide and conquer. Clinton and now Obama have done just as much damage to the working class as any republican ever did.

The Fed is one of the key problems. It's a privately held bank which controls the nations money supply, which is against the constitution. Study up on the Fed which was enacted in 1913, it's at the root of all our current problems.

Look at who Obama surrounds himself with to realize repugs and dems are the same, both serving corporate masters against the well being of the workers. Gates at defense, Bernanke and Geitner in banking. These are republicans.

Although he's got some social leanings which the average progressive might not agree with Ron Paul is spot on with many issues which are ruining this country, mainly we need to take the country's fiscal control away from private hands.
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Odin2005 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-14-10 07:14 PM
Response to Original message
9. The Fed isn't the problem, it's the people running it.
National banks are only as good as the people running them. And now we have Neo-Liberal Corporatists running the show.
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