If the Federal Reserve was to abolished-what would replace it?

[usa]

that video is pretty cool but it's also misleading.

first off: look up capital reserves. banks don't just create whatever money they want. and reserves are not what determines how much a bank can loan. reserves are just meant to ensure a bank has enough liquidity to give people money when they want it. it's the capital requirements that determine how much money a bank can create.

Isn’t that liquidly based on debt and therefore don’t exist? Look closely at the reason the video promotes ban usary/interest payments. It is not to prevent people from making an unearned living, but rather to prevent people from cornering a finite money supply and obtaining control over an entire people as a result.

and what do you think happens to all this money? it's spent, it's used to manufacture goods and to pay people salaries. it's not all immaterial. money is a lubricant for society's activities.

and does anyone think bankers don't work? what do banks do with the interest they collect? it pays for their operations. banks generally don't make more profits than other industries, and they pay taxes just like everyone else. it's a business out to make money just like every other business. i'm not saying that's good or bad. but if you think it's bad for a bank to make money, then you should also think it's bad for other businesses to make money. (and then how do you grow?)

True ^^Banning the payment of interest alone will not get rid of the problem. For example, if a large business continues to earn profits and spends only to acquire more of the means of production (a form of investment) with profits serving as "interest", they could eventually do the same thing. Another example is a payment processing business that always gets a small cut of all transactions. The problem is not so much that some people earn money as interest or as profits, etc., but rather that they don't spend it. They are so obsessed with earning ever more, or perhaps more accurately, gaining dominance over all others. If the owners of the Federal Reserve spent their interest profits freely, would result a much more debt-free money in the system. But they don't because they are mainly interested in taking the wealth of others rather than enjoying the life that wealth should bring; very cruel mindset.

is anyone forcing you to borrow? is anyone preventing you from paying off your debts? lots of people are debt-free. but it means living a simpler life. most people CHOOSE to borrow to buy more stuff, not as a matter of survival.

and nobody's stopping you from being self-sustainable. some people have done it. some people create communities where they can do that. no one's stopping you.

but most people prefer a different lifestyle, a lifestyle that can only exist with creating money to create wealth.

and finally, and most importantly, YOU CAN START YOUR OWN BANK! if you think the system is so advantageous to bankers, then become one! it's a free society, you are free to start your own bank. and if you make huge profits, you can do something good with it.

i prefer to fill MY life with something more meaningful. i'm happy to let other people become wealthy if that's what they want.

don't get me wrong, I HATE the greedy corrupt bastards. the world would be a much better place if there wasn't so much dishonesty among the wealthy. and I HATE seeing our planet mistreated like it is. but this video is full of half-truths and doesn't propose a workable solution.

a good site with interesting info: http://wfhummel.cnchost.com/

Yeah anyone can create a bank and back it with a solid currency or work for exchange of goods barter system. Problem is the 1st example most often leads to a televised standoff with the feds or a stiff prison sentence. I agree a barter system is not for everyone just another example of a system without usary. But if you were to try the first example of your own banking sadly it would be shorted lived.

We are all slaves to the money system because we cannot get out of debt even if we wanted to. Our taxes are going to pay interest on money that was created out of nothing at all.

Even if we ourselves do not borrow money, our government still has to or else the money supply collapses. And we as taxpayers have to pay for the debts of our government. So, we are enslaved to this system even if we personally aren't in debt. The wealth they do spend goes to finance warmachines to destroy people and break up nations only to rebuild(nation building) on again our dime regardless if your in debt or not. Plus those dolars are not circulated back here but overseas.

The civil war here in America is a good example of that the “reconstruction” after the destruction. And here we are over 100 years later talking about states rights again while facing civil 2 as the dollar collapses due to manipulation from a private entity that is neither federal or has shown proof of a Reserve. They have no accountability nor do they share what is exactly in the reserves as Joe Citizen must “file” or face court. Death & Taxes

The book Web of Debt (you can read some excerpts here . On page 150, it mentions an economic advisor to William Jennings Bryan in the 1890's, William Hope Harvey. Harvey has pointed out "that people who took out loans were actually not borrowing "money". They were borrowing debt."

"Harvey considered money to be direct representation of a man's labor, and usury and debt to be a scheme to put middleman bankers between a man's labor and his property... At the heart of the problem, said Harvey, was the Federal Reserve System, which allowed banks to issue debt and pretend it was money."

Dresden James-"The ideal tyranny is that which is ignorantly self-administered by its victims. The most perfect slaves are, therefore, those which blissfully and unawaredly enslave themselves."

Dresden James- "A truth's initial commotion is directly proportional to how deeply the lie was believed. It wasn't the world being round that agitated people, but that the world wasn't flat. When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic."

 

[usa]

Friday, November 9, 2007
When Ron Paul was giving both barrels to Bernanke,
traders on the floor of the Chicago Exchange began chanting "RON PAUL!"
---
CNBC - Traders Cheering on Ron Paul for his questioning during the testimony of Fed chairman Bernanke

11/8/07 check it out ,lol Must watch , what does this tell ya?????????????

This December 16th - Nationwide Ron Paul Rally

 

[usa]

Ron Paul know what he is talking about or was he wrong?

Ron Paul know what he is talking about or was he wrong?

He said this Before the U.S. House of Representatives February 15, 2006

"In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that’s the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.

It sounds like a great deal for everyone, except the time will come when our dollars-- due to their depreciation-- will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come."

-------------
Now lets look at the current news

Nov. 7 (Bloomberg) -- The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves.

Chinese Comments

``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, said at the same meeting.

 

[budvapor]

first off, i appreciate the candid yet civilized discussion. these topics usually lead to name calling and no advancement of knowledge. and this topic in particular is very complicated. i myself do not claim to be an expert. but i am looking for the real answers with an open mind. i appreciate the challenges to my understanding which will hopefully enlighten me if i am wrong and either way deepen that understanding!

my friend you are completely wrong...this whole money game is ABSOLUTELY a zero-sum game...

are you saying the population does not increase? total production does not increase? it's not a zero-sum game.

the FOMC certainly dictates the money supply in this country and controls the trade in all treasury-backed assets...furthermore the amount of a bank's reserves are PRECISELY what dictate the amount of money a bank can lend out...

the confusion comes from the fact that today reserve=cash. so while the basic idea is the same, the real parameter is not cash reserves but capital. the difference is subtle, but the implications are very significant.

cash reserve requirements are applied after-the-fact on a daily basis. if a bank's reserves tonight don't meet the requirements, then the bank is obligated to increase its reserves by borrowing (from the fed for example).

the current system is a descendent of the fractional reserve system. the difference is that back then money/deposits=gold=capital. not so today. hence reserves do not dictate how much a bank can loan. it's capital. but again i suspect people think capital when they say reserves.

the SCAM of our banking system is as follows:
1) Fed purchases treasury bonds/notes from banks/individuals holding them, giving these entities cash money ($)

2) Bank which sold securities now has cash reserves to be lent out to other people. It used to be banks could lend out like $6 for every $1 they had in reserves, this may be different now but it is similar.

same point i made above. in fact some banking systems like in canada have no reserve requirements. how do you suppose it works there? it works the same as the US, because it has to do with capital requirements.

3) The banks receiving deposits by other entities made possible by this overleveraged lending are also entitled to lend money out after they have more reserves on hand, also $6 for every $1 held...

you can see how this is 'creating' more money, right?

yes and no. again this has to do with capital requirements. there has to be something tangible to back all these loans up. most definitely there is leverage to create new money, but within certain limits based on capital backing them up. the cycle cannot keep going indefinitely without something of tangible value (capital, not money) backing things up.

and people don't borrow money just to keep it in a bank account. they do something with it. they grow a business, they purchase property, create capital (not money). then that capital can be used to create more money and continue the cycle. but creating capital implies it's not a zero-sum game.

Now initially in this cycle, this process does seem to create wealth, to 'put value' into the economic system where there was none before...however this is a fallacious notion made possible only by adopting an extremely short-term view of the situation...

The reason this process is still zero-sum no matter the introduction of more money is because prices rise in response to the extra money supply...once prices have risen commensurately with the increased money supply you have the same problems you started with...

i agree with you again but only to a certain extent. this WOULD be a zero-sum game if all the parameters were stable, which is not the case! population increases, production increases, etc. hopefully that's well established by now.

to use the example that's in the book you mentioned, imagine the following ultra simple (and unrealistic but still useful) scenario: 2 people on an island produce and exchange 2 fish and 2 loaves. let's say the money supply is $4. $4 buys 2 fish and 2 loaves. let's say each product costs $1.

now the population increases to 4 people producing and exchanging 4 fish and 4 loaves. but you have only $4 total money supply. so now $4 buys 4 fish and 4 loaves. that works out to $0.50/product. that's deflation.

if you want prices to remain stable, then your money supply has to increase with your production increase. here if you increase the money supply to $8, then you have $8 buys 4 fish and 4 loaves. you can still have 1 product=$1.

now if the money supply increases faster, then inflation occurs. in the same example, let's say the money supply increases to $16 instead of $8, then your 8 products are worth $16. each product is now worth $2. that's inflation.

deflation or inflation are not good or bad per se. in the end it comes down to the same. it's not so much how many dollars each product costs. the goal is to keep the economy growing so people can all get their fish and loaves etc. and it just so happens that people tend to remain optimistic more easily with no to mild inflation. deflation or high inflation makes people nervous, jittery, unpredictable, and causes the economy to crash.

now increasing the money supply to the right amount on the island of 4 people is easy. but when you're talking a whole country with millions of people, industry, and government, and you want to not only keep up with the existing standard of living but also improve it, history shows that the best way is to have a well regulated banking system such as what the western world has.

now i must say that this scenario is a result of deficit spending and the currency would definitely strengthen if there were a surplus (this makes sense b/c a surplus dictates that the fed has removed money from circulation and its sitting somewhere, making the remaining money in circulation more valuable)...i realize this is a gross oversimplification but it is important to not attribute power over the economy to individuals/groups who truly have no power IN THE LONG TERM...much of the anxiety in bad times and euphoria in good times is b/c people nowadays have about a 3-year frame of reference for anything, if that...

i agree that many people and businesses have considerations that are too short-term. and i agree that one individual has very little power. but i disagree that individuals/groups have no power. in fact it's the opposite. the economy depends on everyone's spending. spending depends on people's confidence. if everyone remained optimistic going forward, the economy would stably grow with the population. in other words, _everyone_ who has money contributes to the economy depending on how much they spend.

what the fed do is try to make it easier or harder for the participants to borrow money (and hence spend money) to keep the economy stable. if the economy grows too fast, leading to more inflation, which has a backlash effect later, then the fed increase interest rates, making it more expensive to borrow, so participants don't borrow as much, so less money is created, so less spending occurs, cooling things off. if the economy is sluggish, they lower interest rates, making money cheaper, encouraging more borrowings, leading to more spending, leading to a growing economy.

that's the goal anyway. unfortunately it is so chaotic it usually doesn't work as intended. and i agree that many of the things people like ron paul complain about are real problems. but i don't think the fundamental principles of the current banking system cause these problems, and abolishing the fed or returning to a gold standard would not help. on the contrary, i believe it would make things worse.

if you think i'm full of it i would recommend checking out "The Alpha Strategy" by Pugsley, it can be had for $5 used on Amazon and is a tremendous read...One of the best financial books I have ever read and I have read many...It is from 1980, its unbelievable how relevant it is for our situation today...

peace
nug

EDIT- well hell here's a link you can read it right now if u like...

http://www.biorationalinstitute.com/zcontent/alpha_strategy.pdf

thanks for the link! i checked it out but of course haven't had time to read it all yet.

 

[budvapor]

Isn’t that liquidly based on debt and therefore don’t exist?

no capital is based on things like actual property (or stock in companies that have capital etc.). as the sub-prime mess is clearly showing though, that is not fool-proof by far. but there is something tangible backing all this up.

Look closely at the reason the video promotes ban usary/interest payments. It is not to prevent people from making an unearned living, but rather to prevent people from cornering a finite money supply and obtaining control over an entire people as a result.

it's true that the more money you have, the more money you can make. some people will do better with their money than others. some will build empires and wield a lot of power and abuse that power. but that seems inevitable regardless. i don't see a workable alternative. interest-free loans? who decides who gets to borrow and how much? who pays for operating all that? who watches the watchers? in an ideal world maybe... but in the real world i don't think it's possible. i'd be interested in someone elaborating on how an alternative would work in the real world.

True ^^Banning the payment of interest alone will not get rid of the problem. For example, if a large business continues to earn profits and spends only to acquire more of the means of production (a form of investment) with profits serving as "interest", they could eventually do the same thing. Another example is a payment processing business that always gets a small cut of all transactions. The problem is not so much that some people earn money as interest or as profits, etc., but rather that they don't spend it. They are so obsessed with earning ever more, or perhaps more accurately, gaining dominance over all others. If the owners of the Federal Reserve spent their interest profits freely, would result a much more debt-free money in the system. But they don't because they are mainly interested in taking the wealth of others rather than enjoying the life that wealth should bring; very cruel mindset.

i don't see that... if people don't spend their money, then they're basically taking it out of circulation, and that helps reduce inflation. if they spend it, then they're contributing to the economy. all banks, the members/owners of the federal reserve included, spend most of their income as operating expenses like all other businesses, paying salaries (usually about 1/2 their costs), and purchasing equipment etc.

Yeah anyone can create a bank and back it with a solid currency or work for exchange of goods barter system. Problem is the 1st example most often leads to a televised standoff with the feds or a stiff prison sentence. I agree a barter system is not for everyone just another example of a system without usary. But if you were to try the first example of your own banking sadly it would be shorted lived.

i meant create a normal, legal bank in the current system!

We are all slaves to the money system because we cannot get out of debt even if we wanted to. Our taxes are going to pay interest on money that was created out of nothing at all.

money is created out of existing capital, just like people are born out of existing people!

Even if we ourselves do not borrow money, our government still has to or else the money supply collapses. And we as taxpayers have to pay for the debts of our government. So, we are enslaved to this system even if we personally aren't in debt. The wealth they do spend goes to finance warmachines to destroy people and break up nations only to rebuild(nation building) on again our dime regardless if your in debt or not. Plus those dolars are not circulated back here but overseas.

now we start looking at REAL problems like gov't debt and war. a gov't does not have to borrow or go to war. those are generally bad decisions that do have bad consequences for the people. so indeed under the current circumstances, even if you don't borrow money personally, you still have to pay taxes to pay for the gov't's bad decisions. and certainly a lot of our govt's bad decisions are due to people wielding a lot of power in order to do a lot of harm to a lot of people directly or indirectly and only for the purpose of enriching themselves. and that is EVIL!

here's where we have the best chances of improving our society today: start with political corruption! if only the govt worked for the general interest of its citizens! then you can stop wars, stop unnecessary govt spending, etc. sadly that is far from the case.

The civil war here in America is a good example of that the “reconstruction” after the destruction. And here we are over 100 years later talking about states rights again while facing civil 2 as the dollar collapses due to manipulation from a private entity that is neither federal or has shown proof of a Reserve. They have no accountability nor do they share what is exactly in the reserves as Joe Citizen must “file” or face court. Death & Taxes

this is where things get complicated, because it all has to do with various feedback loops feeding each other.

the current sub-prime disaster is a result of poor risk evaluation. in fact, the banks are hurting! they made stupid decisions by loaning money to people they shouldn't have loaned to. and now their castle of cards is collapsing. and certainly that has ripple effects throughout the economy, the first one being that a lot of people are in difficult financial situations, which impacts their participation in the economy, which has further ripple effects, etc.

but the problem has nothing to do with the banking system. it has to do with bad individual decisions. bankers loaned to people they shouldn't have loaned to. people borrowed more than they should have.

is the fed responsible? possibly. interest rates were very low after the dotcom collapse, which increased the money supply, which made it easier for people to borrow more money, which led to prices to increase, etc. but at the same time the economy was hurting, and limiting the money supply could have caused a depression.

so the money supply increases, leading to a reduction in the value of the dollar. interestingly, domestically, inflation is minimal. but overseas, it hurts the exchange rate. that is cause for concern, but just like other forum members have mentioned, it's probably ok. foreigners have too much invested in the dollar to let it crash. moreover, a cheaper dollar helps our exports tremendously!

The book Web of Debt (you can read some excerpts here . On page 150, it mentions an economic advisor to William Jennings Bryan in the 1890's, William Hope Harvey. Harvey has pointed out "that people who took out loans were actually not borrowing "money". They were borrowing debt."

"Harvey considered money to be direct representation of a man's labor, and usury and debt to be a scheme to put middleman bankers between a man's labor and his property... At the heart of the problem, said Harvey, was the Federal Reserve System, which allowed banks to issue debt and pretend it was money."

Dresden James-"The ideal tyranny is that which is ignorantly self-administered by its victims. The most perfect slaves are, therefore, those which blissfully and unawaredly enslave themselves."

Dresden James- "A truth's initial commotion is directly proportional to how deeply the lie was believed. It wasn't the world being round that agitated people, but that the world wasn't flat. When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic."

i agree that most people are ignorant of how all this works. and being ignorant is not to their advantage. and the educational system has failed them. and on and on. but i don't see how that has to do with the banking system per se, and i don't see a better alternative to keep society going for the better of society as a whole.

i hate to look like i'm defending the bankers. that's not my point. in fact i hate a lot of their practices, taking risks with people's lives for their benefit, as is the case with things like 'universal default'. my point is this is a distraction. this is not the real problem. ultimately, i suspect that the problem as a whole is simply human nature; in particular, the hoarding and power grabbing instincts. until very recently in evolutionary terms, both were key to survival. today, they're diseases, for the little guy who spends every dime on stupid junk, and for the wealthy who reeks of greed and corrupts in order to have more power. integrating that in the human culture is what can save the planet.