U.S. TO DEFAULT ON ITS DEBT – SUMMER 2009

[kewp]

There is a difference between money creation via debt and money creation via printing. We currently create all or the vast majority of the money supply via debt.

Not really. Money is created via credit; debt is simply the other side of that equation.

In the modern age, there really isn’t much difference between cash, credit and debt. Its all just numbers in a computer. However, its much either to destroy debt than cash. Cash hardly ever gets destroyed; not too many people are burning dollars in their furnace (yet). In fact, cash is usually only destroyed when the bill get damaged enough that the banks send them to the treasury to be destroyed (and replaced with new currency).

What happened in Zimbabwe is runaway *physical* printing of their currency. *That* is inflationary. Imagine if the Fed started mailing everyone with a social security number a thousand dollars fresh from the printing press every month. We would see rampant price inflation of basic goods almost immediately and the dollar would decline on the global market.

I think its important to note that there is, however, a significant difference between credit and cash inflation.

You can see the difference being by looking at salaries vs. home and student loans. Things we borrow money to buy increase in price in a credit bubble, due to credit inflation. Housing, education and transportation are a good example. We are paid in cash, not credit and as such salaries have not kept up with the increased price of these goods and services.

This is big difference between now and the 70’s. The 70’s was a cash bubble where everything went up. This is/was a credit bubble.

Oil just plummeted in price and depletion marches on. Sub $70 kills many alternative projects.

If we implemented European mileage standards we would end our dependence on foreign oil overnight.

Energy independence is the kind of thing you can’t wait for the free market to take care if you really want to be ahead of the curve. The market is myopic and will *gladly* kill a consumer today if it means turning a small profit now rather than a big one later. Look at the tobacco industry for an example of this.

Interesting times we live in. Dogmas and ideologies are going to get turned on their head.

Indeed. Our financial system is simply not equipped to deal with the information age. It needs a massive, fundamental overhaul to keep from melting down again.

And I agree with you about over-consumption. As a conservationist it disgusts me. Americans are too fat and over-indulgent. A long recession could do us all some good.

In fact, it may even save our civilization.

[Carl Veritas]

Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[Carl Veritas]

Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[Carl Veritas]

Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[Carl Veritas]

Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[Carl Veritas]

Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[urbanrealtor]

[quote=Bryan]Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

[/quote]
Any government distorts markets. That unto itself is not a valid criticism. The whole nature of republican democracy is to mitigate pure market relationships.

The argument that boom and bust is not part of the free market is not consistent with history.

The 19th century was very turbulent in this regard. During most of this period there was no central bank. That turbulence was the motivation for the establishment of a central bank.

[quote=Bryan]
Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

[/quote]

Drawing the line between the Fed and 1929 is not a theory that has a solid constituency. You may be able to pull some author out some hat but this is not a book club.

Most economic historians do not recognize the depression as the fault of the government. Certainly the government represented a large part of the ecosystem but to ignore margins or innovative (to the point of stupidity) personal lending appears, on its face, noticeably incomplete.
[quote=Bryan]
The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

[/quote]
And right there we landed in black helicopter land.
Seriously, this is getting pretty far-fetched.

[quote=Bryan]
The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[/quote]
The only purpose of money is as a means of wealth distribution or medium of exchange. Its generic. If monetary fiscal policy results in greater productivity, then thats not much of an illusion. You have a point that it may be short lived but the argument that Mr. Bernanke is Dr. Claw doesn’t appear to bear a lot of fruit as an analytical framework.

I would really be interested in hearing a less hyperbolic version of this framework. It sounds like it might have some merit (without claiming the fed is using the weather satellite). Does anyone (Bryan or otherwise) have less salacious version of 20th century American money?

Specifically, can anyone make a good case as to why a precious metal standard is better than precious paper?

Enough people I consider intelligent have said it, that I would like to hear a good argument for it.

[urbanrealtor]

[quote=Bryan]Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

[/quote]
Any government distorts markets. That unto itself is not a valid criticism. The whole nature of republican democracy is to mitigate pure market relationships.

The argument that boom and bust is not part of the free market is not consistent with history.

The 19th century was very turbulent in this regard. During most of this period there was no central bank. That turbulence was the motivation for the establishment of a central bank.

[quote=Bryan]
Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

[/quote]

Drawing the line between the Fed and 1929 is not a theory that has a solid constituency. You may be able to pull some author out some hat but this is not a book club.

Most economic historians do not recognize the depression as the fault of the government. Certainly the government represented a large part of the ecosystem but to ignore margins or innovative (to the point of stupidity) personal lending appears, on its face, noticeably incomplete.
[quote=Bryan]
The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

[/quote]
And right there we landed in black helicopter land.
Seriously, this is getting pretty far-fetched.

[quote=Bryan]
The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[/quote]
The only purpose of money is as a means of wealth distribution or medium of exchange. Its generic. If monetary fiscal policy results in greater productivity, then thats not much of an illusion. You have a point that it may be short lived but the argument that Mr. Bernanke is Dr. Claw doesn’t appear to bear a lot of fruit as an analytical framework.

I would really be interested in hearing a less hyperbolic version of this framework. It sounds like it might have some merit (without claiming the fed is using the weather satellite). Does anyone (Bryan or otherwise) have less salacious version of 20th century American money?

Specifically, can anyone make a good case as to why a precious metal standard is better than precious paper?

Enough people I consider intelligent have said it, that I would like to hear a good argument for it.

[urbanrealtor]

[quote=Bryan]Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

[/quote]
Any government distorts markets. That unto itself is not a valid criticism. The whole nature of republican democracy is to mitigate pure market relationships.

The argument that boom and bust is not part of the free market is not consistent with history.

The 19th century was very turbulent in this regard. During most of this period there was no central bank. That turbulence was the motivation for the establishment of a central bank.

[quote=Bryan]
Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

[/quote]

Drawing the line between the Fed and 1929 is not a theory that has a solid constituency. You may be able to pull some author out some hat but this is not a book club.

Most economic historians do not recognize the depression as the fault of the government. Certainly the government represented a large part of the ecosystem but to ignore margins or innovative (to the point of stupidity) personal lending appears, on its face, noticeably incomplete.
[quote=Bryan]
The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

[/quote]
And right there we landed in black helicopter land.
Seriously, this is getting pretty far-fetched.

[quote=Bryan]
The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[/quote]
The only purpose of money is as a means of wealth distribution or medium of exchange. Its generic. If monetary fiscal policy results in greater productivity, then thats not much of an illusion. You have a point that it may be short lived but the argument that Mr. Bernanke is Dr. Claw doesn’t appear to bear a lot of fruit as an analytical framework.

I would really be interested in hearing a less hyperbolic version of this framework. It sounds like it might have some merit (without claiming the fed is using the weather satellite). Does anyone (Bryan or otherwise) have less salacious version of 20th century American money?

Specifically, can anyone make a good case as to why a precious metal standard is better than precious paper?

Enough people I consider intelligent have said it, that I would like to hear a good argument for it.

[urbanrealtor]

[quote=Bryan]Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

[/quote]
Any government distorts markets. That unto itself is not a valid criticism. The whole nature of republican democracy is to mitigate pure market relationships.

The argument that boom and bust is not part of the free market is not consistent with history.

The 19th century was very turbulent in this regard. During most of this period there was no central bank. That turbulence was the motivation for the establishment of a central bank.

[quote=Bryan]
Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

[/quote]

Drawing the line between the Fed and 1929 is not a theory that has a solid constituency. You may be able to pull some author out some hat but this is not a book club.

Most economic historians do not recognize the depression as the fault of the government. Certainly the government represented a large part of the ecosystem but to ignore margins or innovative (to the point of stupidity) personal lending appears, on its face, noticeably incomplete.
[quote=Bryan]
The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

[/quote]
And right there we landed in black helicopter land.
Seriously, this is getting pretty far-fetched.

[quote=Bryan]
The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[/quote]
The only purpose of money is as a means of wealth distribution or medium of exchange. Its generic. If monetary fiscal policy results in greater productivity, then thats not much of an illusion. You have a point that it may be short lived but the argument that Mr. Bernanke is Dr. Claw doesn’t appear to bear a lot of fruit as an analytical framework.

I would really be interested in hearing a less hyperbolic version of this framework. It sounds like it might have some merit (without claiming the fed is using the weather satellite). Does anyone (Bryan or otherwise) have less salacious version of 20th century American money?

Specifically, can anyone make a good case as to why a precious metal standard is better than precious paper?

Enough people I consider intelligent have said it, that I would like to hear a good argument for it.

[urbanrealtor]

[quote=Bryan]Arraya, you are very close.

The recurring boom and busts are not inherent with the free market. The culprit has always been the expansion of bank credit. It not only produces rising prices but it also distort the production process.

[/quote]
Any government distorts markets. That unto itself is not a valid criticism. The whole nature of republican democracy is to mitigate pure market relationships.

The argument that boom and bust is not part of the free market is not consistent with history.

The 19th century was very turbulent in this regard. During most of this period there was no central bank. That turbulence was the motivation for the establishment of a central bank.

[quote=Bryan]
Read Murray Rothbard’s book— A History Of Money and Banking In The United States.

Here’s my recollection–
Before the US central bank came into being in 1913, private banks issued their own notes. They could not however, coordinate their issuing. In fact, when one over issues the other immediately redeems them in specie, so inflation was arrested in this manner.
The arrival of the US central bank and government decree to use government issued bank notes changed the game entirely. Bank credit can now be coordinated by a central authority. Expanding bank credit caused the 1929 bank panic and turned into a great depression by government economic policies.

[/quote]

Drawing the line between the Fed and 1929 is not a theory that has a solid constituency. You may be able to pull some author out some hat but this is not a book club.

Most economic historians do not recognize the depression as the fault of the government. Certainly the government represented a large part of the ecosystem but to ignore margins or innovative (to the point of stupidity) personal lending appears, on its face, noticeably incomplete.
[quote=Bryan]
The US have in fact defaulted on its obligations when Nixon simply refused to honor our commitment
to the Bretton Woods agreement. The US dollar was
being used as a reserve currency in which the foreign central banks can pyramid their own currencies. The main feature of the agreement was that foreign central banks has the right to redeem their paper dollars for gold. The American peoples gold was confiscated by Roosevelt and had Fort Knox built to store it, so they had no redemption option.

[/quote]
And right there we landed in black helicopter land.
Seriously, this is getting pretty far-fetched.

[quote=Bryan]
The foreign central banks continued to redeem paper dollars for gold up until Nixons time because they realized that the US is devaluing their dollar holdings by continuing to inflate.

American productivity backs the debt the US Treasury
issues.
When the central bank “buys” US debt from the Treasury , it “credits” the govts account with the central bank. New money just created and the govt funds their projects with the new money.

When the central bank “buys” govt bonds from commercial banks, they also pay for it by “crediting” the banks account with the district Fed.
Based on this “reserves” from the Fed, commercial banks can expand credit trough the loan market.
This money often create job creating booms so the illusion of prosperity is there, until the Fed reverses its monetary stance and the bust arrives.

[/quote]
The only purpose of money is as a means of wealth distribution or medium of exchange. Its generic. If monetary fiscal policy results in greater productivity, then thats not much of an illusion. You have a point that it may be short lived but the argument that Mr. Bernanke is Dr. Claw doesn’t appear to bear a lot of fruit as an analytical framework.

I would really be interested in hearing a less hyperbolic version of this framework. It sounds like it might have some merit (without claiming the fed is using the weather satellite). Does anyone (Bryan or otherwise) have less salacious version of 20th century American money?

Specifically, can anyone make a good case as to why a precious metal standard is better than precious paper?

Enough people I consider intelligent have said it, that I would like to hear a good argument for it.

[Carl Veritas]

Arraya—

Which part of “A History Of Money and Banking” did you not understand?

Here is an article by JD Seagraves regarding Bretton Wooods 2 that I think other readers will also find revealing. If some of the historical facts mentioned are incorrect, let’s hear the correct ones—with sources please. You do form an opinion based on facts?

http://www.citizeneconomists.com/view_articles_detail.php?aid=129

[Carl Veritas]

Arraya—

Which part of “A History Of Money and Banking” did you not understand?

Here is an article by JD Seagraves regarding Bretton Wooods 2 that I think other readers will also find revealing. If some of the historical facts mentioned are incorrect, let’s hear the correct ones—with sources please. You do form an opinion based on facts?

http://www.citizeneconomists.com/view_articles_detail.php?aid=129

[Carl Veritas]

Arraya—

Which part of “A History Of Money and Banking” did you not understand?

Here is an article by JD Seagraves regarding Bretton Wooods 2 that I think other readers will also find revealing. If some of the historical facts mentioned are incorrect, let’s hear the correct ones—with sources please. You do form an opinion based on facts?

http://www.citizeneconomists.com/view_articles_detail.php?aid=129

[Carl Veritas]

Arraya—

Which part of “A History Of Money and Banking” did you not understand?

Here is an article by JD Seagraves regarding Bretton Wooods 2 that I think other readers will also find revealing. If some of the historical facts mentioned are incorrect, let’s hear the correct ones—with sources please. You do form an opinion based on facts?

http://www.citizeneconomists.com/view_articles_detail.php?aid=129

[Author]

Posts