Banker Conspiracy Theories?

[lpetrich]

I am not personally "anti bank", but I do think there should be more of a caveat emptor approach with respect to them as opposed to the rigid regulation/government support we have for banking today.

Why? What do you think that it will do?

Why "caveat emptor" and not "sit venditor probus"?

 

[ksen]

I am not personally "anti bank", but I do think there should be more of a caveat emptor approach with respect to them as opposed to the rigid regulation/government support we have for banking today.

Why? What do you think that it will do?

Why "caveat emptor" and not "sit venditor probus"?

That's socialist.

 

[Will Wiley]

You're right about it usually being a Jewish conspiracy for some reason. It also usually heavily involves the Federal reserve bank. This video is long, but it's a good example.

About the US's central bank, the Federal Reserve Bank, we see stuff like Senator Rand Paul - Audit the fed -- it's not clear to me what it is supposed to be guilty of.

I don't know too much about Rand. But why do you think entities get audited?

It's quite normal for human beings to cover things up if they smell a problem, in the hope it will go away and not get bigger

 

[Horatio Parker]

I think they believe the Fed undermines the value of the currency by printing too much of it.

Increasing the money supply is inflationary, period.

100% reserve banking would eliminate the need for the Fed.

It's Austrian economics.

 

[Will Wiley]

I find it hard to believe that people would not be aware of banking conspiracies. One recent one is the Libor Scandal

 

[Will Wiley]

I think they believe the Fed undermines the value of the currency by printing too much of it.

Increasing the money supply is inflationary, period.

100% reserve banking would eliminate the need for the Fed.

It's Austrian economics.

If you are talking about the Fed, then the reasons to audit it should be obvious.
1. They have a balance sheet somewhere north of 4 trillion dollars.
2.They have been involved in an experiment that has never been tried before on this scale.
3.As Warren Buffet noted "no ones knows how the game will play out" once deleveraging happens
[YOUTUBE]https://www.youtube.com/watch?v=tWElxuIP2dE[/YOUTUBE]

 

[ksen]

The FED already gets audited.

http://www.federalreserve.gov/faqs/about_12784.htm

Does the Federal Reserve ever get audited?

Yes, the Board of Governors, the 12 Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review:

• The Government Accountability Office (GAO) conducts numerous reviews of Federal Reserve activities.
• The Board's financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the Office of Inspector General (OIG).
• The Board's OIG audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board's Annual Report. (Before 2002, the reviews were listed in the Board's Annual Report: Budget Review.)
• The financial statements of the Reserve Banks are also audited annually by an independent outside auditor.
• Each week, the Federal Reserve publishes its balance sheet and charts of recent balance sheet trends, as well as provides an interactive guide to the Fed's balance sheet. The balance sheet is included in the Federal Reserve's H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks."

In addition, the Reserve Banks are subject to annual examination by the Board. The Board's financial statements and the combined financial statements for the Reserve Banks are published in the Board's Annual Report.

See our audit page for more information on all of the above audits and more information on the accounting, financial reporting, and internal controls of the Federal Reserve Board and Federal Reserve Banks.

 

[Will Wiley]

The FED already gets audited.

Makes sense. Why do some Americans appear to think it doesn't get audited I wonder. Or do they want a bit more forensic auditing done?

 

[tupac chopra]

There have been some questions around whether the Federal Reserve invests (perhaps through some special purpose vehicle) in stocks, via ETF's. A more thorough audit would reveal things like that. It might raise some interesting questions if that were the case.
http://business.time.com/2013/04/26/why-are-central-banks-suddenly-buying-stocks/

The U.S. Federal Reserve does not appear to have joined in the stock-buying trend. The Fed is not permitted to make direct stock purchases. But there is nothing to prevent it from funding a Special Purpose Vehicle that buys a broad basket of stocks through indexes or Exchange Traded Funds. In the past year, Wall Streeters have speculated the Fed would buy stocks as part of its quantitative-easing programs to stimulate the economy.

 

[tupac chopra]

I find banker conspiracy theories odd. What are they supposedly conspiring to do?

Such theories often involve those bankers being Jews, as if there was something especially villainous about that. But let's look beyond the Jews-as-villains connection.

Such theories are common on the Right, the sorts of people who loudly advertise how much they believe in capitalism. Bankers are capitalists, of course, and anti-banker right-wingers don't seem to be very clear about why bank capitalism is supposed to be bad and other forms good or at least tolerable. A likely reason is that they often end up in debt while being dependent on bank loans for the continuing viability of their businesses.

Do you have any evidence to show that is a "likely reason"?
Banks have been criticised because they are too big to fail, and end up being the recipients of what end up looking like indirect government handouts. What did Noam Chomsky say? Capitalism when they win socialism when they lose. (My memory might be playing up with that recollection)

Dear Mr. Dimon, Is Your Bank Getting Corporate Welfare?

When JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon testifies in the U.S. House today, he will present himself as a champion of free-market capitalism in opposition to an overweening government. His position would be more convincing if his bank weren’t such a beneficiary of corporate welfare.

To be precise, JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.

 

[Loren Pechtel]

I think they believe the Fed undermines the value of the currency by printing too much of it.

Increasing the money supply is inflationary, period.

100% reserve banking would eliminate the need for the Fed.

It's Austrian economics.

100% reserve banking would mean huge fees for having a bank account.

 

[lpetrich]

Such theories are common on the Right, the sorts of people who loudly advertise how much they believe in capitalism. Bankers are capitalists, of course, and anti-banker right-wingers don't seem to be very clear about why bank capitalism is supposed to be bad and other forms good or at least tolerable. A likely reason is that they often end up in debt while being dependent on bank loans for the continuing viability of their businesses.

Do you have any evidence to show that is a "likely reason"?

Not by direct acquaintance, but instead by simple economic reasoning: most people are much more likely to be debtors than creditors. That includes those who run their own businesses.

Banks have been criticised because they are too big to fail, and end up being the recipients of what end up looking like indirect government handouts. What did Noam Chomsky say? Capitalism when they win socialism when they lose. (My memory might be playing up with that recollection)

But banker conspiracies are MUCH older than the current economic troubles. Do you have evidence of similar bailouts of banks in the past? Anything corresponding to "too big to fail" in the past?

 

[Will Wiley]

I think they believe the Fed undermines the value of the currency by printing too much of it.

Increasing the money supply is inflationary, period.

100% reserve banking would eliminate the need for the Fed.

It's Austrian economics.

100% reserve banking would mean huge fees for having a bank account.

Plus apparently the FED is also needed to set interest rates

 

[Horatio Parker]

I think they believe the Fed undermines the value of the currency by printing too much of it.

Increasing the money supply is inflationary, period.

100% reserve banking would eliminate the need for the Fed.

It's Austrian economics.

100% reserve banking would mean huge fees for having a bank account.

Why?

This isn't my idea btw. The Paulian types who want the Fed eliminated favor it.

 

[Will Wiley]

100% reserve banking would mean huge fees for having a bank account.

Why?

This isn't my idea btw. The Paulian types who want the Fed eliminated favor it.

I think they want gold don't they?
But to answer the question. banks create more money (or credit) because they end up loaning out more than they have. This enables them to pay for the running of the business and pay dividends etc. If they have 100% reserves then they can't create anywhere near as much credit. They can't loan as much out.
So, either interest rates go up to provide enough profit, or they charge you a fee to "mind" your money.
Presently they don't have to charge a fee because they loan out, more than you give them , so they make their interest margin "many times over" on the "same money", at the same time. They multiply the amount of money as it's get re deposited and re loaned, each time putting a fraction in reserve.
This all works fine while the economy grows.

 

[Horatio Parker]

If you are talking about the Fed, then the reasons to audit it should be obvious.
1. They have a balance sheet somewhere north of 4 trillion dollars.
2.They have been involved in an experiment that has never been tried before on this scale.

The MMters say deficit and national debt are simply reflections of the surpluses in the private sector. Debt nominated in dollars owed by the US to itself can't bankrupt the country; it's impossible.

So audit away; at least some auditors will have something to do.

 

[Horatio Parker]

Why?

This isn't my idea btw. The Paulian types who want the Fed eliminated favor it.

I think they want gold don't they?
But to answer the question. banks create more money (or credit) because they end up loaning out more than they have. This enables them to pay for the running of the business and pay dividends etc. If they have 100% reserves then they can't create anywhere near as much credit. They can't loan as much out.
So, either interest rates go up to provide enough profit, or they charge you a fee to "mind" your money.
Presently they don't have to charge a fee because they loan out, more than you give them , so they make their interest margin "many times over" on the "same money", at the same time. They multiply the amount of money as it's get re deposited and re loaned, each time putting a fraction in reserve.
This all works fine while the economy grows.

The Austrians say that is inflationary. 100% reserve banking, however, is deflationary. So even tho less credit is available, less credit is needed because prices will be lower. YMMV.

Bank loans aren't constrained by reserves. They can make the loan and get the reserves later.

 

[Will Wiley]

I think they want gold don't they?
But to answer the question. banks create more money (or credit) because they end up loaning out more than they have. This enables them to pay for the running of the business and pay dividends etc. If they have 100% reserves then they can't create anywhere near as much credit. They can't loan as much out.
So, either interest rates go up to provide enough profit, or they charge you a fee to "mind" your money.
Presently they don't have to charge a fee because they loan out, more than you give them , so they make their interest margin "many times over" on the "same money", at the same time. They multiply the amount of money as it's get re deposited and re loaned, each time putting a fraction in reserve.
This all works fine while the economy grows.

The Austrians say that is inflationary.

Yes though IIRC they talk about inflation of the money supply.

100% reserve banking, however, is deflationary

It probably depends upon what definition of inflation/deflation one uses, and what is used as money. For example if gold is used as money and the supply of gold increases 2% each year and the economy grows at 2% each year then all other things being equal we would have a steady state. Same if we increased the amount of "fiat"money by 2% each year.
It's easy to talk past each other with many definitions of inflation/deflation.

So even tho less credit is available, less credit is needed because prices will be lower

I think I broadly agree though there are a lot of dynamic variables that make it complex to model. Such as those mentioned.

Bank loans aren't constrained by reserves. They can make the loan and get the reserves later.

Doubtless. Fair enough but there are supposed to be certain restraints. Even if banks don't adhere to them all the time too.

 

[ryan]

This is an infinitely fascinating topic!

I used to be a central bank conspiracist, but I spent a lot of time trying to figure it all out. I ultimately came up with an uninteresting conclusion: everything is exactly the way it seems.

Buuuuut, there are massively powerful groups who make a lot of money when the Fed decides to borrow for the country, in other words print money. Naturally they will try to put a country into debt so that they can lend them this money. This is the most guaranteed kind of loan, and it pays a high percent of about 6%, where a citizen will only get maybe 2% on a government bond. I know 6% does not sound like a lot, but there really is no other guarantee like a U.S. bond of 6%: real estate 4.5%, stocks/bonds 4.4%, etc.

Nobody knows exactly who owns about 50% of the U.S. debt although there are broad reports that try to explain it but don't actually know the details, http://www.forbes.com/sites/mikepatton/2014/10/28/who-owns-the-most-u-s-debt/ .

Lending to countries is an ancient concept but was brought back into popularity with the Rothschilds; see https://www.rothschild.com/our_history/1820-1850/ . It is fascinating.

The Fed today is a group of privately owned banks that own 12% of the U.S. debt, and they get first dibs on a specially high interest rate. The rest of the citizens get a much worse deal. Massive institutions like banks under the Fed, if morally corrupt, will pressure the government or the U.S. citizens into large expenditures like a war or a solar panel initiative; these are just possible examples. So the conspiracies are pretty much obvious and a part of human nature and thus probably true to some degree.

 

[Will Wiley]

If you are talking about the Fed, then the reasons to audit it should be obvious.
1. They have a balance sheet somewhere north of 4 trillion dollars.
2.They have been involved in an experiment that has never been tried before on this scale.

The MMters say deficit and national debt are simply reflections of the surpluses in the private sector. Debt nominated in dollars owed by the US to itself can't bankrupt the country; it's impossible.

Yes I agree. However that does not mean there can't be problems, and the sage of Omaha gives a clue in the clip posted. The idea is that the Fed unwinds it's position, one day somehow. It will sell the securities it has purchased. There is a lot can can not go well there, depending on things like the strength of the USD, interest rate levels, the strength of the US economy etc.
It is crucial that the economy really does recover for this to happen, but with so much activity happening so easily across borders these days it makes it a little different than previously

So audit away; at least some auditors will have something to do.

The problems that needs to be avoided is a lack of confidence in the central bank especially as it has expanded it's influence and activity so much. The importance of confidence can't be under estimated. The entire banking system relies extremely heavily on confidence.
Which is why it might be best not to audit it forensically