The Battle Over Your Money

[SimpleDon]

It probably would have meant the US would have ended up devaluing the dollar,

Exactly. And they wouldn't have let that happen because that alone would have greatly benefited the middle class by greatly reducing the trade deficit and bringing back high value jobs. Allowing the dollar to be tied to the free market would have even benefited everyone else (rich people too) as there would be no more asset bubbles and real price discovery would be possible again.

The dollar is the world's reserve currency. This means that the US government has to protect its value. That is the Federal Reserve Bank's job, the Fed's. The Fed has to keep inflation under control to maintain the value of the dollar.

By not allowing the dollar to be tied to anything real the fed can financially engineer the economy. And that sounds real good if you think that men are smarter than the free market. But it sounds real bad if you happen to believe (as I do) that a communist style centrally managed economy does not work as well as the free market.

Why do you keep saying that the dollar is not tied to something that is real? I told you that all you have to do to displace this notion is to go to a Walmart and to look at the price tags. They will show what the dollar is tied to that is real. Have you never been in a store? Have you never bought anything? Are you a child?

You can't even decide if you want some free market to set the value of the dollar or if you want to tie the value of the dollar tied to gold. As if you don't know that these are two different and completely opposite ways determine the value of the dollar. This makes you appear even more like a child or even worse like a libertarian.

The Fed is hardly a communist front.

Furthermore there is this. No one knows who owns the fed (a private entity) and congress is not allowed to even audit what they are doing. Why does a supposed free society allow our global economy to be centrally managed by a secret cabal of people we do not even elect? A financially engineered economy sounds good to most of us until we stop to realize that there is nothing about it that is democratic.

The Fed is probably the most transparent government agency.This is largely due to the criticism that I have to believe at point you are just parroting what you have heard from someone else who doesn't know what they are talking about. Rand Paul?

 

[SimpleDon]

The US Federal Reserve is wholly owned by the United States of America. It is managed on behalf of that nation state by a five member board, who are all listed, with photographs, at https://www.federalreserve.gov/aboutthefed.htm.

How much more about 'who owns the fed' could you possibly know, or want to know?

Seriously, you should spend some time browsing that website - it answers a lot of your questions, and provides a lot of information of which you are clearly in dire need, if you wish to discuss this topic without sounding either ignorant, crazy, or both.

Money is nothing like you appear to imagine it to be. The US Federal Reserve is also nothing like you appear to imagine it to be.

Without knowledge of the basics, your opinions range from worthless to risable.

Can you site where it says who owns the fed? Who actually gets paid for what they do? What did they make last year? I dont care about the managers, just the directors and owners.

You will quickly find no real answers to those questions.

The Federal Reserve Bank is a self-financing private corporation created by an act of Congress and controlled by a government agency, the board of governors. Any profits that they make are turned over to the US treasury. What about this is hard to understand?

 

[SimpleDon]

I am sorry, the last read button took me to Page 6. I didn't realize it, although it has happened before. I just noted that we are currently on page 8.

 

[SimpleDon]

The argument against direct control is simple - would you trust Congress to keep the financial system relatively stable and well-working?

A trivial side note: Congress does have direct control over the Treasury Dept., and we can't even get rid of the penny that costs more to produce than it is worth...

Because of lobbying by the company that provides the zinc that the pennies are now made of. Another triumph of modern American enterprise.

 

[SimpleDon]

Many people of many political stripes are trying to caution you regarding notions that are tilting hard into tin foil hat land...and I don't think you are recognizing that.

Fair enough. But let me ask you this funinspace. Why is it perfectly acceptable to foster conspiracy theories with regards to not being able to see Trumps income tax returns. But at the same time it is complete heresy to ask for an audit of the fed? If we do not ever get an audit from the fed, how do we really know where our money is going? And its not like a small amount of money either. Even a rounding error on the interest of the amounts the fed is handling amounts to a huge amount of money. And UNLIKE Trumps tax returns, the money the fed is secretly handling is part of MY money (income tax).

Why is the fed so adamant about never giving us an audit of what they do? The answer probably has a LOT to do with corruption.

Why do you think that the Fed isn't audited? Do you think that the Board of Governors aren't doing their jobs? Complain to Donald Trump, they work for him.

About Trump's tax returns, why do think that Trump doesn't want to do what every President since Nixon has done, make his income tax returns public? Do you believe that it because his tax returns are all being audited?

 

[SimpleDon]

...because back 1971 the US economy would have slammed into a brick wall battling to stay on the gold standard, and who knows what would be in 50 years.

That is when the US technically defaulted on the dollar. There has been a lot of smoke and mirrors since that time to the extent that we now have a stock market that is flourishing during a world wide pandemic while there is massive unemployment. And maybe they can continue to kick the can down the road some more so that when the next super bubble breaks we will all vaporize.

The US didn't technically default on the dollar. Then or ever. All that they did in 1971 was to cut the almost non-existent connection to gold for resolving foreign trade. The US wasn't on the gold standard in 1970.

What are doing here? You don't seem to read the answers to your questions. You certainly don't seem to understand them. All that you do is to repeat over and over something that you have heard that you believe because what? - it satisfies some inter need you have that everything that confuses you is the result of some conspiracy?



The biggest threat to the value of the dollar was

 

[ZiprHead]

Many people of many political stripes are trying to caution you regarding notions that are tilting hard into tin foil hat land...and I don't think you are recognizing that.

Fair enough. But let me ask you this funinspace. Why is it perfectly acceptable to foster conspiracy theories with regards to not being able to see Trumps income tax returns. But at the same time it is complete heresy to ask for an audit of the fed? If we do not ever get an audit from the fed, how do we really know where our money is going? And its not like a small amount of money either. Even a rounding error on the interest of the amounts the fed is handling amounts to a huge amount of money. And UNLIKE Trumps tax returns, the money the fed is secretly handling is part of MY money (income tax).

Why is the fed so adamant about never giving us an audit of what they do? The answer probably has a LOT to do with corruption.

Why do you think that the Fed isn't audited? Do you think that the Board of Governors aren't doing their jobs? Complain to Donald Trump, they work for him.

About Trump's tax returns, why do think that Trump doesn't want to do what every President since Nixon has done, make his income tax returns public? Do you believe that it because his tax returns are all being audited?

As I pointed out earlier, the fed is audited yearly.

 

[DBT]

I prefer the privacy of cash transactions. Nothing to hide, just the principle of the right to privacy....not having everything you do put on record.

 

[Koyaanisqatsi]

I prefer the privacy of cash transactions. Nothing to hide, just the principle of the right to privacy....not having everything you do put on record.

Yes, well, however quaint that sentiment may be, it's all those other people who said the same thing--only they did have something to hide--that got us where we are today.

 

[DBT]

I prefer the privacy of cash transactions. Nothing to hide, just the principle of the right to privacy....not having everything you do put on record.

Yes, well, however quaint that sentiment may be, it's all those other people who said the same thing--only they did have something to hide--that got us where we are today.

Privacy is not quaint. It should be seen as a basic human right.

 

[SimpleDon]

I'm fine with an audit of the FR.

I am glad you are fine with it...but the fed isn't! Ron Paul asked politely and they told him to stick it up his butt. The fed clearly does not work for the American people and they could care less whether or not they ever give us an audit.

What in your mind makes Rand Paul a reliable source about, well, anything? He is a libertarian, which pretty much writes him off of knowing anything about the economy. You could have told us this about 9 pages ago. He has been playing "the bash the fed" game for years now as did his dad, Ron Paul.

 

[SimpleDon]

The various currencies of the world pegged their value to the US dollar and the US dollar was pegged nominally to gold. But it wasn't the gold that you and I think of when we think of gold. The value of the metal that is dug out of the ground was allowed to fluctuate according to supply and demand for the different uses of gold as a commodity. There was another value of the gold that was fixed and this was the gold that the US pledged to tie the dollar to. The net result was the US was tying the value of the dollar to gold without actually doing that. In essence, the only thing that came out of this was fixed currency exchange rates since all of the currencies of the developed wold were tied to the value of the imaginary gold that never changed.

All of this had advantages and disadvantages too, as any system in the real world will have. It restricted foreign trade that was imbalanced between nations. It restricted the flow of capital into and out of a country. All because it limited the amount of an imbalance in trade to the amount of gold that a nation had. It wasn't free trade in any respect. (One of the many ironies of neoliberalism is that you can't have free trade and the gold standard at the same time, unless you have Rumpelstiltskin's spinning wheel that spins out gold.)

I generally agree with you about the gold part of the Bretton Woods system but I do not agree with you that fixed currency exchange rates were bad. Because fixed currency exchange rates prevent trade deficits from occurring between trading countries. The fixed currency exchange rate would have prevented high value jobs being exported from the US to China. We are now seeing the damage all this caused, the political populism, the rise of protesting, and the election of Trump. And there are many who predict we will be going back to some kind of commodity or gold standard when the US loses its reserve status of the dollar.

The purpose of using gold to settle current accounts of the various nations involved in trade was to limit the possibility of large trade imbalances for any one nation, whether a trade surplus or a trade deficit. But the current account of a nation isn't just trade, it is also capital flows, money moving from one country to another for investment, buying insurance, etc.

It was thought that having to settle these accounts with a limited supply of gold would keep countries from allowing these outflows to get out of hand. And it worked pretty well, at least until it was the US that was losing gold at an unsustainable rate. And it was the US that was suppose to have its currency tied to gold, albeit to a fictitious fixed value of gold. And the idea was that the US would peg the value of the dollar in some vague way to gold.

It is hard to say that you are maintaining the value of the dollar to gold if you don't have any gold!

Part of the problem was that Bretton Woods was successful at limiting the trade deficit + capital flows. And some very powerful forces in the US wanted both to increase. Wall Street wanted capital flows to increase so that they could sell more insurance, stocks, bonds, real estate, and companies to foreigners. They wanted to break the unions and forcing American labor to compete against lower cost labor first in the South, then in Mexico and ultimately in China was a sure way to do it. Lowering the cost of labor was certain to increase profits, especially since corporations were gaining ever increasing control over the prices they got for their products.