Steve Faseler

Bernanke Desperate, Fed Out of Ammo

That's an interesting thought. I would add to it that we would then re-index the dollar to an ounce of gold at whatever price was needed to justify the new money supply and go back on the gold standard. This is also what Murray Rothbard proposed to do. The only draw back I can see to it is the reaction of foreign investors. People might stay away from treasury bills like the plague for a while, but that might not be all bad either. It will cure the other rationale for having a central bank. The politicians like the central banking scheme because it allows them to finance whatever boondoggle government program they can dream up. If people stopped buying treasury bills, would the government stop running up debts? Could that finally be what brings the government to the point that it downsizes and starts budgeting like the rest of us - if the money is not there don't spend it? That would be a worthwhile secondary effect.

What would happen if we simply canceled our debt that we "owe" to the Federal Reserve bank? After all, it's not like it really cost them anything to buy the debt in the first place. This is another of Rothbard's ideas, and it would reduce the volume of money that we would have to print to pay off the debt.


On Mar 23 12:56 AM jeffc wrote:

> What would happen if
> 1. Enough US notes were printed to pay off entire national debt
>
> 2. Banks were forced to absorb the increased money supply by increasing
> their reserve ratio to 100%
>
> There would be no increase in the money supply and hence no inflation
> - comments?

Bernanke Desperate, Fed Out of Ammo

I hope you are wrong, but I fear you are right.

I hope enough Americans wake up soon enough to reverse the current course, but I fear they would rather watch The Biggest Loser and their favorite sports teams on TV. I admit that I was not interested in banking or how it worked at all until I got angry about the bailout and resolved to find out why things are the way they are. I think they may have finally over reached to the point that enough Americans are fed up with things and are starting to ask questions. I hope every incumbent Congressman in both parties is voted out of office in 2010. I hope the first thing the new Congress does in 2011 is abolish the Fed, but I fear they won't.

On Mar 22 09:18 PM nova wrote:

> This is exactly where America is heading => 3rd-world country status.

Bernanke Desperate, Fed Out of Ammo

Close, but not exactly. Money is nothing more than a medium of exchange. It does not represent labor. An item's cost reflects the value that you place on acquiring that item if you are the buyer or departing with it if you are the seller. In the eyes of the seller, his labor is of value. In the eyes of the buyer, only the item is of value. The seller's labor is irrelevant to the buyer, so therefore labor cannot be equated to money.


On Mar 22 06:24 PM r0364 wrote:

> Money represents labor, period. As long as somebody will give me
> $100.00 for what I think is $100.00 worth of work and I can get what
> I think is $100.00 worth of goods for it, I and most everybody else
> is content.

Bernanke Desperate, Fed Out of Ammo

I'm glad to see a lot of people took Mr. Glazier to task. It's really not all that complicated how we get all this inflation. The Fed buys treasury bills by writing a check on itself. Where did it get the money? Out of the clear blue sky. Then the banks deposit the Fed check into their account at the Fed. Since we are operating on a 10% fractional reserve requirement, they then loan out up to 9 times that much money in loans (10% + 9(10%) = 100%). Where do they get the money? Out of the clear blue sky. What does all this money out of the clear blue sky cause? Inflation. Who benefits from the inflation? The first users of the money - the ones that get the first loans/bailouts and can use the money before its inflationary impact has had a chance to work its way through the rest of the system.

How can we strike back? Withdraw our money out of the banks that took TARP funding. For every dollar we withdraw they will have to reduce their liabilities by $9, but nobody wants to buy them. Still think you're too small to make a difference? Think again. This is what I call applying leverage in reverse. It is what our grandparents would call a bank run.

There are natural laws at work here that cannot be revoked or repealed by any government. Namely, the law of supply and demand. The law of supply and demand will eventually re-assert itself with a vengeance regardless of the actions of the Federal Reserve bank. All they can do is delay the day of reckoning, and by delaying it increase its severity when it finally comes. Eventually all this funny money will hit the streets, and when it does we will have inflation. The day may come when a dollar is not worth a Continental. Our ancestors learned this the hard way. We are in the process of re-learning it now.

In an immoral way, they are solving this problem in the most cost effective way it can be solved. It is much more effective to re-capitalize the banks than it is to buy up the toxic assets - by approximately an order of magnitude. What I absolutely cannot stomach is that there is no reasonable justification for sticking the American taxpayer with the bill.

To all those naysayers that are belittling Austrian economics, remember that we told you so two or three years from now when inflation rears its ugly head.

As for crediting Paulson and Bernanke with expert status, if they are in charge and they are such experts then why are we here? Why should I trust the arsonists to put out the fire?

The Economy on Dope: Investors Fear Inflation, Embrace Gold

Jews? No, the problem is not Jews. The problem is central banking on the fractional reserve banking system. You are directing your hatred in the wrong direction. If you focus on the wrong problem for the wrong reasons you will fail to recognize and solve the real problem.

The Economy on Dope: Investors Fear Inflation, Embrace Gold

Amen. Just wait till the banks pyramid on top of the $1 trillion dollars of treasuries the Fed just bought and turn it into $9 trillion dollars worth of loans through the wonders of fractional reserve banking. Were did they get the money? They just created it out of the clear blue sky. We will have inflation for sure, and maybe even hyperinflation. It is time for Americans to rub the sleep out of their eyes and discover what is really going on with the Federal Reserve system. Don't accept arguments that anyone else can cause inflation. The only entity that can cause inflation is the entity that controls the printing presses. I think the politicians and the Wall Street bankers have finally over reached enough that people are starting to wonder what is going on. I know I did, and I found the answers at www.mises.org Once you understand how the system works, a lot of things will snap into sharp focus. Things like why our government is always running up huge debts, and who profits from it. Things like why they think the bailouts are necessary, and who is protected by the bailouts and who profits from them. The government and the banks have been profiting at the expense of the average American worker for long enough. It is time to abolish the Federal Reserve system. I'm angry, and I am not afraid to put my real name on this post. I intend to do all that I can to educate others about how things really work. Along the same lines, if you have money in one of these banks that took TARP funds and really want to get back at them, take your money out of that bank and put it into a bank that did not take TARP funds. If enough people did this fast enough we could run these failing institutions out of business faster than Congress can save them. The solvent and responsible banks would be rewarded and could make new loans based on their new deposits. The credit markets would then be unfrozen, and it wouldn't cost the taxpayers a penny. The taxpayers could easily have the last laugh on Congress and the Wall Street bankers. It's legal and easy. All that needs to happen is to spread the word and take action on an individual basis. Our grandfathers knew how to have a run on an insolvent bank. It is time we re-learned the art.