Debqst2

FED DEBATE (Continued)
4.16 - Why has the Fed never been audited?
4.16.1 - The FED has so much power (Money) that those Congressional Bills, introduced to require an audit, have been defeated by those Congressmen, who receive campaign contributions--bribes--from the Banks. This convinces me that they have something to hide.
History, from review of the Congressional Record, going back more than fifty years, proves all such bills are buried in Committee, or voted down.
4.16.1.2 - I agree that it appears they have something to hide -- Bob K.
4.17 - Are regular impartial audits of the Fed worth pursuing?
4.17.1 - No.
The things the Fed is hiding wouldn't show up on any sort of audit that we, the duped, could manage to pass through Congress.
The long lobbying effort needed to institute and audit is nothing but a waste of our time. We must kill the damn thing, not audit it!
Unfortunately, we must have consensus on a replacement first, and, as we see, it's not easy to invent a new monetary system!
4.18 - If we converted our money base from debt to wealth, would banks still be allowed to practice fractional reserve policies?
4.18.1 - No.
Fractional Reserve policies are an inherent part of the debt based money system.
4.18.2 - Yes -- Jack Perrine
I am certainly curious why you think the FED has anything to do with a fractional reserve system?
Further, your last sentence is rather nonsensical in that there are no bankers who do not use what you term a fractional reserve system.
All bankers from time immemorial have loaned out their customers deposits while guaranteeing the customer will have access to his funds when / if he wants them. Any such system where the same deposits are in two places at the same time does what you attribute to a fractional reserve system If they did not do this there would be no point in being a banker.
This constant chiter-chatter about fractional reserves is quite ridiculous. Based on the total required reserves and the total amount of bank deposits to be lent out the actual reserve is between 1 and 2 percent. Based on current figures there should be a potential expansion of about 80.
Since there never is the amount of the reserves have nothing to do with the amount of money that can be loaned. The reserve is used for one and only purpose: to guarantee that checks from one bank deposited in another are good / that the checks will clear.
The limiting factor in bankers lending their customers money is that if they make a mistake it has to be paid for from the bankers capital ....or at least had to be before deposit insurance was stretched to cover all deposits ........ and if there is a problem with bankers loaning their customers deposits it is the removal of responsibility that came about with deposit insurance.
Try describing a system where bankers only loaned their own funds. Granted there is roughly three times as much money loaned in New York via commercial paper than bank loans but this only works when the borrowers have a better credit rating than the banks. If bankers could not have the profit expansion from lending customers deposits they would never lend to entities who did not have better credit ratings than the banks.
4.19 - Does the "Accelerator Effect" from "Money Velocity" compensate for the fact that no money is created for the interest in our debt based monetary system?
4.19.1 - No.
There is one, and only one, mechanism to create money in our monetary system. It is created as the Principal (never the interest) of credit extended by private commercial banks. No matter how fast money changes hands in the economy, it does NOT reproduce itself.
4.19.2 - Yes -- John Turner
There is no need for the FED to "create" the currency for the Interest on Debts. The system does that through The Multiplier and The Accelerator Effects. The FED Banks, just, garnish the efforts of the workers as interest payments from the "capital" created by their labor.
4.19.3 - REBUTTAL to YES answer -- by Bob$$$
John seems to confuse "wealth" with "capital", as the two are somewhat synonymous, but are, to be precise, two different "phases", in the economy. Capital is wealth, but all Wealth is not capital.
Please, Note that the upper case, above, is significant. Capital is wealth that is put to use in the Economy.
4.19.4 - COMMENTS -- Frank T. Brady
I believe we need to spend more time defining "Capital" and "Wealth." I contend that "Wealth" must not be expressed in terms of debt. If I have a checking account whose balance was created out of nothing, and represents the principal of someone's DEBT, it is NOT wealth. Wealth cannot be destroyed by a bank failure.
4.20 - What is our "money supply"?
4.20.1 - Our Money Supply, is made up ENTIRELY of the total FRNs, coins, and account balances created, at one time, by the extension of credit by a private commercial bank.
Our money supply is, I believe, about $5.2 Trillion at the present time. I'm not sure, but I believe that only a few hundred billion dollars of the money supply is physical FRNs or coins.
4.21 - What is "Currency"?
4.21.1 - Currency is the physical part of our money supply, it exists as paper Federal Reserve Notes and metal coins.
4.22 - What are the complaints about the Federal Reserve?
4.22.1 - "Mainstream" criticism is usually limited to:
1) Monetary policy is not accountable to elected officials.
2) The Fed refuses to submit to outside audit.
Criticism from "outside" the "Mainstream" is as follows:
Debt-based money systems create money "out of thin air" as credit extended by private commercial banking institutions. Money is created, however, only for the credit principal. There is no mechanism to create the money to pay the interest due. This causes an ever widening gap between the money supply and the total indebtedness (principal + interest). This gap tends to force producers to acquire cash by raising prices to avoid default.
The result is indebtedness whose rate of increase eventually becomes almost exponential.
4.23 - Is it important to balance the Federal Budget?
4.23.1 - No. -- Frank T. Brady
Balanced budgets would be helpful in a wealth based money system, but in debt based mondey system, recessions nearly always follow Balanced Federal budgets due to the lack of new money normally created by government borrowing.
Since passage of the Federal Reserve Act, each balanced budget was followed by a recession. This "damned if you do, and damned if you don't" dilemma is due to the fact that a huge portion of the money supply is created by the very borrowing we want to curtail. The amount of money created and injected into our money stock by government borrowing is approximately ten times the figure borrowed.
4.24 - Does anyone in Congress understand that our money is "debt based"?
4.24.1 - Yes.
One (1) single member of Congress "gets it." Jack Metcalf, a Republican "Freshman" Representative from the state of Washington understands the problem with our debt-based money system.
Jack did a very courageous thing at the recent hearings in Washington D.C. on the nature and future of electronic currency -- he asked the panel of about six "experts" if any of them would volunteer to comment on how the fact that our money is an all debt system and if it really needed to continue to be that way when electronic currency changes were implemented. There was not a sound from anyone in the chamber for at least 15 seconds.
The "dead air" was broken by the chairman of the committee when he resumed the hearing with no reference to the unanswered query.
4.25 - Do commodity based money system provide the best defense against government currency debasing?
4.25.1 - Yes.
However, they are not a panacea because:
1) Fractional Reserve Banking and Deposit receipt counterfeiting can still wreck the currency
2) Gold "ownership" may have been manipulated and compromised beyond our ability to recover what has been "stolen."
3) Returning to 100% Gold backed currency may have side effects we can no longer culturally accept (such as normal price variations caused by fluctuations between population and the gold supply).
4.26 - Is it true that our monetary system under the Fed is plagued by and ever widening spread between the money supply and the total debt (public and private) principal plus interest?
4.26.1 - Yes.
4.27 - Is our current system working at the present time?
4.27.1 - No.
4.28 - Has our current system worked in the past?
4.28.1 - No.
Certainly not, in light of the depressions, recessions, and enormous losses in the purchasing power of our money.
4.29 - Has a debt based monetary system ever worked?
4.29.1 - No.
4.30 - Does a boom/bust cycle make any sense?
4.30.1 - Yes.
Most Laissez Faire economists insist that these cycles are the natural adjustment of the market to bad business and investment decisions, and that the cycles are always worsened by government intervention.
4.30.2 - No.
Some of today's Monetary theorists insist that boom/bust cycles can be all but eliminated as long as a sufficient flow of wealth backed money is created and spent into the economy at all times.
4.31 - Does it make any sense that a Congress that has the Constitutional right to coin money, could put a nation in $5 trillion worth of debt?
4.31.1 - No.
This question has not been properly discussed -- it is often confused with the question as to whether or not the Fed is Constitutional.
The question is asking why Congress chose to borrow money at interest rather than to "Coin" it. Ignoring the more relevant issue regarding the constitutionality of the spending; would we be better or worse off if Congress had created the $5 trillion out of thin air and spent it into circulation, instead of borrowing it out of thin air and spending it into circulation -- and incurring enormous interest payments for the taxpayers and their children?
4.32 - Should we consider returning to a Gold standard?
4.32.1 - No.
To that I say/ask: What gold?
4.33 - Is the Federal Reserve Constitutional?
4.33.1 - Yes.
I have read the Constitution and if there is one thing I am convinced of it is that the Congress has the Constitutional authority to create the Federal Reserve, hence it is not unconstitutional.
4.33.2 - No.
Although one may argue that it is unconstitutional for Congress to delegate any authority assigned to it in the Constitution, I don't think their actions in this area are nearly as improper as in many other areas -- and we haven't accomplished much trying to point out unconstitutional actions so far.
4.34 - Do banks really EXTINGUISH money paid to loan principals?
4.34.1 - No. -- Richard T. Brown
Have you ever seen a bank statement of sources and uses of funds with a category like FUNDS EXTINGUISHED?
4.34.2 - Yes. -- Frank T. Brady
Banks DEFINITELY extinguish an amount of "money" equal to the payments made toward the PRINCIPAL of loans. The difficulty in understanding this is the primary reason why the Fed was ever allowed to be created in the first place, and why it continues to exist in spite of the damage it does.
One MUST understand that our "money" is nothing more than bookkeeping evidence of DEBT. Demand deposit "money" is created out of thin air when credit is extended, and it returns to thin air as the principal is paid. This, of course, does not mean that they destroy paper FRNs or metal Coins in those infrequent situations where "cash" is received as payment in full for a loan. That "cash" would merely go into their vault and the bookkeeping entry for the loan principal would be reduced by the amount paid on it.
4.35 - When does redeemability of gold, for personal retention as a store of value, become a "Gold Standard"?
4.35.1 - Only when a specific unit of a currency is redeemable for an amount of gold specified by law. In other words, government determines whether or not a "Gold Standard" exists and for whom it exists.
4.36 - Is there a definition for "Gold Standard" that is different than "Gold Backed"?
4.36.1 - No. -- Frank T. Brady
4.37 - Can we say that the ability to buy Gold, with dollars, is the same as "Gold Standard" or "Gold Backed"?
4.37.1 No. -- Frank T. Brady

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