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I totally agree. If you can't find a job here, make a job for yourself and a few others. That is what we need in the U.S. -- more productive jobs that produce goods that are marketable locally and to other nations. That, combined with increasing the national savings rate, are about the only things that are going to save this nation against the huge trade imbalances and federal budget deficits we have.

Who do you think paid for the care of the elderly before social security? Meaningful pensions were almost non-existent. What makes you think you could live on Social Security in 1940?

The mean life expectancy of an adult male retiring in 1940 was 12 years, seven months. The first generation of retirees under Social Security have been dead for over fifty years. Male Life Expectancy

In a service-based economy - in which physical strength and endurance becomes increasingly irrelevant - who employs - and promotes - a younger generation of workers - particularly at entry level?

On January 31, 1940, the first monthly retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. Miss Fuller, a Legal Secretary, retired in November 1939. She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975. History

What about the interment camps?

I'll not defend the internment of the Japanese-Americans. But it did not happen in the true war zone of Hawaii. It did not preclude service in the American military - and there could be vindication for the interned after the war was over. A Village Disappeared

http://www.federalreserve.gov/releases/h6/hist/h6h ist1.txt M1 - 1.37 Trillion USD M2 - 7.27 Trillion USD So 38.6 billion USD is a drop in the bucket. But drops add up over time.

Hmm... an argument to every point except the erosion of freedom in America... Well, I'll at least address your arguments as they stand.

I thought I was clear that I considered the discussion of my sig to be a bit off topic, but if you are that interested, I'm always up for a good debate.

What you say is true only if the government is not also borrowing money from you to pay me the interest and will in turn have to borrow still more from me in order to pay you interest... ad nauseam.

How does that change anything? Interest paid is just another government outlay. A government's ability to service it's debt depends solely on the size of it's economy. There is nothing wrong with the government continuing to borrow to meet its financial obligations as long as the economy continues to grow.

Besides, if the government gives me my money back and it's worth half as much as it was when I put it in... I've lost money.

You don't think the market factors inflation into the interest rates that it demands on the money that it loans?

As to current valuation of the dollar, are all media outlets including (probably your favorite) FOX wrong when they report the dollar to have dropped "dangerously close to historic support value"?

I based my assertion off of the latest statement from the Federal Reserve. The broad index (which is a trade-weighted index vs the currencies of our 26 largest trading partners) is currently at 103.19 compared to the Jan 1997 baseline of 100. I readily admit that our currency has dropped significantly since the highs in 2003, but this is by no means universal (the dollar has appreciated by around 20% vs the Japanese Yen and the Mexican Peso in the past 3 years, for example), and my comment about our currency being worth more today than in 1997 still stands.

all media outlets including (probably your favorite) FOX

Oh, and did that comment add anything to this discussion?

And the figures are hidden because they are not discussed because both parties want to spend like it's going out of style.

What does that mean? You can look up exactly how much money we are spending and exactly how much debt we have (to the penny!) any time you want.

The Wall St. Journal and other media outlets seem to think your source underestimates the debt holdings. Their estimates run in the $1-1.3 Trillion range.

I think we are talking about two different things. The Chinese dollar holdings consist of US Treasury securities, private sector bonds, and cash, and the aggregate total of these holdings is likely in the range of $1-1.3 trillion. The only one of these that our monetary policy can reasonably control is the US Treasury securities, and those amount to a little over $350 billion. This is all moot, though, because China is not going to cripple themselves by deliberately harming their own assets.

You had me until you took your goal of providing these freedoms to Iraq past the point of diplomacy and trade relations. (very noble of you, now how about the Sudan?)

I hate to break this to you, but our motivation to invade Iraq was not to be nice and spread freedom or to control their oil. Our motivation to invade was to eliminate a clear and direct threat to our national security that over 12 years of diplomacy and trade relations was unable to get rid of. It just so happens that the best way to do this, according to our President (and I am in agreement on this), is to replace the brutal oppression of the region with an opportunity for self determination and freedom. There are two components to this, of course. We handily achieved the first part ("Mission Accomplished!", as the partisans like to fixate on), but for a variety of reasons the second part is still a work-i

According to the Fed, total consumer credit debt, excluding mortgages, hit a record $2.4 trillion in September. Factoring in mortgages, outstanding household debt soars to about $12.3 trillion.

My "mention of the fact that the Federal Reserve Banks are corporations is a classic example" of "usually misleading at best and more often outright wrong" claim? You yourself admit it is factual. Please elaborate on why it is misleading.

ou said originally that "a casual glance at where the money is going simply doesn't bear that out" where do you recommend one to take this "casual glance" at where the money is going?

Was a good idea for the Fed to make the M3 money statistics secret?

Do you agree with the finding by the Grace Commission that: "100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government." ?

Well, I'm pretty sure the president appoints the members of the Federal Reserve.

From the Federal Reserve site:

The seven members of the Board of Governors are appointed by the President and confirmed by the Senate to serve 14-year terms of office.

The Federal Reserve is designed to be resistent to political changes. Also, Carter appointed Paul Volcker as Chairman and he served through 1987. If it about picking the right Federal Reserve Chairman, perhaps Carter deserves more credit - as Carter's Wikipedia article would have it:

With the markets for U.S. government debt coming under pressure, Carter appointed Paul Volcker as Chairman of the Federal Reserve Board; Volcker replaced G. William Miller who left to become Secretary of the Treasury. Volcker pursued a tight monetary policy to bring down inflation, which he considered his mandate. He succeeded, but only by first going through an unpleasant phase during which the economy slowed and unemployment rose, prior to any relief from inflation.

You have a good point. One that needs to be carefully illustrated because people like to make this confusing. As a starting point, look for official government sources rather than Nader.org and make a clear distinction between wealth and income.

So, if you want to talk about money income, you can look at Table 676 or 678 of the 2007 U.S. Statistical Abstract. It presents a good trend line. If you want more detail, you could use the Money Income of Households.

The main point from this source is that from 1980-2004, if you use constant dollars, the only group making more money are those making $100,000 or more. Everyone else is earning less.

For changes in wealth, the Federal Reserve has a good piece linked from the Wikipedia article on the topic of Welath Distrubtion in the United States, but it undermines your argument somewhat because I think you have overstated the case a bit:

A key stylized fact is that during this period, the division of wealth observed in the SCF attributes roughly a third each to the wealthiest 1 percent, the next wealthiest 9 percent, and the remainder of the population.

Although the wealth distribution generally rose over the 1989 to 2001 period, simple measures of wealth concentration fail to show consistent patterns. Moreover, few changes in groups' shares are statistically significant. For example, the wealth share of the top 1 percent of the wealth distribution moved from about 30 percent in both 1989 and 1992 to about 35 percent in 1995 and it tapered down to 33 percent by 2001; none of the changes are statistically significant according to the estimation methodology used to compute standard errors for the SCF.

I think the Federal Reserve is probably biased a bit downward...but I don't think you can claim the top 1% controls 95% of wealth. Still, I think your point is a good one. You just need to use a more accurate statistical formulation - say that the bottom 50% only has 3% of all wealth.

They get paid with Federal Reserve Notes well before you remit any of your earnings. And they will get paid whether you remit anything or not. Because there is a printing press that will give it to them regardless.
  Your tax Reserve Notes go to the Federal Reserve to prevent devaluation of the currency. And since the "money" is created out of thin air, that's really the only reason you pay taxes.

"you do know that 79% of the tax burden is carried by the top 20% of income earners, right?"

You mean those folks that hold the vast majority of the assets? Sure just cherry pick a single statistic from a single source and proclaim 'look what I know, you dip shits didn't know this did you, huh, huh?'. Look the issue here is just how out of balance things can get EITHER way before it breaks the system. The balance right now grossly favors those at the top of the economic food chain. If it continues to the point of breakdown just what do you think the fate of the top x% will be? In the end it is in everyones interest to not break the frickin system.

"Maybe for once we should stop being partisan"

Yea, thats rich, considering the drivel to from the "conservative" party I have listened with great restraint, and admittedly often with amusement, for most my life. Can you make a clear argument just using common sense instead of falling back on a single cherry picked statistic form BillO's list of "facts" to throw at a liberal---remember you have to use this word in with a dirty slur pretext or voice. Don't take this to mean I am a just another sheep in the Democratic flock, which in contrast to the Republican flock, is actually more like a herd of cats anyway. I will say I like many others are sick of the "good cop - bad cop" routine the two parties have used so successfully for so many years. So exactly whose drivel is it you like best? Oh thats right you like to quote the "fiducially conservative ones", hehehe, yea.

Wabi-Sabi
Matthew

read...

http://www.federalreserve.gov/boarddocs/speeches/2 007/20070206/default.htm

http://www.ft.com/cms/s/f5e905ce-69d8-11db-952e-00 00779e2340.html

http://neweconomist.blogs.com/new_economist/povert y_and_inequality/index.html

http://www.chicagofed.org/economic_research_and_da ta/wp_abstract.cfm?pubsID=732

http://multinationalmonitor.org/mm2003/03may/may03 interviewswolff.html

http://www.economist.com/world/displaystory.cfm?st ory_id=7055911

http://ideas.repec.org/a/ecj/econjl/v112y2002i478p c68-c73.htm

http://dollarsandsense.org/archives/2004/0704tilly .html

http://www.nybooks.com/articles/18995

http://online.wsj.com/public/article/SB11418244330 8492484.html

http://www.ft.com/cms/s/71954e1a-ad43-11da-9643-00 00779e2340,Authorised=false.html?_i_location=http% 3A%2F%2Fnews.ft.com%2Fcms%2Fs%2F71954e1a-ad43-11da -9643-0000779e2340.html&_i_referer=http%3A%2F%2Fne weconomist.blogs.com%2Fnew_economist%2Fpoverty_and _inequality%2Findex.html

http://ksgnotes1.harvard.edu/Research/wpaper.nsf/

See this link (pdf) from the Federal Reserve in regards to opening accounts for people affected by Katrina. The answer to the second question lays out what a bank must do to verify a person's identity. It lists some forms of identification which may be used. As a rule, the document presented must be an official form of identification. That is why I qualified my previous statements by saying that a matricula consular card is not a valid document for proving the identity of a person.

Additionally - what does immigration status have to do with bank accounts ?

I had an aunt who, until recently, was a legal resident of the U.S. Both she and her husband (one of my father's older brothers) were not born here. He became a U.S. citizen (and served in the military during Korea) while she continued to be a citizen of their native country, Germany.

She was able to open accounts, run a business and everything else because she did what was necessary to follow the law. In her case, she obtained a tax ID number and other related documents.

The issue is not about immigration status. It's about following the rules that have been set down so that all persons not citizens, are correctly accounted for and yes, taxed correctly.

Since a majority of illegal aliens are paid under the table, their earnings are not taxed and, as I said previously, the money they earn is sent out of the country to be spent elsewhere.

It's not that difficult to obtain legal documents to open an account. A passport or green card will do.

Giving a private corporation special powers by the way of law is nothing new under the sun and a continuing trend as privatized law enforcement and private prison corporations etc. come to mind. I see nothing unique about that kind of entity.

And how many of those private corporations were a part of the government for decades beforehand? Look, I'm not quite sure if you're willfully turning a blind eye to the obvious differences between the fed and other private corporations or what, but I'd challenge you to name me one of those private corporations, I'll quickly point out just how greatly it differs from the fed for you.

But how about we cut away from the wiki article, let's go check the Fed:

Who owns the Federal Reserve?

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.(Emphasis mine)

and again in the same FAQ

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Back to you...
Without question, people to be trusted to do whatever in their power towards your best interests.

Just to fill you in a little more, the board acts based on the members. Most of the voting federal reserve banks actually support a team of research economists. For example the Chicago Fed hires a number of economists who regularly turn out publications. These economists make an informed decision based on their opinion of what is best for the long term economic growth of the country. These interests do /NOT/ necessarily fall in line with what the stockholders would like to see happen.

Believe it or not, this is a well documented system that is frequently audited and questioned by congress. This system is /not/ out to further the interests of the stock holders, member banks, or the US politicians.

This really isn't tin-foil hat time, you can read the minutes of the meeting. Part of the power of the USD is the ability to attract foreign investment. So really, you don't even have to trust me or trust the Fed, but if you trust greedy corporations to be greedy, then consider how they are reluctant to invest in countries which have poor monetary policy compared to the willingness to invest in the US. The stark contrast will illustrate that this system isn't just a "have faith in it" scheme, it's a system that greedy corporations have enough belief in to dump billions of dollars.

Giving a private corporation special powers by the way of law is nothing new under the sun and a continuing trend as privatized law enforcement and private prison corporations etc. come to mind. I see nothing unique about that kind of entity.

And how many of those private corporations were a part of the government for decades beforehand? Look, I'm not quite sure if you're willfully turning a blind eye to the obvious differences between the fed and other private corporations or what, but I'd challenge you to name me one of those private corporations, I'll quickly point out just how greatly it differs from the fed for you.

But how about we cut away from the wiki article, let's go check the Fed:

Who owns the Federal Reserve?

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.(Emphasis mine)

and again in the same FAQ

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Back to you...
Without question, people to be trusted to do whatever in their power towards your best interests.

Just to fill you in a little more, the board acts based on the members. Most of the voting federal reserve banks actually support a team of research economists. For example the Chicago Fed hires a number of economists who regularly turn out publications. These economists make an informed decision based on their opinion of what is best for the long term economic growth of the country. These interests do /NOT/ necessarily fall in line with what the stockholders would like to see happen.

Believe it or not, this is a well documented system that is frequently audited and questioned by congress. This system is /not/ out to further the interests of the stock holders, member banks, or the US politicians.

This really isn't tin-foil hat time, you can read the minutes of the meeting. Part of the power of the USD is the ability to attract foreign investment. So really, you don't even have to trust me or trust the Fed, but if you trust greedy corporations to be greedy, then consider how they are reluctant to invest in countries which have poor monetary policy compared to the willingness to invest in the US. The stark contrast will illustrate that this system isn't just a "have faith in it" scheme, it's a system that greedy corporations have enough belief in to dump billions of dollars.

Yes, they could, just raise the interest rate, and it's done. Oh, but then of course there that little trade-off between inflation and employment thing. And of course an economy without inflation would mean an economy where Aggregate demand remains the same, since inflation after all is the result of a growing demand for liquid money, with an ever increasing economy, that would result in generalized poverty... GREAT idea!

Your linked article even says that the Phillips Curve has largely been discredited, and that economists that do use it are known to fudge their numbers to get it to work. So basically, that means they're making it up as they go along. GREAT idea! Then you can just embrace the status quo and shrug your shoulders if something goes wrong. Color me unimpressed.

Why would anyone want inflation? This means that people _have_ to keep investing their capital in order not to lose money... It would be much easier for everyone if inflation didn't exist...

Ah, you're far too trusting. Yes, inflation is bad for everyone, but those who know about it and control it are able to minimize the damage, or even benefit from it.

Think of it like a game of King of the Hill. Pouring icy water on the slopes hurts everyone, but it hurts those at the bottom the most because they don't have their footing yet. The people at the top of the hill are already in a good position, so they are able to use the discord caused by the icy water to their advantage. Obviously, inflation is icy water in this analogy. The rich knew it would sting, but they also knew it would hurt the poor the most because the poor don't have any extra money left over for investments, stock portfolios and the like. When you're struggling to make ends meet creeping inflation is the least of your worries, but it will still hurt you in the long run.

[insert inaccurate history lesson]

Your history lesson is a complete joke. You seem unaware that, first off, the Federal Reserve caused the Great Depression. Milton Friedman is one among those questioning the Fed's role in that debacle. And then, as the country languished in agony, the Fed and its instruments in government, including Roosevelt, used the moment to get us off the Gold Standard. Why? So he could use inflation to stimulate the economy!! In fact, Roosevelt issued Executive Order 6102, which confiscated every American's gold! Read up on it if you don't believe me. It's referenced in the second linked article. Also, as that article makes clear, it wasn't until 1971 that the gold standard was totally banished, but that was just so we could keep inflating the money supply.

Now, noone in the world has the gold standard anymore, so if the US would bring back the gold standard, either the dollar would fluctuate like a madman with the course of Gold or basically anyone in the world would be freely allowed to arbitrage over the Dollar/Gold deal.

Because our economy is basically ruined already trying to bring back the gold standard without adequate control would indeed result in chaos. But allowing runaway inflation to continue indefinitely is also insane. I say we make the painful fix for our children's sake.

Hmmm, how exactly again is inflation government theft? Inflation comes from an increased demand of liquid money from the private sector... The government doesn't win a penny out of it...

Well, technically, the private bankers are the thieves; they're just using the government as the bagman. However, your definition of inflation is incorrect. I think you're thinking of liquidity or something else. Here's a simple definition from Wiki:

"In mainstream economics, inflation is a rise in the general level of pric

For christs sake, wont people learn and get a brain cell these days.

If ONE drug dealer sells $10 worth of drugs to an addict, then that dealer pays two addicts $5 each to wash his car, then they later
buy $5 each of drugs, thats equal to $30 GDP from the same $10.

All total sales from 10000000s of companies != total dollars in circulation (go check your M1/M2 money supply)
http://internationalecon.com/v1.0/Finance/ch40/F40 -4.html

http://www.federalreserve.gov/Releases/h6/hist/h6h ist1.txt

The same one dollar can go back and forth lots of times, (possibly max 10-15 times before tax eats it into zero)

Theres the truth, TAXES are not there for the government to spend (they can borrow it), but its there to control inflation which the
central banks create, as they make all the money and are not owned by the governments.

Its like two mafias, one makes all the counterfeits, the other 'collects fees' for letting it happen.

If you make too many fakes, the taxes go up.

the audience gladly puts up with the ad being onscreen because it doesn't interrupt the show.

Actually, it's a bit more serious than that. The bank http://www.rbnz.govt.nz/ who's phone system he compromised is an approximate functional equivilant of the US Federal Reserve http://www.federalreserve.gov/ (but quite a bit smaller).

He's very lucky he did it in NZ where it appears that the courts consider him stupid rather than malicious. In other countries he might get charged with terrorism related offenses or worse.

In the banking industry, the applicable regulation is fairly strict... the institution must "promptly" notify customers of a material breach and there are relatively few loopholes. So if your broker or whoever was part of a bank, then this would apply. However, if your e-mail address was all that was compromised, they don't really need to notify you. By definition, e-mail addresses are not private information, any more than your physical address is. A number of states, notably California, have privacy laws that can be invoked, but the trigger for a material breach is usually the compromise of a combination of personal identifying data such as name and address (including e-mail addresses) and sensitive nonpublic personal information such as login credentials, account numbers, etc. You might see whether there is a law in your state that applies.

If you get out of your little tunnel and open your eyes, you'll find that the economy is not so great. Real wages have been going down since the 70's (following the start of the outsourcing trend), and many of our fellow americans have been financing the difference. In the last couple of years, this means Adjustable Rate Mortgages to afford payments on a house, 0% auto loans, growing credit card debts, growing trade deficits, growing federal budget deficits.

America has a problem with debt.

That's less than half of the story.

The other half of the story is the debt service ratio, which is the percentage of disposable personal income spent on interest on debts. The debt service ratio has risen only slightly since 1980.

This slight rise is to be expected, though, because real net household wealth is higher than ever and still rising. After all, the more money you have, the greater percentage of it you can afford to spend on interest payments.

Real net household wealth is rising because everyone is innovating, all over the world... and because we're exporting all the mindless jobs (read: assembly lines, manufacturing) to the countries whose technology levels have risen high enough to accept them. In time, those countries will re-export them downward, sort of like hand-me-down clothes you give to your little brother. In fact, the point of this slashdot article is that China is doing exactly that.

So. Either you are a clueless armchair FUDconomist, or you're a liar, or both.

The Federal Reserve Banks and System may not pay taxes, per se (the System is an independent governmental body after all), but it does turn over the vast majority of the System's yearly "profits" to the Treasury of the United States: http://www.federalreserve.gov/generalinfo/faq/faqf rs.htm. The Fed pays (by law) 6% in "dividends" on the stock that chartered banks are required to purchase (and can't sell), and pays all it's own expenses: same FAQ. The rest of it's net income is transfered to the Treasury at the end of the year. That amounted to just over $21B in 2005: http://www.federalreserve.gov/boarddocs/rptcongres s/annual05/ar05.pdf, Table 10, Page 282. Total transfers to the Treasury since the System's inception in 1914 has exceeded $589B, Table 11, Page 287.

The Federal Reserve Banks and System may not pay taxes, per se (the System is an independent governmental body after all), but it does turn over the vast majority of the System's yearly "profits" to the Treasury of the United States: http://www.federalreserve.gov/generalinfo/faq/faqf rs.htm. The Fed pays (by law) 6% in "dividends" on the stock that chartered banks are required to purchase (and can't sell), and pays all it's own expenses: same FAQ. The rest of it's net income is transfered to the Treasury at the end of the year. That amounted to just over $21B in 2005: http://www.federalreserve.gov/boarddocs/rptcongres s/annual05/ar05.pdf, Table 10, Page 282. Total transfers to the Treasury since the System's inception in 1914 has exceeded $589B, Table 11, Page 287.

Not true. It depends on how rich you are. Let me illustrate:

I believe that the USA are in for a big surprise if they don't stop their rampant inflation.

If you have some recommended reading on this

at causing the great depression

The current head of the Federal Reserve is on record as claiming that the Great Depression was a result of a failure of government macroeconomic policy. Business cycles creates recessions, but it takes a macroeconomic failure of a central bank to create depressions. That is the global track record, and the reason why the dot-com implosion created only a recession, not a depression.

From Remarks by Governor Ben S. Bernanke:

"By allowing persistent declines in the money supply and in the price level, the Federal Reserve of the late 1920s and 1930s greatly destabilized the U.S. economy and, through the workings of the gold standard, the economies of many other nations as well."

In the mid 1990's, nearly 50 billion checks were being processed in the US. It was down to 37 billion transactions in 2004 and is steadily dropping. Things like debit cards, increased usage of credit cards for smaller purchases, increased usage of ACH transactions for payroll and billing, online billpay (where many items are transacted via ACH), and the conversion of checks to ACH items either at the point of sale or at large billing houses have all contributed to this.

With the advent of Check 21, any check that you may write will probably not arrive at your bank as a physical item (unless it is deposited there).

In the end, this won't make a bit of difference in the U.S. until it costs corporations money.

Look at patents. People knowledgable about patents and software have almost universally criticized software & business method patents, but the only reason congress and the patent office is starting to look at it is because its costing big corporations money.

You see, the trouble is, when you have people like Alan Greespan saying more copyrights and patents are vital to the U.S.'s economic growth, when congress perceives the entertainment industry as being the growth engine for the U.S. economy, then its tough for congress to vote against these kinds of laws.

http://www.federalreserve.gov/BoardDocs/Speeches/2 003/20030404/default.htm
http://news-service.stanford.edu/news/2004/march3/ greenspan-33.html

Until these same companies feel a pinch from the DMCA, it doesn't matter what the real impact of the law is, it's the message that's carried by the press, by the fed chairman, by the heads of industry such as Bill Gates that will determine the fate of the DMCA.

The collusion comes into place when the first bank is given $1000 by the Federal Reserve.

This is an idiotic post. The Federal Reserve does not just give money away to banks. They give paper currency and coin against electronic balances held by member banks at the Federal Reserve, but that is just trading one type of money for another, not creating it. The Federal Reserve also offers a "discount window" from which banks can request loans at a particular overnight rate, but they charge interest, and can refuse to give the loans if they feel it is not wise to do so, and banks typically do not rely on this for day-to-day-operations. They *do* engage in open market operations to buy and sell government securities, but that is separate from the multiplier.

Banks put their money in reserve accounts at the Federal Reserve, and can lend those reserves to one another at what is basically a market-determined rate. But this is irrelevant to the multiplier. Changing which bank's reserve account at the Federal Reserve holds money does not create or destroy it.

The key link that you've missed out on is that the money goes through the participants in the economy. Your local bank gets deposits because you decided your piggy bank was full and you'd rather earn interest on it. Or because you did work that your employer decided to pay you for.

What is the bank supposed to do with that money? Stick it in a super-sized mattress until you want it? No, they'll lend it to people who want to buy things or to run a business, or through the Federal Reserve to other banks that have customers who want to borrow money.

The trick is that people do not typically take that loan money and keep it in a nice little pile of green paper. Instead, they borrowed the money because they had a good idea of how they could *spend* it. They spend it, let's say at a local merchant, who doesn't need to spend it himself right away, and decides to deposit in a bank.

THAT idea, that all currency, including loans, ends up virtually immediately being redeposited into the banking system, is what causes the multiplier. This happens because currency itself is not particularly useful, whereas deposits can earn interest.

That's not hocus-pocus or collusion. It simply means that when the Federal Reserve DOES engage in changing the money supply by buying and selling government securities, that it has to account for the multiplier effect to know how much money is actually added to the economy for a given operation.

http://federalreserve.gov/pubs/bulletin/1997/19971 1lead.pdf

The $600 billion dollar figure is for physical paper currency. Unless *everybody* dealt in cash all the time, there is no reason this number has to agree with the total money supply.

http://federalreserve.gov/releases/h41/Current/

The collusion comes into place when the first bank is given $1000 by the Federal Reserve.

This is an idiotic post. The Federal Reserve does not just give money away to banks. They give paper currency and coin against electronic balances held by member banks at the Federal Reserve, but that is just trading one type of money for another, not creating it. The Federal Reserve also offers a "discount window" from which banks can request loans at a particular overnight rate, but they charge interest, and can refuse to give the loans if they feel it is not wise to do so, and banks typically do not rely on this for day-to-day-operations. They *do* engage in open market operations to buy and sell government securities, but that is separate from the multiplier.

Banks put their money in reserve accounts at the Federal Reserve, and can lend those reserves to one another at what is basically a market-determined rate. But this is irrelevant to the multiplier. Changing which bank's reserve account at the Federal Reserve holds money does not create or destroy it.

The key link that you've missed out on is that the money goes through the participants in the economy. Your local bank gets deposits because you decided your piggy bank was full and you'd rather earn interest on it. Or because you did work that your employer decided to pay you for.

What is the bank supposed to do with that money? Stick it in a super-sized mattress until you want it? No, they'll lend it to people who want to buy things or to run a business, or through the Federal Reserve to other banks that have customers who want to borrow money.

The trick is that people do not typically take that loan money and keep it in a nice little pile of green paper. Instead, they borrowed the money because they had a good idea of how they could *spend* it. They spend it, let's say at a local merchant, who doesn't need to spend it himself right away, and decides to deposit in a bank.

THAT idea, that all currency, including loans, ends up virtually immediately being redeposited into the banking system, is what causes the multiplier. This happens because currency itself is not particularly useful, whereas deposits can earn interest.

That's not hocus-pocus or collusion. It simply means that when the Federal Reserve DOES engage in changing the money supply by buying and selling government securities, that it has to account for the multiplier effect to know how much money is actually added to the economy for a given operation.

http://federalreserve.gov/pubs/bulletin/1997/19971 1lead.pdf

The $600 billion dollar figure is for physical paper currency. Unless *everybody* dealt in cash all the time, there is no reason this number has to agree with the total money supply.

http://federalreserve.gov/releases/h41/Current/

The Federal Reserve system prints NO MONEY that is the job of US Bureau of Engraving and Printing

ALL banks deal with the Fed as it is part of the job of the Fed to supervise, regulate, and rate ALL banks. There is no "members only" choice in the matter. Sheesh!

People have faith in the system because... well... it has been working "pretty good" so far since they transfer about 93 TRILLION dollars a day.

If you reported to the bank the fraud in a timely manner, your maximum liability can be found here.

Philophically we could have a discussion about the level or form of this payment but even the existence of a government necessitates a citizen contribution of some kind.

The average middle class household pays 50% of their gross income and benefit burden to governments in various forms of taxation. 50%. Half your year you work for others. This is not a "free society" any more.

And the money DOES come out of thin air. Let me explain how the Fed creates new money:

The Fed buys U.S. Treasury bills from a government approved dealer. They write a check for the amount, say $5 million. The dealer takes the $5 million and deposits it into their bank.

Where does the Fed get this money? They print it out of thin air. The U.S. Treasury bills are also an out-of-thin air creation given to preferred cronies of the government.

Look at the M3 money supply figure here http://www.federalreserve.gov/releases/h6/hist/h6h ist1.txt

In 1959, there were US$ 292 billion in print.
In 1969, there were US$ 612 billion in print.
In 1979, there were US$ 1612 billion in print.
In 1989, there were US$ 3944 billion in print.
In 1999, there were US$ 6102 billion in print.
In 2006, there are US$10240 billion in print.

In less than 50 years, the Fed has creates almost $10 trillion out of thin air. Almost half of this was created in the past 8 years. Since the 1st of January 2006, if you base the current inflation rate of the Fed for this year and extend it for the rest of the year, the Fed will print more money in 2006 alone than the value of every ounce of gold in existance.

This is why I don't save in dollars, invest in dollars, or live on dollars.

These would initially go to the fed who would pass them on to DHS, IRS or whoever. The whole thing makes the financial institution err on the side of over-reporting. Not raising an SAR on something that turns out to be an issue (i.e., that Egyptian's down payment for flying lessons) will dump the FI in deep trouble with the regulators.

In most cases the problem can be sorted with a quick call for a reason and a source of funds. In this case it should have been clear that the people had other funds and they were looking to pay of their debt. With a reasonable explanation, all should have been quickly settled.

Oh, I do AML/KYC systems for a largeish bank so this is why I can comment.

The real story here is that the Department of Homeland Security is also responsible for credit fraud. One of the scams people pull is to steal a number, write a bogus check to the credit card company for that card (which guarantees the credit will be there), and then spend the amount that was written on the check before the check is cashed (and detected as bogus).

This scheme (called Kiting) should be on the decline now that the Check21initiative has been in effect since late last year.

For most, it means that the little images of checks that come back on your bank statements are just as good as the cancelled checks that used to be returned to you, but now clears the way for electronic presentation of funds. What used to take several days for clearing is now as fast as an EFT (electronic funds transfer), so they'll know right away if the funds are available in the account.

We won't be able to sustain civilization by allowing supply and demand forces to shift us to accepting a lifestyle on little oil. Hopefully, the prices for oil will increase at a slow rate, slow enough that economies manage to struggle along while the high price on oil increases the economic profit of developing alternative energy sources.

Sorry, the minutes are released 3 weeks, but the transcripts have a 5 year lag.

http://www.federalreserve.gov/FOMC/transcripts/

The most recent transcripts are from 1999. That's modern government?

Also, the FOMC is not the Federal Reserve but a unit under the Fed. The FOMC is the most visible policy-making part of the Fed, but they are not the only thing the Fed does. Much of the Fed's operations are shrouded in secrecy, and the Fed has no legal mandate to tell the citizen anything.

As for changing interest rates on a whim, it is whimsical as the modern macroeconomic theory seems to be modified every few months in order to update every place that it failed. I believe the Austrian theory is more concrete AND more accurate -- and that hasn't been modified or updated in 50+ years.

The Austrians see the boom/bust cycle as directly related to the pressure of having a coerced currency, backed by nothing, and manipulated in such ways as to encourage or discourage savings and investing rather than letting the free market prompt what is truly needed.

The minutes of the FOMC are released 3 weeks after a meeting. Rates do not change on a whim. Go read up on modern macroeconomics.

I'm going to ignore the rest of the points for the moment, because this one deserves a proper answer. It is, in fact, completely wrong.

I'm not sure what you think you read, but my comment was in the present tense. At this point in time, private ownership of gold is not illegal, and neither is the use of it to barter. Furthermore, if the American populace wanted a gold standard they could legislate it or elect someone who will enact it. Nothing I wrote is incorrect. It is not my problem that you read more into it than was written.

I'm aware of the history, but I also recognize that it is history. We've had over 30 years to come back to the gold standard and not only has it not happened, but the whole idea of it has fallen out of mainstream favor. It used to be a subject of popular debate earlier in the century. When was the last time a politician or journalist even bothered to bring it up? What industrialized nation has a gold standard currency right now? I say this not to try to prove a point of view for or against, but rather to demonstrate that the world as a whole, democracies included, has moved away from it at this time. This is in specific rebuttal to your assertion that the only time anyone uses "fiat" currency is when they are forced to. If that's true, then the entire world is forcing itself to all at once.

First of all, a strong economy depends on many factors, and probably the least of them is monetary policy. I'm not saying that it doesn't have an effect, but as long as the changes to policy come slowly enough for the market to adjust, the actual effect isn't all the much. In particular, the economy in this country has nearly always been fairly strong, except for those cases where those in charge of monetary policy managed to mess things up. The less monetary policy we've had, the better the economy's been, but it's almost always been a "strong" economy despite the interference. I would define a successful monetary policy as one the left things well enough alone!

This paragraph is highly ironic considering your links above. Monetary policy is considered by many economists to be one of the most important factors in both causing and alleviating the Great Depression. Roosevelt's move away from the gold standard was a defining moment in beginning the recovery. This 2004 lecture by our newly minted Fed chair covers this story.

Second, the only thing we have to compare the state of our economy to is the "could-have-been". We only have one history, after all, our national history makes comparisons to other countries questionable at best. Since no "concrete" comparison is possible, would you prefer that we set our policies arbitrarily? The only sane way to evaluate monetary policy is to consider the alternatives: they way things could have been had we made different choices.

Other nations can provide a basis for comparative analysis of economic policies. International economic study can also illustrate the ways in which one nation's monetary policy can affect another's. In addition one can look for specific echoes of policy changes--rather than saying "we did ok but could have done better", tying specific economic data to specific policy changes.

No, trust me, APR stands for Annual Percentage Rate. I think the Federal Reserve, the American Heritage Dictionary, and even the Wikipedia community are going to be know more about what APR stands for than some random preacher you found on the Internet. All that link could possibly prove is that the net is full of idiots, something you have already proven with your "Ted Turner is the leader of a massive Jewish conspiracy" signature. Although I think that guy may have known what APR really means and was just using a common literary device to add humor to his sermon.

This is offtopic, but if you haven't already seen this, I think you should. I guess the fed is going to drop the M3 index on 23 March of this year: here.

It's a really large support argument for the idea that the government is going start printing money like it's going out of style. Ben Bernanke and his "helicopter drop" will do quite a bit of damage to the value of the USD, I believe.

I'd like to see ANY real evidence for this rhetoric that increasing the minimum wage increases unemployment. Seriously. Those are the people making bold claims that need to be proved.

It sounds like you already agree that a large minimum-wage increase would decrease employment. For example, if we made the minimum wage $20 per hour, you can bet that McDonald's would put a bunch more money into labor-saving devices to reduce the amount of labor needed to produce a burger. This is Econ 101: raise the price of something, and people will use less, often substituting another good.

It's also pretty obvious that dropping the minimum wage can increase employment. Consider when you drop it to zero, for example. Companies regularly take interns (and non-profits regularly take volunteers) to do scut work that they'd never bother paying anybody to do. It is also the logic behind a lot of worker retraining programs; the government will pay part or all of somebody's salary while they come up to speed in a new job. The subsidy, by reducing the cost to the employer, creates new jobs.

So you agree that a large raise in the minimum wage will cause a loss of jobs. You presumably agree that a large drop in wages can increase jobs. It sounds like your only disagreement is whether the effect appears at sufficiently small values. Or, put another way, you a proposing a novel theory that, unlike a normal market, the effect sometimes disappears for labor. Shouldn't you be the one coming up with proof for your bold claim?

As you'd hopefully expect, there's a fair bit of proof for what you're calling a bold claim. See, for example, "Do Minimum Wages Raise the NAIRU?" by Peter Tulip, Federal Reserve Finance and Economics Discussion Series 2000-38. He concludes that the difference in minimum wages between the US and Europe (where they are much higher) explain a lot of the difference in unemployment (which is much lower in the US).

Name a private school that would be allowed to operate at the level of say the Los Angeles Unified School District. As you note, only the best public schools operate at the level of private schools.

As far as vouchers go, if for example, the voucher were $10,000 per student plus a payment of up to $1,000 directly to the student for good grades, then we'd see a vast improvement over the current situation. So claiming "no number of vouchers" will solve the problem is based on BS. We chose not to fund education at a level that would enable vouchers, but that's a far cry from claiming they won't work at any level.

SS isn't a retirement plan. Its retirment INSURANCE. If all your investments fail and you end up with too little money to live, SS will make sure you can have a roof over your head and food in your stomach. Getting rid of SS will result in even bigger bills down the road, as we have to institute a new program to feed and shelter them when their investments fail (and some percentage of them always will).

I agree that SS isn't a retirement plan, but it isn't retirement INSURANCE either. It's a pyramid scheme (as has already been noted) and a BRIBE to the US voters that allows Congress to spend a couple hundred billion more a year. INSURANCE pays if something goes wrong. There are disability funds in Social Security that meet this definition, but the vast majority gets paid to you whether or not your investments worked out or not. This has resulted in the current elder generation being unusually wealthy. For example, from the Survey of Consumer Finances the net worth of households with heads under the age of 35 jumped by 10% (inflation adjusted) from the 1992 survey to the 2001 survey while the corresponding net worth of households with heads over the age of 75 jumped by 31%. This larger growth in networth has been consistent over a couple of decades, so it appears to me. Currently the 75 and over household has about two-thirds the networth of the under 35 household, but it no doubt has fewer dependents.

My take is that there's no obvious sign here that we need universal "insurance" against retirement. Especially the kind that provides incentives for the elderly to stop working.

As for paying them directly being cheaper- we do pay them directly. We send them checks. I'm not sure how much more directly you want. I suppose you might be able to save by getting rid of the paperwork and just giving everyone over X years of age a paycheck every month. If that was cheaper, I'd be ok with it.

Sorry, I meant here the elderly that were actually poor. Not everyone and their toy poodle.

In engineering, experience means something. Most people aren't engineers- they have minimum wage jobs at WalMart, Target, etc. Experience there doesn't matter. It just increases the labor supply pool, deflating wages even further. Which means they save less, which means they can't retire early, and cycle.

Bull, experience means a lot even in jobs where you flip burgers. Plus, older people tend to be more competent. And having people work who can work seems a lot more rational than paying someone to not work because of some hypothetical labor surplus.

Compared to the rest of health care in the US, its almost sane. The US badly needs national health

I think it can be argued that the FOMC can be partially to blame for the speculative bubble that occured. They destroyed savings by forcing interests rates to the bare minimum (lower than COLA), printed new free money left and right, and offered millions of Americans extra money at very little cost. When people are given all this "free" money at low interest rates, they tend not to value it as much and generally take higher risks. Once the market started to move up (possibly because the first owners of the new money invested in the IPOs), the suckers at the back-end of the inflationary cycle followed suit. Guess who takes their money out once the open market turns into a bubble market?

The Austrian School of Economic thought predicts these bubble/busts due to the inflationary cycle caused by the FOMC and other central banking cartels.

http://www.federalreserve.gov/releases/Z1/Current/ z1.pdf

Foreigners own about 43% of our treasury bonds in 2004. But that only demonstrates their faith in the ability of the American taxpayer to pay enough taxes for debt service. I'm not sure if that's good or bad.

http://www.federalreserve.gov/releases/Z1/Current/ z1.pdf

Foreigners own about 43% of our treasury bonds in 2004. But that only demonstrates their faith in the ability of the American taxpayer to pay enough taxes for debt service. I'm not sure if that's good or bad.

"Achieving full ownership. When buying a vehicle with cash, you receive immediate ownership of the vehicle. When purchasing a vehicle with an installment sales contract or loan, you pay down the loan balance and eventually build equity in the vehicle. You receive full ownership of the vehicle after you make your final payment."

There is "ownership." And there is "full ownership." If you have only payed off $1,000 of the loan, you only own a portion of the car.

-matthew

"You'll note they use the term "current owner". A lien simply records the fact that somebody might have a security interest in the property. It does not mean they own it. It gives them a legal means of seizing that property if any obligations are not met -- but until they seize it they do not own it."

Lien law is more complicated than that and varies from state to state.

http://www.federalreserve.gov/pubs/leasing/resourc e/different/ownership.htm

"Achieving full ownership. When buying a vehicle with cash, you receive immediate ownership of the vehicle. When purchasing a vehicle with an installment sales contract or loan, you pay down the loan balance and eventually build equity in the vehicle. You receive full ownership of the vehicle after you make your final payment."

In other words one ISN'T the full owner of the car. Think of it as joint ownership.

http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?c ourt=10th&navby=case&no=023072

"Clark, supra, at 12-14.
Under the majority approach, regardless of any express statutory requirements, a secured creditor is not required to disclose its status as a lienholder on a vehicle's certificate of title in order to achieve perfected status. Instead, it is sufficient if the creditor is identified as the owner of the vehicle."

Now you see why you should leave the law to the lawyers. Even if in this one case, in this one state, you were correct. There are fifty other states, and territories, let alone circumstances, you could be wrong.

Could you give me a good two or three examples of countries where the regulation of the supply of food causes starvation? Not countries like North Korea where starvation causes regulation of the supply of food.

First off, the burden of proof is for you to give the examples. You're the one that wants to place these impositions and restrictions on what people would normally pay and trade - it almost sounds disengenuious, but for the sake of the facts.....

.... We cannot find exceptions to this rule, no matter where we look: the recent famines of Ethiopia, Somalia, or other dictatorial regimes; famines in the Soviet Union in the 1930s; China's 1958-61 famine with the failure of the Great Leap Forward; or earlier still, the famines in Ireland or India under alien rule. China, although it was in many ways doing much better economically than India, still managed (unlike India) to have a famine, indeed the largest recorded famine in world history: Nearly 30 million people died in the famine of 1958-61, while faulty governmental policies remained uncorrected for three full years.... -- Sen, A., Journal of Democracy, 1999. Nobel laureate economist Amartya Sen.

And what were those "faulty governmental policies", they were price controlls, rationing, and government controlling the land market.

Anyway, I think I understand free markets pretty well. We found this out in California when the power started going out. We found out the meaning of "whatever the market will bear". But just because companies found they could charge more for electricty and people would still buy it doesn't mean it benefited society as a whole. Nor did it help those (thankfully few) whose health was adversely affected by loss of power.

Do you understand markets? Do you live in CA? I do, and they did NOT deregulate electricity. They deregulated wholesale electricity, but not retail electricity. When the price went up, all the retailers were forced to sell at a loss, and all the wholesalers started to divert electricity away from the state by hook or crook. It is only when all the retailers were on the brink of collapse and the whole system started to collase that the state decided to let the price loose causing a freakin nasty correction. It was state regulation that caused the imbalance to begin with, once again, it's disengenuious to now say now we need the state to fix it.

And I know I surely wouldn't want the same market speculators affecting the price of water who are affecting the price of gas and other petroleum products.

While demand from China, and Katrina caused oil and gas to go up, what has really caused it to go up is http://www.federalreserve.gov/releases/h6/Current/ . So lets see, they drastically increase the amount of dollars in circulation, and now people are shocked when those same dollars have less purchasing power, and they think speculators are screwing them? Yeah right. I don't want the same participants affecting the water supply, who are affecting the oil price.

PS. Starting next year, they will stop publishing the M3 money supply statistics. It's because they, and the US has more debt than can ever be paid off anymore, and we all know what they gotta do. (hint: print money) I wonder how many fools are going to blame it on "speculators" as the price of their gas goes to $30/gallon, which it will, and when their utilities jump to $3500 per month, which they will. I would love to feel pity for all those poor people who are predestined to get screwed, but unfortunately, instead of blaming it on themselves for trusting the government (via the fed) to manipulate the dollar - they will almost certainly blame it on people like me (who are prepared for it) with accusations of "speculation" and greed.

Go back and closely study tax revenues from 2000, 2001, 2002, 2003, 2004 - I believe you are mistaken there

Individual Income tax revenues from the IRS data,

1999 - $1,002,185,765
2000 - $1,137,077,702 Increase
2001 - $1,178,209,880 Increase
2002 - $1,037,733,908 Decrease
2003 - $987,208,878 Decrease
2004 - $990,248,760 Increase

you are simply parroting back the pseudo-stuff you've read in the media

No, what I am saying is mainstream economic science. I suggest you read what Federal Reserve Chairman Bernanke said about the Great Depression, or here where he says about the Fed's behavior leading to the Depression "You're right, we did it. We're very sorry." This is someone who holds a Ph.D. in economics from MIT, was a visiting professor of economics at MIT, an associate professor of economics at Stanford, and a professor and department chair of economics at Princeton, a Fed Governor, and now the Fed Chairman.

Go back and closely study tax revenues from 2000, 2001, 2002, 2003, 2004 - I believe you are mistaken there

Individual Income tax revenues from the IRS data,

1999 - $1,002,185,765
2000 - $1,137,077,702 Increase
2001 - $1,178,209,880 Increase
2002 - $1,037,733,908 Decrease
2003 - $987,208,878 Decrease
2004 - $990,248,760 Increase

you are simply parroting back the pseudo-stuff you've read in the media

No, what I am saying is mainstream economic science. I suggest you read what Federal Reserve Chairman Bernanke said about the Great Depression, or here where he says about the Fed's behavior leading to the Depression "You're right, we did it. We're very sorry." This is someone who holds a Ph.D. in economics from MIT, was a visiting professor of economics at MIT, an associate professor of economics at Stanford, and a professor and department chair of economics at Princeton, a Fed Governor, and now the Fed Chairman.

What happens when the US runs out of financial reserves and Beijing decides to stop buying US Treasury bonds????

Current US Treasury debt as a percentage of GDP is not at unprecedented levels, but certainly it cannot continue to grow at the same rate it has been recently.

The Chinese banking and financial industries are currently highly state-owned and screwed-up. The savings glut of China is significantly responsible for high US current account deficits. This is what leads to the odd situation of a developing country lending to a developed one.

As Chinese financial institutions are modernized (and opened to foriegn competition, i.e. those millionaire suits from New York), we can expect that investment will rise in the reverse direction, that is, from America back to China. This will lead to savers in the industrial countries earning higher returns and enjoying increased diversification through investments in China, and borrowers there would have the funds to make the capital investments needed to promote growth and higher living standards.

This could raise interest rates, but the enhanced return in investments should negate inflationary losses.

The Federal Reserve takes it off.

How much more national can it be than that?