vimothy
yurp
I never said that.
Worst Mistake Never Made
- Thread starter zhao
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I never said that.
Mr BoShambles
jambiguous
What should a bank be then? Just somewhere we deposit and withdraw money? And if this is the case then how would a bank make sufficient money to provide all their branches, cash points and other technology, pay their staff, and make some profit so that their endeavours were worthwhile (startup costs, running costs) etc etc?
Why/how would a bank lend money if there was no guarantee that their loans would be repaid? It is precisely because of the inherent risks involved in lending money that banks have to charge interest...
Mr. Tea
Let's Talk About Ceps
I don't think noel is saying banks shouldn't charge interest, but that they have no right to offer credit at all when they don't have the tangible assets to back it up. Er, I think. Noel?
noel emits
a wonderful wooden reason
I'm not talking about Barclays down the high street, I'm talking about banks that issue and regulate currency.
Originally Posted by vimothy
What about this noel: why do you place such importance on human happiness? Don't you think that this is an unrealistically human-centric view of life, an unrealistically self-centred view of life?
but see that is the "modern" warped idea of "happiness" which is self centered and self serving, which ironically does NOT lead to happiness.
i believe "happiness" of one can not exist without the "happiness" of others. and the well being of our species is dependent upon the well being of other species and the environment in which we live.
the Dobe are entirely stress free. and they live in a sustainable, eco-friendly way.
What about this noel: why do you place such importance on human happiness? Don't you think that this is an unrealistically human-centric view of life, an unrealistically self-centred view of life?
but see that is the "modern" warped idea of "happiness" which is self centered and self serving, which ironically does NOT lead to happiness.
i believe "happiness" of one can not exist without the "happiness" of others. and the well being of our species is dependent upon the well being of other species and the environment in which we live.
the Dobe are entirely stress free. and they live in a sustainable, eco-friendly way.
noel emits
a wonderful wooden reason
I'm going to form the Doobie tribe. Our religion will be Bud-ism.
We will worship Michael McDonald
We will worship Michael McDonald
Mr BoShambles
jambiguous
Right... central banks. Anyone know of any good reasons why central banks have to charge interest on the money they issue to governments? There must be stated reasons whether on not they are valid.
Mr BoShambles
jambiguous
I guess there is no good reason to assume that governments won't default on the loans they take out and if they take control of printing money with no mechanism to regulate it (i.e. they don't have any pressure to balance their books) then a downward inflationary spiral is a serious risk. Never good for the average joe bloggs on the street...
noel emits
a wonderful wooden reason
"I believe that banking institutions are more dangerous to our liberties than standing armies ... If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." (Thomas Jefferson, 1743-1826)
You all know that one right?
You all know that one right?
noel emits
a wonderful wooden reason
"A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men ... [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world--no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men." (Woodrow Wilson, The New Freedom: A Call for the Emancipation of the Generous Energies of a People )
noel emits
a wonderful wooden reason
On June 4, 1963, John F. Kennedy signed a virtually unknown Presidential decree, Executive Order 11110 , a mere four months before his assassination on November 22, 1963. This decree returned to the U.S. Federal government the Constitutional right to create and "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury."
As a result, US$4,292,893,815 of new "Kennedy Bills" were created through the U.S. Treasury instead of the Federal Reserve System. In 1964, Kennedy's successor, Lyndon B. Johnson, stated that, "Silver has become too valuable to be used as money." The Kennedy bills were removed from circulation.
....
The importance of these bills is not to be underestimated. The regular Federal Reserve Notes are created through the Fed who exchanges them for an interest-paying government bond. These "United States Notes" were directly created through the U.S. Treasury and backed by the silver held there.
There was no interest to be paid on these bills by the government (or more correctly, by the tax-payer) to the Federal Reserve.
http://www.marketoracle.co.uk/Article2522.html
As a result, US$4,292,893,815 of new "Kennedy Bills" were created through the U.S. Treasury instead of the Federal Reserve System. In 1964, Kennedy's successor, Lyndon B. Johnson, stated that, "Silver has become too valuable to be used as money." The Kennedy bills were removed from circulation.
....
The importance of these bills is not to be underestimated. The regular Federal Reserve Notes are created through the Fed who exchanges them for an interest-paying government bond. These "United States Notes" were directly created through the U.S. Treasury and backed by the silver held there.
There was no interest to be paid on these bills by the government (or more correctly, by the tax-payer) to the Federal Reserve.
http://www.marketoracle.co.uk/Article2522.html
vimothy
yurp
Opportunity cost + risk premium
Mr BoShambles
jambiguous
Interested to know Vim what you make of the whole central banks conspiracy that Noel is suggesting. Especially this bit from the article he links to:
Rising prices is not intrinsic to free-market capitalism. It is a monetary phenomenon caused by increasing money supply. Money, like anything else, is subject to the laws of supply and demand. The more abundant the money, the lower its value.
If the amount of money were to remain constant relative to population, we would see a general decrease in the prices of goods as technologies and transportation efficiencies improved. This would be a boon to consumers.
Consider the rapid spread of telecommunications and computers, two industries where technological improvements have actually been able to outpace the price escalation caused by the monetary inflation of central banks. Lower prices have led to a surge in consumer usage. People don't hold onto their money in hopes of waiting for a better computer or phone. Quite often they buy a second or third one. The consumer base grows as well because for those who previously could not afford one now can do so.
Despite these blatant observations, conventional economic thought believes that decreasing prices are bad for the economy because it encourages saving. It is widely held that consumer spending, not saving, is what drives the economy.
This is a falsehood, perpetrated by those would stand much to gain by further and further indebtedness of the public. Savings leads to capital investment which is the real driver behind capitalism.
Which 'conventional' economists - if any - believe this? Are central banks necessary and is there any credibility in the belief that the whole system is the hands of a few very powerful bankers who can manipulate the money flow for there own benefits (which run contrary to those of the masses?) I don't know what to make of all this...
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vimothy
yurp
This bit is spot on:
EDIT: Inflation is basically an extremely underhand government tax. Noel is veering dangerously close to libertarianism here. He'll be hanging out at the Ludwig von Mises Institute next!
EDIT: Inflation is basically an extremely underhand government tax. Noel is veering dangerously close to libertarianism here. He'll be hanging out at the Ludwig von Mises Institute next!
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Mr BoShambles
jambiguous
Ok so if that is the case then, is there a strong argument to be made that indeed central bankers - by increasing and decreasing the amount of money in circulation relative to pop - are fucking the general public over by making them more and more indebted while raking in huge profits?
vimothy
yurp
That's too strong a statement, IMO. The heads of central banks have possibly the most difficult job in finance. I mean, really, who the fuck knows how macro even works? (Limits of knowledge, once again)! And many of them (Bernancke, Greenspan, King, e.g.) are sympathetic to Friedman's monetarism and come from a broadly libertarian stand-point.
EDIT: And in any case, they're independent of the government in all right-thinking states.
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noel emits
a wonderful wooden reason
I'd say so.
Even more fundamentally though by allowing the central banks to issue currency with debt attached governments must continually borrow further money at interest to pay off the debt. In turn of course governments collect enormous sums in taxes from the public to pay this interest.
noel emits
a wonderful wooden reason
Obviously they are in a position to manipulate the macro.
Does it really make sense to have the regulation of the money supply in private hands?
vimothy
yurp
Well, that is their job-description, right? They're not making money out of it, they're trying to find the correct balance, to the extent that they are able, i.e. to the extent that they are able to understand macro and the forces it shapes. As an example, look at Alan Greenspan -- lauded, feted, whatever, as a financial genius, until last summer when it all started to go wrong. Do you think this was deliberate on his part?