The best explanation of the financial crisis

[SilentBull]

This guy is amazing! Has anyone heard of this guy before?

YouTube - The Free Market Was Framed: Government Intervention Caused The Financial Crisis!

 

[paperplane]

you mean a good reader?

 

[hugolp]

He does good videos. He previously did this one: http://www.ronpaulforums.com/showthread.php?t=239585

 

[Nanerbeet]

When the Fed sets the rate to zero, it is virtually the same thing as if there was no Fed at all. Low interest rates caused by Fed policy are not "artificially low". What is artificial is when the Fed raises them.


ZIP policy is the same thing you'd get in a so-called free market where there isn't a central bank to pay interest on reserves.

 

[Mini-Me]

When the Fed sets the rate to zero, it is virtually the same thing as if there was no Fed at all. Low interest rates caused by Fed policy are not "artificially low". What is artificial is when the Fed raises them.


ZIP policy is the same thing you'd get in a so-called free market where there isn't a central bank to pay interest on reserves.

...

In that case, when the Fed sets the rate to zero and banks borrow from it, where does the money come from that the Fed loans out?

Having a central bank loaning out unlimited money at zero interest rates is nothing like what would happen without having the Fed (and fiat money in general) at all. Without fiat money, the monetary base is restricted to the supply of some solid commodity, like gold, silver, etc., and the interest rates set by the market would reflect that limited supply. The difference between an unlimited, manipulable monetary base, and a monetary base restricted to the limited supply of real commodities, is hardly insignificant. Zero interest rates could never be sustained (or likely even reached for a single moment) with a limited monetary base. Even if we had a fixed amount of fiat money or a fixed growth rate like Milton Friedman wanted (as if that could ever realistically happen given the stupid/evil people attracted to power), the market interest rates would reflect that limited supply.

 

[hugolp]

When the Fed sets the rate to zero, it is virtually the same thing as if there was no Fed at all. Low interest rates caused by Fed policy are not "artificially low". What is artificial is when the Fed raises them.


ZIP policy is the same thing you'd get in a so-called free market where there isn't a central bank to pay interest on reserves.

This is so wrong. Where did you hear or read this?

 

[ILUVRP]

Fed

I wonder what i am missing here.

The FED RES buys money from our treasury for about $1 for a $100 bill.

The fed loans out OUR money to banks and our goverment , we pay interest on our own money so international banks can make billions.

I don't understand why there is not a huge outcry about this by Americans , our national debt would be much less if we didn't have to pay interest on our own money.

If we are going to run under this system of printing money like crazy we might as well let our own treasury collect the interest and dump the federal researve system .

I think only the members of this forum understand this.

 

[echebota]

I don't understand why there is not a huge outcry about this by Americans , our national debt would be much less if we didn't have to pay interest on our own money.

Because this is wrong All FED profits go back to treasury every month. FED has off cource oprrational expenses (buildinngs maintenance, employees salaries) but this FED OPEX is immaterial and is very much regular for a Government agency of this size. By speaking about this non-existant problem we undermine the movement against FED. We have to be carefull on what we put forward as reasons to eliminate the FED. "Americans paying interest on their money" is definitelly not one of them.

 

[TheBlackPeterSchiff]

When the Fed sets the rate to zero, it is virtually the same thing as if there was no Fed at all. Low interest rates caused by Fed policy are not "artificially low". What is artificial is when the Fed raises them.


ZIP policy is the same thing you'd get in a so-called free market where there isn't a central bank to pay interest on reserves.

WTF

 

[ILUVRP]

Because this is wrong All FED profits go back to treasury every month. FED has off cource oprrational expenses (buildinngs maintenance, employees salaries) but this FED OPEX is immaterial and is very much regular for a Government agency of this size. By speaking about this non-existant problem we undermine the movement against FED. We have to be carefull on what we put forward as reasons to eliminate the FED. "Americans paying interest on their money" is definitelly not one of them.

http://www.google.com/url?sa=t&sour...aoFczut-tkExWlKQg&sig2=uCmFR46NM02GQuTbex8Q4g

Its a good read

 

[hugolp]

http://www.google.com/url?sa=t&sour...aoFczut-tkExWlKQg&sig2=uCmFR46NM02GQuTbex8Q4g

Its a good read

That document is wrong.

I recomend you reading this, that cites the actual law, and will give you a good understanding on how the Fed is governed: http://mises.org/daily/4171

 

[Mini-Me]

Because this is wrong All FED profits go back to treasury every month. FED has off cource oprrational expenses (buildinngs maintenance, employees salaries) but this FED OPEX is immaterial and is very much regular for a Government agency of this size. By speaking about this non-existant problem we undermine the movement against FED. We have to be carefull on what we put forward as reasons to eliminate the FED. "Americans paying interest on their money" is definitelly not one of them.

You're correct that the Fed reimburses the Treasury for most interest beyond operating expenses (i.e. profits), but it first pays out a 6% dividend to stockholders according to hugolp's article citing primary sources...which basically works out to skimming from the top (note that some of the interest the Fed receives comes from making loans to other banks, which besides government spending is how money is introduced into the economy). Since the existence of the Fed centers the entire economy around the central banking system, that 6% isn't something to sneeze at. The Fed is still at an absurdly privileged position in the economy at everyone else's expense.

The government isn't totally off the hook for interest though, because it still has to pay interest to other holders of Treasury bonds/bills, like private individuals, companies, and foreign governments. This is part of the reason why our payments on that debt are about a half trillion a year.

Still though, your point is well-taken: The Federal Reserve is fleecing us, but that is not the primary reason to eliminate it. The biggest problem is the disastrous effect that a manipulable monetary base has on our economy, and it doesn't really matter whether the Federal Reserve, the Treasury itself, or Santa Claus is printing it all up; the biggest problem is that it's being done in the first place.