Bernanke: It's a Depression And I Should Be Imprisoned

Discussion in 'Off-topic Political' started by EJR914, Nov 20, 2010.

  1. EJR914

    EJR914 Cheezburger Operator

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    http://market-ticker.org/akcs-www?post=172751

    From this guys opinion, Bernanke and the Fed had some hand in the financial crisis and massive recession that we are still fighting. Of course, nobody is going to come out and admit that, besides Ron Paul. He has said as much before.
     
  2. Thorsen

    Thorsen New Member

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    Although like many on this board who think the Fed is the root of all evil, trying to foster off the blame on them is about as correct as most of Hollywood's movies that involve guns.
     

  3. EJR914

    EJR914 Cheezburger Operator

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    I disagree. I think that the Fed had their hand in this mess. They were not the root cause of it, but they were complicit. They certainly did all they could do to make sure it happened and at best, they did nothing at all to stop it.
     
  4. Rugerer

    Rugerer GeePeeDoHolic

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    "By allowing" :?

    Are you subscribing to the position that our economic mess is due to the government not regulating tightly enough? Should all banks run their loans by the Fed to see if it's "allowed"?
     
  5. Thorsen

    Thorsen New Member

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    I'd love to read how the Fed caused, or at least was complicit in the current financial mess. Linking to a blogger's rant is not substantiation.
     
  6. Hock25

    Hock25 New Member

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    A book on my Christmas list that has been recommended to me is The Creature From Jekyll Island. It's about the Fed and banks and money and the big mess we're in. Here's a link: http://www.amazon.com/Creature-Jekyll-I ... 801&sr=8-1
     
  7. Thorsen

    Thorsen New Member

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    The author is a conspiracy theorist who also advocates that cancer is not being cured because there is an international cabal of various interests who work to keep it as a deadly disease. By the way, he claims to have the cure.

    If you get this book, read it as you would historical fiction.
     
  8. foxtrotterz

    foxtrotterz New Member

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    =D> someone doesn't agree with mainstream line of thought and they are labeled conspiracy theorist. Griffin is a smart man who researched his material. Keep turning your head and just go on believing in what you want. The whole concept of a central bank is destined to make a nation fail.
     
  9. EJR914

    EJR914 Cheezburger Operator

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    No not at all. In fact the opposite. The government, the fed, and the private banks were all in bed together. Do some research. The private banks GAMBLED, knowing that when their gamble failed the government would come bail them out. There is plenty of evidence out there of this.

    You do realize that what happened with the mortgages was literally gambling. In fact, it was so close to gambling that the banks had to go to the STATE and get a special exception only for them, so they would not be subject to gaming laws!

    The corruption is so widespread through the private sector on through the fed and then into our own government that it is astonishing! The regulators stopped regulating, and instead of there being hearings and these criminals being put away for life in prison, they made off with 40 million dollars each in our government tax-payer bonuses!
     
  10. EJR914

    EJR914 Cheezburger Operator

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    :roll: Everything this guy has written in that book can be easily verified. He did years of research to write that book.

    Its easy to just write someone off as a conspiracy theorist. Whatever makes you sleep better at night. Looking the other way will not keep the fed from messing our economy up and making our currency crash. Our country is riding for a fall, and the fed is certainly contributing to all this.

    Why is that we can never look at the fed's accounting and books? Do you know why? It would cause a worldwide depression, because the whole world would realize that its a huge sham, and our wealth is just thin air, all while the fed is making off with the interest that they charge the U.S. just to print money, that You and I pay in taxes. Not to mention the fed is unconstitutional and our founding fathers knew what central banks will do to a country and its currency.

    Why do you think JFK tried to end the federal reserve? Unfortunately he was assassinated before he ever made it law.
     
  11. Thorsen

    Thorsen New Member

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    So JFK was assassinated by the same cabal who keeps cancer as a deadly disease? And I'm the one who gets the eye rolls. Some of you folks are pure Alex Jones level .... you know that right?
     
  12. JiG

    JiG Awaiting censure

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    Oh thank God. Thorsen showed up with his open mind and maturity again. :?
     
  13. Thorsen

    Thorsen New Member

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    JiG, you always make me laugh. As to openmindedness, I am all for that .... as long as your brains don't fall out.
     
  14. EJR914

    EJR914 Cheezburger Operator

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    Here is my eyeroll... :roll:

    Where in the heck did I say that, Thorsen? Boy, there you go trying to twist my words around.

    I said that JFK was assassinated before the law to end the Fed was enacted. You are the one that said there must have been some "End the Fed" conspiracy. There is very little proof to support that argument; therefore, I don't believe it.

    You deduced that, and don't go putting words into my mouth.

    If you'd like to look it up, its Executive Order 11110.

    I understand its hard for a classical liberal such as yourself to realize the damage that the Fed is doing to our currency and eventually to our country, but if you do a little research, you'll understand how the fed manipulates our currency anyway that they want to, and we will never get out of debt, because the more money the Fed prints, the more INTEREST You and I pay them with our tax dollars. We are forever, perpetually in debt thanks to the Federal Reserve. We will always incur debt thanks to them. It makes it much harder to run a balanced or surplus budget when you're constantly incurring debt just to have your own currency! Not to mention the unconstitutionality of the Fed system.

    Here are a few quotes from the Rothchild's themselves:

    "The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class." — Rothschild Brothers of London, 1863

    "Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild

    Here are a few from US politicians:

    "I believe that banking institutions are more dangerous to our liberties than standing armies.
    Already they have raised up a monied aristocracy that has set the government at defiance. The
    issuing power (of money) should be taken away from the banks and restored to the people to
    whom it properly belongs." — Thomas Jefferson, U.S. President.

    "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." — James Madison

    "Whoever controls the volume of money in any country is absolute master of all industry and
    commerce." — James A. Garfield, President of the United States

    "Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" — Sen. Barry Goldwater (Rep. AR)

    This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." — Charles A. Lindbergh, Sr. , 1913

    "From now on, depressions will be scientifically created." — Congressman Charles A.
    Lindbergh Sr. , 1913

    "The financial system has been turned over to the Federal Reserve Board. That Board as ministers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money" -- Charles A. Lindbergh Sr., 1923

    "We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". — Congressman Louis T. McFadden in 1932 (Rep. Pa)

    "The Federal Reserve banks are one of the most corrupt institutions the world has ever seen.
    There is not a man within the sound of my voice who does not know that this nation is run by the
    International bankers — Congressman Louis T. McFadden (Rep. Pa)

    Some people think the Federal Reserve Banks are the United States government's institutions.
    They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign swindlers" — Congressional Record 12595-12603 — Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932

    "The [Federal Reserve Act] as it stands seems to me to open the way to a vast inflation of the
    currency... I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency." — Henry Cabot Lodge Sr., 1913

    Here are some quotes from the Federal Reserve's actual admissions:

    "When you or I write a check there must be sufficient funds in out account to cover the check,
    but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money." — Putting it simply, Boston Federal Reserve Bank

    "Neither paper currency nor deposits have value as commodities, intrinsically, a 'dollar' bill is just
    a piece of paper. Deposits are merely book entries." — Modern Money Mechanics Workbook,
    Federal Reserve Bank of Chicago, 1975

    "We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." — Robert H. Hamphill, Atlanta Federal Reserve Bank

    Maybe some of you guys don't understand the credit system and how US credit is created by the Federal Reserve, but if you understand that, it will help you understand that the FAKE and FALSE credit that the Federal Reserve created, directly allowed the the banks to write loans that they knew would fail, or the loans that they were betting on failing. Then the banks played both sides of the market. They made the bad loans, making the most money that God and everybody has ever seen, it was obscene how much money they made off the bad loans that they knew would eventually fail, and then made even more obscene amounts of money when the economy crashed by shorting or buying puts. Its a win-win for them, and the hard-working American people lose.

    Lastly I leave you with a quote from Ron Paul, "Well if I had to find one group or one person responsible for the collapse, I would put it at the feet of the Fed. They inflated the currency, look at the housing bubble. The housing bubble couldn't have happened if there had not been money created our of thin air, because where would the credit have come from? So the Fed did this, they created the bubble." That is what he said when asked about the Fed's role in the current financial crisis.

    He is now going to be overseeing the Federal Reserve from what I hear, so that should be a good thing.

    So I guess all these presidents, founding fathers, and US politicians are just wack-job nutjob conspiracy theorist, huh, Thorsen? I guess its just easier for you to attack people and call them conspiracy theorist than it is to actually do some research and understand how our economy and central bank system works. Whatever helps you sleep at night.

    Hmm, should I listen to Thorsen, and agree that the fiat currency and the Federal Reserve are good for our country? Or should I agree with The Constitution, former presidents, founding fathers, and US politicians, and not to mention, many current Wall Street insiders?

    So where did this credit come from that created the housing bubble? It could only come from one place. The Private Bank that creates the credit.
     
  15. Thorsen

    Thorsen New Member

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    Ok EJR, let's get back to your claim that the Fed "caused this mess" and back away from claims concerning JFK (that you brought up), quotations and a blogger's rant and instead focus on facts. Since you made the claim that the Fed "caused this mess", then you must have some facts to back up that statement. So I'll ignore the JFK comment (and JiG) since neither add anything to clarify your claim, and we can pretend that this is the beginning of thread and you can start listing facts to support your claim. You made the claim, support it.
     
  16. EJR914

    EJR914 Cheezburger Operator

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    The Federal Reserve by itself cannot cause the bubble, the government and business all had their hand in this. They were part of the problem, though. I will do my best to argue the case using economic principles. I doubt I can PROVE it as you say, as anything can be argued all day long. All I can hope is to persuade you, which I'm pretty sure nothing I write will, as you seem to be set in your decision to support the Fed. That's fine, whatever.

    Basically, the Federal Reserve, kept their rate way too low, which benefited the wall street banks, all the while we were going through a housing boom, everyone was buying a home, even people that couldn't afford it, the banks were able to make the loans and sometimes forced to through the Community Reinvestment Act, and the mortgage originators and brokers were looking the other way at people's qualifications, because they were too busy lining their pockets with cash as well, the regulators stopped regulating, all the while housing prices were sky-rocketing due to the boom. Greenspan should have elevated the federal reserve rate in the face of such a housing boom. That is where the federal reserve helped create the bubble

    We have to go back to Greenspan for this one. Alan Greenspan's low-interest-rate policy after the dot-com bust and 9/11 attacks sowed the seeds for our current recession and the housing bubble. This is the textbook explanation of how the Fed operates. Many people try to downplay the Fed's ability to push down interest rates or to "stimulate" (however temporarily and artificially) the economy.

    From the start of 2002 to the start of 2006 the Federal Reserve bought $200 billion in Treasury bills for cash. There was a $200 billion injection through open-market operations, and yet we have to explain $2 trillion in losses on $8 trillion in face value of mortgages that should not have been made. However, if the required reserve ratio is 10 percent, then a given injection of new reserves, through Fed purchases of securities, allows up to a tenfold increase in the quantity of new money. So with that rule of thumb, a $200 billion injection would be expected to have an impact of $2 trillion.

    To see that interest rates were held artificially low during the housing boom you must look at the annual averages of the monetary-base series and plot the growth rates. Note that the growth rate in 2002 (8.7%) was higher than in 2001 (5.6%). The base bounced around like crazy because of huge injections and then contractions because of Y2K and 9/11. Second, note that the base growth in 2002 was about as high as any year from the 1970s, except 1979 (when base growth was 9.2%). Everybody agrees that the 1970s were characterized by excessively loose monetary policy. It is hard to see then how Greenspan's behavior during the serious onset of the housing boom can be described as moderate.

    One of my hypothesis is that that public policy encouraged low mortgage rates, which raised housing prices. I believe that if the mortgage rates had been higher, then the prices of housing would not have been so artificially high in 2006. Remember, thanks to the Community Reinvestment Act, the government forced banks to write sub-prime loans to people that they knew could not pay it back, but since we were in such an economic boom, the mortgage originators and brokers were lining their pockets with money and regulators were nowhere to be seen, and still are not anywhere to be seen.

    Thirty-year mortgage rates plummeted from about 8.5% in mid-2000 to below 5.5% three years later. This period also saw a spike in monetary base growth, leading me to suspect Greenspan's influence, and the acceleration in the housing boom. On this last point, consider that mortgage rates dropped from about 7% down to about 5.5% from April 2002 to April 2003. Even with perfectly rational consumers, that would be expected to raise home prices about 17%. Over this same period the home price index rose about 14.5%.

    As the prices of houses soared, and the housing boom was in full effect, Greenspan should have made the Federal Reserve rate higher, to stifle the creation of the bubble, but he did not.

    Mortgage rates during the peak of the housing bubble were the lowest in the entire 37 years for which the St. Louis Fed keeps records.

    I think it is incredibly clear that the Federal Reserve manipulated interest rates and certainly had a huge affect on the housing bubble.

    It appears that Alan Greenspan's really low interest rates, which went hand in hand with monetary growth rates comparable to those of the 1970s were a large contributing factor to the housing boom.

    Hope that helps to explain my position, and the position of so many other economist out there, that see that the Federal Reserve causes more harm in our economy than good.

    This will only happen again when we recover from this current recession, we will have another bust, that will be partly laid at the feet of the Federal Reserve. Usually about 7-10 years after the creation of a boom period. Right now good ole' Bernanke, dictator of money, will cause our buying power to be greatly diminished through inflation.

    All boom and bust of our economy is partly generated by the Federal Reserve, as they control the credit, and the money supply. Also, remember that a bust falls three times faster than it took for the boom period to get to its peak. Right now we are at the beginning of a possible boom period. This is good in case you ever decide to do some investing in the stock market. Its always a good idea to buy puts or short stock when the market is in free-fall like in September of 2008. That advice is free.
     
  17. Hock25

    Hock25 New Member

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    Good post, EJR. I hope to understand it better after reading "Jekyll."
     
  18. Thorsen

    Thorsen New Member

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    If by their obvious thinking that if the banks were making the loans then they were good loans, then Greenspan and Bernanke had "their hand in this", then you won't find me disagreeing with you. I would place a greater blame on the Treasury Department, as they should have been tracking the effects of political decisions that allowed the creation of the housing bubble. But there is blame to go around, so Greenspan and Bernanke's pollyannaism regarding the free market certainly attributes them their fair share.

    But, having full faith in free market capitalism usually isn't something we complain about. And that is all that I can see attributable to the Federal Reserve under these two men.

    Please argue and persuade. That can happen. But if your persuasion centers around doing away with our current fiat system and moving back to a bimetallism (gold/silver commodity) economic system, then you simply will not persuade me. I already know how many depressions and recessions were, at least in part, caused by bimetallism prior to the Great Depression (which, by the way can more accurately be laid at the Fed's doorstep than our current economic issues).

    So, do I "support the Fed" as you say? Sure, if it is an either/or choice between returning to some sort of gold standard or fiat currency. The benefits of the latter far outweigh the former when it comes to economic stability and growth.

    Ok, lots of stuff here.

    (1) Fed rates consistently rose from 2004 through 2006. They did not begin to lower until 2007. Looking back we can see that housing prices peaked in 2005 and then began their decline in 2006. So your point about Fed rates being too low leading into the bust are not factually correct. As a way of attempting to mitigate the bust, the Fed has been lowering interest rates since it first began to do so in 2007 and is now as low as it can get as the rate is virtually zero. Basically, other than printing money in order to maintain inflation, the Fed's toolkit is pretty much tapped out.

    (2) CRA has nothing to do with the Fed, but since the Department of Housing under Bill Clinton ordered Fannie and Freddie to fill up 50% of their portfolio with middle and lower income applicants, this point of yours is correct if you pointed to it as one of the primary decision points along the timeline that got us to our current situtation.

    (3) You are correct that mortgage lenders and bankers were looking the other way. In some cases they were actively encouraging and participating in fraud. Leading up to the housing bubble bursting mortgage fraud increased by almost 1500%. And no that isn't a mistake with my zero key. But even those who were not engaging in outright fraud had an incentive to write loans they normally wouldn't write ... Uncle Sam had already indicated that Fannie and Freddie would have to buy them up. Again, doesn't really have a whole lot to do with the Fed, but does again show how a political decision point helped us along this path.

    (4) Although it is addressed in point number one, since you specifically ended this paragraph with "Greenspan should have elevated the federal reserve rate in the face of such a housing boom" and "that is where the federal reserve helped create the bubble" I wanted to point out yet again that the Fed was raising rates three full years ahead of the housing bust. Actually, a better argument against recent Fed activity would be to lambast them for continuing to raise rates during the early declines in housing value. They should have begun lowering rates almost 12 months before they started to do so - but hindsight is always 20/20.

    Yes, Greenspan lowered rates after the dot-com bubble. And yes that is a way to stimulate the economy at the risk of too much inflation. But rates were at 5.25 by the time of the housing bubble. Can an argument be made that the 1% rate of 2003 led to the housing bust? I guess, but I think it was necessary to move us out of the dot-com fiasco. But even then, that was also a combination of greed and political decisions. Do you blame the janitor for cleaning up the messes he has to clean? That is what the Fed had to do following the dot-com mess.

    As to your last sentence, if you dislike the ability of the Fed to stimulate the economy put up an alternative. But if you want to argue the alternative of bimetallism, simply don't try with me. I am fully convinced the facts show this economic system to be less desirable, and to be honest completely unrealistic in today's worldwide fiat currency market.

    Well the problem between QE1 and QE2 was velocity of money was not created under QE1, but shouldn't you have given credit to Brad Delong for the quote?

    This activity of the Fed has nothing to do with the housing crisis being created (the topic of the conversation), but I can understand some people having issues with it. In bullet point:
    - QE1 did not create velocity of money because the Fed focused on buying up bad assets
    - QE2 should create velocity of money because the dealers in the securities the Fed bought will put that money somewhere else; even if they invest it all in gold velocity of money will occur, but I am sure the Fed is hoping for some of these dealers to take the money into the stock market, or even the currency markets.
    - Velocity of money will create an economic lift - think of it as the number of turns of inventory in a business, the higher the number of turns the better (simplistic and not completely true to an economy as an overheated economy is bad too, but a decent enough analogy)
    - From a deficit standpoint, if the QE2 does result in additional inflation all existing debtors will benefit, include the largest debtor in the world, Uncle Sam
    - QE2 should help stave off any remaining deflationary pressures that our economy has been experiencing due to contraction, and if it is true that we are finally moving out of the Great Recession, should be the last infusion the Fed should have to do

    Ok, I think I found where you are cutting and pasting this from, as this has the Brad Delong quote as well as the one above from the blogger that you lifted it from, Robert Murphy.

    To answer his point, loose economic policy was combated by Paul Volcker and was probably the single biggest thing that caused the peanut farmer to lose his job. If he is comparing Volcker's activities to Bernanke's then he is comparing apples to oranges as there were different problems being faced. In the former money supply needed to be contracted, and in the latter velocity of money had to be created. Two completely different things being done to fight two completely different problems.

    As I was reading back through and answering your points I realized you were not positing your own arguments but were cutting and pasting from bloggers. If you want to seriously talk about this using your own words instead of others I'll chat with you. But I am not going through line by line to comment when it is apparent you are simply cutting and pasting; sometimes with information that has no bearing on the topic. Like, for example, the above from the blogger you were using for "reference purposes".
     
  19. elorei

    elorei New Member

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    Holy Plagiarism, Batman! You gotta change stuff up a bit more than that or at least cite the source and not post it in entirety.
     
  20. Thorsen

    Thorsen New Member

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    Well, we aren't writing thesis papers here, so I don't think formal rules of writing should apply. But, if in an argument where you have made a statement concerning the Fed, shouldn't you use your own words to hold up your argument? Or if you want to say "this guy says it better than I ever could", shouldn't you clearly say so and point the other person in that writer's direction?

    What I find more amusing is that stuff was being clipped and pasted which had nothing to do with the discussion at hand. I guess they were copy/pasted because they had numerical percentages in the clipped section. So since those numbers were in a blog entry attempting to portray Greenspan as the primary author of the Great Recession, they must apply to the discussion .... right? :)

    Look, if EJR actually wants to discuss his claim in his own words, I'll talk with him about his point. But I know the basis of his claim. He has bought into bad arguments concerning the benefits of bimetallism over a fiat currency, so the Fed is the bogey man.

    To be honest, I only jumped into this thread because I wanted to see how he would tie his claim of the Fed being the cause of the Great Recession into his ongoing argument for bimetallism over fiat currency. I just wanted to see what logic pretzels he could tie together.