The Federal Reserve

[scott]

yeah, explain how this current flawed fractional banking system is "working better"

1) Using fiat money is completely unrelated to having a fractional reserve banking system.
2) Can you explain what is flawed about our fractional reserve banking system?

[scott]

supply and demand i guess, the same way the value of currencies does. except one is just paper and one is a rare element. gold just seems more stable, it'll hold value through any major financial crisis. the current system seems like it may be unsustainable, we just keep kicking the can down the road.

In September of this year, Gold (using the SPDR Gold Shares as a proxy) fell 11% in value. That was just in one month. How does that qualify as "stable" to you?

[The Reckoning]

the US would be the only nation in the world to use commodity money if it set a gold standard....that would be terrible.

[Drachen]

In September of this year, Gold (using the SPDR Gold Shares as a proxy) fell 11% in value. That was just in one month. How does that qualify as "stable" to you?

It fell 11% in value relative to the dollar.

I agree with you scott, but I just felt it necessary to point out that this comment shows the instability of the dollar more than it shows the instability of gold.

[scott]

I just think that backing our paper money with something real rather than just the lies of a corrupt government would add stability to it. I think the fractional banking system is due to crash in the next decade, we just keep kickin that can down the road. It's a system of debt.

Our fiat money is backed by something real: the full faith and credit of the United States Government, which has never defaulted on a loan in its 235 year history.

I fail to see how backing it with an unstable commodity would add stability.

Why do you think the fractional reserve banking system is due to crash?

[scott]

It fell 11% in value relative to the dollar.

I agree with you scott, but I just felt it necessary to point out that this comment shows the instability of the dollar more than it shows the instability of gold.

Fair point. Though I think can we agree that the value of gold is not static nor particularly stable.

[scott]

Note: I don't vouch for the accuracy of this graph, it's just the first one I found:

[Drachen]

Fair point. Though I think can we agree that the value of gold is not static nor particularly stable.

I would think that it could not be stable and that it would always go up.

If we have 100 million Tons of gold in the world and 7 Billion people, then maybe one gold coin buys you a few groceries.

Now if we have 100 million tons of gold in the world and 14 Billion people, then half a gold coin would HAVE to buy you the same groceries.

Fiscal policy wouldn't cause inflation, Birthrates would.

[scott]

because its a smoke and mirrors economy, there isn't actually any money in the banks. they took on tons of risk because of the FDIC insurance, and damn near all went bankrupt and had to be bailed out by the fed, which still has repercussions today. we're on the brink of a global financial crisis.

How is it smokes & mirrors? It actually works exactly the way economists predict it would.

Using fiat money, having a fractional reserve banking system, having FDIC/NCUA insurance, banks taking unsound risks... all of these are separate items that don't necessarily have anything to do with one another.

Babies and bathwater.

[SnakeBoy]

the system has worked so well that the fed had to loan the banks trillions of dollars to prevent a collapse,

[Winehole23]

was it prevented, or just delayed somewhat?

[Winehole23]

the figure is close to $8 trillion since 2007, $16T if you count foreign ins utions

[scott]

How do they not have anything to do with each other? Under the current system, banks don't even hold onto your money they loan it out and use it to purchase sometimes risky securities..nobody knows or pays attention to what the bank is doing because they all think that they are FDIC insured..therefore the bank is free to take on risk and it's smoke and mirrors because every time you make a deposit, the money supply increases by 10 times what you put in. you and 9 other people are sharing the same deposit essentially, i say sharing because everyone can't go withdraw there money at the same time we share it. the system has worked so well that the fed had to loan the banks trillions of dollars to prevent a collapse, worked so well that it didn't take even 100 years before it has finally spiraled out of control, and we are about to be facing a global crisis.

They don't. You can have fiat money without any of the other things. You can have a fractional reserve system without the other things. You can have deposit insurance without the other things. You can have corruption and unnecessary risk without the other things.

It's pretty straight forward. You're making the critical flaw of lumping them all together.

[SnakeBoy]

was it prevented, or just delayed somewhat?

Ask me in a couple of years. The Fed probably couldn't have prevented (or delayed) it under a gold standard though.

[mavs>spurs]

Oh give me a ing break you gov suckers. The bankers and
Their fraud is 100% to blame for this mess, get off your knees and have a little dignity fractional banking is a HOAX.

[SnakeBoy]

was it prevented, or just delayed somewhat?

I've gambled $20k on prevented...but I could be wrong.

[Winehole23]

Anybody could be wrong, except for YH. He's 100% certain banks are 100% to blame...for something.

[scott]

Thus sprach ze 3.8 GPA

[mavs>spurs]

Yup not being a re enables you to see that the system is broken...just wait and see

[Winehole23]

I've gambled $20k on prevented...but I could be wrong.

http://new.gloomboomdoom.com/public/...ageSPS_ID=1000

[Nbadan]

Yup not being a re enables you to see that the system is broken...just wait and see

The system is broken, but as Occupy is showing, the bankers own the muscle and the guns, and what the bankers want, they'll just take.....so they can print as much money as they want...they control the whole system...

What other option do people have right now?

[SA210]

Well we saw what happened to this man when he wanted to stop using the Fed.

[mavs>spurs]

But tell that to an "economist" like scott who has had it drilled in his head that fractional banking = good from day one and he thinks the system is just fine

[scott]

It's all a massive conspiracy by us professionals. We knew one day a finance/economics undergrad would pull back the curtain, we just didn't think it would be so soon.

[mavs>spurs]

No it's just like doctors..they go all through medical school being taught a certain way, most of them only know how to prescribe medications or have sometimes unneeded surgeries in order to fix a problem. They spend a total of like 2 weeks on nutrition in all of medical school and don't know how to fix anything naturally like a holistic doctor. I can bring up a concern to my doctor and he'll totally dismiss it and look at me like I'm crazy, but when you ask him but what about such and such study and then he'll be like oh yeah, well..um...that CAN work...um..but here let me prescribe you this instead. I had recurring GERD and stomach ulcers that the dude couldn't do anything about until i read up on it and cured it on my own. Bottom line is, you only know what you're taught. That's why some of you economists are staunchly pro-status quo and don't even realize it, it's pure confirmation bias. Anything other than the status quo is just ridiculous to you and it's apparent in your words.