A Fed Thread

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Xan
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Re: A Fed Thread

Post by Xan » Tue Feb 11, 2020 8:38 am

The accusation of "literalist" would apply when somebody takes figurative language, like "it's raining cats and dogs", and takes it literally, as in thinking animals are falling from the sky.

Figurative language has no place in law and especially in a constitution. "enumerated powers" is not figurative language: the only reason those words are there is to specifically repudiate your interpretation. Congress can NOT do anything it wants; it has specifically enumerated powers outside of which it has no authority.

If the best argument for the constitutionality of the Fed (or anything) is that the word "enumerated" should be interpreted as having the exact opposite meaning of what it actually means, then it is clearly unconstitutional. I don't know whether you're presenting the best argument for the constitutionality of the Fed, but if so, then it ain't.

I also don't understand why you're saying that nobody can say a law is unconstitutional until a court finds it unconstitutional, while simultaneously saying that the only way a court can find a law unconstitutional is after somebody says it's unconstitutional.

Yes, to a large extent this is yelling at the TV and expecting something to change. But isn't that a big part of what we do here?
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Re: A Fed Thread

Post by Kbg » Tue Feb 11, 2020 10:46 am

Yes, to a large extent this is yelling at the TV and expecting something to change. But isn't that a big part of what we do here?

Awesome, I loved this. It should go down in the board's hall of great quotes!

I little more yelling...I'm no lawyer nor do I pretend to have any insight into constitutionality....but getting back to the Fed.

I do have a fair bit of the social sciences under my belt as well as economics and I have just never understood what the big issue is with the fed; my argument is as a follows:

1. Pure and simple, money is whatever people believe it is. If they accept something as a store of value that isn't the actual thing then its money. This has always been the case throughout history. Copper disks, seashells, tulips, silver, gold, wheat, clay tablets...there's been a lot of things that have been money. In today's world it's not even paper dollars, it's computer 1s and 0s.

2. In my experience hard money enthusiasts really only look at part of the actual behavior of the stuff. They are all over it's benefits when it comes to constraining inflation, but historically it just has not performed that way for a very simple reason...you can take gold (for example) and add a bunch of other metal to it or mint a much smaller piece of it and stick the same number on it...and governments have done that repeatedly. And, in more recent history no one in their right minds will go back to a gold standard because in a shrinking economy a fixed money standard exacerbates liquidity shortages sometimes to an amazing degree. Such behavior is just plain harmful and counterproductive.

3. Finally, why have most "smart" countries walled of their Fed's from their political processes...see paragraph 2 above. Surprise, politicians will simply do what is best for them and that often ends up being "really" turning on the printing presses. (However, what is really weird is turning on the printing presses isn't doing what it used to...as I've noted before on the board, there is probably a Nobel in Economics to whomever explains what is going on now...historically, this is truly weird stuff)
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Mountaineer
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Re: A Fed Thread

Post by Mountaineer » Wed Feb 12, 2020 8:56 am

Money just makes a barter system easier for those who are not completely self-sufficient in producing their own needs. Free money, in all of its various government sponsored forms, just rewards those who would starve to death in a true barter system.
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Re: A Fed Thread

Post by boglerdude » Thu Feb 13, 2020 1:15 am

> what the big issue is with the fed

Billions created with a keystroke, daily. Are we allowed to see who's getting the repo money?
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Re: A Fed Thread

Post by dualstow » Thu Feb 13, 2020 7:01 am

Mountaineer wrote:
Wed Feb 12, 2020 8:56 am
Money just makes a barter system easier for those who are not completely self-sufficient in producing their own needs. Free money, in all of its various government sponsored forms, just rewards those who would starve to death in a true barter system.
I was going to raise my own cows and make my own shoes and smelt my own metal, install my own plumbing, and build my own clean room, and fabricate my own semiconductors, but...money seems convenient. O0
TLT HITS NEW 52-WK HIGH
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Re: A Fed Thread

Post by shekels » Thu Feb 13, 2020 9:28 am

Without opening a can of worms.
In the U.S. debt-based money system, can we all agree that Money is Loaned in existence?
>:D yes/no
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Kbg
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Re: A Fed Thread

Post by Kbg » Thu Feb 13, 2020 1:56 pm

I think a more accurate description is US money is seeded into existence and depending on what is happening in "the environment" money grows or shrinks.

Who is getting the repo money, large financial institutions of course. However, by definition repos are fully collateralized (and the underlying way more liquid).

Let's imagine I have a 4 week note at Treasury Direct that doesn't expire for two more weeks and I need that cash tonight or for the next week. I turn that note over to boglerdude and he let's me have his note that just matured to use. In exchange I agreed to give him my note + a little interest. He's good, I'm good, boglerdude makes a little extra money at no serious risk.

Wah lah, a repo.

But let's say Russia invades some other country and kbg sounds way too much like kgb and BD just doesn't trust me...well then BD is going to get my note anyway and charge kgb way more interest to do so.

It's of course a bit more complex but the two key points are...

1. Fully collateralized

2. It's not the amount it's the risk that matters; and therefore, what people should watch is what is going on with the associated repo loan spread(s).
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Re: A Fed Thread

Post by technovelist » Thu Feb 13, 2020 3:20 pm

shekels wrote:
Thu Feb 13, 2020 9:28 am
Without opening a can of worms.
In the U.S. debt-based money system, can we all agree that Money is Loaned in existence?
>:D yes/no
Almost all money in the current system is lent into existence. There’s a tiny amount of legal tender money in this country that isn’t. You may have even held a little of it in your hands.
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