Ur banks are belong to us

[guartz]

way to twist words.

Limited tools = few in number. I never said they don't have far-reaching effects. You aren't even understanding the point I'm making.

Seems so simple, low rates = speculation, high rates = bubble burst. You are attributing the conditions of that time with the rates, when they are set as a reaction to the times. They will raise rates when the markets have stabilized to curb the inevitable inflation (i am referring to the current state of the market). If they did it now it would worsen the recession, and would probably bankrupt many companies due to cash flow issues. Seriously, try to understand the bigger picture, try to consider what would have happened if they did the opposite of what they did or if they did nothing.

Maybe analysis is too hard? I imagine it is much easier to put on the tinfoil-hat instead.

More like this though, low rates = inflation, high rates = bubble burst based on your reasoning.

I see what you are saying though, low rates boosts markets and high rates stabilize inflation. I'm trying to look at the bigger picture here, but I need your help I think. Can you help me understand why was the fed implemented in the first place?

[sunb1ind]

I smell a trap

[Beckwin]

I'm gonna field a guess and say the Fed was reacting to the housing market, guartz.

No, not unless they can see into the future.

I thought the housing market bust at least 8 months ago, if not more.

err, it started due to low rates, busted at high rates.

dot.com similar,

1994 similar,
etc.

not a hard pattern to follow.

I think you are looking at it the wrong way. Cutting rates is in response to various economic stimuli to stimulate growth. They raise rates to curb inflation and wean us off cheap credit. The Fed has very limited tools to affect the markets, the people at fault are those that abuse the cheap credit, and lax regulations regarding securities and underwriting.

I don't think The Fed gets enough credit for weathering those storms, essentially translating those recessions into growth. Countries such as Indonesia and Thailand couldn't in the East Asian financial crisis.

This. I'm no economy expert not do I profess to be, but in my limited understanding, the Fed adjusts the interest rate in effort to maintain a stable economy. .com crashes due to wake-up from overspeculation so Fed cuts rates to encourage spending and growth. As housing booms, they scale up the rate accordingly; as housing busts they reduce it again to try and stimulate the market.

[Alleya]

So wait, is guartz the pig or the horse?

[sunb1ind]

I want to play fantasyland too. Let'ssss say the mysterious paper-printing magicians really DID have America's best interests(lol zing) and they were reacting to the economy.

WOW They are doing a BANG-UP JOB right now HUH? 8)


Fun fact: did u kno the constutetion opposes central banking sys? tru story

[Beckwin]

I want to play fantasyland too. Let'ssss say the mysterious paper-printing magicians really DID have America's best interests(lol zing) and they were reacting to the economy.

WOW They are doing a BANG-UP JOB right now HUH? 8)


Fun fact: did u kno the constutetion opposes central banking sys? tru story

So then tell me, what is the Fed's dastardly ulterior motive?

And what, do you really think private business is just so intelligent that nothing bad could ever happen as a result of their action? It's all the government's fault? ITS THE FUCKIN MAN KEEPIN US DOWN

[sunb1ind]

I want to play fantasyland too. Let'ssss say the mysterious paper-printing magicians really DID have America's best interests(lol zing) and they were reacting to the economy.

WOW They are doing a BANG-UP JOB right now HUH? 8)


Fun fact: did u kno the constutetion opposes central banking sys? tru story

So then tell me, what is the Fed's dastardly ulterior motive?

And what, do you really think private business is just so intelligent that nothing bad could ever happen as a result of their action? It's all the government's fault? ITS THE FUCKIN MAN KEEPIN US DOWN

I think you're missing the point, The Federal Reserve is NOT a govt bank. Its no different from any other central bank in the world. Why wouldn't there exist a corrupt system within a privately owned, internationally traded, central bank that has so much power over our govt?

Seriously, google up some Andrew Jackson and tell me that man didn't know wtf he was doing.

[evilbau]

More like this though, low rates = inflation, high rates = bubble burst based on your reasoning.

I see what you are saying though, low rates boosts markets and high rates stabilize inflation. I'm trying to look at the bigger picture here, but I need your help I think. Can you help me understand why was the fed implemented in the first place?

low rates do translate to inflation, due to increases in the money supply.

I suspect you are trying to bait me with that last question, but I will indulge... it was created to provide stability to the national currency, to give some control to money supply, making the banking system more liquid. I personally have never been assed out during a run on a bank, subject to the whims of the mob. I also have not lived through a Great Depression, where the government has no mechanism to alleviate it so it lasts for decades. Some of the charges people have levied against the Federal Reserve system are true, but on the other hand I do not wish to live in those times.

As I said, the Fed does not have very many ways to affect the market, its power comes from financial analysts interpreting, projecting, and trying to take advantage of any changes. People have the tendency to attribute all wrongdoings of individuals who seek to exploit any rate change and change of money supply to the Fed itself. It is not blameless, as it does create the conditions for, say, the real estate boom, but they weren't the the ones who sold 5/1 ARMs, they weren't the ones who sold the risky bonds (although now they are forced to buy them haha).

Not everything is a conspiracy.

[Beckwin]

Why would a Bush appointee force us into a mortgage crisis that could lead to significant recession going into an election season?

[sunb1ind]

Why would a Bush appointee force us into a mortgage crisis that could lead to significant recession going into an election season?

Look how long its taking for people to realize that we are headed into a depression? Who is benefiting off the mortgage crisis? I don't think its a huge leap to say they are reaping the rewards from off this on wallstreet. I have a few companies in mind that I wish I bought stock in lol

[evilbau]

Seriously, google up some Andrew Jackson and tell me that man didn't know wtf he was doing.

The United States of the 1830s was not the financial center of the world. It was not a $11 trillion nation. It was not very financially sophisticated. I don't think invoking Andrew Jackson's name means very much over 150 years after he lived.

Why don't you try to make a point yourself instead of telling people to google it themselves?

[sunb1ind]

Seriously, google up some Andrew Jackson and tell me that man didn't know wtf he was doing.

The United States of the 1830s was not the financial center of the world. It was not a $11 trillion nation. It was not very financially sophisticated. I don't think invoking Andrew Jackson's name means very much over 150 years after he lived.

Why don't you try to make a point yourself instead of telling people to google it themselves?

You obviously don't know much about Andrew Jackson or American History. If you did, then you would know where the central bank came from, and why Andrew Jackson fought against the institution of a central bank. That's ignorant of you to think America is the financial center of the world. It doesn't matter how you scale the events of the past to the present, they are still evermore relevant today.

edit: Hey, I would love to stay here and give you a history lesson, but I'm afraid someone else will have to pick-up where I left off and maybe provide some pictures to help explain the Fed Reserve better. I'm off to dream about winning the lottery and buyin me a house in the Bahamas, peace.

[Beckwin]

Why would a Bush appointee force us into a mortgage crisis that could lead to significant recession going into an election season?

Look how long its taking for people to realize that we are headed into a depression? Who is benefiting off the mortgage crisis? I don't think its a huge leap to say they are reaping the rewards from off this on wallstreet. I have a few companies in mind that I wish I bought stock in lol

...so, about the upcoming Presidential election, which coincidentally will also be making a Fed chair appointment in their term...

[evilbau]

typical sunblind lol

make some vague implications and then run off. For someone who professes to have the intellectual high ground you sure don't like to make a point and back it up. I know quite a bit about Andrew Jackson and United States History, but I wouldn't presume to know more than a stranger. That you do just shows how immature you are. Andrew Jackson's alternative to a national bank was a 'agricultural republic,' which reflects upon the times: we are no longer a nation of farmers. His solution to inflation was to force the banks to produce specie that he knew they didn't have, effectively destroying the banking system (not even the national bank!) and inducing a panic. Andrew Jackson is not the be-all-end-all on opinion regarding a national bank.

America and more specifically, New York, is the financial center of the world. America is pretty central to the world economy if you hadn't noticed. London, Hong Kong, and Tokyo are all financial centers and are important, but they aren't New York City. Which would be more cataclysmic for the world economy: New York being nuked, or London?

[aurik]

Seriously, google up some Andrew Jackson and tell me that man didn't know wtf he was doing.

The United States of the 1830s was not the financial center of the world. It was not a $11 trillion nation. It was not very financially sophisticated. I don't think invoking Andrew Jackson's name means very much over 150 years after he lived.

Why don't you try to make a point yourself instead of telling people to google it themselves?

You obviously don't know much about Andrew Jackson or American History. If you did, then you would know where the central bank came from, and why Andrew Jackson fought against the institution of a central bank. That's ignorant of you to think America is the financial center of the world. It doesn't matter how you scale the events of the past to the present, they are still evermore relevant today.

edit: Hey, I would love to stay here and give you a history lesson, but I'm afraid someone else will have to pick-up where I left off and maybe provide some pictures to help explain the Fed Reserve better. I'm off to dream about winning the lottery and buyin me a house in the Bahamas, peace.

I still don't see a point.

[guartz]

More like this though, low rates = inflation, high rates = bubble burst based on your reasoning.

I see what you are saying though, low rates boosts markets and high rates stabilize inflation. I'm trying to look at the bigger picture here, but I need your help I think. Can you help me understand why was the fed implemented in the first place?

low rates do translate to inflation, due to increases in the money supply.

I suspect you are trying to bait me with that last question, but I will indulge... it was created to provide stability to the national currency, to give some control to money supply, making the banking system more liquid.

ok hold on, I think you lost me there. It was created to provide stability to the national currency and make banking system more liquid?

If I remember the history lesson correctly, the reason banks ran out of money when the stock market crashed, was because deposits were liquid. That is, for every dollar deposited, banks loaned out 100.

Of course, as you said, there was not sufficient control, and scrupulous investing firms were to blame largely and the fed did fix it by creating more liquidity and at the same time asserting more regulations and control.

So here is where I'm lost though, wouldn't the sensible thing to do in that situation is restrict money liquidity and assert personal liability towards investment corps? Instead of just the opposite, if the currency stability was the goal?

I mean, it's been almost 100 years and the same thing keeps happening whats the deal? I just don't understand.

[Kuya]

So some people in this thread are arguing about the particularities or reasons as to why the current "crisis" is taking place and also including a brief history as to where and why it's manifesting, and the other side is arguing that the Feds are out to get everybody.

Come d'habitude.

[evilbau]

More like this though, low rates = inflation, high rates = bubble burst based on your reasoning.

I see what you are saying though, low rates boosts markets and high rates stabilize inflation. I'm trying to look at the bigger picture here, but I need your help I think. Can you help me understand why was the fed implemented in the first place?

low rates do translate to inflation, due to increases in the money supply.

I suspect you are trying to bait me with that last question, but I will indulge... it was created to provide stability to the national currency, to give some control to money supply, making the banking system more liquid.

ok hold on, I think you lost me there. It was created to provide stability to the national currency and make banking system more liquid?

If I remember the history lesson correctly, the reason banks ran out of money when the stock market crashed, was because deposits were liquid. That is, for every dollar deposited, banks loaned out 100.

Of course, as you said, there was not sufficient control, and scrupulous investing firms were to blame largely and the fed did fix it by creating more liquidity and at the same time asserting more regulations and control.

So here is where I'm lost though, wouldn't the sensible thing to do in that situation is restrict money liquidity and assert personal liability towards investment corps? Instead of just the opposite, if the currency stability was the goal?

I mean, it's been almost 100 years and the same thing keeps happening whats the deal? I just don't understand.

Liquidity is how easily something can be converted into money/cash. In this context, liquidity refers to the ability for banks to convert their assets to cash. The National Bank provides this by supplying the banks: runs can no longer occur. Say you have a small local bank. If you manage to round up all depositors and try to withdraw your money at the same time, assuming they don't have the cash on hand, they will go bankrupt. With the Federal Reserve, they will be able to cover those withdraws no matter what, although if it continues obviously the bank cannot survive, but it acts as a safeguard. That wasn't a realistic example, but there are many cases where a bank's assets being illiquid will affect the operations (e.g. Countrywide, Wamu)

You are talking about a fractional reserve banking system. In exchange for the liquidity, the bank gets to invest the money and keep a certain percent (say 20%) to cover operations. It all basically boils down to an agreement: banks only lend out a %, and the Federal Reserve will guarantee they can cover withdrawals. Without the presence of a National Bank, the individual banks would do this anyway, and if a run occurred, they would be screwed. But they also could not forgo the ability to make loans, that is their business after all.

After all that if you still don't think its wise to have this kind of protection for our banks and its consumers, well, I guess you are entitled to your opinion.

[Beckwin]

guartz, bernanke admitted the Fed fucked up basically causing the Great Depression, but since then, we haven't had anywhere near the kind of financial calamity. It's not like this housing/mortgage bust is going to cause another Great Depression, and I think you could probably make a compelling argument for liquidity contributing to America's rise and reign as economic superpower. Having people invest in you is a pretty good thing for the economy.

Gold standard was getting too outdated, and would only hold back the value of American currency, I think- gold would have to be inflated in value to compensate for our economic strength, yet that would mean all the gold in other countries goes up in value too. It just doesn't seem flexible enough to accommodate an expanding and global economy.

[Heian]

I'm gonna field a guess and say the Fed was reacting to the housing market, guartz.

No, not unless they can see into the future.

I thought the housing market bust at least 8 months ago, if not more.

Its just like we are not in a recession.