@christo930 The Fed is part of the US government. If the Fed dissolved it's charter and just became one more government dept (which I think should happen), the process would be the same. The IRS accept reserve notes and ONLY reserve notes, so it's all run by the US government.
Mike doesn't respond to people very much. If you read his blog and other blogs like his (such as Warren Mosler and Bill Mitchell) they will answer more of your questions.
@hottenma Maybe I don't this correctly, but from what I understand is that the federal reserve is a quasi gov entity in that it's chairman and board of governors are appointed by the president and approved by the senate and that it's profits go to the US treasury, but it is owned by the member banks. Their stated purpose is to, be the lender of last resort, construct and implement policies designed to maximize employment and stabilize the currency. Is that a good summary?
@christo930 other than being "quasi gov" and that it's "owned by member banks" I'd say you're right on. It's fully government and "owned" by Congress just as the Treasury is "owned" by congress.
Mike and other MMT practitioners heavily challenge the Fed's ability to achieve it's "dual mandate" of employment and price stability. Check out MMT to see how they "side-step" and "puncture" Fed policy.
We can heavily downsize the Fed. One MMT theorists says it could be run a computer!
@hottenma Don't the member banks own shares of the federal reserve and get paid a 6% dividend by law? That's what it says on the federal reserve website. It also says the member banks can't sell the shares, so I assume they can't use them as collateral for any purposes?
@christo930 all you said is correct. That divie needs to STOP asap imho & MMT would agree. There is just no point in that. The fact that they cannot sell the shares & they cannot be used for collateral doesn't make it a real corporation like everyone wants to tout. It's a government entity w/ an f-d up charter that let's rich banks profit on it (they don't own it...they just profit on it). It needs to stop NOW. But that change is minor (aka no need to "end the Fed").
@hottenma I though Federal Reserves is a private bank that owned by private stock holders, which JP Morgan Chase and Rockefeller family is the largest of all. Although the Rothschild do involved in Federal Reserves System.
We are not under a fiat system. Fiat money is sovereign. A federal reserve note is not FIAT. A US Note is sovereign and Fiat. We do borrow money from the fed. We neeeeec a debt free monetary system with US notes!!
@chimandude go check out Warren Mosler's site. He talks about that all the time. Mike's site does too in and amongst alot of other stuff they talk about there too.
Is there any reason of necessity that fiat money must be loaned into existence (with interest)? This "feature" of our money system means that there is always more debt in the economy than money, is that good?
Do you think that working people who have to subject their savings to risk in the market, just to avoid the erosion of their savings has a negative effect to the economy?
Is the fed good or bad? Should it be more open,more secret or same?
@christo930 Any "interest" the Fed accrues each year is paid back to the Treasury minus Fed expenses. There is no concern of the US "paying back" the Fed. It just doesn't work like that.
With proper fiscal policy we can bring price stability & maximum employment. This handles people's savings desires quite well. Market speculation is a choice & even more so at that point.
The Fed could be downsized & merged with the Treasury. But a lender of last resort will ALWAYS be necessary.
@hottenma But throughout the entire period of my life (I was born in 69), the only way to effectively save money is to expose it to risk, otherwise inflation erodes the value. The year I was born, the average car cost about $3k and a new house for $15.5K, today a new car is $30k and a new house for $291k and that is after the high of 329K in May of 07. So to effectively save money, you have to expose it to risk if you want to retain purchasing power. Does that help or hurt the economy?
I'll ask again, is there any reason that fiat currency needs to be loaned into existence or is that just a policy decision? I don't consider this trivial and one of the reasons is that there is not enough money to pay back all the debt because the interest is never created, this is why the economy HAS to grow each year. In 08-09 the economy only shrunk a few % and the whole system was falling apart. This is a feature of our monetary system, but is this necessary for the system to work?
@christo930 a car in 1969 doesn't offer half the amenities a car today offers. The US dollar has not dropped that much anyway. In fact in the early 2000's the US dollar was at the same spot it was in '69. Yes houses are over-priced. There was a housing bubble thanks to excess lending and a buying crazes.
Inflation can definitely hurt an economy but these days we have deflationary concerns not inflation. Economies work best with price stability and full employment.
@hottenma The price of oil was about $2 since 1969 and is about $100 right now. Literally everything has gone up in price, there has been inflation in pretty much every single year since 1969. This is why we need 2 incomes when 1 would do just fine in 69 and this is why we have to subject our savings to risk to keep the inflation monster from eating our money. Do you at least have a guess as to why the US dollar needs to be loaned into existence?
@christo930 yes I know. But the price of oil is not related to the US dollar or the Fed. It's related to the Saudis as the swing producer & monopoly price setter in oil production world-wide (and no energy alts). They set the price & let quantity adjust. See Warren Mosler's site for more on how all that works. It's got zero to do w/ the Fed's charter, our fiat currency, & the US dollar.
The US dollar isn't "loaned into existence" anymore than humans are "loaned" their next breath.
@hottenma ALL US dollars are loaned into existence, if you don't believe that, you need to go look it up. As for the Saudis, they no longer have the excess capacity to be the swing producer, furthermore, OPEC is responsible for about 40% of the world's oil production. Lowering the price of oil would be devastating to the oil industry and hundreds of projects would have to be shut down because they aren't profitable at much lower prices.
@christo930 getting an energy alt., getting off oil, regulating oil speculations properly, and demanding the Saudis lower prices across the boards as the global price setter will bring down those prices and it will thereby "lower all boats" in the economy since all things in the economy are effected by the price of oil. It's just that simple.
@hottenma How can the Saudi's lower oil prices when they produce 8mb/d and the world market is about 87mb/d? Who, exactly, is going to regulate oil speculation, given that oil is a global commodity? As of right now, there simply isn't a viable option for replacing oil.
@christo930 - Inflationg isn't the reason we need 2 incomes now. When you spend money, that becomes someone else's income and your income is your employer's expense. Income=spending, spending=income. The reason we need 2 incomes is that more and more of the national income is going to the top 1/10 of 1%, because they've bought the govt. The economy has grown while wages have stayed flat for 30 years.
@newsunit If you begun buying gold every month since 2000 (a nice round number), you would be way ahead than if you had
1) Saved he money in a bank account (you would have lost money)
2) Invested it in the stock market (you would have lost money (on the average))
3) Invested it in real-estate (you would have lost money)
I don't own any gold, but it seems to me that the first decade of the 2000's was a big winner for gold and a big loser for other traditional investments.
The problem with "money by decree" is if/when people/countries lose faith in it, and no longer trust the issuer. More and more you are seeing other countries move away from the US dollar hegemony.
@tyronebiggums3 that has nothing to do with our fiat currency. That only effects the relative value of the dollar to foreigners. As long as US citizens continue to pay taxes and/or pay debts with US dollars (ie trust the issuer), then this fiat system is fine.
Our country doesn't issue money by decree, the federal reserve does. You won't answer my questions, so why do you bother?
christo930 1 month ago
@christo930 The Fed is part of the US government. If the Fed dissolved it's charter and just became one more government dept (which I think should happen), the process would be the same. The IRS accept reserve notes and ONLY reserve notes, so it's all run by the US government.
Mike doesn't respond to people very much. If you read his blog and other blogs like his (such as Warren Mosler and Bill Mitchell) they will answer more of your questions.
I hope that helps.
hottenma 1 month ago
@hottenma also read Cullen Roche at Pragmatic Capitalism too.
hottenma 1 month ago
@hottenma Maybe I don't this correctly, but from what I understand is that the federal reserve is a quasi gov entity in that it's chairman and board of governors are appointed by the president and approved by the senate and that it's profits go to the US treasury, but it is owned by the member banks. Their stated purpose is to, be the lender of last resort, construct and implement policies designed to maximize employment and stabilize the currency. Is that a good summary?
christo930 1 month ago
@christo930 other than being "quasi gov" and that it's "owned by member banks" I'd say you're right on. It's fully government and "owned" by Congress just as the Treasury is "owned" by congress.
Mike and other MMT practitioners heavily challenge the Fed's ability to achieve it's "dual mandate" of employment and price stability. Check out MMT to see how they "side-step" and "puncture" Fed policy.
We can heavily downsize the Fed. One MMT theorists says it could be run a computer!
hottenma 1 month ago
@hottenma Don't the member banks own shares of the federal reserve and get paid a 6% dividend by law? That's what it says on the federal reserve website. It also says the member banks can't sell the shares, so I assume they can't use them as collateral for any purposes?
christo930 1 month ago
@christo930 all you said is correct. That divie needs to STOP asap imho & MMT would agree. There is just no point in that. The fact that they cannot sell the shares & they cannot be used for collateral doesn't make it a real corporation like everyone wants to tout. It's a government entity w/ an f-d up charter that let's rich banks profit on it (they don't own it...they just profit on it). It needs to stop NOW. But that change is minor (aka no need to "end the Fed").
hottenma 1 month ago
@hottenma I though Federal Reserves is a private bank that owned by private stock holders, which JP Morgan Chase and Rockefeller family is the largest of all. Although the Rothschild do involved in Federal Reserves System.
ltmikepowell 1 month ago
We are not under a fiat system. Fiat money is sovereign. A federal reserve note is not FIAT. A US Note is sovereign and Fiat. We do borrow money from the fed. We neeeeec a debt free monetary system with US notes!!
dfg93353 1 month ago
@dfg93353 Simple, return to the Greenbacks system which President Lincoln once issued.
ltmikepowell 1 month ago
Mikey: Please educate us on "How" the federal reserve makes money...
chimandude 1 month ago
@chimandude go check out Warren Mosler's site. He talks about that all the time. Mike's site does too in and amongst alot of other stuff they talk about there too.
hottenma 1 month ago
fed creates jobs
dimaniak 1 month ago
I really hope that you will answer my questions:
Is there any reason of necessity that fiat money must be loaned into existence (with interest)? This "feature" of our money system means that there is always more debt in the economy than money, is that good?
Do you think that working people who have to subject their savings to risk in the market, just to avoid the erosion of their savings has a negative effect to the economy?
Is the fed good or bad? Should it be more open,more secret or same?
christo930 1 month ago
@christo930 Any "interest" the Fed accrues each year is paid back to the Treasury minus Fed expenses. There is no concern of the US "paying back" the Fed. It just doesn't work like that.
With proper fiscal policy we can bring price stability & maximum employment. This handles people's savings desires quite well. Market speculation is a choice & even more so at that point.
The Fed could be downsized & merged with the Treasury. But a lender of last resort will ALWAYS be necessary.
hottenma 1 month ago
@hottenma But throughout the entire period of my life (I was born in 69), the only way to effectively save money is to expose it to risk, otherwise inflation erodes the value. The year I was born, the average car cost about $3k and a new house for $15.5K, today a new car is $30k and a new house for $291k and that is after the high of 329K in May of 07. So to effectively save money, you have to expose it to risk if you want to retain purchasing power. Does that help or hurt the economy?
christo930 1 month ago
I'll ask again, is there any reason that fiat currency needs to be loaned into existence or is that just a policy decision? I don't consider this trivial and one of the reasons is that there is not enough money to pay back all the debt because the interest is never created, this is why the economy HAS to grow each year. In 08-09 the economy only shrunk a few % and the whole system was falling apart. This is a feature of our monetary system, but is this necessary for the system to work?
christo930 1 month ago
@christo930 a car in 1969 doesn't offer half the amenities a car today offers. The US dollar has not dropped that much anyway. In fact in the early 2000's the US dollar was at the same spot it was in '69. Yes houses are over-priced. There was a housing bubble thanks to excess lending and a buying crazes.
Inflation can definitely hurt an economy but these days we have deflationary concerns not inflation. Economies work best with price stability and full employment.
hottenma 1 month ago
@hottenma The price of oil was about $2 since 1969 and is about $100 right now. Literally everything has gone up in price, there has been inflation in pretty much every single year since 1969. This is why we need 2 incomes when 1 would do just fine in 69 and this is why we have to subject our savings to risk to keep the inflation monster from eating our money. Do you at least have a guess as to why the US dollar needs to be loaned into existence?
christo930 1 month ago
@christo930 yes I know. But the price of oil is not related to the US dollar or the Fed. It's related to the Saudis as the swing producer & monopoly price setter in oil production world-wide (and no energy alts). They set the price & let quantity adjust. See Warren Mosler's site for more on how all that works. It's got zero to do w/ the Fed's charter, our fiat currency, & the US dollar.
The US dollar isn't "loaned into existence" anymore than humans are "loaned" their next breath.
hottenma 1 month ago
@hottenma ALL US dollars are loaned into existence, if you don't believe that, you need to go look it up. As for the Saudis, they no longer have the excess capacity to be the swing producer, furthermore, OPEC is responsible for about 40% of the world's oil production. Lowering the price of oil would be devastating to the oil industry and hundreds of projects would have to be shut down because they aren't profitable at much lower prices.
christo930 1 month ago
@christo930 getting an energy alt., getting off oil, regulating oil speculations properly, and demanding the Saudis lower prices across the boards as the global price setter will bring down those prices and it will thereby "lower all boats" in the economy since all things in the economy are effected by the price of oil. It's just that simple.
hottenma 1 month ago
@hottenma How can the Saudi's lower oil prices when they produce 8mb/d and the world market is about 87mb/d? Who, exactly, is going to regulate oil speculation, given that oil is a global commodity? As of right now, there simply isn't a viable option for replacing oil.
christo930 1 month ago
@christo930 - Inflationg isn't the reason we need 2 incomes now. When you spend money, that becomes someone else's income and your income is your employer's expense. Income=spending, spending=income. The reason we need 2 incomes is that more and more of the national income is going to the top 1/10 of 1%, because they've bought the govt. The economy has grown while wages have stayed flat for 30 years.
hrmIwonder 3 weeks ago
Fiat money is useless according to the NIA precious metals pumpers. Looks like their metals are worth less now.
newsunit 1 month ago
@newsunit If you begun buying gold every month since 2000 (a nice round number), you would be way ahead than if you had
1) Saved he money in a bank account (you would have lost money)
2) Invested it in the stock market (you would have lost money (on the average))
3) Invested it in real-estate (you would have lost money)
I don't own any gold, but it seems to me that the first decade of the 2000's was a big winner for gold and a big loser for other traditional investments.
christo930 1 month ago
The problem with "money by decree" is if/when people/countries lose faith in it, and no longer trust the issuer. More and more you are seeing other countries move away from the US dollar hegemony.
tyronebiggums3 1 month ago
@tyronebiggums3 that has nothing to do with our fiat currency. That only effects the relative value of the dollar to foreigners. As long as US citizens continue to pay taxes and/or pay debts with US dollars (ie trust the issuer), then this fiat system is fine.
hottenma 1 month ago
Thank you! So was our country's first currency, Tobacco, a fiat currency? How did they manage to corrupt that currency, smoke more than there share?
007HubbaBubba 1 month ago
These are great videos Mike ...
AmericanPolemic 1 month ago