1912 Cartoon

[gwynedd1]

Re: 1912 Cartoon

The Fed's flaw is the same flaw as anything involving people: corrupt people.

The libertarians say that this can be fixed via some amorphous 'free market' price setting, but of course conveniently neglect that the free market must also work through people.

Another alternative is to end all fiat currency and fractional reserve lending, but the consequence of this is highly negative especially in a recessionary era.

What we need is a system which somehow automatically morphs from high fiat during recessions, to fractional reserve during early expansions, to 'hard money' and 'enforced savings' during peak expansions.

I sometimes wonder if even a completely random monetary system every 10 years would also be better; the randomness prevents the full payout from gaming the system.

The "free market" zealots also forget that markets are established by laws. Otherwise, why not get into the extortion business? Sheep herders benefit from decency laws. People who sell life preservers benefit from water safely laws and so on. And then there is the best of all, war profits.

[oddlots]

Re: 1912 Cartoon

That's a neat trick POZ.

[EJ]

Re: 1912 Cartoon

While we're on the subject, recall the chart below that shows how the Fed’s balance sheet changed between 2007 and 2010. Note the change in the composition of assets and liabilities, and also that by adding MBS and Agency debt to the assets and liabilities sides of the ledger at once the Fed’s net position worsened by only $16 billion on a $1.4 trillion increase in liabilities. Technically, the virtually worthless MBS sit on the Fed’s balance sheet as “deposits.”

That was the trick. That is what makes a central bank unlike any other kind of bank.

[ProdigyofZen]

Re: 1912 Cartoon

I am just saying oddlots ;) hehe

[ProdigyofZen]

Re: 1912 Cartoon

Sweet jesus, I love this EJ. Thanks!

[gwynedd1]

Re: 1912 Cartoon

There seems to be more than a few 'Reagan Haters' on iTulip, but I believe the old man made at least one statement that gives the appearance of being infallibly true:

“No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear.
Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!

Unfortunately it seems that government is expanding only for the 21%. 1% at the top and 20% at the bottom.

[lektrode]

Re: 1912 Cartoon

Unfortunately it seems that government is expanding only for the 21%. 1% at the top and 20% at the bottom.

right - and dont forget the political class... (dcarrigg excepted of course, he's one of us ;)

why upon reflection of this obs, have decided that the Rest of Us, are part of "the 69%"

the idea that its "1% vs the other 99" is laffable

[lektrode]

Re: 1912 Cartoon

altho its somewhat true, isnt it?
in the days of yore, the dems in the south represented the 'rebels' vs the lincoln republicans and now they represent the feeding frenzy at the .gov trough, as in: they've never met a .gov program they dont like

being a former resident of the Live Free or Die State, where the republican ideal (thats small r) is still fashionable (tho the recent newcomers from 'south of the border' - of MA - are determined to 'fix' that too) i would offer that once upon a time the dems (and i'm referring to the politicians, not the voters) were the party of the common people, but the prev 4 years (hell, why mince words, the prev 3 decades) have proven them to be anything but. (not that the repukelicans, as mr raz calls em, have been any better)

signed: a THIRD OPTION voter

[llanlad2]

Re: 1912 Cartoon

Circle of Equity- 10th Century Berber Maxim

There can be no justice without the army, no army without taxes, no taxes without wealth, no wealth without justice.

[DSpencer]

Re: 1912 Cartoon

Maybe a pedestrian, "beginner's" question, but is the problem with the Fed a problem with Central Banking per se?

I'm sure you won't agree as we probably hold differing ideological viewpoints, but in my opinion, yes.

The problem I have with it is that it doesn't, to my mind, explain why central banking emerged in the first place.

Because it benefited those in power isn't explanation enough?

Did 9/11 create a need for the Iraq War? Or simply enough political cover for those who wanted it anyway?

From my understanding laissez-faire economics leads to private credit bubbles and busts that the markets are not able to recover from, or recover from in a way that is compatible with some semblance of a democracy intact.

Are you saying that the US never recovered from private credit bubbles that took place in the absence of a central bank? Or are you saying that our democracy was lost in the process?

Or to get to the point, if like the Fed, these institutions are fatally flawed from birth, why did they serve their goals tolerably well for so long before we descended into the bacchanalia of our recent past?

I don't understand the logic. If something is fatally flawed, the flaw must be immediately evident?

Fukushima Reactor?
Madoff Ponzi scheme?
Playing Russian Roulette once a decade?

Regardless of all that: Fed created in 1913. Great Depression 1929-1939. How do you define "tolerably well" and "so long"?

I think this suggests that taking aim at the Fed per se is a bit obtuse if it fails to account for the many years that the Fed fulfilled it's mandate without at least the extent of outrageous corruption implied by the bailouts.

So we should be thanking the Fed for not always being outrageously corrupt to the extent that it is now?

Regardless, how can you say it's fulfilled its mandate? Price stability since the creation of the Fed? Maximum employment?

[lektrode]

Re: 1912 Cartoon

I'm sure you won't agree as we probably hold differing ideological viewpoints, but in my opinion, yes.



Because it benefited those in power isn't explanation enough?

Did 9/11 create a need for the Iraq War? Or simply enough political cover for those who wanted it anyway?



Are you saying that the US never recovered from private credit bubbles that took place in the absence of a central bank? Or are you saying that our democracy was lost in the process?




I don't understand the logic. If something is fatally flawed, the flaw must be immediately evident?

Fukushima Reactor?
Madoff Ponzi scheme?
Playing Russian Roulette once a decade?

Regardless of all that: Fed created in 1913. Great Depression 1929-1939. How do you define "tolerably well" and "so long"?



So we should be thanking the Fed for not always being outrageously corrupt to the extent that it is now?

Regardless, how can you say it's fulfilled its mandate? Price stability since the creation of the Fed? Maximum employment?

+1 on every question = would like to hear more
IMHO, the fed has not only outlived its usefulness - at least in its present structure, "mandate", governance etc - BUT FAILED MISERABLY IN ITS INTENDED FUNCTION - at least the function that was sold to the political class (that would be the dems/majority that voted for it) in 1913

pretty much like every other well-intentioned program the .gov has foisted upon us since.
and i wont even get into what they've (the liberal wing) done to us since the 60's, all of it with "the best interests of the public in mind" meanwhile the UNINTENDED CONSEQUENCES of most of it, quite arguably foreseen by those who engineer such and quite arguably _intended_ by same - witness the unfolding effects of the recent 'healthcare' and 'banking overhauls' (my med ins premiums have gone up 15% in year 1 and it hasnt even started?! and my homedepot/citibank charge acct now mandates a pittance of a minimum payment and slaps me with a $35 late fee if i miss it??!!!! that doesnt even begin to come close to paying off the balance in the promotional "no interest" period? AND THESE ARE SUPPOSED TO BE FIXING THE PROBLEMS AND "helping" THE LITTLE GUY (as the lib/dem/lamestream media keeps telling us (keep repeating the same BS and eventually it becomes 'the truth')

[jiimbergin]

Re: 1912 Cartoon

But really, if there is something in the Fed's structure that is fatally flawed from the beginning, what is it and is there a central bank in the world that doesn't share this flaw, where is it? Are all central banks, by nature, fatally flawed?


* By the way, I watched an interesting interview with Perry Mehrling, author of The New Lombard Street here. There's also a lecture version here. (Haven't read it yet.)

you might want to read. http://www.amazon.com/Creature-Jekyl...9355843&sr=8-1

[LargoWinch]

Re: 1912 Cartoon

Sweet jesus, I love this EJ. Thanks!

Daniel's graphic was spot on and remains true even today:

[mikedev10]

Re: 1912 Cartoon

http://www.bandholz.com/2011/10/us-m...ical-cartoons/