ISF Logo   IS Forum
Forum Index Register Members List Events Mark Forums Read Help

Go Back   International Skeptics Forum » General Topics » Economics, Business and Finance
 


Welcome to the International Skeptics Forum, where we discuss skepticism, critical thinking, the paranormal and science in a friendly but lively way. You are currently viewing the forum as a guest, which means you are missing out on discussing matters that are of interest to you. Please consider registering so you can gain full use of the forum features and interact with other Members. Registration is simple, fast and free! Click here to register today.
Reply
Old 3rd April 2020, 08:33 PM   #161
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Originally Posted by lupus_in_fabula View Post
Not exactly what you are looking for but maybe start here anyway?
That's helpful. As per your link, it's apparently the Treasury who decides when to fund the TGA by moving funds from its TTLs in order to "help" monetary policy. This action would clearly be tightening, as it would drain commercial bank money (perhaps significantly) by the bank in question by sending it to the TGA monetary black hole. I would think this would be disruptive given the likely proportion of the TTL account to the others.

This is an interesting excerpt, from that site:

Quote:
The Treasury has used other debt and cash management techniques in the past in order to help monetary policy. For example, Treasury used to be able to have an intraday overdraft on its TGA; unlimited from 1914 to 1935 and up to $5 billion from 1942 until 1979 (Table 1). As such, at times, the TGA would carry a negative balance during the day and, by the end of the day, the TGA would be replenished by direct financing of the Fed. The Treasury issued “special certificate of indebtedness” to the Fed and in exchange the Fed credited the TGA.
So apparently while Treasury bills and bonds are off limits, SCIs are not!

Perhaps even more interesting:

Quote:
The most straightforward involvement of the Fed into fiscal operations was the availability of an overdraft on TGA until the late 1970s. As stated in the previous section, in practice this overdraft facility had been strictly used for monetary-policy operations, but it could be used for fiscal purpose in case of “national emergency.” The $5 billion limit was, however, very limiting for that purpose and there were Congressional hearings in the 1960s that looked into the possibility of expanding that limit and making the overdraft line permanent (authorization of the overdraft had to be renewed by Congress every two years). This never went anywhere because the use of the overdraft for fiscal purpose was seen as inflationary and unsound. The Treasury always justified the use of the overdraft as a brief and occasional means to finance its expenditures in order to avoid disruptions in the money market.
I don't even see the point of these arbitrary restrictions. If we're going to have a fiat money system, we might as well adopt MMT, abolish the Fed, and give Treasury monetary authority, subject to Congress. That would remove the primary dealer monopoly in New York and save taxpayers, and it might also shed some light on where the money goes.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 3rd April 2020, 10:20 PM   #162
lupus_in_fabula
Graduate Poster
 
lupus_in_fabula's Avatar
 
Join Date: Nov 2006
Posts: 1,631
Originally Posted by Tippit View Post
I don't even see the point of these arbitrary restrictions. If we're going to have a fiat money system, we might as well adopt MMT, abolish the Fed, and give Treasury monetary authority, subject to Congress. That would remove the primary dealer monopoly in New York and save taxpayers, and it might also shed some light on where the money goes.
Regarding the highlighted ... This is what the former Fed chief Marriner Eccles tried to do during the banking committee hearing in 1947 (U.S. House 1947). Obviously that is not the way it is implemented today. Marriner Eccles, once again, alluded to the reason as to why the simpler and more transparent process was not implemented, in a personal letter (quoted in Garbade 2014, New York Fed staff report):

Originally Posted by Eccles 1947
I think the real reasons for writing the prohibition into the [Banking Act of 1935] … can be traced to certain Government bond dealers who quite naturally had their eyes on business that might be lost to them if direct purchasing were permitted.
__________________
...Forever shall the wolf in me desire the sheep in you...
lupus_in_fabula is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 3rd April 2020, 10:26 PM   #163
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 31°57'S 115°57'E
Posts: 16,305
Originally Posted by Tippit View Post
What's patently ridiculous, is the idea that you think that public counterfeiting (seigniorage) is unacceptable, but private counterfeiting is acceptable.
Now I see the problem. You were responding to something that wasn't in the bit that you quoted.

When it comes to printing money, if it comes down to whether the banksters or the politicians should have that power then I admit that this is a Hobson's choice. I think that the banksters win by a slender margin.

As to whether the money supply should have a hard limit (like bitcoin) or be able to respond to changes in demand, I think you know my view on that.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975

Last edited by psionl0; 3rd April 2020 at 10:31 PM.
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 4th April 2020, 08:39 AM   #164
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Originally Posted by psionl0 View Post
Now I see the problem. You were responding to something that wasn't in the bit that you quoted.

When it comes to printing money, if it comes down to whether the banksters or the politicians should have that power then I admit that this is a Hobson's choice. I think that the banksters win by a slender margin.

As to whether the money supply should have a hard limit (like bitcoin) or be able to respond to changes in demand, I think you know my view on that.
I just don't see how any of this follows from anything I wrote. The logic is completely berift. We would be better off legalizing counterfeiting than giving it to a private monopoly. While the currency would be destroyed, at least the general public would benefit on the way down, and it would be obvious to all how important money is. This, as opposed to the slow and perpetual consolidation of everything by the super-rich.

I'm pretty sure you support fiat money so that the money supply can respond to "changes in demand". This also makes little sense, because given a static money supply, we have these things called prices and interest rates which can rise and fall given changes in demand. Price is more than sufficient, and precludes counterfeiters looting the wealth of society in perpetuity.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton

Last edited by Tippit; 4th April 2020 at 08:40 AM.
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 4th April 2020, 09:04 AM   #165
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Originally Posted by lupus_in_fabula View Post
Regarding the highlighted ... This is what the former Fed chief Marriner Eccles tried to do during the banking committee hearing in 1947 (U.S. House 1947). Obviously that is not the way it is implemented today. Marriner Eccles, once again, alluded to the reason as to why the simpler and more transparent process was not implemented, in a personal letter (quoted in Garbade 2014, New York Fed staff report):
This is a great find. I had no idea that Eccles did this, and I did not know that it wasn't until 1935 that the Fed was prohibited from buying Treasuries directly. I had assumed this was the way since inception. It's interesting to note from the conversation between Eccles and Gamble that the interest rate on the SCIs is 25 basis points, of course this is refunded less expenses back to the Treasury.

I don't think the real action is here, or even with the primary dealers in New York, but it probably represents a significant portion of graft for the dealers.

Now imagine if Thomas Edison had his way, both the Fed and Government borrowing were abolished, and the Treasury simply monetized their expenses as they go, and tax receipts went in vacui - into the void. We would have debt-free MMT, as opposed to debt-based MMT. Why do we even need government debt, if the premise is that we can offset inflation via tax policy?
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton

Last edited by Tippit; 4th April 2020 at 09:06 AM.
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 5th April 2020, 08:24 AM   #166
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 31°57'S 115°57'E
Posts: 16,305
Originally Posted by Tippit View Post
I'm pretty sure you support fiat money so that the money supply can respond to "changes in demand". This also makes little sense, because given a static money supply, we have these things called prices and interest rates which can rise and fall given changes in demand. Price is more than sufficient, and precludes counterfeiters looting the wealth of society in perpetuity.
Your theory fails to take into account two things: One is that there is no way to stop buying and selling on credit (near money). Cars can always be sold on terms just like any other hire purchase. People can always borrow to buy a house. (A good thing too. If you had to have the money up front to pay for a house then we would be back to the pre-twentieth century situation where only the very wealthy could own houses and everybody else would have to pay them more rent than they could afford to live in them).

The other thing is that under a gold standard, not all of the gold (or its fiduciary equivalent) is in circulation. Some of it is under mattresses, in bank vaults etc). As long as that is the case, the amount of gold in circulation can increase or decrease in accordance to demand - just like fiat currency. It is when you hit the hard limit that things get interesting. Suddenly people can't get the money to service their debts and start defaulting. This quickly leads to a deflationary recession. Boom and bust was the endless cycle under the gold standard.

Ideally, an statutory authority whose sole charter was to protect the currency would be preferable to a central bank that was there primarily to protect its member banks.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 5th April 2020, 12:06 PM   #167
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Originally Posted by psionl0 View Post
Your theory fails to take into account two things: One is that there is no way to stop buying and selling on credit (near money). Cars can always be sold on terms just like any other hire purchase. People can always borrow to buy a house. (A good thing too. If you had to have the money up front to pay for a house then we would be back to the pre-twentieth century situation where only the very wealthy could own houses and everybody else would have to pay them more rent than they could afford to live in them).
Are you talking about infinite rehypothecation? The idea that someone could lend a gold coin to one person, then that person can lend it to another, and another, and so on ad infinitum? What does this have to do with counterfeiting and monetary debasement? I suppose I would answer that with, there is probably a limit on people's willingness to accept credit risk. And if infinite rehypothecation is a potential problem with sound money, then how much of a problem does it represent with infinite fiat money? In addition, if you ban fractional reserve banking, you remove a lot of inherent fragility in the system and make it much more stable. In a full reserve system, the failed loans of even many do not represent a substantial risk to the economy, and as such don't require more bailouts of the super-rich, and perpetual debasement of money. You've said before that it's a good idea that "people can always borrow to buy a house". It's clearly not a good idea that people can always borrow to buy a house, when there are no lenders with no real savings willing to lend them money to buy a house. In this scenario, it's probably a good indicator that either houses are overvalued, or borrowers aren't creditworthy, and prices need to fall. Debasing the currency to ensure some preposterous human right to mortgage credit is a form of socialism. No one owes you a house, and no one owes you the credit to buy a house - ever. How do you explain the fact that housing affordability (in addition to rents!) is off the charts in the current system? Re-Read this thread to understand my explanation. You claim that very scarce money is theoretically a bad thing, and I very much agree. But we know from a fact, given current events that overly plentiful money for a few privileged elite is definitely a bad thing.

Quote:

The other thing is that under a gold standard, not all of the gold (or its fiduciary equivalent) is in circulation. Some of it is under mattresses, in bank vaults etc). As long as that is the case, the amount of gold in circulation can increase or decrease in accordance to demand - just like fiat currency. It is when you hit the hard limit that things get interesting. Suddenly people can't get the money to service their debts and start defaulting. This quickly leads to a deflationary recession. Boom and bust was the endless cycle under the gold standard.
First of all, I'm not advocating for a gold standard. The elites own all the gold, just like they own all of the access to fiat money and credit. Second of all, you can't repeal economic boom and bust cycles with fiat money/fractional reserve banking. You can only shift the costs away from the wealthy and on to the poor, which is exactly what this system does. If the gold standard was to blame for the Great Depression, then why have there been numerous financial panics under the gold standard which did not result in depressions, or recessions of the same magnitude? I also think the demonetization of silver in 1873 (coinage act of 1873) contributed to future depressions. If gold is the money of kings, then silver is the money of gentlemen, and demonetizing silver at that time would have destroyed liquidity and put that much more pressure on a much more scarce form of money (gold) going forward.

Quote:

Ideally, an statutory authority whose sole charter was to protect the currency would be preferable to a central bank that was there primarily to protect its member banks.
Ideally, we would all accept a form of money which can't be infinitely reproduced or debased, politicians could only get funds by taxation, and when big corporations or banks fail, they actually fail, and the responsible parties get destroyed instead of everyone else.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton

Last edited by Tippit; 5th April 2020 at 12:19 PM.
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 5th April 2020, 12:16 PM   #168
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Did the Gold Standard Cause the Great Depression?

It wasn't the gold standard, but a fractional reserve, fixed-exchange "gold exchange standard" that caused the crisis. Once again, it's the fractional reserve system that is the primary cause of economic crises.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 5th April 2020, 11:23 PM   #169
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 31°57'S 115°57'E
Posts: 16,305
Originally Posted by Tippit View Post
Are you talking about infinite rehypothecation? The idea that someone could lend a gold coin to one person, then that person can lend it to another, and another, and so on ad infinitum?
No, I am thinking mainly of "hire purchase" etc. Instead of paying outright for a car. one gives the dealer a deposit then makes regular payments to the dealer until the price (plus interest) is paid off.

The effect is the same as if the purchaser borrowed the money from somebody to pay the dealer except that he has a different creditor and in the former case, no money (other than the deposit) changed hands. "Near money" was created to do the initial transaction.

You can't outlaw "pay you later" arrangements.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 6th April 2020, 09:14 AM   #170
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Originally Posted by psionl0 View Post
No, I am thinking mainly of "hire purchase" etc. Instead of paying outright for a car. one gives the dealer a deposit then makes regular payments to the dealer until the price (plus interest) is paid off.

The effect is the same as if the purchaser borrowed the money from somebody to pay the dealer except that he has a different creditor and in the former case, no money (other than the deposit) changed hands. "Near money" was created to do the initial transaction.

You can't outlaw "pay you later" arrangements.
If a car dealer accepts a deposit, and monthly payments for a period in exchange for a car, then he has issued credit in the value of the car. No money was created if the deposit comes out of savings.

I don't see how any of this is relevant. I don't want to outlaw credit (except for the Federal Government, who has a limitless desire to spend, and a limitless desire to tax), where did you get that idea? Do you understand the difference between extending credit, and counterfeiting money? Extending credit comes with risk. On the other hand, paying for something by reproducing money and foisting that cost onto savers is virtually costless and riskless (except for average people, who would go to jail for doing what central banks do). What am I missing.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton

Last edited by Tippit; 6th April 2020 at 09:17 AM.
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 6th April 2020, 11:59 AM   #171
AlaskaBushPilot
Illuminator
 
Join Date: Nov 2010
Posts: 4,210
"Modern" Monetary theory is thousands of years old.

So you know the proponents are con artists, using deceptive language. Obviously, one does not want to name one's self Weimar or Assignat or Continental or more recently Bolivar monetary theory.

Currently, the member banks of the federal reserve have a collective theft operation going where the banks print the dough for themselves. They do not want to lose that privilege and will bring every resource at their command to preventing it from happening.
AlaskaBushPilot is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 7th April 2020, 08:34 AM   #172
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,766
Originally Posted by AlaskaBushPilot View Post
"Modern" Monetary theory is thousands of years old.

So you know the proponents are con artists, using deceptive language. Obviously, one does not want to name one's self Weimar or Assignat or Continental or more recently Bolivar monetary theory.

Currently, the member banks of the federal reserve have a collective theft operation going where the banks print the dough for themselves. They do not want to lose that privilege and will bring every resource at their command to preventing it from happening.
How is this not completely obvious to everyone? Why does it take one man in a million as per Lenin to diagnose this?

I think it has something to do with what i believe is a corollary to Stalin; the theft of one man is a tragedy, the theft of millions is a statistic.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 9th April 2020, 02:02 AM   #173
lupus_in_fabula
Graduate Poster
 
lupus_in_fabula's Avatar
 
Join Date: Nov 2006
Posts: 1,631
Well, well ... it seems Bank of England is the first one to simply start (again) crediting the government’s account directly. The account in question would be the historical Ways and Means advances to HM (Her Majesty’s) Treasury.

Link.
__________________
...Forever shall the wolf in me desire the sheep in you...
lupus_in_fabula is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 9th April 2020, 09:08 PM   #174
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 31°57'S 115°57'E
Posts: 16,305
Originally Posted by lupus_in_fabula View Post
Well, well ... it seems Bank of England is the first one to simply start (again) crediting the government’s account directly. The account in question would be the historical Ways and Means advances to HM (Her Majesty’s) Treasury.

Link.

It is still not quite a printing press.
Quote:
The W&M facility is the government’s pre-existing overdraft at the Bank. Any drawings will be repaid as soon as possible before the end of the year. HM Treasury, the Debt Management Office and the Bank will continue to cooperate closely to support the orderly functioning of the gilt and sterling money markets.
So the money still has to come from somewhere - just like it would if it were borrowed from another source.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 9th April 2020, 11:11 PM   #175
lupus_in_fabula
Graduate Poster
 
lupus_in_fabula's Avatar
 
Join Date: Nov 2006
Posts: 1,631
The money comes from the same source, Bank of England. Whether the process is indirect or direct is immaterial inasmuch as gilts are finding their way onto BoE’s balance sheet. Now, of course, the Ways and Means facility is an overdraft, so operationally it’s actually just a matter of debiting rather than crediting.

What’s funny here is the fact that only a few days ago the Governor of BoE went public with a statement that Ways and Means was not going to be used. So all this just serves to show who’s actually in charge here. It’s more like: ‘Shut up and do what you are told.’ Furthermore, the use and “repayment” of the overdraft is subject to the government’s discretion.
__________________
...Forever shall the wolf in me desire the sheep in you...
lupus_in_fabula is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Reply

International Skeptics Forum » General Topics » Economics, Business and Finance

Bookmarks

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


All times are GMT -7. The time now is 10:47 AM.
Powered by vBulletin. Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.

This forum began as part of the James Randi Education Foundation (JREF). However, the forum now exists as
an independent entity with no affiliation with or endorsement by the JREF, including the section in reference to "JREF" topics.

Disclaimer: Messages posted in the Forum are solely the opinion of their authors.