Why Bankers Created the Fed 100 Years Ago

The Market Oracle, UK ^ | 23 December, 2013 | Christopher_Westley

[Errant]

The Democratic Party gained prominence in the first half of the nineteenth century as being the party that opposed the Second Bank of the United States. In the process, it tapped into an anti-state sentiment that proved so strong that we wouldn't see another like it until the next century.

Its adversaries were Whig politicians who defended the bank and its ability to grow the government and their own personal fortunes at the same time. They were, in fact, quite open about these arrangements. It was considered standard-operating procedure for Whig representatives to receive monetary compensation for their support of the Bank when leaving Congress. The Whig Daniel Webster even expected annual payments while in Congress. Once he complained to the Bank of the United States President Nicholas Biddle, “I believe my retainer has not been renewed or refreshed as usual. If it be wished that my relation to the Bank should be continued, it may be well to send me my usual retainer.”

[Toddsterpatriot]

You don’t have a number in mind?

[central_va]

Tariffs would not completely replace income taxes right now. I would say we average 2.7 Trillion imports per year. A 20% tariff would only yield 540 billion. A 20% NRST could make up the bulk of the rest. Drastic spending cuts would be required in a balanced budget amendment with the new sales tax, higher tariffs. The killing of the 16th amendment would be in the balanced budget amendment too.

[Toddsterpatriot]

A 20% NRST could make up the bulk of the rest.

How much would that raise?

[central_va]

How much would that raise?

Approx $1.3T

[Toddsterpatriot]

Is anything exempted? Does it apply to goods and services?

[central_va]

The FairTax is a national sales tax that treats every person equally and allows American businesses to thrive, while generating the same tax revenue as the current four-million-word-plus word tax code. Under the FairTax, every person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities due to the prebate. The FairTax rate after necessities is 23% and equal to the lowest current income tax bracket (15%) combined with employee payroll taxes (7.65%), both of which will be eliminated.

My plan augments this income with 540 Billion in tariffs, so keep that in mind.

Link here.

[Toddsterpatriot]

What happens to my 401K and IRA balances?

[central_va]

What happens to my 401K and IRA balances?

You can cash them in anytime because there is no income tax.

[Partisan Gunslinger]

I’d like to enact trade tariffs and eliminate the income tax, how about you?

Hell no, and hell no. Tariffs are a tax on efficiency, and the income tax is the most efficient tax. If the 10% income tax was good enough for God in the time of the Judges, then it's good enough for us.

[Toddsterpatriot]

What about my Roths?

[central_va]

Hell no, and hell no. Tariffs are a tax on efficiency, and the income tax is the most efficient tax. If the 10% income tax was good enough for God in the time of the Judges, then it's good enough for us.

Thanks for admitting you are a progressive. Your honesty is very refreshing.

You might want to use that as your tagline "the income tax is the most efficient tax". I am sure that will go over well here.

[Partisan Gunslinger]

What fraud do you feel bankers and the Fed have committed that deserves jail time? Be as specific as you can.

I would like to tell you about the events leading up to 1913, but you're nothing but a deflector and an unthinking heckler, you don't discuss things intelligently. You twist words and you can't retain or refuse to retain information.

But those are the terrible crimes, the ones in the first 12 years of the 20th century, and those responsible deserved death for them. There are a good number of us who have studied the details and know the level of crimes that were committed, and they are horrendous.

As far as fraud that deserves jail, the very system itself is slavery. The ripoff of 3% per year is fraud. If the free market causes a rise or fall in a nations currency that's one thing, but to build in a 3% ripoff should be considered theft. To allow foreigners to control the printing our currency should be grounds for an investigation of treason.

It's funny to read your posts on this thread, you blame Bush and Obama for the coming demise of our dollar. It was set in stone in 1913, the demise was going to come as soon as we allowed them in. This is just the final stage of their plan. They don't give a damn if our dollar crashes, they sit pretty no matter what. They look forward to the coming system, when they can openly declare themselves kings.

All fiat currencies fail, it was set in stone like I said. You blame Bush and Obama, but that's like the liberals saying communism is great, we just haven't had the right people do it, Stalin and the rest screwed it up. No, communism is inherently bad and fiat currencies inherently fail, no matter who's in charge.

[Partisan Gunslinger]

You’re right, the gold standard was never a guarantee of any sort of price stability. Obviously.

There are no guarantees of price stability with any system. This system is much worse because we're heading straight for the destruction of our entire economy now. On the gold standard there was always a tomorrow, because markets go up and markets go down, but not with this system.

[Partisan Gunslinger]

Thanks for admitting you are a progressive. Your honesty is very refreshing.

Progressive? lol The income tax system was put in place by God in ~1450BC. How is that progressive? It's the most conservative system there is.

You might want to use that as your tagline "the income tax is the most efficient tax". I am sure that will go over well here.

Everyone knows what I think. There are a lot of people here who want a low flat income tax over anything else.

[central_va]

Quiz: Who said the following "the income tax is the most efficient tax" ?

1. The IRS
2. God
3. Albert Speer
4. Partisan Gunslinger

[Errant]

Thanks for you help on many of these figures!

M2 is currently a bit less than $11 trillion. That doesn't seem to have stopped the government from issuing $17 trillion in debt. Not to mention trillions more in state and local debt, corporate and personal debt.

Government debt is locked up in what is referred to as M4 money, isn't it? That means 17T out of use by the public. Might explain why M2V (velocity) is falling - the government is sucking too many dollars out of the economy? Then there is M3 which they stopped tracking sometime back.

What amounts have they bought in the past before QE, Tarp, or etc.?

Their entire balance sheet, pre-crisis, was about $800 billion

Now we're around 4T. Thanks.

Pretty sure you claimed the Treasury could never pay off any debt, without more money issued by the Fed. If I misunderstood your claim, I apologize.

Sorry, my excessive use of hyperbole mudded the waters. I'm pretty sure if you look at the US debt practically, it will never be paid off. Both because government spending makes up about half (IIRC) of our GDP and the entitled in this country will riot as soon as you begin any sort of meaningful cuts. How do you payoff a 17T debt with a collapsed economy?

I did say that in a debt based fiat system you could never pay off "the debt" (not treasury debt - the entire debt). To clarify that statement, it's pretty simple really: If the first unit had to be borrowed into existence, with interest, then that doesn't leave anything to pay the interest with, so you have to borrow that, and on and on to infinitum until the entire system collapses under its own weight.

Do you know of any reliable data about how much the Fed makes off of each dollar from creation to grave? Thanks!

[Toddsterpatriot]

I would like to tell you about the events leading up to 1913, but you're nothing but a deflector and an unthinking heckler, you don't discuss things intelligently. You twist words and you can't retain or refuse to retain information.

So you won't be providing specifics?

But those are the terrible crimes, the ones in the first 12 years of the 20th century, and those responsible deserved death for them.

Why keep them secret?

As far as fraud that deserves jail, the very system itself is slavery.

The ripoff of 3% per year is fraud.

Who do you feel is ripping you off? How do you feel they are ripping you off? What do you feel would stop this ripoff?

To allow foreigners to control the printing our currency should be grounds for an investigation of treason.

Then it's a good thing that this is not happening.

It's funny to read your posts on this thread, you blame Bush and Obama for the coming demise of our dollar.

You read funny, because I just blamed them for too much idiotic spending.

It was set in stone in 1913, the demise was going to come as soon as we allowed them in.

Does "them" include the Queen of England and Colonel Sanders with his wee beedy eyes?

and fiat currencies inherently fail, no matter who's in charge.

How are those metallic currencies doing around the world?

[Toddsterpatriot]

There are no guarantees of price stability with any system.

Excellent! Most goldbugs don't realize this and have no knowledge of history.

[Toddsterpatriot]

Government debt is locked up in what is referred to as M4 money, isn't it? That means 17T out of use by the public.

Not sure what you mean here. The government did not borrow this $17 trillion to hide the pile of money in a vault somewhere. They borrowed the money and spent lots of it on "the public", much of it on the non-working segment of "the public".

Might explain why M2V (velocity) is falling - the government is sucking too many dollars out of the economy?

Velocity isn't a very useful number, simply money supply divided by GDP. Government spending is part of GDP, so that wouldn't cause velocity to drop.

Increasing the supply, a lot, while GDP is sluggish, will cause velocity to drop.

I'm pretty sure if you look at the US debt practically, it will never be paid off.

Right. Which is a political issue, not a "debt can never be repaid, because borrowing increases money supply" issue.

I did say that in a debt based fiat system you could never pay off "the debt" (not treasury debt - the entire debt).

You could pay off the entire public debt.

Do you know of any reliable data about how much the Fed makes off of each dollar from creation to grave?

Not sure what you're getting at. The Fed prints (gets the BEP to print it) $1 billion in $20s and sells them to a bank, in exchange for their reserve balance of $1 billion. Then they buy T-Bills with it and collect the interest. They make money off the debt they buy, there is no "interest attached" to the FRN, despite idiotic claims otherwise.

Hope that helps.

[Errant]

Government debt is locked up in what is referred to as M4 money, isn't it? That means 17T out of use by the public.

Not sure what you mean here. The government did not borrow this $17 trillion to hide the pile of money in a vault somewhere. They borrowed the money and spent lots of it on "the public", much of it on the non-working segment of "the public".

Sorry for the confusion. This was in reply to your suggestion the the 17T in debt, not to mention the state, local, and commercial debt issued exceeds M2.

I'm was simply saying that the 17T in debt isn't M2, but M4 (i.e., locked away M2 - sort of). If ever paid off, much of it would return to the economy as M2, again? That might even increase inflation?