T Nation

The Fed Takes Over

WASHINGTON (CNN) – The Federal Reserve would have the power to regulate virtually the entire banking and securities industry under proposals to be unveiled Monday by Treasury Secretary Henry Paulson, according to a summary of the proposals provided to CNN late Friday.

http://money.cnn.com/2008/03/28/news/economy/paulson_financial_overhaul/index.htm?cnn=yes

Welcome to the Brave New World (Order).

Sure, but think of the wonderful STABILITY! Oh, such glorious stability we will have. And safety! God Save the Fed! May their presses churn eternal!

Why does everyone get so worked up over this branch of our government? The checks and balances between this branch and the others should keep things in check, no?

[quote]Headhunter wrote:
WASHINGTON (CNN) – The Federal Reserve would have the power to regulate virtually the entire banking and securities industry under proposals to be unveiled Monday by Treasury Secretary Henry Paulson, according to a summary of the proposals provided to CNN late Friday.

http://money.cnn.com/2008/03/28/news/economy/paulson_financial_overhaul/index.htm?cnn=yes

Welcome to the Brave New World (Order).[/quote]

�?ом�?ад, I think you meant:

Щ�?Ш�?�?�?Т�?�? (Ц�?�?) – Т�?е Феде�?ал Ре�?е�?ве �?о�?лд �?аве �?�?е по�?е�? �?о �?ег�?ла�?е ви�?�?�?алл�? �?�?е ен�?и�?е банкинг анд �?е�?�?�?и�?ие�? инд�?�?�?�?�? �?нде�? п�?опо�?ал�? �?о бе �?нвеилед �?онда�? б�? Т�?еа�?�?�?�? Се�?�?е�?а�?�? Хен�?�? �?а�?л�?он, а�?�?о�?динг �?о а �?�?мма�?�? о�? �?�?е п�?опо�?ал�? п�?овидед �?о Ц�?�? ла�?е Ф�?ида�?.

[quote]Sloth wrote:
Why does everyone get so worked up over this branch of our government? The checks and balances between this branch and the others should keep things in check, no?[/quote]

Because its not a branch of our government? The government is forbidden by the Constitution from printing paper money — only gold or silver may circulate. Since this prevents hogwild spending and destruction through debt, the Fed was created as a private concern to exchange paper money (now, electronic blips in a computer) for debt (treasury paper). The money gets spent by Congress and future generations get stuck with the tab.

Of course, the criminals who invented this system die before the repercussions impact, but they got to have the fun of exercising power and destroying a great country.

Read ‘The Creature from Jekyll Island’. Or watch the video.

http://video.google.com/videoplay?docid=6507136891691870450

[quote]BackForMore wrote:
Headhunter wrote:
WASHINGTON (CNN) – The Federal Reserve would have the power to regulate virtually the entire banking and securities industry under proposals to be unveiled Monday by Treasury Secretary Henry Paulson, according to a summary of the proposals provided to CNN late Friday.

http://money.cnn.com/2008/03/28/news/economy/paulson_financial_overhaul/index.htm?cnn=yes

Welcome to the Brave New World (Order).

помѿад, I think you meant:

ЩпШпппТпп (Цпп) – Тѿе Федеѿал Реѿеѿве ѿоѿлд ѿаве ѿѿе поѿеѿ ѿо ѿегѿлаѿе виѿѿѿаллѿ ѿѿе енѿиѿе банкинг анд ѿеѿѿѿиѿиеѿ индѿѿѿѿѿ ѿндеѿ пѿопоѿалѿ ѿо бе ѿнвеилед пондаѿ бѿ Тѿеаѿѿѿѿ Сеѿѿеѿаѿѿ Хенѿѿ паѿлѿон, аѿѿоѿдинг ѿо а ѿѿммаѿѿ оѿ ѿѿе пѿопоѿалѿ пѿовидед ѿо Цпп лаѿе Фѿидаѿ.
[/quote]

Newspeak?

Fed Swat Teams?

http://www.youtube.com/watch?v=i0CMrdl5RLY

[quote]Headhunter wrote:
Sloth wrote:
Why does everyone get so worked up over this branch of our government? The checks and balances between this branch and the others should keep things in check, no?

Because its not a branch of our government? The government is forbidden by the Constitution from printing paper money — only gold or silver may circulate. …
[/quote]

I believe it is the individual states that are prohibited from printing paper money.

[quote]Sloth wrote:
Why does everyone get so worked up over this branch of our government? The checks and balances between this branch and the others should keep things in check, no?

Headhunter wrote:
Because its not a branch of our government? The government is forbidden by the Constitution from printing paper money — only gold or silver may circulate. Since this prevents hogwild spending and destruction through debt, the Fed was created as a private concern to exchange paper money (now, electronic blips in a computer) for debt (treasury paper). The money gets spent by Congress and future generations get stuck with the tab.
[/quote]

Well, if it’s not a branch itself, surely it’s part of one of the other branches. Nothing to worry about.

Look, HH, a central bank is an essential component of a free market system.

[quote]Sloth wrote:

Look, HH, a central bank is an essential component of a free market system. [/quote]

Sure, because the supply of the most important of all goods obviously must be planned.

From an organization that cannot plan agriculture without mass starvation.

[quote]orion wrote:
Sloth wrote:

Look, HH, a central bank is an essential component of a free market system.

Sure, because the supply of the most important of all goods obviously must be planned.

From an organization that cannot plan agriculture without mass starvation.

[/quote]

Come on, you have to centrally plan the free market money supply.

[quote]Sloth wrote:
orion wrote:
Sloth wrote:

Look, HH, a central bank is an essential component of a free market system.

Sure, because the supply of the most important of all goods obviously must be planned.

From an organization that cannot plan agriculture without mass starvation.

Come on, you have to centrally plan the free market money supply.[/quote]

Of course you do.

If you want to finance wars and wealth redistribution via inflation.

What should have been done about the current mess? I was watching the C-Span this morning, and they were discussing this new Paulson plan. Half the people who called in clearly had no idea what they were talking about, while the other half jsut went on a 30 second diatribe about “OMG FEDERAL RESERVE IS A PRIVATE BANK! 9-11 WAS AN INSIDE JOB!” One guy even went as far as to blame Bush for the current mortgage mess.

I don’t know, what do you think would have heppened if the Fed didn’t bail out Bear Stearns? What if the Fed didn’t do ANYTHING at all? The Fed gets so much criticism, but the same people criticizing the Fed, offer no alternative solutions. It is all loony, tin foil hat, conspiracy theory ranting…

Wow you guys hate the Constitution.

[i]
Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;

To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

[/i]

I don’t know if these particular measures make sense but it is certainly within the Constitution to regulate the value of money, and keep on eye on securities to make sure they are not being counterfeited (not just on paper).

[quote]skaz05 wrote:
What should have been done about the current mess? I was watching the C-Span this morning, and they were discussing this new Paulson plan. Half the people who called in clearly had no idea what they were talking about, while the other half jsut went on a 30 second diatribe about “OMG FEDERAL RESERVE IS A PRIVATE BANK! 9-11 WAS AN INSIDE JOB!” One guy even went as far as to blame Bush for the current mortgage mess.

I don’t know, what do you think would have heppened if the Fed didn’t bail out Bear Stearns? What if the Fed didn’t do ANYTHING at all? The Fed gets so much criticism, but the same people criticizing the Fed, offer no alternative solutions. It is all loony, tin foil hat, conspiracy theory ranting…[/quote]

my alternative:

Do nothing.

Let people pay the price for their bad decisions.

What do you think will happen if TBTF banks fully realize that they can privatize earnings but socialize losses?

They will bleed you try that´s what´s going to happen and people who work hard, lay back a little bit of money and invest it wisely will pay the bill.

It is the same old song, one intervention makes the next intervention necessary, which makes the next intervention necessary…

See Hajeks “Road to Tyranny”.

Plus the Fed is probably the most successful conspiracy ever. It is even defended by its victims because all the little junkies think they need their fix.

[quote]Zap Branigan wrote:
Wow you guys hate the Constitution.

[i]
Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;

To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

[/i]

I don’t know if these particular measures make sense but it is certainly within the Constitution to regulate the value of money, and keep on eye on securities to make sure they are not being counterfeited (not just on paper).[/quote]

You are correct. The United States may issue coin, and no state may issue anything that circulates as legal tender. This leads to the question: why doesn’t the US Treasury Dept issue the money? They can’t because paper money can’t be issued by any governmental body.

Lincoln issued treasury paper as a wartime emergency, but that ended with the war.

The Fed is a private consortium of banks. They create money in exchange for debt (T bonds and bills). This allows Congress to spend wildly because there is no Constitutional amendment against debt. It was really a brilliant end run around the Constitution by Paul Warburg and company.

The guys who created the Fed had to meet in secrecy on Jekyll Island, Georgia because they feared lynch mobs, if word got out. Too bad it didn’t.

[quote]Headhunter wrote:
BackForMore wrote:
Headhunter wrote:
WASHINGTON (CNN) – The Federal Reserve would have the power to regulate virtually the entire banking and securities industry under proposals to be unveiled Monday by Treasury Secretary Henry Paulson, according to a summary of the proposals provided to CNN late Friday.

http://money.cnn.com/2008/03/28/news/economy/paulson_financial_overhaul/index.htm?cnn=yes

Welcome to the Brave New World (Order).

помѿад, I think you meant:

ЩпШпппТпп (Цпп) – Тѿе Федеѿал Реѿеѿве ѿоѿлд ѿаве ѿѿе поѿеѿ ѿо ѿегѿлаѿе виѿѿѿаллѿ ѿѿе енѿиѿе банкинг анд ѿеѿѿѿиѿиеѿ индѿѿѿѿѿ ѿндеѿ пѿопоѿалѿ ѿо бе ѿнвеилед пондаѿ бѿ Тѿеаѿѿѿѿ Сеѿѿеѿаѿѿ Хенѿѿ паѿлѿон, аѿѿоѿдинг ѿо а ѿѿммаѿѿ оѿ ѿѿе пѿопоѿалѿ пѿовидед ѿо Цпп лаѿе Фѿидаѿ.

Newspeak?

[/quote]

Cyrillic (or at least it was when I pasted it in there). My opinion of the centrally-planned economy that seems to be the destination our federal government is aiming for.

[quote]Zap Branigan wrote:
I don’t know if these particular measures make sense but it is certainly within the Constitution to regulate the value of money, and keep on eye on securities to make sure they are not being counterfeited (not just on paper).[/quote]

The value of money cannot be regulated.

Paper/coin can be regulated but it has to be backed by a commodity that gives it value. We haven’t been following the Constitution in that regard since 1913.

[quote]BackForMore wrote:
My opinion of the centrally-planned economy that seems to be the destination our federal government is aiming for.[/quote]

Banking has been regulated since 1913. That is essentially the entire economy since there is no bank that a customer can put his money in inside the US that isn’t regulated.

See, the problem is that if the price of the bad decisions were to lead to a depression, then a lot more people would be paying the price for the bad decisions. So the Fed and the Treasury had a choice between bad and worse alternatives. I’ve no desire to rehash it again - suffice it to say that most people think a depression/recession would be worse than inflation plus the added moral hazard (and yes, this includes the calculation that people on fixed incomes will be hurt by inflation).

On a separate note, this IBD editorial makes a good argument that the federal government, not the Fed, had a bigger hand in creating the subprime problem:

http://www.investors.com/editorial/editorialcontent.asp?secid=1502&status=article&id=291507506135021