Is the Federal Reserve Taking a Risk?

Get real. Dangerous inflation cannot occur when products are not being purchased. Duh.

What about the products that people may still think they need to purchase such as milk, bread, baby formula, nappies, gas, diesel, bottled water, etc.....

Chris, I agree 100% with you! Finally some one gets it! Oh my!

The Fed and what they are doing is completely insane. The problem, the "real" problem is Oboma doesn't get it.

You can not print money that doesn't exist. Period.

If the US is serious about doing something, they need to follow what Germany is doing, and has been doing. Yea, I know , they are no where near our size geographically and humanity as far as numbers go. But look at their GDP, take a look at their stocks. These folks are heading in the right direction and have been uneffected in the 70's. 80's, and the only issue "they" have had, was investing in the US playing in the 08 housing markets. But they have recovered early on after realizing what was really happening. Unlike the FEDS, and OUR OWN GOVERNMENT being ASLEEP at the wheel. So here we are now. Screwed, and not even a Kiss from the Presidents. And yes that is pluroal. Bush didn't kiss us and Obama just hugs a select few.

SCREWED!

Lets not even talk about Fannie May and Freddie. Oh My....

Double Screwed, and again , No Kiss.....

"You can not print money that doesn't exist..." Well you can, it just lowers the worth of the currency. It's a deliberate ploy to reduce the real value of the loans the US has with foreign lenders.

But that's not the main problem. You have a banking sector that were allowed to bet heavily (and lost) and were rescued with public money. A classic case of "privatising the profits, socialising the losses".

Obama (or any leader) only has a small number of options to help. Lower interest rates - done. Stimulate exports by devaluing the dollar - on going. Borrow for "pump priming" investment - ongoing.

What ever he does it'll upset someone. Next election he'll get kicked out while the real culprit who released the controls on banks (Reagan) will be seen as a great manager. Ffej

Let's back up here, the Federal Reserve is not responsible for printing money. So lets talk some facts. Banks create money because of the federal reserve. Let me give an example: the fed loans money to banks, it's called the federal funds rate. People go to banks to borrow money, and then provide some collatoral in turn. Say I go to the bank and want to borrow money for my home that is paid in full. I want to borrow $100,000 and the bank only has $10,000 because of investors deposits. The bank gets money, overnight money from the federal funds. Now my house is worth $100,000 the bank only had $10,000, because of leverage (that is they are allowed to loan more than what they have based on credit and underlying assets), therefore, $90,000 of money is allowed to enter the system, it doesn't come out of thin air, that value in this case is tied to an asset ie-the value of my home. There is no inflation in this scenario, banks create money through this process.

Now, while we are experiencing inflation, we can and should directly tie this to the rising price of oil. Oil is a major input to everything we buy. Goods won't make it to market with out it, and most goods need it to be produced. With that said, homes are the most expensive things we own, and their values have been dropping. If you want to say they have leveled off, that is fair, but it hasn't hit bottom, and without the federal reserve to loan money via the federal funds rate, demand for homes will decline further, and prices would decline further if people can't borrow money to buy said homes.

So if you have a problem with the above logic, ask yourself who is responsible for printing money. . . and if you do not know, please google it.

Now, while we are experiencing inflation, we can and should directly tie this to the rising price of oil.

no.

inflation is the difference between the amount of money created by the federal reserve and the gdp. full stop. it is tied to nothing really...

You seem like a smart guy, but you are wrong. There are many causes for inflation. The relevant points to this discussion include the following a) inflation is normal, too much inflation is bad b) there are many factors that cause inflation, printing too much money is one of them, but the fed is not responsible for printing money, which is the premise of this discussion, the treasury prints money c) another cause of inflation is a rise in input costs, like I was saying oil is a major input in all goods d) another cause is demand for workers, the more demand for workers relative to supply this also puts upward pressure on the price of wages- creating inflation (not relative to this case, but relative to causes of inflation) e) a drop in the exchange rate relative to import/export levels f) taxing goods causes prices to artificially go up, which is the last source of inflation I will mention here.

Now, I will gladly entertain your questions, but the above points are irrefutable.

TTFN

Prior to the creation of the Fed (or other central banking mechanisms), prices changed very little. Your statements about inflation are the standard output from the Fed and gang.. (appearance of rising prices, etc)

Thank you for the compliment, but really intelligence has nothing to do with this. The Fed is a deceptive entity, and continues to perpetuate that deception most especially by 'helping' others how to think incorrectly about inflation. If smarts could fix this deception, it would have done so long ago. There are a great number of smart people who have tried to figure out how to fix this, and a lot have suffered for it.

They also want people to think that there are no reasonable alternatives to the fiat currency system... again, that is an untruth.

It doesn't matter who actually prints the money, any more than it matters what atm spits it out. That isn't where the control of the money is. The fed lends money... at interest... that it never had. With the participation of the banks and the goverment, they lend more money than the economy produces. The end result is that the tax payers are put on a hamster wheel and made to run faster and faster and faster, just to stay in the same broke place.

People who disagree with this are typically benefitting from the system, thus justifying their participation in the ongoing criminal activities. (by criminal, I mean a crime against humanity) I really don't care how else you paint it or stroke it. It is akin to being in a gambling house, and trying to convince customers that the house doesn't statistically prevail.

Chris

GA. The Fed seems to be collapsing the dollar intentionally or not. They are either fools or they have a plan... either option is a concern.

Chris -- You have a right....nea, a responsibility, to oppose what the US Federal reserve is doing to the value of your country's currency. But that does affect your credibility in this issue.

Ed

"I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

or

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson

Maybe we need to value what we have. More is not better. We all have a disease called more greed and selfishness which leads to waste. How to function on what we have may be what we need right now. There is plenty out there we always want to satisfy our appetites not knowing what we need by what we want or think we need. Start growing your food and cut back. Sustainablity means to function on what you have.

Sustainability interfaces with economics through the social and ecological consequences of economic activity. Sustainability economics involves ecological economics where social, cultural, health-related and monetary/financial aspects are integrated. Moving towards sustainability is also a social challenge that entails international and national law, urban planning and transport, local and individual lifestyles and ethical consumerism. Ways of living more sustainably can take many forms from reorganizing living conditions (e.g., ecovillages, eco-municipalities and sustainable cities), reappraising economic sectors (permaculture, green building, sustainable agriculture), or work practices (sustainable architecture), using science to develop new technologies (green technologies, renewable energy), to adjustments in individual lifestyles that conserve natural resources.

Here is a hilarious (but true) explanation of the idiocy of 'quantitative easing':

http://www.youtube.com/watch?v=PTUY16CkS-k

Yes it's hilarious. Yes, it is a string of truths constructed into a very effective propaganda piece. Very likely designed by people to influence Americans into supporting the very same conservative policies that drove the US into the great depression in the 1930-32 period and laid the foundations for the second world war.

Now, like then, there are a large number of very smart and self serving people that are unaffected by current economic conditions and see a huge opportunity for personal gain in these trying times. The big difference today is that there are more of them (note that 70% of American workers are still fully employed), they have a wonderfully effective electronic media propaganda machine at their disposal and they have the financial wherwithall to drive it's output.

So it's a new century with a new set of selfish distractions to keep us ignoring a new set of foreign competitors as they slowly build their strength. 1910 or 1930 all over again. But that is history. The history humankind is doomed to ignore and then repeat.

We worry about our sons and their families. The best we can hope for after we're dead is that their native talents will keep them afloat while their peers are passing into a self destructive oblivion.

Ed Weldon

perhaps you should

My two cents... The Federal Reserve is a misnamed institution. It actually is a private central bank that 'loans' money to the US. The Federal Gov may print the money but the Federal Reserve controls it. Part of the US debt goes to paying the interest on the loaned money to the Federal Reserve. In other words, the Federal Gov will never be debt free because it is always borrowing money from the Federal Reserve.

I cannot remember the person that said this but the quote goes something like this.... "As long as I control the money supply, I care not what laws are passed". This person was the creator of the private central banking system that has become the Federal Reserve.

Our country is not the only one that has a private central bank. Do a Google search on the Federal Reserve and you will find out when it was created. That will tell you that our recent presidents were / are not responsible for creating the problem only in making it worse.

Research Germany around 1932-1939 for info on what happens when money keeps getting added to the economy and print presses are working over time printing money.

As working class trickle down was metaphorically representative to me of being pissed on. Leastways they at least called it correctly as a trickle, and not a stream, river, creek or flood.

Nevil Shute, who I consider the engineers novel writer with street cred as a businessman involved in the aviation industry moved to Australia when Great Britain instituted high inheritance taxes. Course when aristocrats stop investing in the ideas and businesses of their own nation, then they undercut the willingness of the proletariat to let them keep their family money, since they aren't doing much good with it.

Seems to me nation states today want it both ways. They want a Global Economy, without any fair assessment of monetary valuations that level the field.

At any rate there are factors of philosophy and culture, involved that skew things right much where no one can see the forest for the trees. Global Village is an oxymoron.

The banks don't want your collateral of overvalued land and houses and malls. They just loan against that stuff if they think you can keep it yourself, or sell it at a profit without bothering them too much.

When looking at the world from a working class perspective, and trying to figure out how best to start a country from nothing, I of course want to print money people will like to use to pay bills. From what of nothing could I create bonds?

According to my study all I own really is my life. Hence I determined that all fees paid to the nation for services would provide Whole Life Insurance policies for all citizens giving their very lives value as collateral equal to, or as more than property.

The services that my nation, or any nation are correct to provide are defense, and education.

Why did Hong Kong become powerful? I predicted 30 years ago that Hong Kong would take over China, more than China take over Hong Kong, and far as the rise of China is concerned I feel I was essentially correct.

Accordingly Transcendian Theory as far as control of land is concerned adopts a Lease concept which I have seen work for Aviation FBOs, and Hong Kong, and China.

What the hell, all things are temporary...

Once Transendia is up and running a nice little confederation of airports and ports, well it will vie for power and importance with the UN, and either take over the UN, or be taken over by the UN.

Key economic theories of me, the Transcendian, are valuation of the individual via insurance, to balance the capitalistic half right banking founded only on property.

All right I admit this is utopian, and further dependent on a pool of educated citizens.

Ever wondered why I, the professed political scientist of CR4 hangs out here too much?