Essential Economics for Politicians

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Laced said:
Money is a government-issued instrument, without which the modern market cannot function. Money, without government setting interest rate, is like a bird without wings. Free market in the purest sense cannot exist without government enforcement. For example, freedom of contract is nothing more than an abstract concept without government enforcement through its court system. Practically speaking, you'll find the purer form of free market in China, Brasil, India and a few other emerging economies. If you speak to any businessman who's done transactions in these jurisdictions, the overwhelming majority of them would rather do a transaction in the US. As a matter of fact, they'd rather sell in the US at lower prices in the US. Aside from our infra structure, they have greater confidence in our legal system that spell out each party's rights and obligations. Such confidence arises precisely because UCC has been universally adopted in the US. That is government "intervention" you can call it, but it's precisely such government "intervention" that truly makes the market stable and free.

There're economists who argue otherwise, but they're on the fringe. They have an antiquated view of the market. Mainstream economists accept that there has to be government action to ensure a free market. The issue is no longer whether, but how much.
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Interest rates are prices. They impart information. They tell a business person whether or not to undertake a certain capital investment. They measure financial risk. They translate the value of future cash flows into present-day dollars. Manipulate those prices — as central banks the world over compulsively do — and you distort information, therefore perception and judgment.

Interest rates ought to be discovered in the market, not administered from on high. They can’t do their essential work if someone, say a central bank, is muscling them around. Let’s get the central banks out of the business of using interest rates — and stock prices and exchange rates, too – as instruments of national policy. Today, investors live in a hall of mirrors: They don’t know which values are real and which are distorted by monetary manipulation. Market-determined rates will help restore clarity.--http://www.nationalreview.com/article/441128/james-grant-monetary-manipulation-must-end
 
espola said:
The US Treasury and Federal Reserve are not government institutions? You should write and tell them. I don't think they know that.
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One is, one is not. They both know who they are. Hence the balance sheet. But please feel free to write to them and explain the Feds balance sheet to them.
 
The Board of Governors in Washington, D.C., is an agency of the federal government. The Board--appointed by the President and confirmed by the Senate--provides general guidance for the Federal Reserve System and oversees the 12 Reserve Banks. Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations. In addition, though the Congress sets the goals for monetary policy, decisions of the Board--and the Fed's monetary policy-setting body, the Federal Open Market Committe--about how to reach those goals do not require approval by the President or anyone else in the executive or legislative branches of government.
 
Bruddah IZ said:
The Board of Governors in Washington, D.C., is an agency of the federal government. The Board--appointed by the President and confirmed by the Senate--provides general guidance for the Federal Reserve System and oversees the 12 Reserve Banks. Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations. In addition, though the Congress sets the goals for monetary policy, decisions of the Board--and the Fed's monetary policy-setting body, the Federal Open Market Committe--about how to reach those goals do not require approval by the President or anyone else in the executive or legislative branches of government.
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The Federal Reserve was established by Congress. The members of its board are appointed by the President with approval of Congress. Many of its functions overlap with other government bodies, such as the Treasury. The only way it could be eliminated is by an act of Congress and approval of the President.

Congress was wise when it established the Fed to make it as independent as possible from political influence by Congress and the President. Its Governors are appointed for terms of 14 years and cannot be removed except "for cause", and none ever has been. The Fed also funds itself by charging fees to its banking customers, returning its surplus every year to the Treasury, so it can't be blackmailed by threats to cut its funding. Don't confuse that independence with its existence as part of the US Government.
 
espola said:
The Federal Reserve was established by Congress. The members of its board are appointed by the President with approval of Congress. Many of its functions overlap with other government bodies, such as the Treasury. The only way it could be eliminated is by an act of Congress and approval of the President.

Congress was wise when it established the Fed to make it as independent as possible from political influence by Congress and the President. Its Governors are appointed for terms of 14 years and cannot be removed except "for cause", and none ever has been. The Fed also funds itself by charging fees to its banking customers, returning its surplus every year to the Treasury, so it can't be blackmailed by threats to cut its funding. Don't confuse that independence with its existence as part of the US Government.
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Which significant functions of the Fed overlap with what the Treasury does or does not do. And why would Congress eliminate their lender of last resort?
 
espola said:
Don't confuse that independence with its existence as part of the US Government.
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Every financial crisis that the U.S. economy has gone through has been caused by an increase in the money supply by the Fed. The Fed purchases Government Bonds with the new money/federal reserve notes which drives down interest rates (the price of money). Bonds become an asset on the Feds Balance sheet and the money/federal reserve notes balance it all out as a liability. Not confused about the Feds monopoly on money.
 
Bruddah IZ said:
Every financial crisis that the U.S. economy has gone through has been caused by an increase in the money supply by the Fed. The Fed purchases Government Bonds with the new money/federal reserve notes which drives down interest rates (the price of money). Bonds become an asset on the Feds Balance sheet and the money/federal reserve notes balance it all out as a liability. Not confused about the Feds monopoly on money.
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"yes, yes . . . the Bilderburgs . . . the Rothschilds . . . NWO . . . alien wars underground . . . FALSE FLAG! FALSE FLAG! buy gold! BUY GOLD!" Alex Jones or Izzy or both?
 
Hüsker Dü said:
"yes, yes . . . the Bilderburgs . . . the Rothschilds . . . NWO . . . alien wars underground . . . FALSE FLAG! FALSE FLAG! buy gold! BUY GOLD!" Alex Jones or Izzy or both?
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Sheesh!! Not only do you watch more Fox channel then anybody else but you're in to the conspiracy theories too!!
 
Hüsker Dü said:
"yes, yes . . . the Bilderburgs . . . the Rothschilds . . . NWO . . . alien wars underground . . . FALSE FLAG! FALSE FLAG! buy gold! BUY GOLD!" Alex Jones or Izzy or both?
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I wish I could remember the name of that guy on the 3AM infomercials who was screamingly convinced that the Fed was an instrument of the Devil, or foreign powers, or secret space aliens, or something he couldn't really tell us unless we bought his tapes or DVDs. I thought his head was going to explode right on camera. I'm sure Izzy bought all 7 sets.
 
Bruddah IZ said:
Every financial crisis that the U.S. economy has gone through has been caused by an increase in the money supply by the Fed.
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We know you think that. The world isn't that simple. Sometimes crisis are caused by plain old fashioned greed and speculation.
 
espola said:
I wish I could remember the name of that guy on the 3AM infomercials who was screamingly convinced that the Fed was an instrument of the Devil, or foreign powers, or secret space aliens, or something he couldn't really tell us unless we bought his tapes or DVDs. I thought his head was going to explode right on camera. I'm sure Izzy bought all 7 sets.
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Why were you up at 3:00 am in the first place ???
And secondly, why would you turn on " That " channel at 3:00 am ???
 
espola said:
I wish I could remember the name of that guy on the 3AM infomercials who was screamingly convinced that the Fed was an instrument of the Devil, or foreign powers, or secret space aliens, or something he couldn't really tell us unless we bought his tapes or DVDs. I thought his head was going to explode right on camera. I'm sure Izzy bought all 7 sets.
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Your memory, by your own admission, seems to be deteriorating more and more in the past year. You've admitted not being able to make connections as well as posting anonymous Donald Trump supporters. I dare not ask what year the DVD or tape set was available. I could probably you tube it if you could remember the guys name.
 
Interest rates are prices. They impart information. They tell a business person whether or not to undertake a certain capital investment. They measure financial risk. They translate the value of future cash flows into present-day dollars. Manipulate those prices — as central banks the world over compulsively do — and you distort information, therefore perception and judgment.

Interest rates ought to be discovered in the market, not administered from on high. They can’t do their essential work if someone, say a central bank, is muscling them around. Let’s get the central banks out of the business of using interest rates — and stock prices and exchange rates, too – as instruments of national policy. Today, investors live in a hall of mirrors: They don’t know which values are real and which are distorted by monetary manipulation. Market-determined rates will help restore clarity.--http://www.nationalreview.com/article/441128/james-grant-monetary-manipulation-must-end
 
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