"End the Fed!" - WHY?!

[JohnnySavage]

Why would that be a condition for failure of a federation? The American states didn't start to fail when they set up a federal government.

Ummm... I'm loathe to give you a Constitutional Law lesson as it would fall on deaf ears.

The States, had the power of the King prior to adopting the Constitution. They voluntarily ceded some of their power to the new Federal government and formed a new nation. They were never "nations" on their own.

...which has absolutely nothing at all to do with the conversation at hand.

 

[4est_4est_Gump]

A glimpse down the rabbit hole:

https://mises.org/library/inflation-hawk-lacker-was-feds-fall-guy

 

[4est_4est_Gump]

Paying no attention to their own econometric constructs such as the GDP, the Fed has declared that the economy is fantastic. After all, the unemployment rate has leapt downward over the last several years (just don't look at the denominator — the labor participation rate) and the Fed's inflation measures are right around their arbitrary 2% level. Allegedly, these two pieces (and the unrelenting stock market) means everything is great!

According to the WSJ's summary: "Fed officials plan to continue gradually raising interest rates unless the economy begins to deteriorate." So the financial system, after eight years of balance sheet expansion at the Fed, is stable, unless it's not. Then what? Well, then the rate-rising narrative will quickly reverse and we'll be back where we were — more stimulative monetary policy!

Yellen couldn't resist a hearty slap on her own back as she praised the Fed as doing well at — get this — keeping inflation low. Seriously. They run around with their hair on fire in panic that deflation is a great threat and that the Fed's balance sheet needs to be quadrupled in order to Save the World. Then they express pride at their ability to keep inflation low. Of course, last year they were frustrated because they just could not hit the 2% inflation target! Amazing. Every data point is either an excuse for more Fed intervention, or otherwise a reason to bow to the cheering media.

https://mises.org/library/end-ultra-easy-money

 

[KingOrfeo]

Ummm... I'm loathe to give you a Constitutional Law lesson as it would fall on deaf ears.

The States, had the power of the King prior to adopting the Constitution. They voluntarily ceded some of their power to the new Federal government and formed a new nation. They were never "nations" on their own.

So what? Why can federation work with subnational states but not with nations?

 

[Rightguide]

With or without the Fed, what it consists of is money, which is dictated by the market in that it is the one thing everybody agrees to want.

When did the "Market" dictate that we have coins that look like silver but are mostly Zinc, Pennies that look like copper but are mostly Zinc? When did the "Market" demand a note that doesn't meet the definition of a note? When did you write a letter to the government demanding your money be debauched and then counterfeited to look like something it really isn't?

 

[JohnnySavage]

When did the "Market" dictate that we have coins that look like silver but are mostly Zinc, Pennies that look like copper but are mostly Zinc? When did the "Market" demand a note that doesn't meet the definition of a note? When did you write a letter to the government demanding your money be debauched and then counterfeited to look like something it really isn't?

Why do you (seemingly) prefer copper and silver to zinc? None have any intrinsic value.

 

[KingOrfeo]

When did the "Market" dictate that we have coins that look like silver but are mostly Zinc, Pennies that look like copper but are mostly Zinc? When did the "Market" demand a note that doesn't meet the definition of a note?

When those things were introduced and the market accepted them as real money. Anyway, a Federal Reserve note is legal tender for all debts public and private, how does it not meet the definition of a note? Who says a note has to be something you can redeem for coins of precious metal?

 

[KingOrfeo]

Why do you (seemingly) prefer copper and silver to zinc? None have any intrinsic value.

They have, they're useful metals with a market price. Which does not mean that price should bear any relationship to the purchasing power of coins containing them.

 

[JohnnySavage]

They have, they're useful metals with a market price. Which does not mean that price should bear any relationship to the purchasing power of coins containing them.

And the "market price" is a certain number of Dollars. Which brings us back to the value of a Dollar.

ALL money is just a marker for trade. Centralized currency is simply a convenient conduit for that trade. If you find a seller willing, you could buy an acre of land for 10 pounds of sea shells. The sea shells are money. A sea shell, a pound of gold or a fist full of diamonds all have the value of what someone else thinks they are worth.

 

[Rightguide]

Why do you (seemingly) prefer copper and silver to zinc? None have any intrinsic value.

So why don't we just leave it looking like Zinc instead of trying to disguise it as copper or silver? Why do we put mill marks on the edges of dimes, quarters, half-dollars, and dollar coins, when there is zero threat of them being clipped as a coin made of precious metals might be? When did the Federal Reserve Note all of a sudden gain "legal Tender" status, when all Federal Notes in the past from 1934 to 1963 have always declared:

This note is legal tender for all debts public and private and is redeemable in "lawful money" at the United States Treasury or Federal Reserve Bank.

And on the bottom of previous notes a "Will Pay To The Bearer On Demand" so many "Dollars."

This disclaimer is a tacit admission the note isn't real money. Present Federal Reserve Notes do not say what they are redeemable in, where it can be redeemed "on demand" for a certain amount of "Dollars.". This is because, like our coins not being real money, today's Federal Reserve Note is not a real "Note."

This part of the reason why my bag of US silver dimes (real money) with a face value of $500 is now redeemable in over $7000 dollars in Federal Reserve Notes.

Federal Reserve Notes used to represent actual value by virtue of the redemption clause. Today their only value is that the United States government will accept them as a payment in taxes. So, what is circulating is not money but a script in which taxes are levied. This is why it is used and accepted in commercial transactions. If the government would decide tomorrow to accept only blue glass beads in the payment of taxes all Federal Reserve Notes would lose their value completely overnight.

 

[JohnnySavage]

Your argument is silly. You simply want to trade one exchange conduit for another.

e.g., This part of the reason why my bag of US silver dimes (real money) with a face value of $500 is now redeemable in over $7000 dollars in Federal Reserve Notes.

If your "real money" has value, why would you trade it for Dollars that you say isn't real money?

 

[Rightguide]

Your argument is silly. You simply want to trade one exchange conduit for another.

e.g., This part of the reason why my bag of US silver dimes (real money) with a face value of $500 is now redeemable in over $7000 dollars in Federal Reserve Notes.

If your "real money" has value, why would you trade it for Dollars that you say isn't real money?

I wouldn't, that is the point. The other point is, the alleged "note" that really isn't a note continues to lose buying power, mine doesn't. A twenty dollar gold piece would buy the best suit of clothes in the market in 1900, it will pretty much to the same thing today, unlike the Federal Reserve Note.

 

[4est_4est_Gump]

Why do you (seemingly) prefer copper and silver to zinc? None have any intrinsic value.

Tell that to the people trying to farm in California that are continually having to replace the wiring to their equipment...



Victor Davis Hanson has written extensively on the topic.

Silver has a value in electronics.

Zinc is silver mining residue.

 

[JohnnySavage]

I wouldn't, that is the point. The other point is, the alleged "note" that really isn't a note continues to lose buying power, mine doesn't. A twenty dollar gold piece would buy the best suit of clothes in the market in 1900, it will pretty much to the same thing today, unlike the Federal Reserve Note.

But you are measuring buying power as a function of a Dollar! I'll trade you a bushel of wheat for your silver coins. That's the value of your coins, to me. Someone else may give you a new car. And those trades are perfectly fine, but not practical in most cases. Walking around with a five dollar bill in your pocket is easier then lugging a bushel of wheat around.

 

[KingOrfeo]

So why don't we just leave it looking like Zinc instead of trying to disguise it as copper or silver? Why do we put mill marks on the edges of dimes, quarters, half-dollars, and dollar coins, when there is zero threat of them being clipped as a coin made of precious metals might be?

Tradition. People have expectations as to what a coin should look like. If those are satisfied, its metallic content doesn't matter; they can make it out of zinc, plate it with something that looks silvery, and leave the silver to make tableware and jewelry. And BTW, nobody is disguising zinc as copper; only the penny looks as if it is made of copper, and in fact the penny has a high copper content, it is made of bronze.

When did the Federal Reserve Note all of a sudden gain "legal Tender" status, when all Federal Notes in the past from 1934 to 1963 have always declared:

This note is legal tender for all debts public and private and is redeemable in "lawful money" at the United States Treasury or Federal Reserve Bank.

And on the bottom of previous notes a "Will Pay To The Bearer On Demand" so many "Dollars."

I find it very hard to believe that even in 1934-1963 one could take a $10 bill to a bank and exchange or redeem it for a gold eagle. In fact, I believe private possession of gold other than jewelry was mostly illegal during that period.

This disclaimer is a tacit admission the note isn't real money.

Any money you can spend or invest is real money.

If the government would decide tomorrow to accept only blue glass beads in the payment of taxes all Federal Reserve Notes would lose their value completely overnight.

True, trivial, and irrelevant.

 

[4est_4est_Gump]

Notes are popular with central planners because printing is cheaper and paper more abundant than mining and easier to inflate.

The main reason that they took copper and silver out of the money is not because we would redeem it but because we would melt it down and sell it in order to beat the inflations by trading the precious metals for more dollars than what your bag of coins is worth based on their face values alone. In short, like Marcus Aurelius, they also inflated the value of their coin through the process of debasement by use of junk metals.

 

[Rightguide]

Tell that to the people trying to farm in California that are continually having to replace the wiring to their equipment...



Victor Davis Hanson has written extensively on the topic.

Silver has a value in electronics.

Zinc is silver mining residue.

The production costs of producing a Federal Reserve note of any denomination is the same, and might even be less as the denomination goes up because of shorter press runs and production costs. They will be "loaned" to the treasury for a promise to pay, in future taxing authority, interest plus principle.

 

[Rightguide]

Tradition. People have expectations as to what a coin should look like. If those are satisfied, its metallic content doesn't matter; they can make it out of zinc, plate it with something that looks silvery, and leave the silver to make tableware and jewelry. And BTW, nobody is disguising zinc as copper; only the penny looks as if it is made of copper, and in fact the penny has a high copper content, it is made of bronze.

This is bullshit, the current formula is 97.5 percent zinc and 2.5 percent copper (copper-plated zinc).

 

[JohnnySavage]

Notes are popular with central planners because printing is cheaper and paper more abundant than mining and easier to inflate.

The main reason that they took copper and silver out of the money is not because we would redeem it but because we would melt it down and sell it in order to beat the inflations by trading the precious metals for more dollars than what your bag of coins is worth based on their face values alone. In short, like Marcus Aurelius, they also inflated the value of their coin through the process of debasement by use of junk metals.

Physical currency is a very small amount of the total amount in circulation, and an even smaller amount of the entire value of goods and services tied to the Dollar.

 

[4est_4est_Gump]

Well that's a point, but it is not particularly relative to the discussion...

 

[Rightguide]

I find it very hard to believe that even in 1963 one could take a $10 bill to a bank and exchange or redeem it for a gold eagle.

It could be exchanged for ten silver dollars.

Any money you can spend or invest is real money.

Then why would you need a disclaimer saying your notes can be exchanged for "lawful money?"

True, trivial, and irrelevant.

Not trivial or irrelevant to the true value or utility of Federal Reserve Notes. You just don't like admitting it.

 

[KingOrfeo]

This is bullshit, the current formula is 97.5 percent zinc and 2.5 percent copper (copper-plated zinc).

Hm. So they changed that.

 

[KingOrfeo]

Then why would you need a disclaimer saying your notes can be exchanged for "lawful money?"

Probably some psychological reason no longer relevant.

Not trivial or irrelevant to the true value or utility of Federal Reserve Notes. You just don't like admitting it.

The value and utility of a note is what you can buy with it. What, do you think there can be any kind of money that always holds its value independently of events? There can't. A gold coin with a purchasing power based solely on the market value of its gold content can lose value in the event of a major gold strike, it's happened before. It is no safer to put your money into gold than notes.

 

[Rightguide]

Hm. So they changed that.

Like everything else. But you don't mind. It could be a copper coated peanut, right?

 

[KingOrfeo]

Like everything else. But you don't mind. It could be a copper coated peanut, right?

If I can spend it, it might as well be stone.