What has the Federal Reserve done to the US?

Gary K

New member
Banned
The Federal Reserve's stated purpose for existance is to limit inflation. Let's look at what kind of job they have done in this respect.

The first link below will give us the amount of inflation between the years 1800 and 1900 as shown in the value of the dollar in the year 1800 compared to the value of the dollar in the year 1900. The second link will give the value of the dollar the year 1900 and compared to the value of the dollar in the year 2016. What do these comparisons mean to us as everyday citizens? Every time the value of the dollar goes down real wealth is transferred from your pocket to the pockets of the banking system. This is how inflation steals from you. It is an invisible tax that takes money from your pockets and places it into someone else's pockets. This in today's banking systems means, in reality, the central banks.

http://www.in2013dollars.com/1800-dollars-in-1900?amount=1

Notice that the purchasing power of the dollar in 1900 was exactly the same as it was in 1800. This means the dollar had lost none of it's value during that 100 year time span. This time span took place before the Federal Reserve was created. It means that the purchasing power of the dollar was the same. If someone earned $1000 in the year 1800 and another person earned the same thing in the year 1900 the person in 1900 had the same standard of living as the person in 1800.

http://www.in2013dollars.com/1900-dollars-in-2016?amount=1

Now notice that $1 in 1900 is the same value as $27.03 in 2016 dollars. That means the value of the dollar in 2016 is 3.699 percent of the year 1900 dollar. This means that the modern dollar is worth only 3.7 cents compared to the dollar in 1900. The rest of the dollar, 96.3 cents has been transferred out of our pockets into the pockets of the central bankers. Has the Federal Reserve done what it said it would do? Who was better off, we citizens after the Fed was created, or the people who lived before the Fed was created? Who had a higher standard of living?

You wonder why you are having problems making ends meet? This is why. We have had 96 out of 100 pennies in every dollar transferred away from our pockets. It is real value taken away from you by the financial manipulations of the central banking system.

What are the only 2 conclusions that we can draw from these facts.

1. The Federal Reserve bankers are hopelessly incompetent and have no idea whatsover as to what they are doing.
2. The Federal Reserve bankers know what they are doing, and they are doing it intentionally to bankrupt this nation and its people. This means: The stated purpose for the Federal Reserve is an absolute lie.

No other conclusions fit the facts.
 

The Barbarian

BANNED
Banned
You wonder why you are having problems making ends meet? This is why. We have had 96 out of 100 pennies in every dollar transferred away from our pockets. It is real value taken away from you by the financial manipulations of the central banking system.

You think that the average American family was better off economically in 1900 than it is today? Can you show us your numbers and where you got them?

That sounds absurd on the face of it, but I'd be willing to take a look. What do you have?
 

rexlunae

New member
The Federal Reserve's stated purpose for existance is to limit inflation. Let's look at what kind of job they have done in this respect.

That's false. Allow me to quote from the Federal Reserve Act of 1913:


An ACT To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposeses.


https://fraser.stlouisfed.org/scrib...orical/fr_act/nara-dc_rg011_e005b_pl63-43.pdf


Far from "limiting" inflation, the whole point ("elastic currency") was to create the possibility of inflation. The Fed does seek to limit inflation in the sense of keeping it from running out of control (although the cases where this can happen are very few), but it also seeks to keep it above zero, at a low but sustainable rate. A commodity currency cannot inflate, and thus it's value rises and falls uncontrolled according to market forces. But a fiat currency like the modern US dollar is designed to be adjusted for stability, including modest inflation.

So, your understanding of the goal is off base.

You wonder why you are having problems making ends meet? This is why. We have had 96 out of 100 pennies in every dollar transferred away from our pockets. It is real value taken away from you by the financial manipulations of the central banking system.

You're only looking at one side of this. The median income in 1900 was $438/year. https://usa.usembassy.de/etexts/his/e_prices1.htm
 

Gary K

New member
Banned
Do any of you understand what is going on? You don't appear to at all. The gdp on the US in the year 1900 was $20.7 billion. An income of $438/yr bought a lot back then. You could buy a house for less than $2000. That's less than 5 times the median income. And remember median income back then was based on a single wage earner. Today's median income is based on a two income family.

However, that means very little in what I was speaking to. Back in 1900 paper dollars could be redeemed for the same amount of physical gold and both gold and silver currency was in circulation. That means there was tangible wealth backing a US dollar. Today? Not so much. All our currency today is based upon debt. Meaning there is nothing behind it. It is printed out of thin air. In fact, if everyone paid all their debts off there would be 0 dollars in circulation..

If the dollar is so valuable today why do we see bitcoin and a bunch of other electronic currencies being created? Why is gold, which was approximately $20/oz in 1900 now at $1300+/oz? Gold hasn't appreciated in value. The dollar has lost that much in value. And if you research the price of gold today you will find that it's price is being manipulated downwards by the central banks. Even with that going on it still takes 67 times more dollars today to buy an ounce of gold than it did in 1900. Many financial analysts will tell you that gold's real price right now is more like $5000-8000/oz than $1300/oz. Add to that the debt to gdp ratio in 1900 was only 10%. Today it is 103.7%.

And you guys are trying to tell me how much better off we are today than in 1900? You are financially retarded.
 

rexlunae

New member
Do any of you understand what is going on? You don't appear to at all. The gdp on the US in the year 1900 was $20.7 billion.

...and now it's $19.739 trillion. So, a little less than 1000x what it was, in face-value.

An income of $438/yr bought a lot back then. You could buy a house for less than $2000. That's less than 5 times the median income. And remember median income back then was based on a single wage earner. Today's median income is based on a two income family.

The current household GDP is over $59,000. Five times that is $295,000, which will buy a decent house in a lot of current markets.

However, that means very little in what I was speaking to. Back in 1900 paper dollars could be redeemed for the same amount of physical gold and both gold and silver currency was in circulation. That means there was tangible wealth backing a US dollar.

Correct. It's one of the things that really held the economy back.

Today? Not so much. All our currency today is based upon debt. Meaning there is nothing behind it. It is printed out of thin air. In fact, if everyone paid all their debts off there would be 0 dollars in circulation..

It's all just a network of promises and offers. Also called an economy.

If the dollar is so valuable today why do we see bitcoin and a bunch of other electronic currencies being created?

The setup doesn't really have a lot to do with the question, but the answer to the question "why do we see bitcoin...being created" is that it's driven by broken economics and bad math from crypto-anarchist idealists in Silicon Valley. And it's actually a great tool to explain why the fiat currency skeptics are wrong.

In order to understand why, you have to understand something that the architects of Bitcoin don't understand. You have to understand the purpose of money in an economy. Many people think that the purpose of money is as a store of value. But that's not it. The purpose of money is to serve as a medium of exchange, to allow for an economy. In order to serve this function, it has to hold value to a certain extent, but it isn't necessary, and as it turns out, it's actually detrimental for it to hold all of its value, or, even worse, for it to gain in value. A currency that is deflating encourages holding on to the currency. Holding the currency in itself is an investment, and buying things with the currency has a cost of both the face value that's spent at a point in time, but also the future value that could have been realized if it was held longer. On the other hand, a currency that is inflating gradually has an incentive to spend and invest it, because at the moment you invest it, you can expect that it will have a lower value in the future. You don't want it to inflate so fast that people aren't willing to accept it for goods and services, but it actually should be inflating gradually.

Bitcoin is the opposite of money. Because the biggest anxiety that the people who designed it had was that central banks would act in their own interests, and steal value from the economy, they designed a system that could not be governed like a fiat currency, and thus it could not be inflated deliberately, and it also was built with very slow, fixed growth rate that was determined when the code was written and adopted, and that would eventually stop, which means that if the Bitcoin economy grows, it would be severely deflating.

Think about this: What can you actually buy with a Bitcoin? I don't mean by buying dollars and using those to buy bitcoins. What can you actually buy directly with them? Not a whole lot. The size of the Bitcoin economy (as opposed to the market cap of Bitcoin) is effectively 0. People who invest in Bitcoin mostly horde it, maybe selling it occasionally, but never really making anything. Thus, the value of Bitcoin is driven by hysteria, FOMO, and misguided economic ideology, punctuated with enormous regular crashes.

Put another way, while Bitcoins can be used to trade on shear volatility and the foolishness of dumb money, there is no crypto-economy because of severe, built-in deflation.

Why is gold, which was approximately $20/oz in 1900 now at $1300+/oz?

Inflation, duh. It's a feature, not a bug, and...it's a good thing.

Another good thing about inflation: it erodes accumulated debt and wealth.

Gold hasn't appreciated in value. The dollar has lost that much in value.

There's a reason that countries sometimes try to manipulate their national currencies by lowering the value. By devaluing a currency, you stimulate your economy by making foreign trade more attractive to foreign buyers. A strong dollar would be bad for the economy, although it would benefit people who hold a lot of wealth in US dollars.

And if you research the price of gold today you will find that it's price is being manipulated downwards by the central banks.

I believe the Fed was targeting a 1% inflation rate. It's not like this is secret or illicit.

Even with that going on it still takes 67 times more dollars today to buy an ounce of gold than it did in 1900. Many financial analysts will tell you that gold's real price right now is more like $5000-8000/oz than $1300/oz. Add to that the debt to gdp ratio in 1900 was only 10%. Today it is 103.7%.

It doesn't matter how many dollars it costs to buy gold. What matters is how much things cost versus how much revenue flow you have access to. If you took two zeros off of the currency, people would work for $0.15 an hour, and you could buy a new car for less than $200. These numbers have only short-term relevance, and if you go to a different country, you'll see vastly different numbers in use, with no loss of anything important.

And you guys are trying to tell me how much better off we are today than in 1900? You are financially retarded.

Could you be a little bit more thoughtful in your use of language please?
 

Gary K

New member
Banned
Let's look at some of the ideas being put forth on this thread.

1. Debt is better than tangible wealth. If you owe millions you're wealthier than if you actually have millions in tangible wealth such as gold and silver. Owing $19.8 trillion of debt is better than owning $20 billion in real wealth. In other words, the more you owe the richer you are.
2. Holding a pile of IOUs makes you wealthier than having tangible wealth such as gold and silver.
3. Gold and silver restrict an economy. In other words, owning tangible wealth restricts the accumulation of tangible wealth. Pretty much a nonsensical idea.
4. Having a currency that is constantly losing it's value is better than having a currency that holds its value. An example would be that it is really good for you if you put $100 in the bank at 5% interest and you have inflation of 5% at the same time. In this example at the end of the year that interest is lost to the inflation. You have only $100 of purchasing power at the end of the year even though your money earned 5% interest. That is somehow better than depositing $100 of gold and earning the same 5% interest for a year. At the end of that year you now have $105 worth of purchasing power. That $5 is not good for you. It's better to have $0 more purchasing power. That increase in real wealth is a restriction on you.

The above is Keynesian economics made simple. And Keynesian economics is what is being touted as good for you by those who disagree with me.
 

rexlunae

New member
How is eroding wealth a good thing?

Great question. The short answer is because it encourages investment.

Suppose you have a dollar. If you know that in a year, it will be worth less than it is today, you have an incentive to try to get a better deal. So you start a business, you buy stock, you lend your money out, you buy commodities, anything you can do not to suffer loss from inflation. And in so doing, you create the real tangible wealth that is the whole point of an economy anyway. You become a job creator.

Money that holds its value, or worse, increases in value, enables the rich to remain idle, and suppresses an economy.

And, if you want an investment that has the properties of a commodity, you can just buy commodities. Buy gold, buy silver, buy platinum, but don't hold dollars.

And inflation is not a good thing if you are the one being owed.

Debt is an investment. You have to price that into your considerations.
 
Top