Threaded Mode | Linear Mode

sunken · 01-22-2008, 07:01 PM

In order to head off what was sure to be a bloodbath in the stock market today, the Fed lowered the interest rate a whopping .75. This caused a shake up in the market, but there is concern that people will smell the desperation in the air and cause further speculation. However, it did seem to help the market bounce back by the end of the day.

Do you think this will help or hurt?

Mike_115 · (This post was last modified: 01-23-2008 08:11 AM by Mike_115.)

These crashes are a market correction from artificially low interest rates. The only way to lower interest rates (without turning people away because you are out of money) is to create more money, witch farther devalues the dollar. If you push interest rates lower you are pushing the the market along, but at some point it will have to happen. Either at some point they raise interest rates and cause a recession, or they keep printing money and lowering interest rates till the dollar is worth nothing, and then the entire economy will completely fall apart. What we need is to stop creating money, preferably link it to gold or silver. From my understanding this will create a recession to correct the inflation from before, but once we are through that the economy should level out without so many booms and busts.

A very interesting look at what happens with unchecked inflation is here. http://www.rogershermansociety.org/yugoslavia.htm I highly advise reading it, it's entertaining and informative.

Edit

Read this also, it shows what is happening, and where we are heading. Hyper inflation is what will happen here, the doubling of income taxes would also kill the economy because there would be no money left in the market, and people would stop working. We are stuck with horrible, and even worse. http://www.newstarget.com/z019659.html

sunken · 01-23-2008, 02:54 PM

I think you are right. It was short term correction that got us into this mess to begin with. The economy will still wind up in recession at some point and that will finally once again slam the economy back into alignment. It won't be pretty or pleasant, but a necessary evil.

I'm not really sure how we could go back to the gold standard at this point. I know Ron Paul talks about it a lot, but is it really something that could be done? I always think of a shattered glass and someone trying to glue it together. It may not be possible to put it back together, at least not in the same way. I'm wondering if this might be one of those scenarios.

cnelson · 03-29-2008, 09:03 AM

sunken Wrote:I'm not really sure how we could go back to the gold standard at this point. I know Ron Paul talks about it a lot, but is it really something that could be done? I always think of a shattered glass and someone trying to glue it together. It may not be possible to put it back together, at least not in the same way. I'm wondering if this might be one of those scenarios.

Crazy Idea or not?: How about an energy standard? Take US power production and divide it by the total amount of money out there. Every dollar backed by .00001 KW-Hrs. Would it encourage energy efficiency?

Anybody for taking power away from the FED? We should start a 100% reserve bank. It won't pay any interest, it'll just protect your money and let you use debit cards and what not. BUT if everyone uses it, we live in a deflationary period and prices would fall. We should set up an online one. Then the gold standard proponents can ignore their self-interest and use it to start to get all the kinks out, and some day in the future we can organize a mass bank run and have everyone put their money into 100% reserve banks only. The money supply will contract 10 fold. Stocks will plummet. The value of our dollars will rise. The restaurants will have to reprint their menus. But afterwards, we'd be living in a deflationary period. woot. dream come true.

Mike_115 · 03-31-2008, 06:33 AM

I don't think an energy standard would be very good. With that you are basically just shifting the power to create money from the fed to the power companies, building new power plants would be the same as counterfeiting. The good thing about a gold or silver standard is that there only exists so much of it. To create more money you have to find, and then mine for it, and the work doing that is worth the money you get.

As far as your idea to start a private bank there are already things like that. They are basically electronic gold banks. You purchase so much gold, and can transfer that to someone else's account. You can also sell the gold to get fiat money back, and I think withdraw the actual gold. If enough people realized and used that system we could phase out the Federal Reserve Bank.

cnelson · 03-31-2008, 11:00 AM

Mike_115 Wrote:I don't think an energy standard would be very good. With that you are basically just shifting the power to create money from the fed to the power companies, building new power plants would be the same as counterfeiting. The good thing about a gold or silver standard is that there only exists so much of it. To create more money you have to find, and then mine for it, and the work doing that is worth the money you get.

This question is a misnomer: who has the power to create money? As far as I'm concerned, I'm not mad at the people who create the money. I'm mad at the way and reasons that they do; it seems to be completely disconnected with the actual economy.

Connecting money to energy production just seems to make more sense to me. When we acquire more factors of productions, more money should be created... when we loose factors, money should be destroyed. Energy consumption, to me, seems to be the one factor most closely connected to the actual economy.

And if someone builds a new power plant, then great! Our industrial society will have more power, pushing the PPF outward.