This is carry over from the Iran thread. It's a totally different topic so should really have its own thread.

On the Iran thread, Spjones posted a video clip of the author of The Creature from Jekyll Island.



I don't want to further derail the Iran thread... plus the Iran thread is political and may get deleted while this is more economical than political and may not....

My question... for those that wish to abolish the Fed...

If the Fed were to be abolished, what would prevent the runaway inflation that would surely result from excessive fiscal spending?

The FED doesn't need to be abolished it just needs to be run in a responsible fiscal manner, and not run with an agenda guiding the rate decisions. A good FED knows when it is needed to stimulate the economy and not to hold it back as is the case currently.

Bob... you think the economy is in current need of stimulation?

I do believe that it will certainly start the ball rolling faster, particularly in home ownership and business opportunities that are holding back and hindering that market and that is a very prominent and vital part of this economy.

What prevented runaway inflation before the federal reserve was created in 1913? From 1775 to 1913 prices only increased about 20%. Since 1913, the dollar has lost 97% of its purchasing power.

Ya I got it way off topic. lol

Thomas Sowell said it best about ending the fed

“ when you remove cancer,,,,, you don’t replace it with anything,,,,”

Inflation is caused mainly from increasing money supply

Sound money stops this,,,

If they ran out of money,,, they couldn’t spend more,,, for very long,,



Just like you, and me

We could borrow,,, but it would become more expensive to borrow,,, until we couldn’t borrow any more


Without the Fed, money supply couldn't be expanded at will through fiat issuance,,, fractional reserve banking,,,, or

low-interest credit creation,,,,which distort markets and fuels inflation

Wanted to add:

The fed is bad!!

Trumpster wants to control the fed,,, which is even more bad!!!

Prepare yourselves!!!!

If anything, I believe the Fed has been cutting too quickly. The stock market is continuously breaking records, most companies have sky high valuations, inflation is well above the goal of 2%, and the GDP growth was above expectations. The market is in no way stagnating, imo. It's pretty much on fire. I thought it would take a hit today... between the threat of criminal charges against Powell, the threat of capping the interest rate banks can charge for credit cards at 10%, and the unrest in Iran... but even all of that the market just shrugged off to forge ahead. I don't believe it needs any stimulating.





Did the federal government spend then at the rate it spends now?

You make some good points but I believe it's a stretch to say that money supply couldn't be expanded through fiat issuance. It historically has been. Also, why would you think the money supply couldn't be expanded via fractional reserve banking without a central bank?

Fractional reserve banking should be illegal

Money supply being expanded is the problem,,,

Sound money(fixed supply) solves this problem

Is federal spending enabled by the Fed is a valid question in response.

GOLD

That is exactly what will prevent inflation. Do away with fiat paper and return to gold. Paper is an infinite resoure while gold is finite.

Who gets to decide what Gold is worth?

The parties exchanging to gold decide what it’s worth

Gold really only works at a local level as a medium of exchange

It’s heavy,,, hard to store,,hard to transport,,,hard to verify

That’s why the created paper money

Locally, for small transactions it works fine

The open market decides.

Yes, carrying a pouch full of gold coins is kind of medieval so we had both coins and paper gold certificates at one time. Govt currency solidly linked to an equivalent amount of gold.

Paper money was fine as long as its was tied to the gold standard. At least to me. I could be missing something but going off the gold standard was a huge mistake.

With a gold backed currency the govt holds the gold, they can value it at whatever they want and previously that has been a problem

I think if you asked Trump that question today you'd get a resounding NO, LOL.

But it's a good point.......

As we race down the inevitable digital road,,,

A digital currency,,, with a fixed supply,,,decentralized(NO government control),,,,totally transparent,,,,verified every 5 mins,,,, easily transported

Sure would be nice

Economy vs Stock Market are two different things. One doesn't have follow the other in the world of finance.

The economy and the stock market are distinct yet interrelated concepts:
The economy encompasses the overall production and consumption of goods and services within a country, reflecting how money is made and spent by citizens, companies, and governments.

The stock market is a platform where investors buy and sell shares of publicly traded companies, representing a smaller segment of the economy.

While the stock market can indicate investor sentiment and expectations about future economic performance, it does not always accurately reflect the broader economic health.

Economic growth is typically measured by metrics like gross domestic product (GDP), while stock market performance is measured by indices like the S&P 500.

In summary, the stock market is just one aspect of the economy, and fluctuations in stock prices do not necessarily correlate with the overall economic conditions.

Our country needs the Feds involved with our Economy Health and future.

I'm not sure if your post is just a general commentary or directed at me, since I am the only one that directly mentioned the market. But, in that post I also pointed out that GDP growth was hotter than expected, and inflation remains above the 2% goal of the Fed, which are both indicators of economic health not directly related to the market.

Yotetrapper30, not directing it to anyone directly. I was just making a point/fact because it is easy to blame one for the other. I hope no harm to anyone just wanted to point it out because when a thread is started on these subject there shouldn't be that confusing. Sorry if I spoke out of line.

Unpopular opinion,,

The welfare state started in the 1910’s,,,,, beginning with pensions

The same time as the fed was created

The beginning of the downfall,,,to much government,,,,Keynesian economics

And it’s still preached today

It’s not a coincidence,,,,

,

Why would you think that gold is finite ?

In order to believe that , one would have to reject one of the basic principles of geology.........Uniformitarianism..........The processes that have operated in the past are still operating today in a uniform manner. IOW.....there is gold (and everything else) still being created in the earth today just as there was in the past


Returning to some degree of gold standard might stabilize the dollar but it could also cause a severe contraction in economic activity world-wide because gold would have to be re-valued massively.

Also, I don't think we should put our country in a position where we can't spend or borrow money to deal with an unforeseen crisis like a war or a natural disaster....or some other unknown unknown.

To eliminate inflation completely could also eliminate economic growth simply because there isn't sufficient capital to borrow or because a gold backed currency may create higher interest rates.....making it more difficult and more expensive for businesses to borrow. It could lead to deflation eventually.

Recall that one of the major problems that led to the creation of the Fed was that there were thousands of banks in the US that were issuing their own currencies............clear back to the 1860's this was a problem.

How do you value a currency issued by bank X relative to currency issued by banks Y & Z ?? And don't forget we were on a gold standard at that time.

There was also the social phenomenon of bank runs and failures that were caused by farmers needing currency/credit in the spring....for seed and equipment but not paying back those loans or deposits until fall when they sold their crops. It created a tremendous imbalance of available cash over disparate geographies. It was the classic rural-urban divide.

So IMO this is not a simple subject with a simple solution.

Bottom line for me is I do not want politicians of any stripe setting interest rates.....Talk about chaos ! There would be almost no continuity or ability for households or businesses to plan, save, invest, or grow.

To those who think Powell is at fault here for something remember.......there are 12 people voting on the FOMC where rates are concerned. Powell is just one vote. How is it logical to think he is calling the shots on rates ?

Rates ,......IMO, are too low at this point. They never should have cut at the last two meetings. Hopefully they will not cut again at the end of this month.

Not at all!!



I don't think it's that unpopular of an opinion. Well, at least not on here.

The two ingredients that can dictate Fed Rate decisions is Inflation, Job Numbers. Considering those two number is why their decision was made in every Fed Gathering on rates. Their decision is basically followed those numbers.

Perhaps finite was the wrong term. Would limited be better?

In camparision to paper which is literally growing in trees gold is infinitesimally rarer and harder to source.

I’m completely not an economic expert of any kind like a number of you on here are. But I think a lot of what you said is on point with just how I feel. Anything short of FED independence as it has been to this point for the most part will not do us any favors. Happy trapping! ScottW

Yes! I do not think they will cut again this month... I would be very surprised if they do.





Yes... the Fed has a dual mandate. They must consider both unemployment and inflation. Some think inflation should be given more consideration than unemployment. At any rate... unemployment is 0.4% higher than the target currently, while inflation is 0.7% higher than the goal. Inflation has been higher over the target (I believe) than unemployment has been for the last two meetings in which the Fed has cut rates.... if they were going solely by the numbers, they wouldn't have cut. There are other things besides just the numbers they take into consideration. But IMO they've been cutting too fast.

and poorly distributed too

IDK,,, seems like a lot of folks thinking the government(or a group of bankers) should solve their problems, and carry them thru to the end

I think the Federal Reserve is necessary to control inflation. There is no greater threat to a retiree than to have run away inflation while stuck with a fixed income.

Why do we need to stimulate the economy with lower interest rates when all.we hear from the administration is that the economy is booming?

Trillions of debt is coming due this year,,,

Lower interest rates are critical

Punishing savers,,,,,,

Inflation is a persistent economic happening where the cost of goods and services increases over time. This increase in prices is primarily driven by factors such as rising production costs, wages and benefits, increased demand, and central bank policies aimed at maintaining the economy's money supply.

Inflation costs can go down but in most all products costs go up so inflated prices stay and it becomes the norm.

We don't!



Well........ yeah but..... you're kinda forgetting about the effect of fiscal stimulus on inflation....

There is nothing *Federal" about the F..R. it's a private bank, mostly owned by overseas interests. And there is nothing in "reserve". It's completely contrary to our best interests.

I believe we need a central banking system. I believe need a FDIC type backing for banks. I don't not believe in a debt currency and neither party can be trusted with the ability to create Mom out of thin sir

Ken, gold is being revalued massively. It wasn't all that long ago it was under 900 dollars . Inflation is a good thing when it's organic and created by the normal flow of the free market. That flow also allows for deflation. The FED is more afraid of deflation than inflation.

As far as a country needing to have the ability to create debt backed money to fight a war my question is how did we fight and win 2 great wars?

In case anybody hasn't been paying attention the FED has restarted QE

The primary mechanisms for creating new gold atoms are cosmic stellar explosions and colliding neutron stars. The gold was already present in the cosmic gas cloud from which the sun and planets of our solar system formed. There isn't more new gold being created within the earth and any new gold being deposited on the earth (via asteroids, etc.) is a drop in the bucket. There's still gold being created via processes out in the cosmos, but not on earth.

Based on the most recent reports, inflation has ticked down while unemployment has ticked up. The Fed makes it's decisions not only based on what the numbers are right now but also which way they are trending. It's like driving a car: you need to apply the brakes before your car reaches the point you want it to stop.

How many months in advance??

Devil's advocate here... what is your educational background in geology?

Oh....... I've noticed!

What is white17's educational background in geology?

I have taken college-level coursework in chemistry and physics. What are the mechanisms by which new gold atoms are created within the earth?



Well, a bunch of smart people on a committee at the Fed meet roughly every 6 weeks to talk about it and potentially change interest rates.

Well.... I reckon that's his place to say and not mine.

Then why don't you ask him?

I know. Why don't YOU? He'll be here tomorrow and I am sure he'll reply.

It seemed, from your question, that you're arguing that someone must have a particular credential before they're allowed to weigh in on a topic, but this principle is being selectively enforced by you, since you asked me but not him.

Why would I ask him, when I already know his educational background? I was just trying to ascertain whether you had a similar background or if you just took a class in physics and chemistry like every other college level student.....

So, if one must have an educational background in geology to post about the creation of new gold atoms within the earth, and you are "allowing" white17 to post about it, does that not logically imply that he has an educational background in geology? Or are you selectively applying the rule?

This showed up on my feed this morning,,,,, it’s pretty good

Former Fed Chairs and Treasury Secretaries are now warning us that the U.S. is “acting like an emerging market.”

The irony is thick.

The U.S. started acting like an emerging market under their direction and leadership when they debased the currency, monetized the debt, and backstopped insiders.

These are the same leaders who spent decades eroding the Fed's credibility by normalizing Fed intervention, turning monetary policy into a backstop for fiscal excess and financial markets.

They helped create an environment drowning in debt and moral hazard, and now that the politicization of the Fed becomes more overt, they’re suddenly worried about weak institutions and Fed independence?

I'm sorry but you don't get to destroy the Fed's credibility for 30+ years, then clutch your pearls when the consequences arrive.

I asked Grok to summarize the irony of these signatories lecturing us about Fed independence and inflation, and it delivered...

Alan Greenspan: The Maestro of Bubbles

Greenspan, the five-term Fed chair who spanned Reagan to Bush Jr., is the godfather of easy money.

He kept interest rates artificially low in the early 2000s, inflating the housing bubble that exploded into the 2008 financial crisis. His "Greenspan Put" essentially signaled to Wall Street that the Fed would always bail them out, encouraging reckless risk-taking.

This guy chaired the Council of Economic Advisers under Ford and basically wrote the playbook for moral hazard. Now he's signing a letter about "weak institutions" and "negative consequences for inflation"?

Bro, you created the inflation monster by flooding the system with cheap credit.

If the U.S. feels like an emerging market, it's because you treated it like one—printing to prop up cronies while savers got wrecked.

Ben Bernanke: QE King and Bailout Baron

Bernanke, two-term Fed chair and Bush's economic adviser, took Greenspan's mess and supersized it. Post-2008, he unleashed Quantitative Easing (QE), aka money printer go brrr, buying trillions in assets to bail out failing banks and prop up the stock market.

This wasn't "stabilizing" the economy; it was wealth transfer from Main Street to Wall Street, inflating asset bubbles while real wages stagnated.

Bernanke's actions politicized the Fed more than any "criminal inquiry" ever could, making it a tool for endless intervention. Now he's whining about undermining independence? You undermined it yourself, Ben—by turning the Fed into a central planner's wet dream.

Timothy Geithner and Henry Paulson: The Bailout Bros

Geithner (Obama's Treasury Secretary and NY Fed President) and Paulson (Bush's Treasury Secretary) were the dynamic duo of the 2008 bailouts.

They orchestrated TARP, funneling hundreds of billions to banks and institutions—often with no strings attached—while homeowners drowned in foreclosures.

Geithner famously argued for "foaming the runway" for banks, meaning soft landings for the elite at the expense of everyone else.

Paulson, a former Goldman CEO, basically used public funds to save his old buddies. These moves entrenched "too big to fail," making the financial system more fragile and dependent on government backstops.

Fast-forward to today: inflation from their era's policies has eroded savings, and the debt they piled on is why politicians are now meddling with the Fed. Hypocrisy level: expert.

Janet Yellen: From Fed Chair to Treasury Printer

Yellen's resume is a fiat hall of fame: Fed Chair under Obama/Trump (2014–2018), Treasury Secretary under Biden, and earlier roles under Clinton.

As Fed Chair, she inherited Bernanke's $4.5 trillion balance sheet monster from QE rounds and kept the printer humming—reinvesting maturing securities to maintain that bloated size for years, while holding rates near zero. The easy-money era she extended blew up asset bubbles, widened wealth gaps, and primed the pump for the 2020s inflation surge.

As Treasury head, she oversaw trillions in stimulus during COVID, much of it funded by Fed money creation. Remember when the Fed's balance sheet hit $9 trillion? That's Yellen's world.

Her policies directly contributed to the "highly negative consequences for inflation" she now decries. And let's not forget her flip-flopping on inflation being "transitory"—a lie that cost everyday people dearly as prices soared. Irony level: nuclear.

Just today, Yellen went on CNBC blasting threats to Fed independence as "extremely chilling" and warning that pressuring the Fed to cut rates to manage federal debt payments is "the road to a banana republic."

Ma'am, they literally paved that road under your leadership and policies. As Fed Chair, you spent years normalizing a massive, interventionist balance sheet and near-zero rates that turned the Fed into Wall Street's perpetual backstop—eroding its credibility long before any political pressure became more obvious. Peak hypocrisy.

I'd like to revisit this and perhaps request a clarification. I stand by my post that no new gold atoms are being created within the earth. If anybody disagrees, whatever their credentials, I challenge them to explain to me how new gold is being created.

However, there are geological processes that can create new gold deposits with gold that was previously inaccessible. The earth's crust is but a sliver of the earth's mass and I'm sure there's gold located deeper than any of our mines that we have no means of extracting. Is this, perhaps, what you mean, that there are still processes in motion that will continue to create new gold deposits in the crust from stores that were previously within the bowels of the earth?

I agree with you at the atomic level absolutely.
I was referring to geologic processes being the same as they have been throughout geologic time. My thoughts at the time concerned processes like plate tectonics and old material being re-melted an redistributed via magma plumes . That is why I made the comment to Warrior about poor distribution.

We know that there are new atoms forming all the time in the Earth's crust due to the radioactive decay of other atoms. I am not saying that the number of atoms is increasing. That is fairly constant.. but for example uranium decaying into lead or potassium into calcium and argon.

But I certainly didn't mean to imply that new gold atoms are being created. But new ore bodies certainly are.

Hope that explains where I was coming from

So I was correct then. Gold is a finite resource.

No,,, above ground supply of gold increases every year

The higher the price,,,, the more gold is discovered

Similar to oil. Boone Pickens was a little off in his projections.

But he just said no more is being created. Hence what is available to be mined is indeed finite.

It’s scarce,, not finite

Although not practical,,,, it can, and has been created in a lab

This might help you understand what he was talking about..... https://en.wikipedia.org/wiki/Ore_genesis

Anybody remember the last President to ask for a tighter monetary policy?

In full, section 2A states that the Fed “shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”9

What about the third mandate? What is a moderate interest rate?

Whatever the market decides.

I may be oversimplifying things, but wouldn't it be whatever rate is required to achieve the other two mandates?

It looks like QE, sounds like QE, smells like QE, but they say it's not QE?

Was a toss up between the silver thread, and this thread,,,,

They’re going to do what ever it takes to win the midterms

Understanding what a “crack-up boom” looks like, and the consequences are very important

Not saying we are there yet,,,, but that’s where we are headed

Seems like I remember some conspiracy theories over who owned the Fed Reserve and that it got settled over on a grassy knoll, but I think they blew it off as just blowing smoke.

Well, it seems when you don't achieve moderate long term interest rates, then rate cuts can only be so stimulating. I wonder if negative rates would be moderate?

BTW Freddie and Fannie used to be an independent GSE. Apparently, now a politician can order some money printing?