[quote][b]Posted by:[/b] Mr Libertarian The problem with the US open window policy is that for every dollar that the fed gives, then it has to keep it in as an asset. [/quote] Certainly. That is technically a loan they have made, and thus, they have "created" money and expanded the money supply. Obviously they don't "print" money as that is the Treasury's job, which is another pet peeve. [quote][b]Posted by:[/b] Mr Libertarian Countries such as Japan had this policy didn't work so well in 1990 (the biggest asset bust in history, #2 I believe is Argentina). When the Central banks allow "natural" rates to give out, it creates a low artificial give out since they are competing as a bank. [/quote] Japan's problem was deflation, not inflation. Japan tried lowering interest rates to combat it, but as you can't obviously lower rates below 0% (realistically), there is a limit on what central bank policy can do. I'm curious why you link the two, since your main problem with Federal Reserve policy is the threat of inflation in the US - not deflation. [quote][b]Posted by:[/b] Mr Libertarian They will not be a "last resort", it is a "hey guys, I -blam!- up again and I'm willing to pay as little as possible!" [/quote] The reason why the Federal Reserve is regarded as a "lender of last resort" is because the window rate is set higher than the rates that banks charge each other. A bank is only going to take a Federal Reserve loan when there are no banks willing to make the loan. The reason why you saw the explosion of Fed lending during 2007-2010 was because of the "credit crunch" - banks were unwilling to lend to other banks. The Fed became the lender of last resort for everyone because no one was willing to lend. That threat has mostly gone away, and the Federal Reserve window is back to mostly disuse.

[quote][b]Posted by:[/b] Mr Libertarian First Off I would like to say I am a fan(ish) of reserve banking. (Only when It's private) The problem with the US open window policy is that for every dollar that the fed gives, then it has to keep it in as an asset. Countries such as Japan had this policy didn't work so well in 1990 (the biggest asset bust in history, #2 I believe is Argentina). When the Central banks allow "natural" rates to give out, it creates a low artificial give out since they are competing as a bank. The Discount Window has had a few members, but now they are retired sadly. They will not be a "last resort", it is a "hey guys, I -blam!- up again and I'm willing to pay as little as possible!" [/quote] But they are the lender of last resort. They're not paying as little as possible since ideally they'd be borrowing from other commercial banks. I kinda think you're confusing overnight lending rates with bank bailouts. [Edited on 11.14.2012 12:59 PM PST]

[quote][b]Posted by:[/b] A Good Troll [quote][b]Posted by:[/b] Mr Libertarian #2_ We borrow from the same banks that we loan to them at extremely low assets bought by the GoldmanSachs and ask for extremely high interest rates in bonds. (BTW, the person who authorizes this is the head chaiman of the New York branch of the federal reserve, he worked for Goldman Sachs). Then in return, we invest in bubbles or made bubbles that soon failed. [/quote] I'm sorry, but this is an incredibly big pet peeve of mine. The Federal Reserve effects two rates. The Federal Funds Rate set by the FOMC is used for overnight loans when banks drop below reserve requirements. The Discount Window issues loans to banks on a short-term basis when banks have liquidity problems. It is usually higher than the Federal Funds rate by a hundred or so basis points and is also short term and backed by collateral. The Discount Window is generally assumed to be a lender of last resort as they price their rates above what other banks are willing to lend for. Bank of America can not borrow from the Federal Reserve at 0-0.25% and turn around and give you a mortgage at 4%. Every time I hear this I want to kick little children.[/quote] First Off I would like to say I am a fan(ish) of reserve banking. (Only when It's private) The problem with the US open window policy is that for every dollar that the fed gives, then it has to keep it in as an asset. Countries such as Japan had this policy didn't work so well in 1990 (the biggest asset bust in history, #2 I believe is Argentina). When the Central banks allow "natural" rates to give out, it creates a low artificial give out since they are competing as a bank. The Discount Window has had a few members, but now they are retired sadly. They will not be a "last resort", it is a "hey guys, I -blam!- up again and I'm willing to pay as little as possible!"

[quote][b]Posted by:[/b] xImNotProx Not a dying group at all. There are still a lot of people who are opponents of free trade with low wage countries.[/quote] There are still opponents. It's not the polarizing issue it once was though. Political parties with a history of protectionist policies have evolved to favor free trade. It's increasingly an accepted fact as it should be.

[quote][b]Posted by:[/b] Mr Libertarian You are speaking like a keynesian and also a Cronyist (or Crony).[/quote] No, I'm speaking like a capitalist who's lost his hardon for childish, idealistic capitalism that America simply will never let happen. Zero corporate tax rate? Flat consumption tax? Privatization of many aspects of the government? Great! It will never happen though. It is necessary to realize that when you go around claiming that the government dumping money from its own budget into the market is crony capitalism. [Edited on 11.14.2012 12:39 PM PST]

[quote][b]Posted by:[/b] x Lord Revan x A basic introduction macroeconomics class is barely enough to go from. I have an B.A. in economics and I still don't pretend to know how to "fix the economy." The economy is simply far too multifaceted to be able to use macroeconomic math. Economics relies on a perfect, simplified model. [/quote] This. It's more complex than your Intro to Macro/Microeconomics prof would have you believe.

[quote][b]Posted by:[/b] Mr Libertarian[/quote] I think a lot of your trepidation when it comes to Federal Reserve policy and government intervention in general is the risk of inflation. Inflation isn't necessarily in and of itself a bad thing. Inflation as you know punishes savers and benefits borrowers if those costs are not priced into the initial loan interest rate. US consumers are known to be big borrowers - we generally benefit from inflation just as much as government. Wages in general have risen along with inflation here in the United States. Yes - a dollar bought five loaves of bread back in the day. But back in the day, the average household income wasn't over $50,000 either. [Edited on 11.14.2012 12:37 PM PST]

Multiple economic theories and views lead to different mindsets. There's no right answer to any economic problem, because they're all different.

[quote][b]Posted by:[/b] Mr Libertarian #2_ We borrow from the same banks that we loan to them at extremely low assets bought by the GoldmanSachs and ask for extremely high interest rates in bonds. (BTW, the person who authorizes this is the head chaiman of the New York branch of the federal reserve, he worked for Goldman Sachs). Then in return, we invest in bubbles or made bubbles that soon failed. [/quote] I'm sorry, but this is an incredibly big pet peeve of mine. The Federal Reserve effects two rates. The Federal Funds Rate set by the FOMC is used for overnight loans when banks drop below reserve requirements. The Discount Window issues loans to banks on a short-term basis when banks have liquidity problems. It is usually higher than the Federal Funds rate by a hundred or so basis points and is also short term and backed by collateral. The Discount Window is generally assumed to be a lender of last resort as they price their rates above what other banks are willing to lend for. Bank of America can not borrow from the Federal Reserve at 0-0.25% and turn around and give you a mortgage at 4%. Every time I hear this I want to kick little children. [Edited on 11.14.2012 12:36 PM PST]

[quote][b]Posted by:[/b] A Good Troll [quote][b]Posted by:[/b] Mr Libertarian There has been no proof over economic growth and stimulus. Why? Because art.boom = art.bust + the new amount of debt (or inflation) that the country receives.[/quote] In the short run, sure the growth exists. As you said, if the government borrows a dollar, the cost of that dollar is the initial principal plus whatever interest will be paid on that dollar. Current ten year T-Bill rate is 1.625% - simple interest, not compounded. The simple interest cost for that ten year T-Bill $1.1625. So, your money multiplier has to exceed 1.1625 in a zero inflation environment to be worthwhile - and this ignores any positive benefits to society or efficiencies created (i.e., infrastructure spending). Realistically, it would be illogical to pay down debt in the interest rate environment we have. The debt is too cheap and is basically free (probably negative - average inflation rate in the US over the past century is about 3%) once you factor in inflation costs. If I had access to ten year loans at 1.625%, I'd take out every single dollar someone was willing to give me.[/quote] When I say economic growth, I ment overall. I'm not going to lie and say that low articificial prices makes booms, however, once money is circulated, inflations, rising prices...etc. Your idea is correct on borrowing and lending, but pragmatically it will not work because of taxing, we burden the region, or in inflating, we increase the money supply, or by just borrowing, which we will have Crony Capitalism. I see that the inflation rate is 2% at the moment (we are not talking about any of the QE conferences.) Yet since 95% of the dollar value has been lost. A dollar in 1913 would be $20 here.

[quote][b]Posted by:[/b] theHurtfulTurkey [quote][b]Posted by:[/b] Mr Libertarian [quote][b]Posted by:[/b] theHurtfulTurkey [quote][b]Posted by:[/b] Mr Libertarian Also, stimulation worsens the economy.[/quote] Yeah, increasing the money supply, there's no way that could help promote GDP growth...[/quote] Look theory is that every dollar the government spends is income for someone who, when he spends that income, provides income for another person. This is the Keynesian multiplier effect. The Government gets this money from taxing, borrowing, and inflating money. When the Government does these things, the regions of Jobs are destroyed and then new areas have artificial jobs. There has been no proof over economic growth and stimulus. Why? Because art.boom = art.bust + the new amount of debt (or inflation) that the country receives.[/quote] Which has nothing to do with the fact that government spending on the private sector, barring a previous increase in taxes, adds to the money supply. Of course there's a smart way to do it, but you're implying that the government is increasing taxes just to dish it back out for stimulus money, when in reality (notably in the Bush stimulus), the point of the bill is to put some of the money back into the economy. I'm not supporting Keynesian nonsense, but stimulus measures are certainly not anti-capitalist.[/quote] Again, I said there are three ways for the Stimulus program to work: - Inflating - Borrowing (refer to 1 and 3) - Taxing But since the government already has income tax and other programs, they already insured a dry well. (Fun fact: Income tax was enforced the same year the Federal Reserve was made) #1_ Inflating is something I covered, no need to explain again unless you ask for it. #2_ We borrow from the same banks that we loan to them at extremely low assets bought by the GoldmanSachs and ask for extremely high interest rates in bonds. (BTW, the person who authorizes this is the head chaiman of the New York branch of the federal reserve, he worked for Goldman Sachs). Then in return, we invest in bubbles or made bubbles that soon failed. Internet bubble, College bubble, Housing bubble...and so on! #3 _ Government already taxes too much, and they won't think about taxing more. You are speaking like a keynesian and also a Cronyist (or Crony). Keynesian: Make a quick jumpstart and then a big crash. Crony: Cooperation of State and Corporations. Why do you believe that their was a snap in 1972 on money? Why is that their was a roaring boom in 20's and then a depression? Now we are heading to a recession [i]again[/i], but I already know the consequences of what's going to happen. Solution: Allow the free market to do what's necessary: The free market knows what industry is a boom and which one isn't. Allow multiple currencies for competition. Reduce taxes so there will be more spending on the market. Audit the Fed, then end it. Also, [quote][b]Posted by:[/b] Stage_IV Mr. Libertarian, have you read Human Action or Man, Economy, and State? I'm a Voluntaryist myself. [/quote] Both, but I prefer Mises over Rothbard due to the fact that Mises is more Pragmatic; not a believer in anarch-capitalism.

[quote][b]Posted by:[/b] x Lord Revan x I have an B.A. in economics [/quote] I have a B.S. in Economics. I am totally superior. Pfft. Liberal Arts. [Edited on 11.14.2012 12:18 PM PST]

[quote][b]Posted by:[/b] Vgnut117 Take the opponents of free trade for example. Which are probably a dying group. [/quote] Not a dying group at all. There are still a lot of people who are opponents of free trade with low wage countries. [Edited on 11.14.2012 12:13 PM PST]

[quote][b]Posted by:[/b] Celticsgreen17 The job to tell people what is wrong with the economy but provide no step by step process on how to fix it. [/quote] LOL. Economists do provide steps. It is no different than a psychiatrist telling you how to improve yourself. It is up to the government in the end in whether or not it will follow the advice.

I want these jobs. The job to tell people what is wrong with the economy but provide no step by step process on how to fix it. Consultants, sports writers, economists just vent about whats wrong with their respective field and get paid. Seems legit

[quote][b]Posted by:[/b] Mr Libertarian There has been no proof over economic growth and stimulus. Why? Because art.boom = art.bust + the new amount of debt (or inflation) that the country receives.[/quote] In the short run, sure the growth exists. As you said, if the government borrows a dollar, the cost of that dollar is the initial principal plus whatever interest will be paid on that dollar. Current ten year T-Bill rate is 1.625% - simple interest, not compounded. The simple interest cost for that ten year T-Bill $1.1625. So, your money multiplier has to exceed 1.1625 in a zero inflation environment to be worthwhile - and this ignores any positive benefits to society or efficiencies created (i.e., infrastructure spending). Realistically, it would be illogical to pay down debt in the interest rate environment we have. The debt is too cheap and is basically free (probably negative - average inflation rate in the US over the past century is about 3%) once you factor in inflation costs. If I had access to ten year loans at 1.625%, I'd take out every single dollar someone was willing to give me. [Edited on 11.14.2012 12:11 PM PST]

[quote][b]Posted by:[/b] Mr Libertarian [quote][b]Posted by:[/b] theHurtfulTurkey [quote][b]Posted by:[/b] Mr Libertarian Also, stimulation worsens the economy.[/quote] Yeah, increasing the money supply, there's no way that could help promote GDP growth...[/quote] Look theory is that every dollar the government spends is income for someone who, when he spends that income, provides income for another person. This is the Keynesian multiplier effect. The Government gets this money from taxing, borrowing, and inflating money. When the Government does these things, the regions of Jobs are destroyed and then new areas have artificial jobs. There has been no proof over economic growth and stimulus. Why? Because art.boom = art.bust + the new amount of debt (or inflation) that the country receives.[/quote] Which has nothing to do with the fact that government spending on the private sector, barring a previous increase in taxes, adds to the money supply. Of course there's a smart way to do it, but you're implying that the government is increasing taxes just to dish it back out for stimulus money, when in reality (notably in the Bush stimulus), the point of the bill is to put some of the money back into the economy. I'm not supporting Keynesian nonsense, but stimulus measures are certainly not anti-capitalist. [Edited on 11.14.2012 12:04 PM PST]

Mr. Libertarian, have you read Human Action or Man, Economy, and State? I'm a Voluntaryist myself.

[quote][b]Posted by:[/b] A Good Troll [url=http://www.youtube.com/watch?v=d0nERTFo-Sk]ITT: Hayek vs. Keynes[/url][/quote] Meh, I thought I was awesome; Hayek rocks! Also OP I see your concern is on the federal reserve. The video has been 100% true and with a few explanations that the guy should have clarified. There is a seminar at the misis.com where there will be a course to talk more about it; I suggest that you should register for it. [Edited on 11.14.2012 12:02 PM PST]

[quote][b]Posted by:[/b] theHurtfulTurkey [quote][b]Posted by:[/b] Mr Libertarian Also, stimulation worsens the economy.[/quote] Yeah, increasing the money supply, there's no way that could help promote GDP growth...[/quote] Look theory is that every dollar the government spends is income for someone who, when he spends that income, provides income for another person. This is the Keynesian multiplier effect. The Government gets this money from taxing, borrowing, and inflating money. When the Government does these things, the regions of Jobs are destroyed and then new areas have artificial jobs. There has been no proof over economic growth and stimulus. Why? Because art.boom = art.bust + the new amount of debt (or inflation) that the country receives.

[quote][b]Posted by:[/b] HyperWiz I must wonder, if there's so many economists that known that's wrong with the economy of a country such as United States, why don't they fix it? [/quote] Because while economists know what's good, the general population is uneducated when it comes to economics and therefore thinks anything that doesn't give everybody exactly what they want when they want it is wrong. People these days don't like to work hard for things, they like them to be handed to them. It's a societal problem, not a problem with economists. For example: "ZOMG HOUSEHOLD DEBT IS SUPER HIGH WTF IS THE GOVERNMENT GOING TO DO ABOUT IT?" Normal answer: "Nothing, it is not the governments responsibility to pay for your financial mistakes." Crazy society answer of today: "UHM, THEY SHOULD FIX IT FOR ME. THIS ISN'T FAIR THAT SOME PEOPLE ARE MILLIONAIRES JUST BECAUSE THEY ARE SUCCESSFUL AND MADE BETTER FINANCIAL CHOICES THAN ME. TAX THEM MOAR AND GIVE ME THEIR DOLLARS." It also doesn't help that the President of the United States refuses to hear a word against taxing the wealthy. To him, that solves all problems. Punish the successful. [Edited on 11.14.2012 12:06 PM PST]

[quote][b]Posted by:[/b] Disambiguation The problem is that nobody believes the economists.[/quote] That's because Hope and Change is so much more credible. Didn't you know?

[url=http://www.youtube.com/watch?v=d0nERTFo-Sk]ITT: Hayek vs. Keynes[/url]

[quote][b]Posted by:[/b] Mr Libertarian Also, stimulation worsens the economy.[/quote] Yeah, increasing the money supply, there's no way that could help promote GDP growth...

[quote][b]Posted by:[/b] MadMax888 [quote][b]Posted by:[/b] Mr Libertarian Also, stimulation worsens the economy.[/quote] But it saved thousands of jobs. I'd say that's a win.[/quote] Artificial boom = Artificial bust (and providing the higher number of unemployment and inflation) Look at any boom in the US During the 21st and 20th (since there was any [excluding the internet internet, but even that was a bubble technically] and it will show what were the results.