Quite the argument there. Personally attacking someone whose name I never mentioned!
Good, you stay mesmerized by the bright lights and big smoky explosions. I’ll be sneaking around and looking at the man behind the curtain.
People don’t put ideas in my head. People tell me their stories and I check the stories out. That’s the thing called “critical thinking”, you should really try it sometime.
You didn’t have to.
A moderator might say your snark is too much for this forum.
I can call Ron Paul an idiot because he’s a public figure. Oh, and also because I looked at the garbage he says and applied critical thinking and saw that he’s an idiot.
Because debt is inherently neither good nor bad. It is simply a fiscal tool that often makes it possible to do things and achieve goals that would otherwise be impossible.
Actually, a moderator might well say everyone should calm the hell down.
Next personal shot earns a warning. So do subsequent ones.
The way that private entrepreneurs set interest rates and extend credit, in effect creating paper money, does seem peculiar. But this has been a model at least since the Lombard bankers before the voyages of Columbus, and has dominated world finance since. It has the advantage that political authorities cannot degrade money, e.g. with printing presses. Libertarians will admire this use of free market principles. With the gold standard discarded almost a century ago, central banks have been created to provide a “monetary base,” but of course this is readily understood by the cognizant. Such government/bank cooperation combines the benefits of both free-market credit and regulation.
A fair return to responsible entrepreneurs is fine. That regulations were lacking is shown by crises in the 1980’s and 2008, but I’d lay the blame for that on Congress and Executive branch, rather than on the central bank itself.
My take on this issue is different from yours, Joe. That’s why I asked you the question. Answering my own question, I’ve read a variety of economics scholars. I’d love Friedman’s Monetary History as a birthday present (but, since my yet-to-read list is very long, would prefer to have just an on-line URL for excerpts). But I’m certainly no expert. My last formal course in economics was in the 1960’s. :eek: I do read on relevant topics, including even an article by Alain Pilote, probable crackpot. (I’d ask SDMB experts on U.S. monetary history to comment whether that article, ignoring its obvious spin, contains factual errors.)
So is Paul a mentor or not? Are you willing to answer my question?
Central banks, yes. The point of fractional reserve banking is to stop small banks from doing that and getting themselves in trouble. They have to keep a fraction in reserve.
There was inflation well before then, as a cursory study of numismatics would indicate. Maybe not as much in the United States, which kept trying earnestly to get back to “hard money” even at the cost of frequent depressions.
Well, yes, that is bad.
The Long Depression started in the USA and spread through the international economy. Same can fairly be said of the present depression. Neither the economy nor the global market for money really stops at the border–maybe for a Marxist state it could.
So you “invest” (that is, lend businesses money) and presumably expect returns, but decry banks (which pool money from many investors) when they do the same? :dubious:
But it does improve, which pretty much invalidates your whole argument.
I should note that a central bank can probably survive *not *seeing interest paid on its debt, given it has a literal license to print money; but that’s still not desirable most of the time.
If you look further in the Bank of England article, they have a lengthy discussion (with graphs) covering reserves. The paper is not an attack on fractional reserve banking, as far as I can tell based on a skim. It’s an argument for adjusting the way textbooks describe things. It certainly isn’t the final word. [In fact, I’m surprised I couldn’t find a reference to the alleged obsolescence of reserve requirements: maybe I didn’t look hard enough.]
Sheesh Joe, you’re calling the for abolition of a practice that has existed for hundreds of years, spans all the countries of the world and has been considered and rejected by a variety of thinkers. Done carefully, that can be a fringe argument. Work hard enough and you might bring it to the level of minority opinion: we’re not there yet. But usually it’s in the realm of cranks. “Fringe” in my nomenclature would be something to aspire to.
You need to question your information sources. Paper money existed between 1790 and 1860. It was issued by banks. A fraction of the value of the notes issued were backed by gold. Merchants would consult tables to put varying discounts on the value of different banks: a dollar bill wasn’t worth a dollar. Scammers would try to pass off bills from shoddy banks in the hinterlands with mixed success. Commerce was awkward, but dodgy bills still beat barter.
Again: question your info sources. Any published author who quotes Article I, section 8 without a discussion of early 1800s private money creation is either a crackpot or a charlatan. Seriously: you can’t study that period without running into these sorts of facts. So you have to consider the possibility that your info sources are trying to pull the wool over your eyes.
That said, I and a lot of people will agree with you that 2007-2008 was a grand clusterf&$%.
BTW, MSFT just borrowed a bunch of money. Turns out that much of their cash is overseas, and they’d have to pay tax on it if they brought it back. Plus they paid almost nothing for it in interest. If you can borrow at X% and get 2X% return, you are crazy not to borrow. It’s why paying off a low interest mortgage is a bad idea if you can get a better return on the money elsewhere.
Huh, so has Apple for the same reasons.
At any rate, you can go to google finance and look at the financials of any major corporation. Exxon has $5.0 billion in cash and $11.6 in long term debt. Walmart has $6.7 billion in cash and $41.7 billion in long term debt. Debt is a fixture of American capitalism and heck worldwide capitalism. It would be intriguing to locate a major company that has avoided it altogether over its lifecycle.
Right there you lost because you made a bad assumption. While I did read “End the Fed”, by the time I read it it was a lightweight piece of work on the subject. And I’m really not a libertarian.
So your anti-Fed, allusions to a standard - say, maybe a Gold Standard - just happen to coincide with Ron Paul. But you don’t like the guy. Okay.
Whomever else gave you these ideas was dumb. And so is Ron Paul who also has them.
Well that’s a personal opinion that I don’t share with you at all. Oh about 50 or 60 years ago, debt was something you avoided.
And I have to object, those goals are certainly possible by just having a little patience and saving towards them. All debt does is reward you for impatience and then penalize you with interest for your lack of patience.
This isn’t a useful contribution to this thread. At best it’s an ad hominem by proxy, and it’s an inappropriate proxy since you’re pulling Ron Paul out of left field. He’s not the only person to advocate for a gold standard, and he’s not otherwise relevant to the discussion at all. You do your side a disservice by your participation.
I’d like to see some serious data on this, as I can’t believe that IBM or Ford didn’t borrow money to finance business expansion, back in the 1950’s. Or the 1920’s.
The Gold Standard is dumb no matter who advocates it. End stop.