# Why do libertarians always want to abolish the FEDERAL RESERVE **URL:** \ **Category:** Great Debates\ **Created:** [December 14, 2018, 4:06pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124 "2018-12-14T16:06:55Z")\ **Posts on this page:** 20\ **Page:** 15
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 28, 2018, 2:21pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/281 "2018-12-28T14:21:22Z")
> [@Kamaski](#): > > America used to be the largest producer nation in the world, now it is the largest consumer nation. It is the largest debtor nation. It has the worlds largest trade deficit, not trade surplus. Consumption must be provided for by production, that’s basic common sense, no amount of accounting trickery, credit default swaps or dishonest banking techniques will change that. Consumption must always be provided for by production, no matter what. > > So I think this discussion should really be about HONEST CAPITALISM vs DISHONEST CAPITALISM I might find myself agreeing with some of these comments. _ **But these comments have VERY little to do with libertarianism, the gold standard, or the Federal Reserve System.** _ Even if we lay some small blame on investment banking, why is the FedRes system the culprit? Do you think you can connect the dots between your sentiments I’ve quoted and “Why do libertarians always want to abolish the FEDERAL RESERVE”? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 28, 2018, 2:42pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/282 "2018-12-28T14:42:55Z")
> [@Kamaski](#): > > America used to be the largest producer nation in the world, now it is the largest consumer nation. It is the largest debtor nation. It has the worlds largest trade deficit, not trade surplus. Consumption must be provided for by production, that’s basic common sense, no amount of accounting trickery, credit default swaps or dishonest banking techniques will change that. Consumption must always be provided for by production, no matter what. Can you tell me what a “credit default swap” is? (BTW, that question is for **Kamaski** , not anyone else. He is still unclear on who owns the Federal Reserve System but feels comfortable in throwing around a term like that, so I’m wondering what he understands it to mean.) ---
**Author:** ![Kamaski](https://avatars.discourse-cdn.com/v4/letter/k/9d8465/32.png) [@Kamaski](https://boards.straightdope.com/u/Kamaski)\ **Post date:** [December 28, 2018, 3:17pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/283 "2018-12-28T15:17:50Z")
A quote from Michael Douglas in the movie “Wall Street: Money never sleeps” (2010) … He explains it better than I ever could. \* You are all pretty much screwed. You do not know it yet, but you are the ninja generation. No income, no job, no assets. You’ve got a lot to look forward to. Someone reminded me the other day that I once said, greed is good. Now it seems its legal But it is greed that makes my bartender buy three houses, he cannot afford with no money down. And it is greed that makes your parents refinance their 200,000 dollar mortgage for 250,000 dollars. Now they take that extra 50,000 dollars and go to the shopping mall so they can buy a new plasma TV, cell phones, computers and an SUV. And hey, why not a second home? Gee Wiz, we all know the prices of houses in America always go up. Right? It is greed that makes the government of this country cut the interest rates to 1% after 9/11 so we can all go shopping again. They got all these fancy names for trillions of dollars for credit, CMO, CDO, SIV, ABS. You know I honestly think there are only 75 people in the world that knows what they are. But I will tell you what they are, they are WMDs. Weapons of mass destruction. When I was away, it seemed that greed, got greedier. With a little bit of envy mixed in. Hedge fund managers came home with 50 to 100 million bucks a year. So Mr. Banker, he looks around and says. My life looks pretty boring. So he starts leveraging his interest up to 40%, 50% to 100%. With your money not his. Yours. Because he could. You are supposed to be borrowing not them. And the beauty of the deal is no one is responsible. Because everyone is drinking the same cool-aid. Last year ladies and gentlemen, 40% of all corporate profits came from the financial services industry. Not production, not anything remotely to do with the needs of the American public. The truth is we are all part of it now. Banks, consumers they are moving the money around in circles. We take a buck, we shoot it full of steroids and we call it leverage. I call it steroid banking. Now I have been considered a pretty smart guy when it comes to finance. Maybe I was in prison too long, but sometimes it is the only place to stay sane, looking out from the bars and say, hey is everyone out there nuts? It is clear as a bell to those who pay attention. The mother of all evil is speculation. Leverage debt. The bottom line is, it is borrowing to the hilt. And I hate to tell you this, but it is a bankrupt business model. It will not work. It is systemic, malignant and its global. Like cancer, it is a disease, we got to fight back. How we going to do that? How we are going to leverage that disease, back in our favor?” - ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 28, 2018, 3:29pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/284 "2018-12-28T15:29:30Z")
The fact that you can Google and find that quote doesn’t, in my opinion, demonstrate any understanding on your part of what something like a “credit default swap” is. (And remember, you’re the one who mentioned them, so it’s reasonable to expect you understand what they are.) And incidentally, if you can Google that, how come you can’t Google to find out who owns the Federal Reserve System? ---
**Author:** ![Kamaski](https://avatars.discourse-cdn.com/v4/letter/k/9d8465/32.png) [@Kamaski](https://boards.straightdope.com/u/Kamaski)\ **Post date:** [December 28, 2018, 4:39pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/285 "2018-12-28T16:39:42Z")
Would you please explain what they are , thank you?? I have studied what CDS are in the past, but reading the Wikipedia page it seems like they involve a lot of complicated language. I spend a lot of time in lower manhattan btw, right by Wall Street and I often see bankers coming out of work, or ride the subway with some of them. A couple times I have had a conversation with them. i have always wondered what goes on inside these tall buildings on “the street”. Kind of like a daydream. What are their conversations like, what kind of deals happen? Obviously bankers will not talk about that kind of info openly, because its private. The people who made the film “the big short” tried to show what was/is happening in big banks, but I feel there is always more to the story than that. I know there is. I don’t think I have ever desired to be a banker (i don’t think I’m smart enough,lol) , but I just wonder what its really like. Can a man really go in there with $1,000 and turn it into a million, or perhaps a billion? Btw that talked about, 40 Wall Street, is A very beautiful building. It says “THE TRUMP BUILDING” in big gold capital letters on the front entrance. If I was rich I would wanna live there lol. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 28, 2018, 4:46pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/286 "2018-12-28T16:46:46Z")
If you’ve studied credit default swaps in the past, you’re one up on me. I bow to your greater expertise and look forward to hearing what you can tell us about them. BTW, 40 Wall Street appears to be an entirely commercial building so it seems unlikely you could live there. And Trump gets about zero credit for the beauty or architecture of the building, as it was constructed in 1929 by others. ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [December 28, 2018, 5:27pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/287 "2018-12-28T17:27:10Z")
> [@Kamaski](#): > > Would you please explain what they are , thank you?? > > I have studied what CDS are in the past, but reading the Wikipedia page it seems like they involve a lot of complicated language. It is doubtful the word “studied” applies to whatever you did in the past as the [Wikipedia page](https://en.wikipedia.org/wiki/Credit_default_swap) is a quite straightforward presentation. They are indeed complex instruments. > [@](#): > > I spend a lot of time in lower manhattan btw, right by Wall Street and I often see bankers coming out of work, or ride the subway with some of them. A couple times I have had a conversation with them. The lower manhattan financial district is mostly given over to the capital markets activities - the investment banking, a very different thing than the commercial banks. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [December 28, 2018, 6:00pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/288 "2018-12-28T18:00:21Z")
> [@Kamaski](#): > > I don’t think I have ever desired to be a banker (i don’t think I’m smart enough,lol) , but I just wonder what its really like. Can a man really go in there with $1,000 and turn it into a million, or perhaps a billion? Actually, if you have foresight to pick your stocks right and have a little patience to boot, yes. ---
**Author:** ![Kamaski](https://avatars.discourse-cdn.com/v4/letter/k/9d8465/32.png) [@Kamaski](https://boards.straightdope.com/u/Kamaski)\ **Post date:** [December 28, 2018, 6:28pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/289 "2018-12-28T18:28:47Z")
Ok, so Wall Street/lower Manhattan is dedicated to INVESTMENT BANKING, I didn’t know that. What is the deference between investment and commercial bank? And what kind of banking caused the ‘08 crash? ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [December 28, 2018, 6:52pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/290 "2018-12-28T18:52:43Z")
[Investment Banking](https://en.wikipedia.org/wiki/Investment_banking), [securities brokerage](https://en.wikipedia.org/wiki/Brokerage_firm). ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 28, 2018, 6:58pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/291 "2018-12-28T18:58:37Z")
Again: _ **We’re trying to connect the dots between what you’re saying now, and the OP which mentions ‘Libertarians’ and the ‘Federal Reserve.’** _ Let me begin by repeating my post from earlier in the thread: > [@septimus](#): > > The Panic of 1907 began with a shenanigan. The Heinze brothers attempted to engineer a short squeeze in the United Copper Company they controlled, and borrowed heavily to do so. They miscalculated and became insolvent. Banks began to fail and stocks began to crash. It was a rather mild crash by today’s standards — much smaller in percentage terms than the 2008 crash; at the depth of the 1907 crash the market was still well above its 1903 low. Moreover in those days the business cycle was much more vicious than at present. Crashes were common. > > But this crash led to worldwide panic, and runs on banks both in the U.S. and in Europe. The world was on a gold standard then so many parties demanded that they be paid in … wait for it … gold. The Bank of England watched its gold supply deplete. American banks watched their gold flee to Europe as French investors sold American stocks. Investors didn’t want paper, let alone today’s “electrons.” They wanted Gold, and gold was in short supply. > > J.P. Morgan [led] a cartel of big bankers to maintain liquidity. This is not altogether different from Paulsen cajoling big bankers during the 2008 crisis. One difference is that Morgan pledged a good portion of his personal fortune to a joint civic-minded endeavor of many banks while firms in 2008 indulged in competitive jostling and greed, and laughed as Bear Stearns went under. > > Twenty-five years after the Panic of 1907 much of the world went off the gold standard, trading much of its gold bullion to the U.S. Treasury for Dollars at what seemed like an inflated price. A glance at a chart of the Dow-Jones Industrial Average will show that the erratic oscillation between boom and panic was largely tamed after that point. The Crash of 2008 should serve as a reminder that, if unregulated, Wall Street players will continue to have their fun, running con games and other shenanigans. So: The Panic of 1907 occurred _when there was no Federal Reserve System._ The Panic wasn’t caused by a central bank, it was caused by the absence of one. A major worldwide meltdown might have occurred were it not for the wealth and influence of a single unusual man — Pierpont Morgan — who stepped up when government was unprepared. The 1907 crisis was caused by the Greed of financiers. And, yes, the world was on a gold standard then;\* indeed you can see that demand for payments in specie were a major problem in that Panic.\* Today, such a Panic can be addressed, to some extent, by “creating dollars” on a computer! _In those days, it was literally a ship approaching New York Harbor with a large quantity of gold bullion onboard that finally dampened the crisis!_ And if you want to summarize the philosophy of Libertarianism in one word, that word would be … _ **Greed.** _ > [@Kamaski](#): > > [quoting a movie character] Someone reminded me the other day that I once said, greed is good. > … > It is greed that makes the government of this country cut the interest rates to 1% after 9/11 so we can all go shopping again. > … So Mr. Banker, he looks around and … starts leveraging his interest up to 40%, 50% to 100%. With your money not his. > … > Last year ladies and gentlemen, 40% of all corporate profits came from the financial services industry. Greed is human nature. Many many people are _not_ egregiously greedy … _but those people are not the people who rise to dominant positions in financial industries._ The FedRes lowers interest rates _to stimulate employment, so that struggling households can have a breadwinner._ It is confused to think the Fed operates only to help the rich. Nitpicks: (1) The Fed had already lowered its target FedFunds rate by more than 3% in 2001 _before_ the attack on Manhattan. The economy was already in recession. (2) I agree that it is quite unfortunate that the financial sector has attracted the best minds and makes huge profits. However, I think that 40% figure is exaggerated. ---
**Author:** ![Kamaski](https://avatars.discourse-cdn.com/v4/letter/k/9d8465/32.png) [@Kamaski](https://boards.straightdope.com/u/Kamaski)\ **Post date:** [December 28, 2018, 7:52pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/292 "2018-12-28T19:52:59Z")
septimus, thank you for posting that information, I think its very important. Can I ask you, did you write that yourself or was there a source. I don’t doubt it’s 100 percent true. I think people should know more about JP Morgan and the role played in the early 20th century in the economy. But I seem to think that JP Morgan was a more honest banker than the bankers alive today, I wish he was still alive, I wish he could have seen the catastrophe of 2008 and what bankers are like today. I would love to hear his opinion on modern banking, he probably wouldn’t understand it. The connection with the federal reserve in regard to investment/commercial banking is that a person working at Bank of America has a cell phone, and he can talk to a person a the federal reserve and ask for advantageous policies. They can have a nice long conversation on hen phone, and agree to meet for lunch. 0 people know about this meeting, thats scary, its basically like a shadow government. And if you really don’t think that people working at large banks have had discussions with the federal reserve, think again. ---
**Author:** ![John\_Stamos\_Left\_Ear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_stamos_left_ear/32/3198_2.png) [@John\_Stamos\_Left\_Ear](https://boards.straightdope.com/u/John_Stamos_Left_Ear)\ **Post date:** [December 28, 2018, 8:26pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/293 "2018-12-28T20:26:51Z")
> [@septimus](#): > > And if you want to summarize the philosophy of Libertarianism in one word, that word would be … _ **Greed.** _ [This bears repeating.](https://d2a2wjuuf1c30f.cloudfront.net/product_photos/64913544/file_d8cb9dd40c_original.jpg) ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 28, 2018, 8:46pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/294 "2018-12-28T20:46:48Z")
> [@Kamaski](#): > > septimus, thank you for posting that information, I think its very important. Can I ask you, did you write that yourself or was there a source… > > … And if you really don’t think that people working at large banks have had discussions with the federal reserve, think again. The words were my own; the facts are available on-line. I evidently need to “think again” about FedRes corruption. (a) not all regulators are corrupt. (b) most important FedRes decisions are macro-level rather than affecting specific banks. (c) there are better targets, IMO, if you’re looking at opportunities for malfeasance by high-level federal banking officials, e.g. the Secretary of the Treasury, and perhaps the S.E.C. and U.S. Congress. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [December 28, 2018, 8:52pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/295 "2018-12-28T20:52:17Z")
Libertarianism=greed Seems like a youtube comment level analysis. Libertarianism=nonviolence Greed is one of the many non-violent things libertarians would permit in a free society. ---
**Author:** ![EscAlaMike](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/escalamike/32/4177_2.png) [@EscAlaMike](https://boards.straightdope.com/u/EscAlaMike)\ **Post date:** [December 28, 2018, 8:57pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/296 "2018-12-28T20:57:53Z")
> [@WillFarnaby](#): > > Libertarianism=nonviolence > > Greed is one of the many non-violent things libertarians would permit in a free society. What’s missing in a Libertarian society is the mechanism that the greedy use for exploitation (the state). ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [December 28, 2018, 9:07pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/297 "2018-12-28T21:07:59Z")
> [@septimus](#): > > The words were my own; the facts are available on-line. > > I evidently need to “think again” about FedRes corruption. > (a) not all regulators are corrupt. > (b) most important FedRes decisions are macro-level rather than affecting specific banks. > (c) there are better targets, IMO, if you’re looking at opportunities for malfeasance by high-level federal banking officials, e.g. the Secretary of the Treasury, and perhaps the S.E.C. and U.S. Congress. If you are taking input from a person who shows no evident understanding of banking but seems to have the argument objective of throwing discredit on the american institutions, ça va. ---
**Author:** ![Kamaski](https://avatars.discourse-cdn.com/v4/letter/k/9d8465/32.png) [@Kamaski](https://boards.straightdope.com/u/Kamaski)\ **Post date:** [December 28, 2018, 9:15pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/298 "2018-12-28T21:15:25Z")
If it was my world, all “top people” (meaning the people in charge) at big banks would be required to serve 4 years in the Marine Corps. I guarantee they more honest and humble after having to deal with Mr. Drill Instructor screaming at the top of his lungs in their face. By the way, how many big bankers who were involved in 2008 went to jail? Besides Bernie Madoff? What’s taking so long? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 28, 2018, 9:20pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/299 "2018-12-28T21:20:45Z")
> [@EscAlaMike](#): > > > [@WillFarnaby](#): > > > > Libertarianism=nonviolence > > > > Greed is one of the many non-violent things libertarians would permit in a free society. > > What’s missing in a Libertarian society is the mechanism that the greedy use for exploitation (the state). Honestly, the way Libertarianism is being described sounds to me much like how Communism is described; something that sounds good in an ideal state but impractical in reality. ---
**Author:** ![Chisquirrel](https://avatars.discourse-cdn.com/v4/letter/c/6bbea6/32.png) [@Chisquirrel](https://boards.straightdope.com/u/Chisquirrel)\ **Post date:** [December 28, 2018, 9:25pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/300 "2018-12-28T21:25:32Z")
> [@WillFarnaby](#): > > Libertarianism=nonviolence Who enforces this nonviolence is your utopia? [Previous page](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124.md?page=14) [Next page](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124.md?page=16)