Fiat Currency & Fractional Reserve Banking

[robespierre]

Who here will now admit that the socialized monetary system is a complete failure?

Is it obvious to those of you who fancy yourselves technocrats, that you and people like you are a cancer on modern civilization?

I interested in hearing from those who have ever supported central banking and government "managing" of the money supply.

[ptgatsby]

Who here will now admit that the socialized monetary system is a complete failure?

Is it obvious to those of you who fancy yourselves technocrats, that you and people like you are a cancer on modern civilization?

I interested in hearing from those who have ever supported central banking and government "managing" of the money supply.

Bubbles form, bubbles collapse. It wasn't the use of fiat money that started it, and it won't be fiat money that ends it.

FWIW, I take technocrat to be a compliment. I rather like the concept of those specialising in knowledge ruling.

[IlyaK1986]

Bubbles form, bubbles collapse. It wasn't the use of fiat money that started it, and it won't be fiat money that ends it.

FWIW, I take technocrat to be a compliment. I rather like the concept of those specializing in knowledge ruling.

QFT

[pure_mercury]

I'd love to get back to sound money (or, perhaps, a complete free market in money), but we are all still breathing and online and working right now. The sky hasn't fallen, except for people who were foolish enough to believe that they'd never take losses. Also, the major problems we've had are due to crappy loans being offered and accepted, and poor oversight. Those miscues are not endemic to fractional reserve banking.

[robespierre]

Bubbles form, bubbles collapse. It wasn't the use of fiat money that started it, and it won't be fiat money that ends it.

Sure it was. The socialists who believe they can manage the capital markets via manipulation of interest rates and various forms of credit manipulation have utterly gutted our economy. By pushing the interest rate below the market determined rate, which was done in the mid-late 90's and after the tech bubble, the central planners have changed America from the world's wealthiest creditor nation, to the world's biggest debtor nation. The distortion of the price of money(interest rates) fooled people into thinking that borrowing was a good idea.

In a rational economy, the interest rate is expressed in the markets as the ratio of savings to the demand for capital investment. When these are unhinged, as they have been since 1913, you have the business cycle.

If you'd like to read about it, try this:

http://www.mises.org/books/tmc.pdf

FWIW, I take technocrat to be a compliment. I rather like the concept of those specialising in knowledge ruling.

Right, but the point is that you have no right to rule over anyone. The very idea that a central committee populated by the intelligentsia can plan the economy has been thoroughly debunked since 1919.

Aside from the moral argument against totalitarian economic rule, there are the numerous utilitarian criticisms. Even if the central planners are brilliant and have "the people's" best interests at heart, they cannot have complete knowledge of the market. The knowledge of local conditions is embodied in local transactions by local agents. This information cannot be known by central planners, no matter their technologies.

[robespierre]

Also, the major problems we've had are due to crappy loans being offered and accepted, and poor oversight. Those miscues are not endemic to fractional reserve banking.

Fractional reserve banking, along with the federal reserve, played a large part in expanding the money supply, thus making funds for loans seem more available. However, this money was not backed up by more goods in the economy, it was merely more paper chasing the same amount of goods.

[ptgatsby]

Sure it was.

It? Humankind has a huge history of bubbles. It's not a new thing.


If you'd like to read about it, try this:


I'm familiar with Mises and Austrian economics.


Right, but the point is that you have no right to rule over anyone. The very idea that a central committee populated by the intelligentsia can plan the economy has been thoroughly debunked since 1919.


"Right to Rule"? Every system needs rulers, and the basis for which they have any "right to rule" is arguable. I prefer this over any other form of popularity, force or some such.

This information cannot be known by central planners, no matter their technologies.

So, now technocrats are socialist and totalitarian? Not by definition.

I'd hardly say that the US is ruled by technocrats at all. Way too much political capital. And not surprisingly, the 'totalitarian' and 'technocrat' views are exclusive, or even mandatory.

[Lateralus]

Moreover, there seems to be no test of whether or not what they are doing is a good thing. When the market responds negatively to a new infusion of cash, they say that it isn't enough. When the market responds positively, they take credit for fixing the problem. The state maintains the charade that it is the one infallible institution.

Escape from the Depreciating Dollar - Llewellyn H. Rockwell, Jr. - Mises Institute (http://mises.org/story/3152)

[pure_mercury]

Escape from the Depreciating Dollar - Llewellyn H. Rockwell, Jr. - Mises Institute (http://mises.org/story/3152)

I twice had breakfast with Lew Rockwell. He was nice enough, although he and Murray Rothbard were supposedly the authors of the racially-charged material in the Ron Paul Political Report. Disappointing. His sister was kinda bitchy, too.