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Old 01-23-2008, 07:13 PM   #81
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Wrong.

a) Anyone in debt *is* affected - you pay interest on money created out of nothing
b) The income tax pays for interest on the govt's debt to the Fed
c) The *real* inflation rate is often higher than the wage rate increase - in other words, your real salary is decreasing!
d) Every boom and bust cycle affects the middle class and the poor. If you can't ride out the bust, you lose everything. We're in for a global recession this year or early next.

Are you saying most people don't resemble the above?

Only the "investor class" and up, can take advantage of the system - those that can ride out any bust, and have enough cash to buy up hard assets at a discount during the bottom of a bust cycle.

The real reason people don't care is that they're completely unaware of it.
How many people can even estimate how much the increase in monthly payment is, for a 30 year home loan, going from 6% to 7% APY?
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Old 01-23-2008, 07:48 PM   #82
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Originally Posted by JasonC SBB View Post

The real reason people don't care is that they're completely unaware of it.
+1

also
http://video.google.com/videoplay?do...51819335380093
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Old 01-24-2008, 12:38 AM   #83
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Wrong.

a) Anyone in debt *is* affected - you pay interest on money created out of nothing
So your telling me you will lend me $1000 interested free?
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Old 01-24-2008, 02:08 AM   #84
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I'm not the Fed, I don't have that power.
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Old 01-24-2008, 02:11 AM   #85
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Here's a really good article with a good overview of how the world works:

http://www.opednews.com/articles/lif...ot_food_3f.htm
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Old 01-24-2008, 02:34 AM   #86
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tvalenziano,

Here's an explanation of how the subprime mess blew up, how the companies wrote subprime mortgages and sold them for a profit:

http://www.globalresearch.ca/index.p...xt=va&aid=7413
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Old 01-24-2008, 01:19 PM   #87
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a) Anyone in debt *is* affected - you pay interest on money created out of nothing
b) The income tax pays for interest on the govt's debt to the Fed
a) You pay interest for the service of brokering the money. No different than how someone might pay money to the owners of a car wash for the service of washing their car. No tangible commodity has been produced, however value has been created- you now have a clean car. The owners of the car wash cannot provide the service of washing your car for free- they have expenses to cover in the form of a real estate lease, employee salaries, and supplies; and presumably they wish to make a profit by providing this service as well. In much the same way, banks charge you interest for providing you with a service. They have expenses to cover, they wish to make a profit, and though they haven't manufactured any tangible thing they have created value by empowering you to purchase a home.

b) Things like this are why the "national debt" is a fictitious number. The Gov't has a debt to the Fed. News flash: The government and the fed are the same thing- strawman entities formed to represent the citizens of the country in a tangible fashion. One cannot be in debt to the other because they are both the same thing in the end.

We run into this situation all the time where I work. PR&E is a division of Harris, which is a really big corporation. (They're principally a defense contractor, the broadcasting thing is sort of a sideline.) As a result, we have lots of accountants, analysts, project managers, vice-presidents, etc. Any time we do a big project, there is a Day of Reckoning at the end whereby all the accounts are tallied. They use the term "buckets" to represent the accounts of all the various departments within the organization where money goes in, money sits, and money comes out.

For example, right now we are working on an encoder for the transmitter guys, who are a different department. We're all engineers, but they're RF engineers and we're audio & DSP engineers. As we expend labor designing and prototyping this product, money is constantly being transfered from the transmitter design budget to the studio design budget. No actual money is moving anywhere, but numbers are moving around on paper. If we expend more labor than we agreed to, then our department will be "poor" even if the sales of this product wildly exceed expectations. It's a transmitter product, so all of the "profits" will be credited against the transmitter bucket, and yet our "bucket" will be empty (or more precisely, in deficit.) (They won't actually receive any of this money, however they will appear on paper to be profitable.) Likewise, if we spend fewer hours than predicted designing the product then our department appears in a positive light, but again, we don't actually receive and financial remuneration. The transmitter "bucket" just winds up with some residual money in it, even though no financial transaction actually took place.

I've always argued against this system for the following reasons:
1- We are all the same company. There is only payroll office, only one sales force, only one billing department. More importantly, there is only one Harris Corporation, only one Board of Directors, and only one HRS on the NYSE. None of these people care whether the transmitter department won an accounting pissing-contest against the studio department, they only care whether the company as a whole earned more money than it spent.

2- We are all salaried. None of us get paid for overtime, nor do we get docked if we wake up with a hangover and decide to play hooky for a day, or if we tend to spend abnormally high amounts of time on MiataTurbo.net. As a result, the specific number of hours that we actually spent working on any particular design is pretty much irrelevant. At the end of the day, the company pays a fixed amount of money to retain an engineering staff, and historically we tend to get our designs done on-time, from a calendar standpoint. ie: If it's gotta be done next Friday we'll get it done by Friday. We may "spend" 100 man-hours or 1,000 man-hours. It doesn't matter since they didn't pay us any more or any less, nor was the product actually delayed.


It's really the same deal. There is only one United States of America. It doesn't matter if agency X "owes" money to agency Y. There's only one Department of the Treasury, only one Congressional Budget Office, only one Office of Management and Budget (executive) and only one Joint Committee on Taxation.


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Only the "investor class" and up, can take advantage of the system
Who are the "investor class" exactly? Is my sister a member of the "investor class" because she has a 401k? Am I a member of the "investor class" because I have a brokeredge account and hold a few securities independent of any structured retirement plan? Or are only managers of Morgan Stanley and JPR Capital part of this elite group? Even if they are, what, prey tell, is so bad about that? Were it not for the Market Makers ensuring the liquidity of the exchange, the system would collapse.

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How many people can even estimate how much the increase in monthly payment is, for a 30 year home loan, going from 6% to 7% APY?
Depends. How many people are able to access google.com and type the words "mortgage calculator" into the resultant text entry box?

A conventional 30 year fixed loan of $200,000 at 6% will cost $231,676.38 in interest over the life of the loan assuming a standard repayment schedule of $1,199.10 per month. At 7% that loan will cost $279,017.80 at a payment of $1,330.60 per month. The increase therefore is $131.50 per month, or appx $47,340 in total. (Somewhere in there I seem to have misplaced a dollar and forty-two cents. Damn rounding errors.)

That took about four minutes and some 3'rd grade math.
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Old 01-24-2008, 07:42 PM   #88
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a) There is NOTHING fundamentally wrong with the concept of charging interest on a loan. The problem is that money is created out of nothing AND lent out, AND the money to pay the interest on the loan is not created at the same time AND the principal and (most of the) interest are destroyed when the loadn is repaid. The paradox is that every time a loan is repaid, the interest comes from the existing money supply thereby shrinking it; the only way to prevent that is to keep writing loans, and this gradually replaces the exisiting money supply with money that is owed. This is why debt is spiralling out of control. This also results in an unstable system producing booms and busts.

Watch this cartoon video to understand it. It goes into the history of banking and banking concepts.
http://video.google.com/videoplay?do...74362583451279

b)The government and the Federal Reserve are NOT the same thing. The Fed is a group of private banks! It is not a government agency!


Investor Class: Those whose primary source of income is NOT a salary but income from investments.
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Old 01-24-2008, 07:53 PM   #89
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Originally Posted by Joe Perez View Post
A bit of light thread hijacking, for which I apologize in advance.

In other words, Gold is fiat money! The real value of Gold is no different at all than the real value of a paper note- less in fact if you consider that the paper note can be burned to keep warm, or used to wipe one’s **** in the forest- Gold has no such practical attributes. The key idea here is that both Gold and paper notes have value only because a large number of people collectively agree that they have value. If the entire population of Europe were to wake up one day and realize that this Gold thing they’ve been banking on has got about as much practical value as boron in the grand scheme of things, then the global economy would collapse. No different than a bank note, really. Or even a dollar bill.

Gold isn’t even a stable commodity. The rate of gold mining has tended historically not to track the rate of economic development, on either a global or national scale. While it has the theoretical advantage of not lending itself to deficit spending, it is hardly a practical means for standardizing an economy. Rapid increases in the supply of Gold (such as the relatively recent California gold rush) tend to diminish the value of Gold and produce inflation. Likewise, a sharp decrease in the rate of global Gold production would have a paralyzing effect on the economies of the world, essentially implying that since the Gold supply has ceased to grow, that by definition the overall creation of value and wealth must also cease.


Discuss.
Actually gold has important uses in electronics and for instance the B-2 Stealth Bomber relies heavily on gold for shielding in it's RF cables. So while Gold has no intrinsic value to most there is one area where it actually is useful and purposeful.

Mark
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Old 01-24-2008, 07:58 PM   #90
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Gotcha, I agree with that statement. Trying to reduce our dependency on foreign oil through passenger vehicles is asinine. Due to the bulk of plastic goods and petroleum/gas power plants and industries passenger vehicles really don't count for ****. Of course, the same is true of emissions, but that doesn't stop them from ******* with our cars.
The most simplistic way to reduce dependence on foreign oil is to simply invade the offending country or countries and declare them sovereign US territory. Problem solved, oil is now ours and we now depend on a new domestic supply acquired through assertive procurement. To be honest, that is how Iraq should have gone down.

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Old 01-24-2008, 08:22 PM   #91
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Er no. The easiest way is to drill Alaska.
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Old 01-24-2008, 08:34 PM   #92
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Er no. The easiest way is to drill Alaska.
That's one big reason why certain portions of the world laugh at our country when we complain about high oil prices. Why should they budge when our own country is being handicapped by our own environmentalists.
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Old 01-24-2008, 08:50 PM   #93
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thats only if you actually believe in "peak oil"
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Old 01-24-2008, 08:56 PM   #94
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Has it ever really made sense that the environmental lobby in the U.S. had the power to thwart the development of resources so vitally needed by the American people, to stand firmly in the way of the great U.S. oil industry, and to prevent every effort to achieve energy independence? Jeez, gag me with a spoon!
The explanation here: http://www.opednews.com/articles/1/l...ot_food_3f.htm
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Old 01-24-2008, 08:58 PM   #95
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a) The paradox is that every time a loan is repaid, the interest comes from the existing money supply thereby shrinking it;
In isolation, yes.

In practice, there are other activities which increase the money supply on a permanent basis, offsetting this contraction. The most familiar is the issuance of treasury securities (bonds). At redemption, the cash to pay out these bonds is often generated by simply printing dollars outright. This is a permanent increase to the money supply, since the interest generated by these bonds does not need to be repaid, nor was it necessarily derived by taxation or some other taking of money. It is, in essence, free money.

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b)The government and the Federal Reserve are NOT the same thing. The Fed is a group of private banks! It is not a government agency!
The Federal Reserve System is a combination of:
1- Numerous Member Banks, which are private corporations,
2- The twelve Federal Reserve Banks, whose stock is primarily held by the private member banks in its region, but which operate entirely under the unalterable charter of the US gov't,
3- The Board of Governors of the Federal Reserve System, who are appointed by the President of the United States, and
4- The Federal Open Market Committee, which is a government entity.

So to speak of "The Fed" without going into further detail is a bit of a generalization. It is a cooperative entity which, as a whole, exhibits some of the qualities of a private agency and some of the qualities of a government agency. The expansion of the money supply which occurs when the Central Bank purchases bonds from the Treasury and then re-sells them to agencies such as the commercial banks is at its inception a direct government-to-government transaction.

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Originally Posted by JasonC SBB
Only the "investor class" and up, can take advantage of the system - those that can ride out any bust, and have enough cash to buy up hard assets at a discount during the bottom of a bust cycle.
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Originally Posted by Joe Perez
Who are the "investor class" exactly?
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Originally Posted by JasonC SBB
Investor Class: Those whose primary source of income is NOT a salary but income from investments.
Then it's a false statement.

There are plenty of folks in the world whose primary income source is either a salary or a wage who chose to practice a consumer lifestyle behavior which is "below their means", thereby creating a gradually increasing private surplus of cash. "Hoarding", if you will.

In the days of olde, this cash would traditionally be placed into a cigar box in the back of the undergarments drawer, or at best be invested directly into a private bank in the form of either an interest-bearing savings account or as Time Certificates of Deposit. Within the past few decades however it has become increasingly common for this cash to be invested into the securities market, either directly or through the services of an investment manager.

Assuming that the individual in question has chosen only to invest an amount of money which they do not immediately require for sustenance (or more realistically, the continuation of their accustomed lifestyle in the absence of a catastrophic life event) then that individual can "ride out any bust, and have enough cash to buy up hard assets at a discount during the bottom of a bust cycle." After all, isn't the "average salaried person" pretty much the exact target audience of a Mutual Fund?

I just wish one of those enlightened individuals at Morgan Stanley would tell me the secret of knowing exactly when the bust cycle has bottomed.
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Old 01-24-2008, 11:39 PM   #96
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In isolation, yes.

In practice, there are other activities which increase the money supply on a permanent basis, offsetting this contraction. The most familiar is the issuance of treasury securities (bonds). At redemption, the cash to pay out these bonds is often generated by simply printing dollars outright. This is a permanent increase to the money supply, since the interest generated by these bonds does not need to be repaid, nor was it necessarily derived by taxation or some other taking of money.
Read this about "monetizing the debt" by purchasing bonds. Here is the mechanism in detail by which the Fed destroys money:

http://fskrealityguide.blogspot.com/...debt-scam.html



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The Federal Reserve System is a combination of:
.. but which operate entirely under the unalterable charter of the US gov't,
3- The Board of Governors of the Federal Reserve System, who are appointed by the President of the United States, and
4- The Federal Open Market Committee, which is a government entity.
From
http://www.realityzone.com/creature2.html
Quote:
Flaherty says that the Board of Governors is politically appointed. This is true and it is supposed to make us feel safe in the thought that the President responds to the will of the people and that he selects only those who have the public interest at heart. The part of the story omitted by Flaherty is that the President does not select these people from his own personal address book, nor does he ask the public to submit nominations. With few exceptions, he makes appointments from lists given to him by the staffs of banking committees of Congress and from private sources that have been influential in his election campaign. The most powerful of all these groups are the financial institutions (including prominent members of the Fed itself) and the media corporations over which they have effective control. One does not have to be a so-called conspiracy theorist to recognize the tremendous influence that these institutions have over the outcome of presidential campaigns, and anyone with knowledge of how our current political system works will understand why the President makes exactly the appointments that the banks want him to make. All one has to do to see the accuracy of this appraisal is to examine the backgrounds and attitudes of the men who receive the appointments. While there is an occasional token individual who appears to come from the consumer sector of society, the majority are bankers deeply committed to the perpetuation of the system that sustains them. Anyone who would seriously challenge the power of the banking cartel would never be appointed. So, while Flaherty is correct in what he says, the implication of what he says (that the Fed is subject to control of the people through the political process) is entirely false.
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