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Old 10-14-2008, 08:38 PM   #81
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It's hard to really be sure how large of an impact the media has on these affairs.

On the one hand, I'm part of "the media" (on the tech side) and I think that most reporters are worthless pieces of **** who wouldn't know integrity, balance, and a sense of proportion if it lept out of the ground and bit them upon the labia / *******. Of course we sensationalize things! Fear sells- you know the old adage "If it bleeds, it leads!" just needed a little updating for the Naughties*.

Terrorists are plotting to kill you, Chinsese industrialists are plotting to poision your children, and (here's a prediction) the democrats are plotting to install a system of National Socialism and Central Planning. If we can keep my grandmother glued to her TV, convinced that the end of the world is just one legislative vote away, then that's one more set of eyes and ears we can deliver to the sales & traffic deprtment (the ones who book advertizing).


On the other hand, I'm not sure if we really have that much power. Jason is right in that all the individual investors in the whole world are pretty insignifigant next to the Market Makers- the real movers and shakers of Wall Street. Besides, they didn't even have MSNBC or CNN-FN or Fox News back in '29, or '73, or '87...

We're not really going to know how this will pan out until it does so, I'm afraid...


(*) "Naught" is a popular term for expressing a quantity of zero. If the decade 198x was The Eighties, and the decade 199x was The Nineties, then the decade 200x is The Naughties.
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Old 10-14-2008, 08:52 PM   #82
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Originally Posted by ZX-Tex View Post
Por ejemplo... The other night I was channel surfing and saw Glenn Beck on CNN (mainstream media) go off on this nonsensical tirade of why the market is behaving the way it is. IMO his editorial was really pretty silly, and was clearly meant to provoke an emotional response in the viewer. I listened to the end of what he had to say out of curiosity but changed the channel soon after.
Oh. What? Were you just talking to me? I'm sorry, I don't speak spansh.

On a serious note, I'm not at all worried at the moment about stocks, or the market, or an impending depression. That doesn't mean I choose to be ignorant on the subject. Er, subjects I suppose. Meaning, I am aware that there are threats, but I'm not affraid until I see evidence of it effecting more people. So far, stocks are down and housing situations have screwed many suckers and the unfortunate.

My job isn't at risk yet. I'm not going to lose a home. I'm not making less than I can afford to live on. When I see signs of unstoppable chaos or depression. I'll jump on the band wagon that some have started.
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Old 10-14-2008, 10:42 PM   #83
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1- Jason, does it bother you at all that most of the financial writers you are linking to seem to fall broadly into the "I have a tinfoil hat" category insofar as public perception is concerned?
Because they call the Federal Reserve for the scam that it is? I don't know. I guess people who believe it's a scam have a greater tendency to find conspiracies everywhere. <shrug>

But then, would you call Peter Schiff and Addison Wiggin (of IOUSA fame), "tinfoil hatters"?

Make no mistake, the Fed is a scam.
To whit: this $850B bailout, why does the Fed create it out of nothing then loan it to gov't, such that you and I will have to pay it back with taxes, instead of the Treasury just creating the money directly and not owing it back to a cartel?

And, look at history, see who wrote the Federal Reserve Act.

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People who advocate a return to the gold standard, for example, are not likely to be taken seriously. It's just not gonna happen.
Saying "the gold standard is better", is different than "let's go go back to the gold standard". I personally think a NON-debt based fiat currency system is best.

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Who will find the small nuggets of truth in their arguments?
Some people like Gary North have a lot of good stuff to say and perhaps the occasional (in the past AFAIK) crazy stuff.
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Old 10-15-2008, 12:21 AM   #84
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Make no mistake, the Fed is a scam.
It's not a scam, it's a collective hallucination. In that way, it's very much like the real estate market. It is not based upon and solid, tangible thing, but upon assumptions and agreements. We agree to allow the Fed to create and destroy money in such a way as to moderate the behavior of the banks, the businesses, and the consumers. A majority of us have collectively "bought in" to this idea, and therefore the system works. It's only a scam if it is operating in such a manner as to intentionally deceive those who are participating, and I just don't see where that's the case.



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And, look at history, see who wrote the Federal Reserve Act.
Representative (and eventual treasury secretary) Carter Glass (D) Virginia, an independent newspaper owner, and Senator Robert Owen (D) Oklahoma, a Freemason lawyer, banker and Cherokee-rights activist.

Despite initially claiming to oppose the Aldrich Plan (which would have completely privatized the currency system) Owen would later fall back to his old banker's roots and speak against the Fed when he realized that other, earlier plans would have been more favorable to the owners and controllers of private banks.


I just ran across a great piece of Owen's opinion, in the form of an introduction to a book written by one Gertrude Coogan, a woman of strong conviction. In it, Owen writes the following:
The basic principles of monetary science are simple. Knowledge of the science has been made difficult by those who have converted these simple principles into an enigma.
(...)
In my opinion, America faces a crisis which may result in the loss of our Representative Constitutional Government unless every man and woman (...) will bestir himself or herself toward the problem of bringing the fundamental truths of monetary science to every fireside.
(...)
The solution of the problem to protect our homes does not rest with a few leaders in a distant city. It is necessary that every man and woman appoint himself and herself a leader.

Now, several things in this bothers me.

First, Owen begins by adopting an alarmist tone, speaking of a conspiracy against the reader by dark forces unknown and intoning of imminent and grave crisis should the reader not heed his warning. I find this off-putting, and I believe that it prejudices the audience. In modern society, I expect such letters to end with the instruction that I forward this correspondence to ten other people after striking off the top-most name on a list and adding my own at the bottom.

Second, Owen is espousing the view that Americans ought to take the time and effort to educate themselves about the fundamental operation of the monetary system, and to bear the responsibility for ensuring their financial security. This, sadly, is a crock. While I don't intend to suggest that each and every American citizen is a drooling moron, I do know that, in general a great majority of Americans are either unable or unwilling to independently educate themselves regarding topics that they consider uninteresting or confounding. They would much rather be told that someone else is looking out for their interests, and that they need not bother themselves with such things. In fact, I believe I'd apply this generalization to most westerners today, not just Americans.


Do you see my point here? It's not that I disagree with the premise of Owen's findings, however I believe that his conclusion is worthless. Thus, he reduces himself to the same level as, say, a third-party presidential candidate. They may me intelligent, they may be well-read, they may even be correct, but in the end, they're not going to accomplish anything.




Quote:
Saying "the gold standard is better", is different than "let's go go back to the gold standard".
You're right. The first statement (gold is better) is merely wrong, while the second (let's go back to gold) advocates a course of action which would be catastrophic.


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I personally think a NON-debt based fiat currency system is best.
By your logic, the stock market should not exist. The value of a company is nothing more than the liquidation value of its assets, so the stock price hinges soley upon how many buildings, desks, and photocopiers the company owns.

Let me ask you this: How do you have a fiat money system that is not debt-based and yet also not tied to a commodity? Answer: you don't. By advocating a fiat system in this context, you're using fancy words to describe a gold-based economy that allows us to use "gold certificates" rather than carrying around actual gold. Referring to that story you used to have in your sig, the point right after the banker started issuing certificates, but before he started making loans.

Well, here's the problem with that. Such a system assumes an essentially fixed money supply. The amount of money in circulation cannot expand. This assumes that the sum total of all value is also a constant- it does not allow for the population to grow, nor does it allow for value to be created- particularly where the concept of intellectual property (intangible objects having value) is recognized.

The Gold Standard fails to recognize several fundamental questions which relate to the nature of gold itself. Where did the gold come from in the first place? We were not all born in possession of a certain amount of gold; someone (or a group of someones) had to mine the gold. These individuals came into possession of money without actually doing or building anything useful to the society, and yet their gold is absolutely necessary to allow the economy to function. They can continue to create additional wealth for themselves at any time by mining additional gold from their land. At worst, they might choose to form a cartel.

The idea also betrays an underlying isolationist attitude. How can one country trade amongst a multitude of nations when the value of its currency is essentially random, having no real relationship to the value of its economy?




Now, how exactly does the fundamental nature of the monetary system relate to the movements of the stock market? I keep waiting to see someone close the loop on this.
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Old 10-15-2008, 03:21 AM   #85
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By your logic, the stock market should not exist.
Huh?? What does this have to do with a non-debt based fiat system? I think you have a misconception of a non-debt fiat system.

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Let me ask you this: How do you have a fiat money system that is not debt-based and yet also not tied to a commodity?
Simple. I believe it is a government's privilege to issue currency (This is called "seignorage privilege". The Treasury simply expands the money at a rate equal to the growth of the economy. If the economy grew last quarter at 1%, it will therefore in this quarter, create new money equal to 1% of the existing money supply. It creates this money and spends it into the economy, as part of its operating expenses, adding to its budget. Because when it creates the money, it isn't owed back to anyone (like it is now), there is no mechanism by which the new money can be destroyed (which would contract the money supply). And, if the new money creation rate tracks the growth of the economy, inflation hovers around zero. A necessary part of this system is that fractional reserve banking is outlawed, because that also enables the money supply to be expanded and contracted.

Quote:
By advocating a fiat system in this context, you're using fancy words to describe a gold-based economy that allows us to use "gold certificates" rather than carrying around actual gold.
Huh?? The problem with the gold standard of old is that when coupled with fractional reserve banking, as you pointed out, he who has the gold and the issuance of paper money, has the power to expand and contract the money supply at will, leading to false booms and depressions. The trick of using paper currency to expand and contract the money supply at will has been around for thousands of years.

Quote:
Well, here's the problem with that. Such a system assumes an essentially fixed money supply. The amount of money in circulation cannot expand.
I explained above that it is expanded at a rate equal to the growth of the economy, targeting zero inflation.

On the Fed, check out this book:
http://www.barefootsworld.net/fedsecrets_00.html
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Old 10-15-2008, 06:43 PM   #86
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Article I, in which the nature of the argument is critiqued:

As I read through that last message, I was composing a reply in my head. Something along the lines of:

"Now that's what I'm talking about. You're clearly expressing your ideas using easily comprehended language and citing examples to provide support, rather than simply referring the reader to some piece of literature without any guidance whatsoever on what the reader is expected to gain from it. That is a coherent and well-crafted response."


And then I got to the link at the bottom.


As I opened it, and began reading Mr. Mullins' essay on Federal Reserve Banking, I was shocked to find that the Foreward to his essays depicts in stunning fashion the very point I've been trying to make all this time. Let me quote the first paragraph:
In 1949, while I was visiting Ezra Pound who was a political prisoner at St. Elizabeth’s Hospital, Washington, D.C. (a Federal institution for the insane), Dr. Pound asked me if I had ever heard of the Federal Reserve System. I replied that I had not, as of the age of 25. He then showed me a ten dollar bill marked "Federal Reserve Note" and asked me if I would do some research at the Library of Congress on the Federal Reserve System which had issued this bill. Pound was unable to go to the Library himself, as he was being held without trial as a political prisoner by the United States government. After he was denied broadcasting time in the U.S., Dr. Pound broadcast from Italy in an effort to persuade people of the United States not to enter World War II. Franklin D. Roosevelt had personally ordered Pound’s indictment, spurred by the demands of his three personal assistants, Harry Dexter White, Lauchlin Currie, and Alger Hiss, all of whom were subsequently identified as being connected with Communist espionage.
(It goes on like this for several pages, where Mullins describes his years-long relationship with Pound before getting up on the cross and all but martyring himself.)

Right off the bat, the author credits the basis of his fiscal education to none other than Ezra Pound, describing him as a "political prisoner" and accusing President Roosevelt of consorting with communists.

For those who are not familiar with Mr. Pound, he was an American-born gentleman who moved to Italy in the 1920s and lived as something of a beatnik. In addition to being a prolific poet and a literary genius, he was also an openly anti-semitic fascist who supported Mussolini both before and during the second world war.

During the war, he produced a considerable volume of anti-American propaganda (both economic and social) in print and via radio. Here is a site where some of his radio broadcasts are transcribed: http://www.yamaguchy.netfirms.com/7897401/pound_ezra/radioPound.html You really have to read this stuff to appreciate what an utter lunatic the fellow was. A few select exerpts:

"Well, why pick on the Jew ? I have heard the term “Jewish impertinence,” in fact Gaudier-Brzeska used to use it. But I think it was a fellow named Brooks, along in January, had got ’em beat, and the name ain’t Hebrew and I don’t reckon he is even a crypto. At any rate some murking broadcaster tellin’ the world or the Italian residents in the United States that America loves Italy and only got a grudge against the regime. Waaal, as Franklin Delano was recently cursing out the Italian for what they did in 1911, before the word fascist existed, he certainly has got NO alibi, no alibi whatsoever. Now all the United States did to show how it loved Italy was to lie like billyOh for 20 years, and try to starve Italy into submission: tariff wall, refusal of Italian goods, refusal of emigrants. What way is that to show love ?"

"And as for the Australians, they deserve a Nippo-Chinese invasion. Criminals were their granddads, and their contribution to civilization is not such as to merit even a Jewish medal. Why the heck the Chinese and laps don’t combine and drive that dirt out of Australia, and set up a bit of civilization in those parts, is for me part of the mystery of the orient."

"Lookin’ back and rememberin’ my far distant childhood on the corner of 47th and Madison Avenue where there is now such [a?] sumptuous Hotel Accommodation Thinkin’, thinkin of my Great Aunt’s family furniture, moved a few blocks up the street. I wonder if the ole grand piano is still workin’ for the folks that took over, foreclosed the mortgage, or something, anyhow, sold the old lady up.

And Mr. Fouquet, and pop Quackenbush, all that generation that remembered the Civil War. All gone with the ash barrels. Think of swell ballroom, right where my Great Uncle used to keep his bunch of bananas, and I used to play chequers with him; my old Great Aunt’s black man of general all work, or rather any work, some work, that he used to dodge to play chequers on top of the apple barrel, before the days of the Windsor Fire, Two Hotels, Windsor and Buckingham, ornament of Fifth Avenue, back before you kids remember.

An’ yaller Martha. She used to take snuff. That’s a long time before the great night life of Harlem. Back when Owen Wister, it may have been, wrote “Philosophy 4”—now why do I think of that ? And why did that darkie porter in Grand Central Station look at the E. initial before my name on my suitcase in 1939 and say: Now how do I come to know that, that E. stands for Ezra? Sort of nearly undersized porter."

And so on...


At any rate, Italy's King Victor Emmanuel III (at the behest of the Grand Council of Mussolini's own fascist government) finally got up the gumption to have Mussolini dismissed from power, and began negotiating with the Allies. The King would make a number of strategic blunders later on resulting in the decimation of his army (and his own exile) but the key thing is that in the wake of Mussolini's expulsion, Pound was seized by Italian police and held for a while before being deported to the US where he was charged with treason. Political prisioner indeed...


So, you see the problem here. I honestly have no idea whether the views and opinions espoused by Mr. Mullins are sound or not. However, the fact remains that in his opening remarks he choses to credit a raving lunatic with providing the basis for his education, and demonstrates somewhat paranoid tendances himself. As a test to see who is still reading at this point: walrus gumboot. Respond in kind. But getting back to the point, the result of all this is that my interpretation of Mullins' writing, if I even choose to read it, is likely to be severely prejudiced.


And THAT is what I'm trying to get at, Jason. It seems like every single source that you cite is wearing a tinfoil hat! Either make your own arguments self-supporting, or find sources to back you who aren't insane. It impacts your own credability.



Article II, wherein matters of substance are discussed:

Wow, Article I took longer than I'd expected. And here is the real meat of the conversation. While I comprehend everything that you've said, I cannot see how, as a matter of practical implementation, it is feasible.

You are suggesting the end of fractional reserve banking. In other words, the end of the mortgage industry. Wanna buy a house? I hope you've got a 100% downpayment. Because there's not enough "hard" money in existance for the banks to make mortgage loans to everybody.

So nobody can afford to buy a home on the current market, and the value of residential real-estate collapses, taking with it all the equity that several generations of Americans were depending on as their nest egg. And hell, even if banks decide not to call every single one of the loans currently on the market, you know that in the wake of decimated propery values and the erasure of all equity, the default rate on outstanding mortatges is going to apprach 100%.


No more car loans either. Now, I don't really agree with auto lending in the frist place- I've paid cash for every motor vehicle I've ever bought except the first one. And while it sickens me to see middle-class folks who are upside-down on 3 or 4 year old cars trading them in for a newer model because the dealers says "It doesn't matter how much you owe, we'll pay off your trade-in!", I do recognize that there are people out there for whom the financing of an automobile is a necessary tool. So what's this gonna do to them? Hell, what's it gonna do to the domestic auto industry? Much as I dislike GM, Ford and Chrysler, I do recognize that their collapse will not bode well for the economy as a whole.


Moreover, supply-inelasticity of the currency has its own set of perils. What happens during periods when the demand for money exceeds the supply of money? A devaulation of other goods and services, which is funadmentally no different from inflation.


So, in all seriousness- how do we address these issues? I've heard a lot of people (both politicans and humans) say that "X" is good, without discussing the practical ramifications of implementation.



Article III, in which the day's events are re-capped:
So Wednesday saw a fairly gradual decline in the Dow, surprisingly absent of any dramatic peaks. In total the index ended down 733 points (a loss of 7.8%) to erase most of Monday's gains, despite a surprisingly ordinary trading volume.
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Old 10-15-2008, 07:32 PM   #87
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Yes that decline today was painful to see. I was hoping the expected recessionary based declines such as low earnings, sales, etc. were already priced in at this point but the market does not seem to think so. The question remains... Where is the bottom? I think it is close rather than far. Most seem to be predicting at this point however that the recovery will probably not happen until late next year. So even if we are at or near the bottom, I suspect we might have a long period of flat market performance similar to what happened after the dot-com bubble burst bottomed out.

But then again, my opinion on the market and $2 will get you a cup of excellent coffee at Starbucks.
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Old 10-15-2008, 10:59 PM   #88
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Joe, you keep on trying to do Ad Hominem attacks on sources rather than dig deeper.

Perhaps more "radical" ideas only come from "radical" thinkers, and so anything outside the mainstream comes from people outside the mainstream. Thus if you try to look for sources that are "mainstream", only mainstream ideas come from them.

Nikola Tesla was considered a loon, for example. But of course, he invented the AC motor and electric transmission system.

If I only post sources that would withstand any sort of Ad Hominem attack, that's would be like censorship of ideas. Ideas need to withstand scrutiny, not personalities.

Consider that you are reading the things I send not with an open mind and trying to understand my position, but instead with the mindset of looking for arguing points. This line from you is very telling:
Quote:
And then I got to the link at the bottom.
Rather than spending a lot of time typing, PM me your address and I will send you a copy of Web of Debt. The book is heavily referenced and explains a lot. You can follow the books and links in the bibliography.

There's another well written book, called "The Creature From Jekyll Island":
http://www.amazon.com/CREATURE-JEKYL.../dp/B00181HBR0

Mullins' book just happens to be one that's downloadable.

Re: a non debt based fiat currency system and home loans. The very reason home prices are so high now, is because they've been driven up by cheap loans because of Fractional Reserve Banking. Do you see the chicken and egg situation? You're forgetting the fundamental precept that money is a medium of exchange and a representation of value. If a house was built by labor then it stands to reason that because that house came into existence and thus expanded the size of the sum total of goods and services, then in a non-debt based fiat system wherein the money supply tracks the sum total of goods and services, then the value of that newly built house in dollars gets created at nearly the same time.

Re: "demand for money". Again there only needs to be money proportional to all the goods and services in the economy - IOW it should track the size of the economy. As the economy grows, so does the money supply.

I have another link to a book describing how loans would work in a system with honest money, but you're gonna get into your Ad Hominem attack again. I'll send it to you if you promise to keep an open mind and consider the IDEAS, rather than trying to look for ways to retort.
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Old 10-16-2008, 02:50 AM   #89
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Joe I realize that we may not be on the same page wrt the function of money and banking. Here's a nice parable:

http://www.relfe.com/plus_5_.html
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Old 10-17-2008, 10:21 AM   #90
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As per Jason's original title thread: http://www.msnbc.msn.com/id/27235731/

I'll take his opinion over that of all the rest of the experts you mention.
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Old 10-17-2008, 01:13 PM   #91
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Here's a neat explanation of money and credit:

http://mises.org/story/3151
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Old 10-18-2008, 12:35 PM   #92
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Jason, if you're not even going to bother to fully read what I wrote before posting comebacks, then this conversation can serve no further purpose. Sorry.



BenR- I like your suggestion. Did a bit of research and Apple does seem to be a particular bargain at the moment. From a technological perspective, I've loathed them passionately ever since the IIc and the Mac 128k ushered in the era of closed-architecture and proprietary I/O interface- it seemed like if Evil Steve had his way, 1984 really would be like 1984 after all. And I've been foretelling their doom ever since Good Steve exited the company 20 years ago. And I've been wrong at every turn. So I picked up 100 shares yesterday and we'll see where that goes.

Still looking for a couple more bargains to get into. I'm leery of my old favorites old & gas right now, but GE seems like a possible contender. Google also seems to be in the limelight right now (and for sure, they do seem to be the MSFT for the 21'st century) but I can't help feeling that they're still overvalued.
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Old 10-18-2008, 01:15 PM   #93
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Originally Posted by JasonC SBB View Post
Here's a neat explanation of money and credit:

http://mises.org/story/3151

That explanation seems to ignore the fact that the US has had a massive deficit for more years than many here have been alive...
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Old 10-20-2008, 12:34 PM   #94
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fahver, I don't understand your comment. The link is only a lesson about money and credit; perhaps you're missing out on the fact that the current monetary system being a debt-based fiat system, is what allows the government to run a massive deficit?

Joe, I'm sorry I lost you there. I think perhaps we're arguing at cross purposes. The whole monetary system thing is a huge topic, and it's hard to be able to explain things in short posts.

The best book I know of that explains all this, and is heavily footnoted (so you can research the sources), is

http://webofdebt.com

I am offering you a copy of it.

As for "my proposed system is good but how do we transition"? One possible method is explained at the end of the video
http://video.google.com/videoplay?do...74362583451279
wherein bank loan reserve requirements are gradually increased to 100%, and the Treasury gradually creates said 100% reserves for the banks, by creating the money for itself (i.e. not borrowing it from the Fed which just creates it too).


As for the original topic. I explained over several posts that we're headed for a further crash - perhaps in days, weeks, or a few months. Being in the market now is very risky.

The reasons are:

- indicators all point to a deepening recession (e.g. manufacturing)
- the derivatives bubble is popping
- massive corruption from regulation and "anti-regulation" in the past decade has contributed to this huge bubble (the bigger the bubble the bigger the pop)
- and the monetary system as I have been discussing, is the root of the boom/bust cycle, and why the above corruption is at all possible

Here's an interesting proposal on how to get out of this bind:

http://www.webofdebt.com/articles/modest_proposal.php
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Old 10-20-2008, 01:07 PM   #95
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I can haz a tin foil hat?
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Old 10-20-2008, 02:31 PM   #96
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Google also seems to be in the limelight right now (and for sure, they do seem to be the MSFT for the 21'st century) but I can't help feeling that they're still overvalued.
I like Google too and what they are doing with their growth areas, like Android. I also thought they were overvalued back at the IPO. Man was I wrong. I am thinking about buying some myself.
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Old 10-20-2008, 02:46 PM   #97
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I like Google too and what they are doing with their growth areas, like Android. I also thought they were overvalued back at the IPO. Man was I wrong. I am thinking about buying some myself.
I've been thinking about that lately too. Buy a ton of google stock while its low.
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Old 10-20-2008, 05:17 PM   #98
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fahver, I don't understand your comment. The link is only a lesson about money and credit; perhaps you're missing out on the fact that the current monetary system being a debt-based fiat system, is what allows the government to run a massive deficit?

My point is that the writer at that link does not appear to know that....
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Old 10-20-2008, 09:24 PM   #99
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That's totally impossible. The folks over at mises.org constantly rail against the deficit made possible by a belief in Keynesian economics and by the Federal Reserve.
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Old 10-20-2008, 10:27 PM   #100
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Quote:
Originally Posted by JasonC SBB View Post
That's totally impossible. The folks over at mises.org constantly rail against the deficit made possible by a belief in Keynesian economics and by the Federal Reserve.
Which just goes to prove... if something is 'published' on the internet by some radical liberals, its the TRUTH....
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