Debquest

FED DEBATE

4.0 - QUESTIONS AND ANSWERS
This section contains a list of questions posed during debate. When consensus is reached on the answers to questions, the question is changed to a statement moved to the "Facts" section -- until then, the question remains in this section and answers are recorded.
NOTE:
Multiple answers may indicate opposing opinion or comments. Single answers do not necessarily indicate consensus.
4.1 - With the "Money Reform Act," how do you keep the Robert Byrds from paving the entire state of Virginia?
4.1.1 - I think it is far easier to tailor the bill to prevent such an outlandish possibility than it is to find a way to keep the Fed from driving us into serfdom. For one thing, I believe the residents of a state may have something to say about their local government paving over their state.
4.2 - With the "Money Reform Act," how do you keep the Henry Gonzales' from building a HUD home for every body in the country?
4.2.1 - That one is easy -- HUD homes are NOT transportation infrastructure, and it would be up to the bills implementors to construct suitable language.
4.3 - With the "Money Reform Act," how do you stop a Congress that has shown itself capable of running up a 5 trillion dollar debt from the 1 trillion it was in the early 70's?
4.3.1 - Again, you must consider the VERY significant positive changes that reform would bring about -- no gasoline taxes, none of the price inflation driven by the economy scrounging for ways to pay for interest on the public debt for which the money does not exist!
I haven't even begun to discuss the things Byron has described (too quickly for me to grasp permanently) about why taxes and political vote buying would steadily decrease as our terrible inflation problem dissipates toward zero.
Don't forget that our declining standard of living is the pressure that drives the welfare state -- remove that pressure, expand the middle class, and the transformation of our society and politics may be unimaginable.
4.4 - If the "Money Reform Act" gives the printing press back to Congress how do we keep the politics out of it?
4.4.1 - Damned good question! For now, let me just mention that, for the same reasons I mentioned above, it seems that giving Congress the LIMITED authority to create money only for the purpose of spending it as payment for PRODUCTIVITY leaves INFINITELY less opportunity and motivation for corruption than our current system. It seems a lot less likely that Congress will find a way to control us through excessive construction of transportation infrastructure projects requested by the people then the financiers and wall street have through excessive inflation, indebtedness and compound interest.
4.5 - With the "Money Reform Act," it seems to me that something similar to the FED would have to be founded again as a trustee with strict procedures preventing pork funding projects.
4.5.1 - Absolutely, and again, I think that would be one heck of a lot easier than surviving what we have today. (See 4.4.1)
4.6 - With the "Money Reform Act," I could picture them being a sink hole for multi-billions of dollars in re-building projects that would seem necessary to the power structures in those cities - but to an open market might be a waste of resources since they may be as obsolete as buggy-whips in the changing paradigm shift from an industrial age to an information age?
4.6.1 - I believe that "transportation infrastructure" will be around at LEAST as long as money itself. Whether it is space travel or time travel or teleportation technology, we will want to move people and goods from one place to another for a long time to come.
4.7 - Is Treasury Official Russell L. Munk correct to state that "the actual creation of money always involves the extension of credit by private commercial banks."? 4.7.1 - No.
"The Fed can *purchase* any asset, whether it's debt or pork bellies. The difference between *purchasing* debt and purchasing a commodity, is that the debt expires on a regular basis, and new debt must be purchased to replace old debt. Therefore, it is false to say that the Interest for loans is not created."
4.7.2 - Yes. -- (Bob$$$):
The Currency of the United States, which was backed by gold and silver, was de-based, first in 1934, Under President Roosevelt, with Congress agreeing, to eliminating the gold redeemability, and in the early 1970's, under President Nixon, silver redeemability was eliminated, again, with Congressional approval, and all U.S. Currency was exchanged, except for the Silver Certificates, which are still available, but difficult to obtain, at Federal Reserve Banks.
Current U.S. Currency, the majority in circulation, is made up of a few debased silver coins and Federal Reserve Notes, (FRN's).
The amount of U.S.Notes, that was exchanged for FRN's is not known, but that quantity is the amount that became an immediate debt instrument for the U.S. Taxpayer. From that date, all FRN's represented the U.S. Taxpayers debt to the FED.
They increase that debt every time the commercial banks make a loan. They have the U.S. Treasury print the FRN's, and pay a nominal fee, per each FRN, regardless of denomination, for printing costs.
That is the only labor expended to back the FRN, if you do not count the bank personnel's labor for making the loan.
In conclusion, the FRN is a debt instrument created, or printed, by the bank, to allow an individual to go into personal debt. The personal debt is compounded by the fact that the FRN, also, represents a debt for the U.S. Taxpayer.
That debt is a mortgage on the past, and future, Labor Productivity of each U.S. Taxpayer.
And that is what gives the FRN its value.
4.7.3 - Yes -- F.T. Brady
When the Fed purchases a debt, it creates the purchase PRICE of that security. It does NOT create the money corresponding to the interest bearing component of that security. When the debt "expires" and new debt is purchased, the same thing happens! Why is this so difficult to see? The interest payments made to the holder (the Fed) of these securities is NOT created with bookkeeping entries as was the purchase of the securities.
The interest is paid with money that was created AS THE PRINCIPAL OF A PREVIOUS DEBT PURCHASE.
4.8 - Would the balance of trade payments "problem" be affected if we converted our money base from debt to wealth?
4.8.1 - Yes -- F.T. Brady
Although I haven't given this a great deal of thought, I feel that the way in which foreign trade payments were handled may make the difference in whether or not the rest of the world followed our lead in eliminating debt based money. To accept money backed by debt in payment for our goods, while paying for imports with money backed by wealth certainly does not seem to make any sense to me.
4.9 - With the conversion of our money base from debt to wealth, would we have to maintain a system of import tariffs?
4.9.1 - Yes -- F.T. Brady.
4.10 - If we converted our money base from debt to wealth, and the rest of the world remained on the debt base system, would we have to demand payment in gold or dollars in order to protect the purchasing power of the money we receive for export payments?
4.10.1 - Yes -- F.T. Brady.
4.11 - Is some debt desirable?
4.11.1 - Yes.
Debt to build schools, roads, dams, and other capital projects are usually self funding, i.e. they generate the revenues to pay back the debt. The debt which is catastrophic is that which is generated for consumption items which have no built in payback mechanism. Unfortunately, most of the debt is for the latter purposes.
I like the Sovereignty Resolution which has been backed by 1000s of counties, cities, and key professional organizations.
This would authorize Congress to loan money at NO INTEREST directly to governmental bodies for two purposes. First, to finance self funding capital projects and second to pay off past interest bearing debt. Imagine 20 years from now not having any more interest bearing debt.
4.11.2 - No. -- F.T. Brady
Gold was an almost "perfect" medium of exchange, because it was "backed" by the labor it represented and it couldn't be counterfeited. Of course, this "perfection" was compromised once the gold was deposited, goldsmiths began issuing receipts for gold they did NOT have, and those receipts began to circulate as "money."
The problem, as we all know, was NOT with gold, but with fractional reserve banking and "legal tender" laws forcing people to accept as money pieces of paper claiming to be receipts for gold which did not exist.
I submit that there is no difference in the "quality" of the following two kinds of money. (assuming NO fractional reserve practices or counterfeiting)
1) Gold coins created when a prospector had his gold "coined freely" by the government.
2) Government created currency spent into circulation (NOT LOANED) to pay for the construction of a road or bridge.
It is the contention of Byron Dale and the Coalition to Reform Money that the money created in this way would NOT be "bad inflation" (it is an expansion of the money supply matched by a corresponding expansion of wealth production). This currency would represent an increase in wealth -- NOT debt -- and its entry into the economy couldn't be fairer -- it benefits FIRST those whose productivity expanded the wealth (new infrastructure) of the nation.
Unlike the Sovereignty Resolution's Interest Free Loans, the CRM proposal recreates, for the first time since free gold coinage, a PERMANENT wealth-backed money supply expansion driven by increased productivity. The Sovereignty scheme retains debt-backed (albeit interest-free) money and repayment of the construction loans extinguishes the currency and contracts the money supply. Worse, the wide scope of local government enterprises eligible for Sovereignty funds opens the door for all kinds of ethical and political problems -- not to mention the questionable nature of the various projects deemed as "wealth" -- Federal armories, FBI offices, prisons, etc., etc.
4.12 - Is the Federal Reserve Bank (FRB) a Privately Held Corporation?
4.12.1 - Yes.
4.13 - Does the FRB have a majority of foreign ownership?
4.13.1 - Yes.
Foreign owners (76%):
52% by Rothschild Bank of London and Berlin
08% by Lazard Freres Bank of Paris
08% by Israel Moses Seif Bank of Italy
08% by Warburg Bank of Hamburg and Amsterdam
U.S. owners (24%):
06% by Lehman Brothers Bank of New York
06% by Kuhn Loeb of New York
06% by Chase Manhattan/Rockefeller Bank of New York
06% by Goldman-Sachs (Treas. Sec. Rubin's Alma Mater)
4.14 - Is it true that our total debt (public and private) exceeds $30 Trillion?
4.14.1 - Yes.
4.15 - Is it true that the steady decline of our purchasing power and standard of living are a direct result of changing our money, from a wealth-base to debt-base, by the Federal Reserve Act and related laws?
4.15.1 - Yes.

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