Government power over banks?: Philosophy Forums

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Government power over banks?
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Government power over banks?

litkey
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Posted 09/15/09 - 05:27 AM: Subject: Government power over banks?	#1
Banks control the money supply. They are mere corporations, and the only goal they have is profit. This being true (?) they are often harmful to individuals, as people get into a great deal of debt (after taking loans) and can't pay back interest(s) etc., however, they can also be detrimental to governments. Governments borrow from banks, at interest, and often the government cannot pay back the interest, so what do they do? - They borrow more money, and it is the people that have to pay this money back. Is this some sort of new world order that is meant to keep us all slaves? My questions are: Why don't they create their own money supply, and forget the interest? This is possible. Why not create money that stays in the economy permanently? - why do we always need to make loans?? The system simply cannot maintain inself ie., it is not sustainable: how can 'permanent growth' and 'sustainability' co-exist? It's impossible, right? Surely we need a sustainable world economy, if goverment doesn't take over the money supply, and end the corporation then the world economy will always serve only the elite, and cause the rest of us to be slaves. Thoughts.
That's what tyrants get! - John Wilkes Booth “This is an impressive crowd: the Have's and Have-more's. Some people call you the elites. I call you my base.” -Bush Something cannot come from nothing.

ManiacJack
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Posted 09/15/09 - 01:00 PM:	#2
If banks control the money supply, then we are not reading the constitution. Damn nearly every president who has gone with a "government owns the dollar, the dollar does not own the government" line has been shot. The problem is, now, that because of this swindle the robber barons such as George Soros have enacted, Governments are firing people and businesses are collapsing. Supposedly, recovery is just around the corner-- what a big lie! I think Abe Lincoln's Greenback serves as a prime example of what the government can do. I do believe JFK had a similar government authored currency that went around the federal reserve... but don't take my word for it.
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unenlightened
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Posted 09/15/09 - 02:15 PM:	#3
litkey wrote: Why not create money that stays in the economy permanently? - why do we always need to make loans?? Money is loans. A bank-note is a written promise - a token for trust. If the banker turns out to be untrustworthy, then you might as well use it to wipe your arse - hence the current price of gold. I'll swap you this stunning insight for a loaf of bread.
...most of our actions are the result of the past, or according to a future ideal. That's not action, that is just conformity. J Krishnamurti "Philosophy, to the Philistine, is an evolutionary process, watched over by some sort of brisk dynamic Providence, and culminating in the supreme insight of modern thought." John Cowper Powys

Cadrache
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Posted 09/15/09 - 03:06 PM:	#4
Is it pompernuckle? Mr. Goat is correct. Paper money technically has no monetary value. Can't blame the banks though. You can't do everything - so you should hire somebody to do everything. Anybody watch Babylon 5? The Mimbari caste system reflects this somewhat. They gave power to the 'working-class' because both the religious and warrior caste were too unwilling to continue society - merely keep it.
"...There was a writer who asked why it was that when we find positive experiences we say that only the physical facts are real, but in negative experiences we believe that reality is subjective. He made an example of those who say that in birth only the pain is real, the joy a subjective point of view, but that in death it is the emotional loss that is the reality." - Tony Ballantyne, Recursion. _____________________________________________ Truth is want. - The internal state of matters. Truth is Need. - The external state of affairs.

JAC
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Posted 09/16/09 - 10:45 AM:	#5
litkey wrote: Banks control the money supply. They are mere corporations, and the only goal they have is profit. This being true (?) they are often harmful to individuals, as people get into a great deal of debt (after taking loans) and can't pay back interest(s) etc., The main crux of the housing crisis was that the government, through the Federal Reserve, artificially lowered interest rates. That, combined with huge subsidies in the housing industry through Fannie Mae and Freddie Mac, encouraged people to take on more debt than they could handle, accelerated the price of housing to unrealistically high levels, and created, therefore, a bubble. In other words, do not blame the banks so much for the debts of people (not that the banks do not play an important part in this, just that the government is the fundamental problem here). If it were not for the government monopolizing the banking industry than there would be competition in it. This would drive down prices - i.e., lower interest rates and less predatory lending. It would also keep interest rates realistic and allow for bank failure to be a serious threat to bankers, keeping them honest and accountable for their loans - i.e., no unrealistically low interest rate loans to people who banks know can not pay them back. Is this some sort of new world order that is meant to keep us all slaves? Probably. Why don't they create their own money supply, and forget the interest? Who is "they"? The banks? People? Regardless, the government monopolized the money supply a long time ago (right after the civil war) with something called "legal tender laws." These laws force people to accept "dollars" as payment if the "dollars" are offered. In other words, no business in America can refuse to accept dollars if you offer it to them. This artificially increases demand for the government currency and provides incentives for people to use them. And interest plays an important part in any monetary system. It is the price that you expect me to pay in the future for the immediate convenience of having money I would not otherwise have. Of course, there are alternatives to interest rates. Rather than charge me an interest rate on my debt you could take something of mine as collateral, or I could agree to do "X" amount of labor for you, etc. In a free society, where banks and private individuals are allowed to compete with another for loans, the dominance of interest rate loans might be challenged considerably by collateral-based loans, or loans for labor, etc. And, of course, competition itself would always drive down prices. Not only that, but I highly doubt in a free society - a society without government intervention - that this many loans would even be necessary. The government is mainly to blame for creating the huge housing bubble - bubbles that size don't exist in free markets; there is no way they could without some kind of entity, like the government (with the power to steal from people through taxation and print their own money that they can then force people to accept), heavily subsidizing investment in an industry through faulty incentive structures such as artificially low interest rates. There is no way THAT much money would pour negligently into one industry without some kind of very powerful, very persuasive entity encouraging it. Why not create money that stays in the economy permanently? - why do we always need to make loans?? Inflation - or an increase in the money supply - leads to more investment and consumption, which helps grow an economy. An important part of this, which helps the economy maintain a healthy, stable, consistent growth, is deflation - which occurs every time a loan is paid back and the debt is erased. Loans are an important part of any advanced economy. But I share your disdain for our current system - and that is because the government is screwing everything up. The system simply cannot maintain inself ie., it is not sustainable: how can 'permanent growth' and 'sustainability' co-exist?[quote] See above ^^ Of course, there will always be individual "shrinks", or periods of individual "non-growth." Not every investment made by every individual will always turn out as expected and produce a profit. But, remember, there is no way to have as many individuals absolutely tricked into making faulty investments as they did with the housing market then with government involvement. Interest rates never would have been so low for people who were making little money, and they never would have been tricked into believing they could afford a $500,000 home and pay back their debt, and institutions like Fannie Mae and Freddie Mac never would have made those loans, and neither would the corporate banks if the government wasn't there to bail them out after their mistakes. It's an absurd, government-corrupted system. They played the American people and ran away with their money. [quote]It's impossible, right? Surely we need a sustainable world economy, if goverment doesn't take over the money supply, and end the corporation then the world economy will always serve only the elite, and cause the rest of us to be slaves. Government already HAS taken over the money supply. Imagine if there were NO legal tender laws! Then you and I could say, "Fuck these paper dollars! I know they are worthless, and I know they are being controlled for purposes I want no part in! I refuse to use them!" But we don't have that choice because the government is there to force their monopoly on us. The world economy "serves the elite" BECAUSE of the government, not in spite of it.
"A life with love will have many thorns, but a life without love will have no roses." - Friedrich Nietzsche "I feel as if I were a piece in a game of chess, when my opponent says of it: That piece can not be moved." - Soren Kierkegaard

sheps
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Posted 09/17/09 - 09:13 AM:	#6
I heard an expert on Newsnight say the other day that he believed that there would be a switch in the way monetary policy is managed between the West and the East. China, which has admired Western capitalism for so long but stuck with a largely state controlled economy, may well become more of a consumer-driven, free market based society. The West, on the other hand, will have to transfer to a system where the government has far more control over economic events. Because China has lent so much money to America, taking in enormous amounts of bad debt, they may well become a credit driven society, whilst the West returns to being the world's main source of industry. If wages continue to rise in China, and if the government finally decides to throw off the shackles of a weak communist model and embrace rampant consumerism (leading to improved human rights), then they could become the centre of finance capitalism. No more cheap products made in China for anyone, though - a complete transfer, with the West returning to being massively industrialised, and China housing the disgraced American investment banks.
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unrealist42
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Posted 09/17/09 - 10:42 AM:	#7
The government does not control the money supply, the privately owned Federal Reserve Banks do. While the government appoints the presidents of the regional banks and their overall chairman, it does not appoint the boards of directors of these banks. If the treasury wants money it must borrow it from the fed and pay interest or issue bonds or notes to the public. For a long time the US had no central bank and banks issued their own money. The comparative value of this money was extremely variable and counterfeiting was rampant. Banknotes were discounted heavily for weak or faraway banks that were unknown in the local area. Many banks kept huge books of all the various banknotes in circulation and their relative values which needed to be updated continuosly.

JAC
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Posted 09/17/09 - 05:33 PM:	#8
unrealist42 wrote: The government does not control the money supply, the privately owned Federal Reserve Banks do. While the government appoints the presidents of the regional banks and their overall chairman, it does not appoint the boards of directors of these banks. Yes, that is understood. The Federal Reserve is a "quasi-private" entity. However, whether you want to say the government controls it, or it controls the government, is regardless - the real point is that both, no matter their intentions, work in conjunction with one another to cause problems. For a long time the US had no central bank and banks issued their own money. The comparative value of this money was extremely variable and counterfeiting was rampant. Yah, and for a long time people traded hay for fish, and fish for feathers, and feathers for clay, etc. But eventually one good emerged as valuable to all in that specific economy and, thus, currency was born. No government needed. If counterfeiting is rampant then, at some point - unless there is a powerful entity with monopolistic characteristics to prevent this natural process from unfolding - that "bank note" or that "currency" lose public interest, being that it gains recognition as easily counterfeited. Those who carry the currency, therefore, have an incentive to ditch it for another, less "counterfeit-able" one; and, given that people respond to incentives, they will do so. Also, there is no reason to believe that the government can make less "counterfeit-able" currency than a private company. If anything, there is less reason to believe that, since the government has monopoly advantages which, inevitably, lower quality. It is only through force and coercion that the government is able to keep its ever-failing gig together. Also, when the government monopolizes the currency, forbidding competition and forcing the currency onto the people of an economy, it is allowed, and has incentives, to do whatever it wants with the currency. With no competitive market forces keeping it in check, the currency can continue to cause bubble after bubble, and continue to lose its value, and yet no one will ditch it. Even those who have knowledge of the dollar's devastation use it regularly due to its convenience. I mean, everyone in your community and across America accepts the dollar, no matter what, so why switch to another currency? It is easier, thanks to government intervention through legal tender laws, which create artificial demand for their currency, to just use the government currency. Thus, even those who are knowledgeable of its defects, still use it. For the same reason that my knowledge of Wal-Mart's low prices doesn't stop me from buying more expensive Coca-Cola at the store a minute's walk from my home: it's convenient. If the market was not so heavily distorted by government intervention then we would not see a currency like the dollar ever existing in the way it exists now.
"A life with love will have many thorns, but a life without love will have no roses." - Friedrich Nietzsche "I feel as if I were a piece in a game of chess, when my opponent says of it: That piece can not be moved." - Soren Kierkegaard

MarchHare
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Posted 09/18/09 - 02:25 PM:	#9
sheps wrote: a complete transfer, with the West returning to being massively industrialised The West already is massively industrialised; although industrial employment has been dropping for decades, industrial production almost always increases on a year-on-year basis. If you count Japan as "Westernised" (which it is in the sense of being an advanced first world economy), then eight out of the top ten exporting countries in the world are Western: https://www.cia.gov/library/public...nk.html?countryName=United States&countryCode=us®ionCode=na&rank=4#us "sheps" wrote: The West, on the other hand, will have to transfer to a system where the government has far more control over economic events... whilst the West returns to being the world's main source of industry. I doubt that those two eventualities are compatible, though that depends to some extent on the degree to which governments try take control over economic events. I emphasise "try", because (a) economic events are impossible to control to any major degree and (b) the measures needed to at least stabilise economies over long periods (eg. money supply control, banking capital reserve requirements, public spending controls etc.) are unlikely to be politically compatible with a democratic system which has strong incentives against such measures.
Doubt requires a reason to doubt. Nothing is immune from potential doubt. The correct response to a question isn't always to try to give the question's answer.

sheps
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Posted 09/18/09 - 05:50 PM:	#10
MarchHare wrote: I doubt that those two eventualities are compatible, though that depends to some extent on the degree to which governments try take control over economic events. I emphasise "try", because (a) economic events are impossible to control to any major degree and (b) the measures needed to at least stabilise economies over long periods (eg. money supply control, banking capital reserve requirements, public spending controls etc.) are unlikely to be politically compatible with a democratic system which has strong incentives against such measures. I disagree with this, as I believe you should as a respectful admirer of the individualist capitalist system, MarchHare Essentially, it is without doubt that societies where the state has a large degree of control over the economy tend to be massively focussed on industrial production and exports. Look at Soviet Russia, or China for example. Governments that have large amounts of control over their economies do not need a complex financial structue like the West has; heck, if you need money for a business, why go to an independant bank for a loan, when the government can give you the cash? In any case, in reference to your last sentence here, is it beyond the realms of possiblity that the Western model of democracy will come under severe pressure when faced with the far more immediate (though perhaps short term) economic benefits that state run industries can give people? State control over the economy leads to the development of heavy industry and more exports, as they don't need so much privitisation in the financial sector. Unfortunately, government control heavy industry often doesn't prove itself to be strictly speaking compatible with democratic freedom; as above, look at the Soviet Union and China. MarchHare wrote: If you count Japan as "Westernised" (which it is in the sense of being an advanced first world economy), then eight out of the top ten exporting countries in the world are Western I'm genuinely surprised by this; if it wasn't from a seemingly credible source, I'd seriosuly doubt it. I mean China, only the third largest exporter? And India, not even in the top 20? I'd like to see how many exports from the likes of the Netherlands where made via heavy industry. And why bung the EU in at the top as a "country," when it lists all its members figures anyway?
The Midnight Sun Never Sets.

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