Let us think back to our high school days, recall why the Fed. was instated, what it's been doing, and reflect on its necessity.

Some of you may think it's a stupid question, but it's a relevant one. Your response is always appreciated, no matter how banal it may seem at first.

Let us think back to our high school days, recall why the Fed. was instated, what it's been doing, and reflect on its necessity.

Some of you may think it's a stupid question, but it's a relevant one. Your response is always appreciated, no matter how banal it may seem at first.

High school days? How old are you? Why? To control the U.S, pure and simple.

The Federal Reserve is necessary to make sure banks don't overleverage their lending. A disaster in banking is an economic disaster for the U.S. The Federal Reserve is an important safeguard of our national economic well being.

Let us think back to our high school days, recall why the Fed. was instated, what it's been doing, and reflect on its necessity.

Some of you may think it's a stupid question, but it's a relevant one. Your response is always appreciated, no matter how banal it may seem at first.

What's it have to do with your high school days. You are over a 100?

The Federal Reserve is necessary to make sure banks don't overleverage their lending. A disaster in banking is an economic disaster for the U.S. The Federal Reserve is an important safeguard of our national economic well being.

Right. Thank you. To add, I'll recall that the Great Depression affected the entire world and that the wellbeing of our economy is closely tied with wellbeing of economy everywhere else and isolation is unthinkable.

Would you say that inflation in this country occurs solely because of Federal Reserve?

High school days? How old are you? Why? To control the U.S, pure and simple.

He said high school days because that's where you get your introduction to the system AND for many, it's been their ONLY exposure to it's workings. The operation of the FED is probably one of the greatest mysteries to the average citizen in the street. They have all kinds of misconceptions about it.

The "why" is not at all as you say - it's to stablize the economy through limiting/expanding what the banking industry can do. That's hardly "controlling" the country in the way you seem to make it appear.

Why? To control the U.S, pure and simple.

This is not the Conspiracy forum.

What's it have to do with your high school days. You are over a 100?

Every 12th grader should know the answer to the questions I am asking here.

Inflation does not occur solely due to the Federal Reserve. Inflation can be caused by foreign prices increases, e.g. oil.

Would you say that inflation in this country occurs solely because of Federal Reserve?

Absolutely not. The greatest single cause of inflation is the never-ending spiral of wage increases which in turn causes price increases which necessitates wage increases which....

The main goal of the FED is to attempt to minimize inflation AND deflation.

Thank you.

So when Ron Paul "wins a debate" on Fox News, why do we all applaud instead of doing a little thinking about what he actually stands for? He doesn't think the Fed. is necessary, he was obviously another sensitive underachiever like G. W. B. when he went to school.

I don't applaud Ron Paul.

Thank you.

So when Ron Paul "wins a debate" on Fox News, why do we all applaud instead of doing a little thinking about what he actually stands for? He doesn't think the Fed. is necessary, he was obviously another sensitive underachiever like G. W. B. when he went to school.

I certainly do not applaud him nor agree with what he says - only uninformed individuals would do that.

The main goal of the FED is to attempt to minimize inflation AND deflation.

No, the idea is to minimize both inflation and unemployment. If either one gets too close to zero, the other one will shoot up, so they play a constant balancing act.

Whats the alternative?

Inflation means "inflating the money supply". which means more dollars in circulation.
That is to say paper dollars with no backing. When this happens, people with real wealth (ie gold) move away from things that rely on the value of the dollar to do well. Interest goes up.

The alternative is the silver standard.
BTW does anyone know why US coins have notches in the edges and what it represents?

BTW does anyone know why US coins have notches in the edges and what it represents?

The ridges on coins were introduced to stop counterfeiting but since no one in their right mind is going to go to the trouble of counterfeit quarters they're just there for aesthetic purposes now.

Could someone please tell me, this may seem incredibly ignorant (but i have no clue) : Does the Federal reserve lend money to the U.S government at interest ?. And since all the money is controlled by the reserve, does that mean the the Govt. is in perpetual debt ?

The ridges on coins were introduced to stop counterfeiting but since no one in their right mind is going to go to the trouble of counterfeit quarters they're just there for aesthetic purposes now.

Incorrect. They were originally placed there because of the silver content of the coins and the purpose was to detect shaving metal off the edges. And it's simply been continued out of tradition.

Could someone please tell me, this may seem incredibly ignorant (but i have no clue) : Does the Federal reserve lend money to the U.S government at interest ?. And since all the money is controlled by the reserve, does that mean the the Govt. is in perpetual debt ?

No. that's not so.

The ridges on coins were introduced to stop counterfeiting but since no one in their right mind is going to go to the trouble of counterfeit quarters they're just there for aesthetic purposes now.

Incorrect. They were originally placed there because of the silver content of the coins and the purpose was to detect shaving metal off the edges. And it's simply been continued out of tradition.


No, When coins were made of silver and they collected them for taxes the Gov would remove shavings from the edges to make more coins without actually increasing the amount of silver in the market. This was one of the first systems created to increase money supply.

The coins were treated as the same value , yet at less weight.

And so was born inflation.

Now, in the U.S. it is aesthetics. This much is true.

No, When coins were made of silver and they collected them for taxes the Gov would remove shavings from the edges to make more coins without actually increasing the amount of silver in the market. This was one of the first systems created to increase money supply.

The coins were treated as the same value , yet at less weight.

And so was born inflation.

Now, in the U.S. it is aesthetics. This much is true.

That's a total myth. I suggest you do a little basic research because that methind of taxing was NEVER done in the U.S.

I never said the U.S. started this.
Did you read the last scentence.

Kingdoms are considered government , also. Are they not?

This trick is as old as the hills. And it's not a method of taxing. It's a method of inflating the money supply.

Could someone please tell me, this may seem incredibly ignorant (but i have no clue) : Does the Federal reserve lend money to the U.S government at interest ?. And since all the money is controlled by the reserve, does that mean the the Govt. is in perpetual debt ?

Don't feel too badly because there's a lot of misconceptions about how the FED works, including, obviously our member Oreodon't who gave you an incorrect and incomplete answer.

The FED both lends AND borrows money from the U.S. Government (the Treasury Dept., to be precise). When it buys from the government, the effect is to put more money into circulation which has an effect of driving down interest rates at the consumer level. When it sells to the government, the results are the exact opposite - there is less money available for loans and consumer interest rates rise. It's the old law of "supply and demand" at work.

So the answer to your final question is no - it doesn't not keep the government in perpetual debt. In fact, there are periods of time when the FED is debt to the government - when it's attempting to reduce the money supply in order to control inflation. (It also has other tools for doing that as well such as increasing the rate it charges banks for loans and by raising the amount of cash reserves they are required to keep on hand.)

I never said the U.S. started this.
Did you read the last scentence.

Kingdoms are considered government , also. Are they not?

This trick is as old as the hills. And it's not a method of taxing. It's a method of inflating the money supply.

Sure I read it. But your problem is that you originally asked about the U.S. - not other kingdoms/governments. And I quote you: " why US coins have notches in the edges and what it represents?"

And THAT is the precise question I answered. If you wanted something different you should have clearly said so!

Don't feel too badly because there's a lot of misconceptions about how the FED works, including, obviously our member Oreodon't who gave you an incorrect and incomplete answer.

The FED both lends AND borrows money from the U.S. Government (the Treasury Dept., to be precise). When it buys from the government, the effect is to put more money into circulation which has an effect of driving down interest rates at the consumer level. When it sells to the government, the results are the exact opposite - there is less money available for loans and consumer interest rates rise. It's the old law of "supply and demand" at work.

So the answer to your final question is no - it doesn't not keep the government in perpetual debt. In fact, there are periods of time when the FED is debt to the government - when it's attempting to reduce the money supply in order to control inflation. (It also has other tools for doing that as well such as increasing the rate it charges banks for loans and by raising the amount of cash reserves they are required to keep on hand.)

I did not give an incorrect answer. The answer is 'no' and your muddled answer is full of misnomers.Your answer is muddled by incorrect use the word 'government'. The FED is not an alien body. There is not the FED on one side of the equation and the government on the other. There are governmnet agencies and departments on both sides of the equation. The FED does not 'lend' money 'to the government' and there is no relationship to a perpetual debt. The FED is a mandated and appointed body under the oversee of the President and Senate.

Inflation = Artificially increasing money supply. And they will never get it right because the economy is made up of humans. These humans make choices that the Fed will NEVER be able forsee completely.

They Gov is playing God. Scooping dollars here to inject there. This makes for an extremely rough market landscape full of high peaks and low valleys. And noone knows where their money is safe because tax and policy change with the wind, just like the decisions of the Fed.

I did not give an incorrect answer. The answer is 'no' and your muddled answer is full of misnomers.Your answer is muddled by incorrect use the word 'government'. The FED is not an alien body. There is not the FED on one side of the equation and the government on the other. There are governmnet agencies and departments on both sides of the equation. The FED does not 'lend' money 'to the government' and there is no relationship to a perpetual debt. The FED is a mandated and appointed body under the oversee of the President and Senate.

No, it is you who doesn't understand the basic WORKINGS of the FED. I did not even attempt to address the makup of the FED and how it fits into the fabric of things - that has nothing to do with the question at all.

It most certainly DOES buy and sell securities from/to the government - actually, the Treasury Dept. as I carefully pointed out. I strongly suggest you go off and do some basic research - you've got a lot more to learn.

Sure I read it. But your problem is that you originally asked about the U.S. - not other kingdoms/governments. And I quote you: " why US coins have notches in the edges and what it represents?"

And THAT is the precise question I answered. If you wanted something different you should have clearly said so!

Yes, I answered in the reverse order that a asked. Wups.

No, it is you who doesn't understand the basic WORKINGS of the FED. I did not even attempt to address the makup of the FED and how it fits into the fabric of things - that has nothing to do with the question at all.

It most certainly DOES buy and sell securities from/to the government - actually, the Treasury Dept. as I carefully pointed out. I strongly suggest you go off and do some basic research - you've got a lot more to learn.

Your baloney meter is on high. . Money is not printed or produced by an alien body which, in turns, lends it at 'alien determined rates' to your generic government. It is ALL part of a larger concept called 'government. A US Treasury (a department of the governmnet) is a department of the USA and the FED is a mandate of te government agency consisting of an appointed board of directors.

You need to learn to define your terms and not get sidetracked by terms such as agencies, departments, etc. It's all one big ball of wax called 'government'.

Inflation = Artificially increasing money supply. And they will never get it right because the economy is made up of humans. These humans make choices that the Fed will NEVER be able forsee completely.

They Gov is playing God. Scooping dollars here to inject there. This makes for an extremely rough market landscape full of high peaks and low valleys. And noone knows where their money is safe because tax and policy change with the wind, just like the decisions of the Fed.

Not precisely correct. The primary cause of inflation is the never-ending wage/price spiral. Wages are increased which is passed along to consumers as an increase in prices for the goods produced - which, in turn, means that wages have to increase so that people can continue to buy to live - which means that prices go up again - and the whole thing NEVER ends.

And contrary to your second paragraph, the FED does a pretty decent job of smoothing out those high peaks and deep valleys. I don't believe you fully understand what a TREMENDOUS mess it would be like without the FED doing that!! It would be continual swings between HIGH inflation and DEEP, DEEP depressions!!!

I was watching some movie and they said something like 30% of our wages goes to the Federal Reserve as taxes.
Is this true?
Seems kind of extreme and after reading this thread it seems they too didn't know how the Federal Reserve worked.

Plus how could there ever be too little money in circulation? And how does that cause inflation?

Not precisely correct. The primary cause of inflation is the never-ending wage/price spiral. Wages are increased which is passed along to consumers as an increase in prices for the goods produced - which, in turn, means that wages have to increase so that people can continue to buy to live - which means that prices go up again - and the whole thing NEVER ends.

And contrary to your second paragraph, the FED does a pretty decent job of smoothing out those high peaks and deep valleys. I don't believe you fully understand what a TREMENDOUS mess it would be like without the FED doing that!! It would be continual swings between HIGH inflation and DEEP, DEEP depressions!!!

Most rich investment consultants would disagree. Oh, and if they are wrong about money issues they don't get paid ,unlike the clowns in the FED who get a paycheck regardless.
Motivation, anyone?

I was watching some movie and they said something like 30% of our wages goes to the Federal Reserve as taxes.
Is this true?
Seems kind of extreme and after reading this thread it seems they too didn't know how the Federal Reserve worked.

Plus how could there ever be too little money in circulation? And how does that cause inflation?

No, Klippy, it's not true - the FED doesn't collect ANY taxes at all. That's the sole function of the IRS.

Yes, there can be too little money in circulation and the FED reacts quickly to corret that. No, it doesn't cause inflation at all - it causes a recession because when money is tight, people and business cannot afford to borrow because interest rates will have risen too high.

Yes, or something very much like it.

BTW read-only has been give the correct infro.

American Heritage Dictionary
in·fla·tion (ĭn-flā'shən) Pronunciation Key
n.
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency.


It is a direct result of flooding the market with dollars that are worth less.
No variables about it.

Yes, or something very much like it.

BTW read-only has been give the correct infro.

Thank you, Billy. I get the distinct sinking feeling that you and I may be the only ones here who actually understands the FED and precisely how they work. Of course it's also possible that one or two other might but just haven't chimed in.

It's really depressing to see just how MANY people don't even have a clue about the whole matter.

American Heritage Dictionary
in·fla·tion (ĭn-flā'shən) Pronunciation Key
n.
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency.


It is a direct result of flooding the market with dollars that are worth less.
No variables about it.

That's only a tiny piece of the matter - I gave you the correct answer and clearly said it was the BIGGEST factor.

Want to do just a little more research? You'll be surprised at what you can learn.

To be completely accurate, it's a cause and effect situation. What you just posted is simply the EFFECT - what I keep telling you is the real CAUSE of that effect. Big difference!!

Thank you, Billy. I get the distinct sinking feeling that you and I may be the only ones here who actually understands the FED and precisely how they work. Of course it's also possible that one or two other might but just haven't chimed in.

It's really depressing to see just how MANY people don't even have a clue about the whole matter.



Well then, how will they address the fact that the U.S. dollar is going down,down,down???? Which, I might add, has been predicted by global economists everywhere.. Was this just an oversight by the all powerfull FED?

Please, explain.

Well then, how will they address the fact that the U.S. dollar is going down,down,down???? Which, I might add, has been predicted by global economists everywhere.. Was this just an oversight by the all powerfull FED?

Please, explain.

Very simple - and you should know enough already to have the answer to THAT one! The FED only has control over the U.S. banking system and money supply - NOT foreign currencies or economic policies!! Egad!! Don't you know anything at all about global economics???:bugeye:

Well then, how will they address the fact that the U.S. dollar is going down,down,down???? Which, I might add, has been predicted by global economists everywhere.. Was this just an oversight by the all powerfull FED?

Please, explain.

Real Estate price rise
Oil price rise
slow wage rise
Rise in population
Bigger companies less competition
More money spent on nothing(Advertisements)

The answer is really complicating I'm sure.

No, Klippy, it's not true - the FED doesn't collect ANY taxes at all. That's the sole function of the IRS.

Yes, there can be too little money in circulation and the FED reacts quickly to corret that. No, it doesn't cause inflation at all - it causes a recession because when money is tight, people and business cannot afford to borrow because interest rates will have risen too high.

Thanks for the answers Read Only.
I didn't think it was.

The point is that no one has faith in a fiat currency that has little backing it. This faith is even less when the government is over taxing and has a large hand in economic actions.

No? Prolly not.

The point is that no one has faith in a fiat currency that has little backing it. This faith is even less when the government is over taxing and has a large hand in economic actions.

No? Prolly not.

No. Just more misconception on your part. The U.S. began going off the silver standard in 1964 and completed the process in 1968. And the dollar did very well until just recently. Care to figure out how long that was? There has been plenty of faith in it.

Would you care to guess just how much havoc would exist if the government did NOT take a large hand in the matter?? Once again, that's where the FED - having been established by the government - comes into play, along with tariffs and import duties.

Half of one man's life is not a great stand IMO. And most say it's been a bumpy ride since the late 70's.

With the U.S. gov's wreckless actions all over the globe since then, they are lucky to be in business at all.

I wish I had your good outlook.

Half of one man's life is not a great stand IMO. And most say it's been a bumpy ride since the late 70's.

The '70s weren't so bad. And 39 years is VERY, VERY long time for anyone's currency to be fairly stable. Many countries cannot even claim such a thing for 39 months. And there are several that can't even make it to 39 days!

With the U.S. gov's wreckless actions all over the globe since then, they are lucky to be in business at all. Their "wreckless actions" are absolutely wonderful - it's the reckless ones that concern me. ;)

I wish I had your good outlook.

Let me say that it isn't just a matter of faith, it's a result of having watched the U.S. make corrections and adjust to changing conditions for 60 years. It's true that times ARE tough now but they have been before. We're much more resilient than many people give us credit for.

Don't feel too badly because there's a lot of misconceptions about how the FED works, including, obviously our member Oreodon't who gave you an incorrect and incomplete answer.

The FED both lends AND borrows money from the U.S. Government (the Treasury Dept., to be precise). When it buys from the government, the effect is to put more money into circulation which has an effect of driving down interest rates at the consumer level. When it sells to the government, the results are the exact opposite - there is less money available for loans and consumer interest rates rise. It's the old law of "supply and demand" at work.

So the answer to your final question is no - it doesn't not keep the government in perpetual debt. In fact, there are periods of time when the FED is debt to the government - when it's attempting to reduce the money supply in order to control inflation. (It also has other tools for doing that as well such as increasing the rate it charges banks for loans and by raising the amount of cash reserves they are required to keep on hand.)

Ah, ok . thanks, So when the money is being lent or bought, Is there any interest ? between the govt and the FED ? . So they control inflation by limiting the money supply right ? (not an expert at this..)

We're much more resilient than many people give us credit for.

I sure hope thats true, because you've stirred up a shitstorm in the modern world and it ain't gonna die down easily.

Ah, ok . thanks, So when the money is being lent or bought, Is there any interest ? between the govt and the FED ? . So they control inflation by limiting the money supply right ? (not an expert at this..)

Yes, there is interest paid both ways. And that's correct - they combat inflation by reducing the amount of money available.

The '70s weren't so bad. And 39 years is VERY, VERY long time for anyone's currency to be fairly stable. Many countries cannot even claim such a thing for 39 months. And there are several that can't even make it to 39 days!

Their "wreckless actions" are absolutely wonderful - it's the reckless ones that concern me. ;)



Let me say that it isn't just a matter of faith, it's a result of having watched the U.S. make corrections and adjust to changing conditions for 60 years. It's true that times ARE tough now but they have been before. We're much more resilient than many people give us credit for.

now there is no need to make fun of hungray like that

I sure hope thats true, because you've stirred up a shitstorm in the modern world and it ain't gonna die down easily.

Sure it's true. We've been in trouble with the biggest part of the world before and eventually came through it fine. And this time around we've actually got China and India on our side economically. For China, we're huge buyers of their exports and in the case of India, we do a lot of our outsourcing there - big, big income for them. So both of those countries (and many others) are heavily linked to us and our interests financially.

And in case you haven't noticed lately, even France now wants to be our buddy again. It's already happening today.

The ridges on coins were introduced to stop counterfeiting but since no one in their right mind is going to go to the trouble of counterfeit quarters they're just there for aesthetic purposes now.

I was told that the ridges were introduced to stop "coin shaving" from the bad old days of gold and silver coines, when people would scratch metal from the border. The ridges make that much more noticeable.

The precious metal standard was stupid. It required a lot of time and effort to dig up ore and process it so that it could sit in a vault. That's a lot of effort for something that fiat money demonstrates we don't really need.

Sure it's true. We've been in trouble with the biggest part of the world before and eventually came through it fine. And this time around we've actually got China and India on our side economically. For China, we're huge buyers of their exports and in the case of India, we do a lot of our outsourcing there - big, big income for them. So both of those countries (and many others) are heavily linked to us and our interests financially.

And in case you haven't noticed lately, even France now wants to be our buddy again. It's already happening today.

Aren't you forgetting your Achille's heel: oil ?

back to the Federal reseve, So money is being traded forth and back between these two entities and that affects the overall currency of the country right ?, which raises the question: does the FED have oversight ?

Aren't you forgetting your Achille's heel: oil ?

No, that wasn't what I was addressing. I was specifically talking about all the countries around the globe that had, in one way or another, lost respect for the U.S. due to the current conflict in the Middle East.

[qyote]back to the Federal reseve, So money is being traded forth and back between these two entities and that affects the overall currency of the country right ?, which raises the question: does the FED have oversight ?[/QUOTE]

Yes, to your first question - in addition to the other tools I mentioned.

Second question: Absolutely. It has to present a report annually to the Speaker of the House and every single move it makes is very visible - just as the recent cuts in the interest rate were. Additionally, the president may remove any board member (or as many as warranted) "for cause." And while the cause isn't specifically outlined, it obviously would include lack of performance and any suggestion of wrong-doing (illegal actions). No president has ever done so, to the best of my knowledge, but such a call would hardly be opposed by anyone. It would be very, very unwise for a president to do so on a frivolous matter.

Great, because after watching the zeitgiest movie, i was worried about perpetual debt ..

...The precious metal standard was stupid. It required a lot of time and effort to dig up ore and process it so that it could sit in a vault. That's a lot of effort for something that fiat money demonstrates we don't really need.Yes and more serious ones, related to the fact that someone can wipe out your savings (in gold etc) with lucky strike that hits the "mother load." etc. I.e the FED's ability, imperfect as it may be, to manage the economy is very much better than no ability at all. It is not commonly said much now but years ago the FED's responsibility was often described as "to lean against the wind" - I.e. promote a more stable economy. They just did that again yesterday with an advance of $41 billion into the banking system as it looked like Meril Lynch and/or Citi might not be able to honor its obligations - sending the stocks down 360 points.

Just as a historical note, of some interest, stones have been used as money on some South Pacific islands, Those islands are basically broken up coral sands and "stone free" until 3 or 4 hundred years ago, when some sailing ships stopped to steal cargo and fresh water. When these ships left the island they left some of their balast stones behind as the loot stolen served as balast.

These stones were rare, novel, durable, objects of an "obviously" more advanced civilization - usually centrally collected and initiatlly "owned" by the tribal leaders. If one had an ugly daughter perhaps he gave one of his stones to some young man willing to marry her. Eventually the ownership of the stones was distributed by these types of processes. The stones always remained in an orderly array at the center of the village, but everyone knew which stone belonged to whom. - Robbery was impossible in their system and in that reguard it was superior the the "gold standard" developed by the self-proclaimed "more advanced" civilization - I.e. ours that is un able to live in harmony with nature as their's did.