For almost all of America's first 120 years, there was no federal income tax — and few people complained that the government didn't have enough revenue.
For those same 120 years, there was no Federal Reserve System — and the federal government printed no paper money (except for Lincoln's Civil War "Greenbacks"). Consumer prices gradually dropped by a third between 1800 and 1913 — and banking crises were occasional and mild. But with the Federal Reserve in charge, prices rose 1,800% by 2000 and the country suffered its worst-ever banking crisis in 1933.
43 comments:
what does all of this mean, linnette?
can you explain more?
Very intereting.
I think it means, plain and simple, that Americans have been ripped off by the government. Bottom line. In a nutshell. The final analysis. My conclusion.
Film at eleven.
Nah, no film at 11. There was gonna be a film at 11 but Britney Spears's shears and Anna Nicole's baby daddy and the idiots who got stranded with their dog on Mt Hood bumped all the important stories.
I'm glad they saved the dog. They should have left the idiots who went up Mt. Hood with a storm looming. The dog is lucky he didn't end up dinner and a pair of warm socks.
I blame Steve Irwin. He's the one that started this "let's challenge nature" BS.
linnette?
Yes, it does matter and we are not doing "fine." Do you really think the Federal Reserve can make us rich just by printing more money? Most people do not understand how the Federal Reserve system makes it possible for Congress to persistently spend more than is collected in taxes each year. The government must either borrow or print money to operate – and both result in the value of the dollar dropping. What happens when we borrow a billion dollars every day just to run the government? And what happens when the Federal Reserve increases the money supply by trillions of dollars in just 15 years? Simple answer: The more money that is printed, the less every dollar is worth. Everyone was alarmed in 1980 when the federal debt reached $1 trillion. Just 25 years later, it is almost $8 trillion.
The biggest danger confronting us is not terrorism or illegal immigrants. It is the disastrous fiscal policies of our own government.
There is a good documentary at youtube, "Money, Banking and the Federal Reserve."
robert?
I'll let Linnette take this one but I did have one question for Robert.
Robert, Did you watch the "Money, Banking and the Federal Reserve" video on youtube that Linnette suggested?
Thanks for suggesting that video Mom...I mean, Linnette. I just watched it.
Robert, please explain what you mean by: "the largest expansion in the history of the world." (Expansion of what?)
Also:
"The government spent lots of money and our country led the entire world to many great discoveries. The technology that we came up with...." (What great discoveries and technology did the government come up with?)
looks like i've got the whole place to myself....
No, I'm here too.
That is TOO FUNNY!
I can't believe there's still nothing going on in here, guess I'll check back in a day or two.
That means that my position made sense!
Okay, Linnette, what are you trying to prove by taking on the Federal Reserve System? Do you want to go back to 1914? Have you ever protested a labor dispute in which goverment workers, educators, unions, and hospitals demand higher wages and benefits and usally get them? The PRESS always gives the best photo coverage and interviews to these strikers. Every increase in wages and benefits fuels inflation without any help from the Federal Reszeve System. That's the way I see it and the way it will always be unless we go into a terrible Depression.
Violet's Great Uncle Hank
More from Uncle H ~ The Daily Breeze has another strike story in todays's edition in which Cal State union leaders are talking about work stoppage for higher salaries. The opposition to these salary and benefit increases show no signs of public outcry. If they go through with the strike, it will spread tp every educational and government institution and those three pennies you are showing will soon shrink tp two cents regardless of the Federal Reserve.
He's making sense...
Linnette?
OH IT LOOKS LIKE ROBERT WINS!!!
The government doesn't have their own money to fund anything. They (the government) steal it from us (the Americans). And it's only a matter of time before technology advances. We may leave in an advanced technology age from 1913, but that's normal. In 1913 they had cars, when only a few years earlier they didn't. So it's no kudos to the government that we have advanced.
Saying we're better off is saying that the government knows what to do with our money better than us. Like Social Security, which you and I probably won't see and all the other great programs we fund from our tax dollars. I'd rather see my paycheck 100% in the bank instead of giving the government 1/2. I'll fend for myself thank you.
In 1913 more of your money went in your pocket, who cares there was no LCD TV to spend it on? They bought stuff they needed more; most likely glass for their windows or indoor plumbing.
llliiiinnnnnnnneeeeetttte?
I agree with robert also. He's so smart!
The Federal Reserve System was devised for a variety of reasons but the single most important is PRICE STABILITY!
Paul Volker was much maligned during the late 70's but he made tough decisions that had to be made. When OPEC got greedy for the 2nd time (the first being in 1973) Volker hiked the Overnight Fed Funds Rate to 18% basically choking the U.S. economy! This allowed the U.S. to get out of a near worst case scenerio called stagflation..the combination of high inflation and recession.
Luckily the next Fed chairman, Alan Greenspan, didn't have an inflationary period to speak of so his overall record while imppecable was easily accomplished.
For the recored Bernanke has already proven to be a worthy Fed Chairman...
What's my point!
Help the Fed achieve price stability by Ditching your SUV & Stop buying forgein oil!! The U.S. economy won't be vulnerable to inflationary pressures from countries that hate us like Iran, Nigeria, Venezuala & ulimately Iraq...the 2nd most proven oil reserves in the world!
Whoa! We's talking about apples and spinich here, sonny.
Uncle Hank: You said, “Every increase in wages and benefits fuels inflation without any help from the Federal Reserve System.” I disagree. Increased wages and prices do NOT cause inflation; in fact, they do not even contribute to it. Inflation is caused by only ONE thing; AN INCREASE IN THE SUPPLY OF MONEY. It is this increase in the money supply which CAUSES wages and prices to increase; wage and price increases, in other words, are the RESULT of inflation.
The government causes inflation--and that is the ONLY cause. The government accomplishes this through big printing of paper money; the government is the ONLY one who has the power to increase the money supply.
Money is not wealth. Wealth can only be produced by labor. When the Federal Reserve prints up money faster than people can produce wealth (e.g., automobiles, televisions, etc.), the ratio between available money and available products increases. The supply of money increasing faster than the production of goods, increases the demand for the available goods, which, as per the law of supply and demand, stimulates prices to rise.
Many people think that the Federal Reserve System is necessary to prevent panic and disorder in banking. Few people stop to realize that the Federal Reserve was established 16 years before the great crash of 1929!
Bob is right. It doesn't matter. Actually, controlled inflation is a good thing. It allows the money supply to grow so that the majority of the people have enough to pay their bills and save. Its like the survival of the fittest. The weak can't make it and fall into financial dispair, the economy falters, they allow more liquidy into the system. Its a cycle. It also allows us to gain against the rest of the world.
Inflation also allows us to pay back our debt with cheaper dollars. After 30 years of paying off your mortgage, the amount you paid will seem small compared to current prices.
The comment from "anonymous" which says: ...[Inflation] allows the money supply to grow so that the majority of the people have enough to pay their bills and save....It also allows us to gain against the rest of the world."
That is meant to be a joke, right? Please tell me you are just kidding. If you're not, then you are grossly misinformed about the mechanics of inflation.
Robert: You said that the inflation rates now are the lowest in the last fifty years. I believe you are wrong about that. From where are you getting your figures?
waiting on robert now....
This is a very interesting debate, guys...
It's too bad I don't know enough about the subject to participate, but I will say this: Whatever the situation, when government gets control of it, the problems start, which most people don't recognize as problems because government presented them as solutions, and the public fell for it, as usual, so that what do we have? People complaining that the government should do more to fix the problems (that it created in the first place), and those same people thinking they know the real causes of the problems: not enough government involvement!
So whoever said, "Its a cycle" was right...
That's my story and I'm sticking to it!
Film at eleven.
Well, Lisa, it sounds like you DO know enough to participate!
Robert brought this debate to a screeching hault.
Not so fast. Robert's figures are decade averages.
In October 2006 the annual inflation rate (CPI-U) was 1.31% and it was 50% higher at 1.97% in November. Currently, it is 2.42%. So, we do not currently have the lowest inflation rate in the last 50 years. (In 1998, the yearly average was 1.55.) There was a 15-year downward trend, but that broke in 2004 and it is now heading upward. Nevertheless, I think you are all missing the big picture. More on this a little later...
later?????
hope no one minds if i chime in here.i've got a question: what is inflation, i've always wondereed
Inflation is not caused by prices going up or greedy businessmen wanting more money or destroying the environment. It is caused by the Government printing more money. When the Government increases the money supply each dollar is worth less.
Here is an example from inflationdata.com: Suppose you had ten people on an island where each person has $1. and each person had one item for sale. The average price for each item would be $1.
Now suppose you wanted to make everyone richer so you gave each one another dollar. There are still only 10 items for sale but now there is $20 to spend so the average price would now be $2 This means the price doubled, so no one is any richer because they can still only buy one item with their $2.
But suppose instead of being given another dollar each of those people worked and made another item to sell instead. Now there are 20 items and only $10 to buy them. At first it looks like everyone is poorer but really the average price will now be 50 cents each, so everyone can afford two items.
The Federal Reserve Act was passed in 1913 in the aftermath of the recession of 1907. Its success can be measured by (1) the recession of 1921, the Great Depression of 1929–39, the recessions of 1957, 1970, 1975, 1980, 1981, 1990, and 2001; and (2), the decline in the value of the dollar – approximately 95% since 1913.
Taxes cannot be raised fast enough to cover all the spending the government does. The federal government issues U.S. Treasury bonds to finance its deficit spending. The largest holders of those Treasury notes – our largest creditors – are foreign governments and foreign individuals. Asian central banks and investors in particular, especially China, have been happy to buy U.S. dollars over the past decade. But foreign governments will not prop up our spending habits forever. Already, Asian central banks are favoring Euro-denominated assets over U.S. dollars, reflecting their belief that the American economy is headed for trouble. It’s akin to a credit-card company cutting off a borrower who has exceeded his credit limit one too many times.
Debt destroys U.S. sovereignty, because the American economy now depends on the actions of foreign governments. While we brag about our role as world superpower in international affairs, we are in truth the world’s greatest debtor. Like all debtors, we are not truly free. China and other foreign government creditors could in essence wage economic war against us simply by dumping their huge holdings of U.S. dollars, driving the value of those dollars sharply downward and severely damaging our economy. Foreign central banks “Now have considerable ability to disrupt U.S. financial markets by simply deciding to refrain from buying further U.S. government paper.”
Ultimately, debt is slavery. Every dollar the federal government borrows makes us less secure as a nation, by making America beholden to interests outside our borders. So when you hear a politician saying America will do “whatever it takes” to fight terrorism or rebuild Iraq or end poverty or provide health care for all, what they really mean is they are willing to sink America even deeper into debt.
Thank you Ron Paul. That comment sums it up very well for those involved in this debate that are MISSING THE BIG PICTURE!
I got it. So what your saying is the goverment prints money but it isnt even there to print, cuz there isnt money. Cool.
coooooooool....i've got the whole place to myself again.... right on, man.
Not so. I sit here and observe quietly, contemplate on the issue, and reflect on the profundity of it all...
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