The US Economic System: Is it totally screwed via a flawed banking system?

[indie]

Three interesting videos to watch/consider as you ponder this question:

America: From Freedom to Facism (http://video.google.com/videoplay?docid=-1656880303867390173&q=from+freedom+to+facism&total=82&start=0&num=10&so=0&type=search&plindex=0) , Money as Debt (http://video.google.com/videoplay?docid=-9050474362583451279&q=money+as+debt&total=1362&start=0&num=10&so=0&type=search&plindex=0) and Money Masters: How International Bankers Gained Control of America. (http://video.google.com/videoplay?docid=-515319560256183936&q=money+masters&total=1369&start=0&num=10&so=0&type=search&plindex=0)

Money as Debt is a fairly short (48 minutes) but informative primer to this concept of the worthlessness of money. It summarizes how US banks are essentially given legal chutzpa to create money out of nothing. . . banks are, for some reason or another, allowed to earn interest on money which technically does not exist, backed by deposits and reserve requirements which are not equal to the amounts being loaned out.

I did know that our US "reserve requirement" system has been bogus for a long time, but I found the video very interesting, nonetheless; even having studied for an MBA. I learned quite a few things that I didn't know before from the video.

America: Freedom to Facism is a semi-controversial scale-tipping type of a documentary.

Although it's long, I highly recommend the third full-length video Money Masters: How International Bankers Gained Control of America . . . 3.5 hours !! (more than enough time to get the gist of both sides' side of the issues being discussed and generally all-in-all very informative, IMHO.)

All three of these videos allude to this little flub in the US constitution which has essentially set the US up for impending economic doom: the reality is that sustainability of our current economic model (borrowing money to pay interest on borrowed money) cannot go on forever. The "little flub" was the failure of the founding fathers to insert a clause into the constitution that would prevent/outlaw (or at the very least limit) government spending. Thus, the Federal Reserve Board (which many people think is a government or regulated institution, but it's actually not -- it's a *privately* held/controlled entity) can essentially dictate a recession if it wishes, as it holds a virtual monopoly on the printed money supply.

It's obviously a very complex subject, but maybe meaty enough for us to discuss here, if any are so inclined. Watch one or all three of these videos, maybe share some observations or comments and tell us what you think.

[Chimera]

Unfortunately economics is one of those subjects that most people think is too difficult to understand, so people are willing to suspend basic logic and common sense in deference to the so called experts. Nobody would believe they could manage their personal finances by continuously borrowing more and more money, at least not for long, and yet that's our current policy.

January 2003
1 US dollar = 1.60 Canadian dollars
1 US dollar = 1.02 Euros
1 US dollar = 0.64 British Pound
1 US dollar = 1.80 Australian Dollars

October 2007
1 US dollar = 0.98 Canadian dollars
1 US dollar = 0.71 Euros
1 US dollar = 0.49 British Pound
1 US dollar = 1.20 Australian Dollars

But don't fret America, 1 US dollar is still worth 30,000 Zimbabwe Dollars and 1233 Iraqi dinars.

[Dark Razor]

The US Economic System: Is it totally screwed via a flawed banking system?

Yes.

It's not just the US though, its all nations that use a fiat money system, interest, and an "independent" central bank (which will lead to the central bank controlling policy instead of the government.) Which will cause the politicians to be the executing arm of the economy instead of the economy beeing a political tool to achieve prosperity for the people.

[MySavior]

Do you understand how the currency system works? That is, how the value of the US dollar is determined, as compared to, say, the Canadian dollar?

If you don't know, then I'll say that its alot like the stock market. And a currency's relative value is determined by the amount of that currency every other country is purchasing. The USD was just about the king, because ALOT of other countries were purchasing US currency to go about their business.

And much like a company's value in the stock market doesn't necessarily reflect how well that company is doing (profit-wise), so does the value of a country's currency not necessarily reflect how well the country is doing. Think P/E ratio.

Anyway, the Japanese yen is kinda sucky, if you look at its value, but you have to realize that it doesn't mean the Japanese aren't doing well. In fact, with all the merchandise they export, they are making a killing, given their size.

Anyway, the fact that the US dollar's value is dropping inline with the current state of the economy not being too good is very close to being a coincidental intersection of all but exclusive things.

The value of the USD relative to other currencies is relative, and floating, just like the value of the US dollar today, compared with the US dollar 5 years ago.. it all depends.

Now, why would other countries not need to buy as much USD as it has in the past?

The US has been buying alot more loans than ever before, but to whose benefit?

Its all about spin, eh? Faith. Fear. etc. Whatever country is seen as the king gets loathed, looked up to, and treated as such. While america was seen as the be all, end all, and while america had everything (most transactions) done on the mark of the American dollar, so was the value of the USD rising, and seen as a king. If we start doing business in other currency, or other countries stop seeing the need to buy our currency, so does the value of the currency stop being as important, relative to other currencies in the world.

Also, if america keeps getting bad press, then so will the value of the dollar keep going down. And as america falters a little bit, and things that have been around for quite sometime (the banking system) get setup to make the country look bad, then so will the value of the currency look bad. America could have a record year for profits based on transactions with other nations, and it wouldn't mean diddly if there wasn't an even balance among the use of its own currency and those of a foreign nation. America could have a record year of profits, and it wouldn't matter if its bad press helps talk other nations out of doing business in USD.

I'm not saying the banking system is bad, I'm saying it going "pop" hasn't seen its day yet. It could happen in the future, but it isn't REALLY what's causing problems today.

I DO think that this floating currency and stock market bullshit is what makes everything as fickle as it is, and the banking system may have some similarities, in terms of fickleness.

Its all fucking arbitrary.

The US being King. Arbitrary.

At one point it was because we had the most resources, etc.. but now its just arbitrary.

Maybe I'm agreeing with everyone, but it was fairly stupid for america to sort of "give away" the soapbox on top of which it was undeniably king.

[rek]

The banking system isn't flawed, its working perfectly - exactly how it was designed to work. Too bad, though, it was designed to screw over the average person.

I agree with MySavior in that you can't look at exchange rates to really determine how a country is doing, they do float very similar to the stock market - sure it matters some but it's not everything.

That being said, the US dollar has depreciated greatly in value through inflation. I really think this is one of the main reasons the rich get richer and the poor get poorer; and yet it is virtually ignored and accepted as a fact of life. There's no reason a dollar today has to be worth pennies compared to a dollar not that many years ago, except that we've been told that it's ok.

Those without the money to invest, those who live of wages which lag behind inflation, and therefor most americans in general are robbed blindly by this system and yet they ignore it. We complain about stupid shit, try to enforce regulations that only hurt everyone, but we let this one slide.

Most people are slaves to the system. A bunch of little ants running around always trying to fight a battle they will never win. I like going to big stores and seeing everyone race around like ants, wasting money, thinking one day they will be better off - but most of them never will.

I blame them for a lot of it, but that's an issue for another thread, anyway our system of banking does screw over the average person more than it should. Our government is so large, complicated, and completely out of control that I don't see what anyone can do about it; not like it represents the people anymore, it can't when it's so big.

[immortalmack]

I think one thing that people forget is that banking systems must be flexible. If you start puttin all kina laws on a banking system you actually do damage by tying it's hands in bad times ( see stagflation). Actually when the world market was falling in the early 90's it was the US that agreed to boom it's market and take the lead and buy the rest of the worlds goods to keep them afloat. After so long of US Americas buying all this foreign crap, the foreign countries want to keep their booms going are getting mad as hell because it's time to return the favor and buy US stuff and they don't want to. So what you really see is the US making sure , through a favorable exchange rate for us, that they do buy our stuff because it will be almost as cheap or cheaper in some cases than making it themselves. So all you Brits, Teutonics and Asians stack up on your Coca Colas and Cadillacs cuz we stackin'em deap and selling 'em cheap.

[Canuck]

That's some funny shit right there. "The US agreed to boom it's market" to prop up the rest of the world - what? They must be smoking some fine Canadian cannabis in Detroit 'cause that's about as out there as I've ever heard. They US has been succumbing to their own propaganda of "Consumption is King" - buy buy buy, spend spend spend. The reason you're consuming shit from the rest of the world instead of your own is of course a complex social, political and economic issue not to be boiled down in a simple one-paragraph answer but suffice it say, your government's allowance of the continued out-sourcing of American jobs is one, the "Wal-Mart" mentality of something for nothing is two, and the equally perverse Union mentality of a King's ransom for unskilled labour work is a third.

The notion that you agreed to "boom" your economy is...amusing.

[stopharian]

That's some funny shit right there. "The US agreed to boom it's market" to prop up the rest of the world - what? They must be smoking some fine Canadian cannabis in Detroit 'cause that's about as out there as I've ever heard. They US has been succumbing to their own propaganda of "Consumption is King" - buy buy buy, spend spend spend. The reason you're consuming shit from the rest of the world instead of your own is of course a complex social, political and economic issue not to be boiled down in a simple one-paragraph answer but suffice it say, your government's allowance of the continued out-sourcing of American jobs is one, the "Wal-Mart" mentality of something for nothing is two, and the equally perverse Union mentality of a King's ransom for unskilled labour work is a third.

The notion that you agreed to "boom" your economy is...amusing.

I agree that notion is quite amusing..........still you are getting a bit superior for a 51st stater. Consumption is king in Canada too and the Chinese also make all the shit in the Canadian Walmarts.

[Canuck]

No arguments here.

We haven't embraced off-shore manufacturing quite as hard yet but with our climbing dollar that might change. I suppose as long as we have oil, wood, water, gold and diamonds we'll probably continue to be a net exporter...one would hope.

[brenna]

The banking system isn't flawed, its working perfectly - exactly how it was designed to work. Too bad, though, it was designed to screw over the average person.

I agree with MySavior in that you can't look at exchange rates to really determine how a country is doing, they do float very similar to the stock market - sure it matters some but it's not everything.

That being said, the US dollar has depreciated greatly in value through inflation. I really think this is one of the main reasons the rich get richer and the poor get poorer; and yet it is virtually ignored and accepted as a fact of life. There's no reason a dollar today has to be worth pennies compared to a dollar not that many years ago, except that we've been told that it's ok.

Those without the money to invest, those who live of wages which lag behind inflation, and therefor most americans in general are robbed blindly by this system and yet they ignore it. We complain about stupid shit, try to enforce regulations that only hurt everyone, but we let this one slide.

Most people are slaves to the system. A bunch of little ants running around always trying to fight a battle they will never win. I like going to big stores and seeing everyone race around like ants, wasting money, thinking one day they will be better off - but most of them never will.

I blame them for a lot of it, but that's an issue for another thread, anyway our system of banking does screw over the average person more than it should. Our government is so large, complicated, and completely out of control that I don't see what anyone can do about it; not like it represents the people anymore, it can't when it's so big.



I agree, the system works perfectly for those who designed and manage it.


The fact that the rest of humanity are all slaves in everything but name both saddens and angers me beyond words. Walking around with the "They Live" sunnies on while everyone else is happily consuming the Earth to death, and paying with their own freedom for the privilege of inflating the already obscenely wealthy, well I'm not crazy yet, but some days I wonder.

I've watched both the first films mentioned, and would recommend Money as Debt as the best intro to the subject.


The fact is we cannot have sustainability in any quarter of our lives without a sustainable economic system. I hope those up in arms about global warming etc realise that becoming a green consumer is little more than shuffling deck chairs. The whole bloody economic boat is sinking. When it is eventually deliberately scuttled then we face depression and destitution on an incredible scale.

I've just been told the Aus dollar is at a twenty three year high against the US. Most every other currency has been keeping parity with the US dollar and disguising how worthless it is.

Everyone in the know is attempting to garner all the wealth they can before the cash cow has to be slaughtered.

Observe the historic patterns. We are again at end of empire.

[brenna]

And thanks indiejade, for the links, and the chance to vent a little.

[immortalmack]

That's some funny shit right there. "The US agreed to boom it's market" to prop up the rest of the world - what? They must be smoking some fine Canadian cannabis in Detroit 'cause that's about as out there as I've ever heard. They US has been succumbing to their own propaganda of "Consumption is King" - buy buy buy, spend spend spend. The reason you're consuming shit from the rest of the world instead of your own is of course a complex social, political and economic issue not to be boiled down in a simple one-paragraph answer but suffice it say, your government's allowance of the continued out-sourcing of American jobs is one, the "Wal-Mart" mentality of something for nothing is two, and the equally perverse Union mentality of a King's ransom for unskilled labour work is a third.

The notion that you agreed to "boom" your economy is...amusing.
Canuck, how old are you? Unless you were paying attention from about 1996 til now and was listening when irrational exuberance, Asian tigers, the end of boom bust cycles and "the dow reached a record high of 9000" then don't try pick apart one word in my statement. Also stop reading the economist. It will confuse gay weed smoking politicians/populace in Canada.

[Zero Angel]

Is the economic system so complex, that it is not easy to understand that if you continually create fake money, the temporary prosperity granted by it will be withdrawn in the future? The people that should really be worried are those who either trading internationally or working with virtual assets (like stocks, loans, or mortgages), should the money decline in value than it should not completely obliterate local economy or the basics. The stock market crash in the 30s after all was caused by a poorly managed economic system with no backup plans, the next crash is not going to hurt people as much but it probably will happen, and soon, and even then those who are working with real assets need only barter with each other to leverage these assets. An independent economy *should* sustain itself in any case -- look at Canada for example, we have had a lower dollar ($1 USD ~ $.65 CAD) for the longest time, but local economy ensured that everyone had all of their necessities covered and taken care of. With a self-sustaining economy and plenty of natural resources, international stock prices had relatively little to do with 'our' quality of life, which is at the root of we're talking about here.

EDIT: But then again if we're outsourcing labour and good, it causes a ripple effect where we owe other countries increasing amounts of things just so we can do business with them, and this owing gets passed on in the form of job cuts to pay for debt, etc which is very harmful to everyone once the first few big dominos topple over. I sort of retract my argument.

[enjoysham]

Interview with Alan Greenspan on the Daily Show. Second column, fourth row.

http://www.comedycentral.com/shows/the_daily_show/videos/most_recent/index.jhtml?start=46

And a solid read about the history of the gold standard from reason online:

http://www.reason.com/news/show/122167.html

(I'm not advocating anything; just putting blood in the water.)

[indie]

Our government is so large, complicated, and completely out of control that I don't see what anyone can do about it; not like it represents the people anymore, it can't when it's so big.

From what I understand, one of the main purposes of the US Constitution was to attempt to limit the power of the federal government. Unfortunately, and as you mentioned, the more complicated that system gets, the more out of control it seems to get. . . and the complexity only increases with time. Examining the source of that complexity inevitably leads to the source of money which is the "power to create debt" and . . . well, it's hard to not imagine why and how the system got so screwed up to begin.


I've just been told the Aus dollar is at a twenty three year high against the US. Most every other currency has been keeping parity with the US dollar and disguising how worthless it is.


Yeah, maybe I was wrong to single out the US monetary system in light of its nature in the global economy.


The stock market crash in the 30s after all was caused by a poorly managed economic system with no backup plans, the next crash is not going to hurt people as much but it probably will happen, and soon, and even then those who are working with real assets need only barter with each other to leverage these assets.

The crash in the 30s was caused by a literal shortage of money. . . what most people don't know is that the federal reserve system made a conscious effort to create this shortage, a 25-30 percent decrease in the money supply (cited) just prior to the actual crash. In essence, it was an orchestrated depression. Crazy to think about.

[Canuck]

Canuck, how old are you? Unless you were paying attention from about 1996 til now and was listening when irrational exuberance, Asian tigers, the end of boom bust cycles and "the dow reached a record high of 9000" then don't try pick apart one word in my statement. Also stop reading the economist. It will confuse gay weed smoking politicians/populace in Canada.

Oohhh...an age jab and a homosexual slur in one post - stinging...ouch even. Oh man, how can I ever address the complete lack of substance in your post when you're being so...so darn mean?

Let's go back to your original post shall we? Explain how the US decided to <I love this> "boom it's market". Please, educate us economically ignorant foreigners about the miracles pulled off by the same structure that can't keep it's own internal housing bubble from exploding around the world. Who orchestrated the mass consumption of foreign produced goods on credit? Who unleashed a tidal wave of good-will for foreign made products such that even the staunchest flag-waving, union-supporting, anti-communist gleefully bought Made in China shit from Wal-Mart?

Here's what you've done - a massive techno-mania that collapsed and promptly bankrupted a huge number of (not so) sophisticated investors and your every day Mom and Pop playing in the market with NO idea what was going on. Then, you built a massive housing bubble that's only just starting to rain it's effects around the world causing ripples throughout Europe and Asia. China, possibly your single largest holder of currency and government debt is spooked enough even they're selling shit off - and if anyone is going to take a hit from your falling dollar outside of Canada (us unfortunately being your largest trading partner), it's China - provider of all things cheap. Canadians have been gleefully building and selling our resource corporations to the Americans, a practice I find rather unpalitable - not because they're in the hands of Americans, but in the hands of any foreigner.

You didn't boom anything (that you haven't busted that is), except for perhaps the pockets of Haliburton, Blackwater and the rest of the war machine. Now that your economy is tanking, Canada is going to follow suit - stands to reason given our incestuous relationship. Ah the beauty of short-sighted profiteering over real business creation.

If I sound a bit caustic or aggressive when it comes to discussing your "We saved the world's markets" post, remember - it's response in kind to the arrogance of such flawed thinking.

[immortalmack]

Oohhh...an age jab and a homosexual slur in one post - stinging...ouch even. Oh man, how can I ever address the complete lack of substance in your post when you're being so...so darn mean?

Let's go back to your original post shall we? Explain how the US decided to <I love this> "boom it's market". Please, educate us economically ignorant foreigners about the miracles pulled off by the same structure that can't keep it's own internal housing bubble from exploding around the world. Who orchestrated the mass consumption of foreign produced goods on credit? Who unleashed a tidal wave of good-will for foreign made products such that even the staunchest flag-waving, union-supporting, anti-communist gleefully bought Made in China shit from Wal-Mart?

Here's what you've done - a massive techno-mania that collapsed and promptly bankrupted a huge number of (not so) sophisticated investors and your every day Mom and Pop playing in the market with NO idea what was going on. Then, you built a massive housing bubble that's only just starting to rain it's effects around the world causing ripples throughout Europe and Asia. China, possibly your single largest holder of currency and government debt is spooked enough even they're selling shit off - and if anyone is going to take a hit from your falling dollar outside of Canada (us unfortunately being your largest trading partner), it's China - provider of all things cheap. Canadians have been gleefully building and selling our resource corporations to the Americans, a practice I find rather unpalitable - not because they're in the hands of Americans, but in the hands of any foreigner.

You didn't boom anything (that you haven't busted that is), except for perhaps the pockets of Haliburton, Blackwater and the rest of the war machine. Now that your economy is tanking, Canada is going to follow suit - stands to reason given our incestuous relationship. Ah the beauty of short-sighted profiteering over real business creation.

If I sound a bit caustic or aggressive when it comes to discussing your "We saved the world's markets" post, remember - it's response in kind to the arrogance of such flawed thinking.

Canuck to prove my point I could give you an accurate analysis from the 50's til now. But I'll save you the boredom.

[Canuck]

On the contrary, as a "student" of social patterns and it's effect on economics, I'm looking forward to your explanation. I fully expect you to not back up your "chose to Boom the economy" in any fashion because...well, because utter and complete nonsense can't be proved, but I'd still like to see what evidence you've read that's convinced you otherwise.

So please - present it from the 50s forward, how the US made a concious decision to support the rest of the world for the good of those foreign economies. Please don't forget to include fun little side trips like the origin of the term Banana Republic ('cause that was for their benefit too wasn't it?).

[Architectonic]

Mismanagement of the US dollar already did severely hurt the economies of several countries (such as those in South America) which had fixed their currency to the USD (why they would do such a stupid thing is a different topic altogether)..

I think one thing that people forget is that banking systems must be flexible.

If that is true, then why don't we have a free banking system, rather than a system which is controlled by a very small group of people?

The centralized banking system has NOT proven to be more stable than what existed before - not only the great depression and other recessions, but also massive inflation, exaggeration of the boom-bust cycle etc, which happened repeatedly in the 20th century.

[Canuck]

Canuck to prove my point I could give you an accurate analysis from the 50's til now. But I'll save you the boredom.I'm still waiting...:reading:

[guccimane]

yes its all fucking rigged by the Illuminati. Go to www.godlikeproductions.com and search for NWO or Illuminati they have some goodass info there
Anyone read lords of finance? I need to get on that.

[guccimane]

Who has their hooks in the Federal Reserve and how is it controlled?
I know at least that the treasury secretary position is controlled by Goldman Sachs which is run by bankers. But I dont understand the corruption in the Federal Reserve. I'm sure it is there just don't see it.

[guccimane]

Anyways the Illuminati have had the whole world mostly under its control for the last few centuries at least. They have been siphoning out all the gold and silver to dilute our money supply. They have all that shit and they just keep the game going so they can keep fucking with us and controll us.

[Qfwfq]

Who has their hooks in the Federal Reserve and how is it controlled?
I know at least that the treasury secretary position is controlled by Goldman Sachs which is run by bankers. But I dont understand the corruption in the Federal Reserve. I'm sure it is there just don't see it.

That theory is elaborated on in Money Masters. It's very convincing, but there are some technical flaws in it. Despite those small flaws, the supporting logic is enough to sway my opinion. I don't believe such enormous wealth was merely squandered in the shadows. If you can't see an elephant, but there's only one place he could be hiding... I'm inclined to place him there.