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  • Yes, we should tie treasury yields to the deficit as a % of GDP.

    1 10.00%
  • Yes, we should tie treasury yields to the deficit as a % of gov't spending.

    1 10.00%
  • No, we should let bankers keep running the Federal Reserve.

    8 80.00%
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Thread: A Simple Way to Kill the Fed

  1. #1
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    A Simple Way to Kill the Fed

    Would you support tying treasuries to the budget deficit as a percent of government spending or GDP?

    For example, this year, the budget deficit is 8.51% of GDP. Therefore, treasury par value would sell at 8.51%

    Find out more here:

    Government Spending Details: Federal State Local for 2012 - Charts

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    Re: A Simple Way to Kill the Fed

    Quite frankly, I don't know enough about how the current system works to know what the hell you're talking about.


    But I do know that spending is too high if there is a budget deficit.
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    Re: A Simple Way to Kill the Fed

    Quote Originally Posted by The Mark View Post
    Quite frankly, I don't know enough about how the current system works to know what the hell you're talking about.


    But I do know that spending is too high if there is a budget deficit.
    The Fed is an excuse to manipulate interest rates for the sake of "balancing" inflation and unemployment.

    The government doesn't want to pay much on its debt, so it prefers low interest rates.

    In turn, low interest makes credit cheap, so unemployment goes down since consumers buy more and businesses invest more.

    In turn, inflation goes up because of cheap credit, so paying off debt becomes cheaper for consumers.

    With more liquidity comes more activity. Ergo, an increased need for regulation.

    Ergo, an increased demand for government spending and intervention.

    The only way I can see getting over this is if we tie treasury yields to the budget deficit as a % of GDP or government spending.

    That way, the government can't expand recklessly, and overheat society into a self-fulfilling prophecy of needing more government.
    Last edited by Daktoria; 05-17-12 at 06:18 PM.

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    Re: A Simple Way to Kill the Fed

    Quote Originally Posted by Daktoria View Post
    The Fed is an excuse to manipulate interest rates for the sake of "balancing" inflation and unemployment.

    The government doesn't want to pay much on its debt, so it prefers low interest rates.

    In turn, low interest makes credit cheap, so unemployment goes down since consumers buy more and businesses invest more.

    In turn, inflation goes up because of cheap credit, so paying off debt becomes cheaper for consumers.

    With more liquidity comes more activity. Ergo, an increased need for regulation.

    Ergo, an increased demand for government spending and intervention.

    The only way I can see getting over this is if we tie treasury yields to the budget deficit as a % of GDP or government spending.

    That way, the government can't expand recklessly, and overheat society into a self-fulfilling prophecy of needing more government.
    So the FED is bad because it keeps our consumer spending based economy afloat? I'm not exactly a fan of debt-purchased consumer goods as an economic model, but its reality we have to live with for the moment. Your proposal would crash the economy, making any theoretical benefits not worth the cost.

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    Re: A Simple Way to Kill the Fed

    Quote Originally Posted by rathi View Post
    So the FED is bad because it keeps our consumer spending based economy afloat? I'm not exactly a fan of debt-purchased consumer goods as an economic model, but its reality we have to live with for the moment. Your proposal would crash the economy, making any theoretical benefits not worth the cost.
    Can you describe the benefits of living in a service economy?

    I feel like your argument is, "We shouldn't remove sugar from our diet because then, we'll get tired and cranky."

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    Re: A Simple Way to Kill the Fed

    Here it is again. A simple rule to fix a complex problem vs. no solution at all. Yup, first simplify the description of problem, note that this doesn't simplify the problem nor does it need to be perfectly accurate, just sound right. It can help to have a solution in mind when your coming up with the description of problem. Next a simple solution is far easier to come up with. Check by using recursion, i.e. check the solution against the problem and adjust one or the other as necessary with the objective that fewer words is better. Believe the the result. Then you are done.

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    Re: A Simple Way to Kill the Fed

    I do not trust the bankers, maybe this is wrong....but they, and all of us are human....so...I trust the people even less....

    But, I do think that this system can be improved.

    So, this is an idea, maybe not a good one....

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    Re: A Simple Way to Kill the Fed

    Quote Originally Posted by The Mark View Post
    Quite frankly, I don't know enough about how the current system works to know what the hell you're talking about.


    But I do know that spending is too high if there is a budget deficit.
    Good answer.
    The deficit could be due to too little revenue as well as too much spending....may a 10-90 or a 50-50 deal......

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    Re: A Simple Way to Kill the Fed

    There is no easy way to completely eliminate The Fed. We have to look at our economic policy as a whole along with our Constitution. First and foremost, the Constitution would forbid it under the 10th Amendment (you know that silly document our forefathers ratified to put power to the people). However, you can't simply eliminate it overnight. It would take a lot of time and effort to slowly faze it out.

    We run under Keynesian economics which runs under the assumption that spending is better. That is the basic interpretation of it. Keynesian economists think that the private sector needs to be regulated by public spending, and a central bank rather then a free market. This system has led to more economic downfall then any other. Whenever you place too much power in the hands of government chaos ensues. The Fed is allowed to print money out of thin air and create credit rates. They have control over the unemployment stats which are also under the artificially created numbers under The Fed. The funny thing about the Federal Reserve is that it is no more "federal" then FedEx. There is no accountability, or system of audit. We just blindly trust these groups of bankers to take care of us.

    Austrian economics would be better which states that economies run better on free markets with little intrusion from government. Instead of flawed stats they derive economic theory from principles of human action. It is a more logical and sound way to run an economy then all this government interference.

    Once we change the way we run the economy and focus more on a free market system, then The Fed becomes irrelevant.
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    Re: A Simple Way to Kill the Fed

    Quote Originally Posted by Daktoria View Post
    Can you describe the benefits of living in a service economy?

    I feel like your argument is, "We shouldn't remove sugar from our diet because then, we'll get tired and cranky."
    The pain and suffering experienced by the American people from a major economic crash is far beyond getting tired and cranky. A better analogy would be an alcoholic with withdrawal so severe that it can kill him. The FED is an absolute requirement to avoid disaster given current circumstances. If you want to get rid of the FED, you first need to alter the economic paradigm so it no longer becomes necessary. Saying "I don't like the FED and we should get rid of rid regardless of the consequences" is childish and has no place in sensible economic policy.

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