Paul M Foster wrote:
> On Tue, Sep 07, 2004 at 05:37:18PM -0400, Bryan J. Smith wrote:
>
> <snip>
>
>>>Bankers and corporate elites get richer, everybody else loses.
>>
>>Agreed. The monopoly the Federal Reserve has had on the amount of cash
>>in this country is at the heart.
>
>
> I'll disagree here. The key to any economy is productivity. The Fed can
> act as a brake or a stimulus, but producitivity is what drives any
> economy. The problem in this society is that too much of the wealth
> vests in the hands of too few _who produce too little_.
I sort of agree with you, but don't be too quick to dismiss the
effects of monetary policy set by the Fed. The Fed has lots of ways
of creating money, and does so in astronomical amounts. Why do you
think you can buy a house full of furniture with no interest and no
payments for a year. Keep on shopping! That's the only thing that is
keeping the economy going, so that "pundits" can claim the economy is
doing well. (Apparently the definition of "economy" == number of
people shopping)
As a shorthand, we say that they are printing money like crazy, but
they have various mechanisms, like changing marginal rates, etc.
In classical economics we learn that flooding the monetary system with
dollars causes inflation. So why is there no inflation. First, there
IS inflation--the government manipulates figures to lie to you. But
more important, is the fact that vast quantities of these dollars flow
to China, where banks are hoarding billions, and also buying T-bills,
stocks, bonds, etc. Nice of them to lend money back to us. Of
course, since you don't think it matters....
Lemme give you a prediction. Some day, I would say within five years,
China will take over Taiwan, by force, which the US, once upon a time,
swore they would never let happen. The Chinese leaders will make one
phone call, saying that if the US interferes, they will destroy the US
currency, virtually overnight. And the US will stand back and let
Taiwan go.
> The stock market
> is the prime example of this. Buying and selling stocks (and
> commodities) is an example of concentrating wealth while producing
> nothing of value. That's a drag on an economy. It bids the costs of
> everything up, while the benefits mostly accrue to those really just
> push money around.
>
> Paul
>
>
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