• 25 Feb 2009 at 10:03 AM

Return Of The Beard: Frank Versus The Beard

10:03: Congresscritters wander into the hearing room.
Frank: There is no option other to work with the existing system. Sure, we have to bail out the bankers that you hate, but this is the first important step in totally revamping the financial system in the way we think it should be reconstructed. So just relax, jumpy public you. Relax. There will be plenty of time for hangings (easy there Waxman, we haven’t forgotten your dreams) once we [put out the fire/let the flood waters recede/quell the masses]. Really, what I’m trying to say is that without universal healthcare we just have no way to fix anything. Right? Right, ‘kay-thanks-bye.
Paul: I’ve been telling you idiots that this system has been doomed to failure for decades. Inflating this bubble again is a total misunderstanding. Hey, did you notice I shined up my congressional pin this morning? I was sort of expecting the cameras today, you know.
CNBC: Ok, we were here to watch the Beard, not you idiots. BREAKTIME.
(We should have just stuck with CSPAN).
Beard: Let me read from a dense stack of old economic texts with current events woven in to convince you that they are relevant to our activities over the last several weeks.
Dealbreaker Commenter: The guy over Bernanke’s right shoulder has an incredible amount of red hair.
Editor: That’s John Thain in disguise.
Barrett: How about judicial cramdowns? Huh?
Beard: Yeah, I’m going to just dodge that question, thanks.
Kanjorski: Hey, so the rumor is going around that we weren’t on the verge of disaster, and I’m sort of fearful that this will be used to argue that we are a bunch of idiots likely to do more harm than good. So, can you reassure us that we were totally fucked?
Beard: Yes… well…
Frank: You! With the pager! I’m going to stick this gavel where it doesn’t shine if you don’t turn that thing off.
Beard: Yeah, we were fucked. Seriously.
Paul: Seriously, what has to happen for you to think that stimulus might be a worthless joke or even a dangerous mistake?
Beard: Well, if inflation goes crazy, I’ll know I was wrong.
Paul: So if I were to ask you…
Frank: Nope! Time to vote! Everyone head for the playground! Not you, John Thain in disguise. You sit right there.
Crickets…
shortly.png
Frank: Sit your asses back down and let’s go.
Maloney: Hey, Obama got a lot of applause when he said the bank bailout was not about helping banks but about helping people. So, what do you think? Oh, and I have some homework for you to complete.

75 comments (hidden to protect delicate sensibilities)
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Comments (75)

  1. Posted by guest | February 25, 2009 at 10:07 AM

    “If they can’t start a meeting without you, well, that’s a meeting worth going to, isn’t it? And that’s the only kind of meeting you should ever concern yourselves with.”

  2. Posted by guest | February 25, 2009 at 10:11 AM

    So, wait, he is blaming his own stupidity on following the wishes of his constituents?

  3. Posted by Clown Capital | February 25, 2009 at 10:13 AM

    Does Barney Frank have a book out? He should, because he’s fat and gay. Talk about overcoming the odds…

  4. Posted by guest | February 25, 2009 at 10:16 AM

    I wanna see Erin Burnett’s new chest.

  5. Posted by guest | February 25, 2009 at 10:17 AM

    Did that Ron Paul guy just say “get rid of the dollar standard?” And replace it with what?

  6. Posted by guest | February 25, 2009 at 10:24 AM

    In middle school everyone learns not to trust anyone with two first names so now they want us to trust “barney” “frank” and “ron” “paul” both with two first names.

  7. Posted by Anal_yst | February 25, 2009 at 10:24 AM

    @5
    The Marshmallow standard, duh!

  8. Posted by guest | February 25, 2009 at 10:26 AM

    The guy over Bernanke’s right shoulder has an incredible amount of red hair.

  9. Posted by guest | February 25, 2009 at 10:26 AM

    @3- direct barney frank quote… “I’m used to being in the minority. I’m a left-handed gay Jew. I’ve never felt, automatically, a member of any majority.”

  10. Posted by guest | February 25, 2009 at 10:26 AM

    http://www.bloomberg.com/apps/news?pid=20601087&sid=agUcSLdvN1xQ&refer=home
    “Deutsche Bank’s Quantitative Team to Leave, Start Hedge Fund ”
    do you think they are leaving in the style of Boaz Weinstein?

  11. Posted by guest | February 25, 2009 at 10:28 AM

    Axe continues to come down hard at the old MER. More announcements today and tomorrow. Sales and trading continues to be the target.

  12. Posted by guest | February 25, 2009 at 10:29 AM

    @5, diamond-backed money, bru

  13. Posted by guest | February 25, 2009 at 10:34 AM

    I freakin love Ron Paul, the lone Austrian on the Hill.

  14. Posted by Investorcluzo | February 25, 2009 at 10:41 AM

    @anal_yst – did you and fun work out a place for libations yet? wtf. I need to plan.

  15. Posted by guest | February 25, 2009 at 10:41 AM

    Does Barney Frank have any teeth?

  16. Posted by guest | February 25, 2009 at 10:50 AM

    “Getting houses down to their fundamental value?”

  17. Posted by merkin capital partners | February 25, 2009 at 10:50 AM

    coming this fall, from the producers of I am Sam, and Milk…Sean Penn in “I Am Barney Frankth”

  18. Posted by guest | February 25, 2009 at 10:51 AM

    Hah, nice EP. It’s John Thain wearing an orangutan pelt on his head.

  19. Posted by cy | February 25, 2009 at 10:53 AM

    5-
    Ron Paul simply wants a currency that cannot be printed out of thin air at the whim of our government or bankers.
    Think about it, which would you rather use for a means of exchange (because that’s all money really is)…
    Something that’s difficult to create more of, or something that can be created at will, esentially stealing from the current holders?

  20. Posted by guest | February 25, 2009 at 10:57 AM

    @19,
    No, he wants a currency that can be mined out of the ground. If we’re all into this barter thing why not just reintroduce shiny beads?

  21. Posted by Anal_yst | February 25, 2009 at 10:58 AM

    @ Merkin
    It took all the strength I could summon not to snarf coffee all over my monitor, you bastard, although, I think you may have misspelled the title (typo, perhaps)?
    “…I am Bawny Fwankth” sounds a bit closer to reality.

  22. Posted by guest | February 25, 2009 at 10:58 AM

    @ 13 and 19
    right on…some get it, some dont
    Paul/Schiff 2012

  23. Posted by guest | February 25, 2009 at 10:59 AM

    Congressman Paul . . . heroic or Quixotic?

  24. Posted by Anal_yst | February 25, 2009 at 11:00 AM

    @ Merkin
    It took all the strength I could summon not to snarf coffee all over my monitor, you bastard, although, I think you may have misspelled the title (typo, perhaps)?
    “…I am Bawny Fwankth” sounds a bit closer to reality.

  25. Posted by guest | February 25, 2009 at 11:00 AM

    Congressman Paul . . . heroic or Quixotic?
    Either way . . . the man has my vote

  26. Posted by guest | February 25, 2009 at 11:01 AM
  27. Posted by Anal_yst | February 25, 2009 at 11:03 AM

    ah mother effing double post, my bad
    @ Cluzo
    No idea mang, drawing serious blank.

  28. Posted by guest | February 25, 2009 at 11:04 AM

    Why does Frank Always cut people off? Geez, this is why these guys never get anything done.

  29. Posted by guest | February 25, 2009 at 11:04 AM

    26, in this day and age where spending trillions that do not exist on meaningless stuff in the name of ‘stimulus’ is considered mainstream, anyone remotely aware of or trying to get everyone back into reality will be labelled quixotic.

  30. Posted by guest | February 25, 2009 at 11:05 AM

    Barney and Maxine talking as they go off to vote. Ruh-roh, maybe she wants some time to question Bernanke.

  31. Posted by cy | February 25, 2009 at 11:12 AM

    20-
    It took me awhile to figure it out the whole gold thing, so hopefully I can help someone today…
    When I first heard people talk about using gold as money I thought it was anachronistic and ridiculous. I mean, gold has basically zero real world value, beyond jewlery and some industrial uses, so why should we bother? I think Buffet said something along the lines of, “if aliens came down and saw us digging up gold from the mountains just to bury it in a vault somewhere, they’d think us irrational beings.” OK, so on the surface it doesn’t make much sense, but you have to consider the HUGE advantage it has to paper money… It cannot be created at will.
    We are, right now, seeing the effects of a government printing too much money. They may do it under the auspices of “creating credit,” but all they’re actually doing is printing money that doesn’t correspond to any actual real resources. When you have too much money chasing too few resouces, only one of two things can happen. We can either see general price inflation (which we’ve sort of seen) or ridiculous asset bubbles (of which we’ve just seen a few tremedous examples).
    When you take away the ability of the government to create more money on a whim, you cannot have the massive misallocations like we’ve recently seen. So while it sounds completely crazy to use a commodity money, it would prevent the sort of disaster we’re living through now.

  32. Posted by blndebnker | February 25, 2009 at 11:12 AM

    @Cluzo/Analyst – what time were you guys thinking?

  33. Posted by guest | February 25, 2009 at 11:17 AM

    @13, 19 & 23 Unfortunately Ron Paul will be proven correct as will all true free market capitalists. But Barney’s large and in charge, and so is Nancy and Harry and BHO…

  34. Posted by guest | February 25, 2009 at 11:19 AM

    @20,23, True-it would be nice to have a currency that politicans and central bankers couldn’t create out of thin air (steal from savers either by taxes or borrowing long term etc), but what could it be if not gold? Silver? Other?
    The problem is that the politicans are thrilled with the current program and the people are not educated to understand the problem. Those that are somewhat educated, are told to “invest for the long term” or contribute regardless of market conditions to mutual funds in their 401ks etc.
    The counter argument to Paul/Schiff or whomever espouses the free market monetary currency is, OK, who would run the money? If not the Fed,do you trust Congress to administer monetary supply? I certainly don’t trust Frank/Pelosi. Or Newt Gingrinch or the others before them.

  35. Posted by guest | February 25, 2009 at 11:22 AM

    @CY,
    One problem – paper isn’t just reproducing itself. The problem isn’t with the paper itself, it’s with the idiots who control it. The problem is only as big as those in Washington who have the power to make more. If we just had a responsible system then there is no reason for gold.

  36. Posted by Investorcluzo | February 25, 2009 at 11:28 AM

    @blndebnker/anal_yst – 6:30. will send out a locale later. think village-ish.

  37. Posted by guest | February 25, 2009 at 11:30 AM

    @ 15 He had them removed to facilitate fellatio.

  38. Posted by guest | February 25, 2009 at 11:37 AM

    As long as Mr. Axe is out there saying you can’t take nationalization off the table then no one is going to believe when he says no nationalization?

  39. Posted by cy | February 25, 2009 at 11:38 AM

    36-
    I somewhat agree with you. If we had a stable amount of dollars in the world, and the gov’t was not able to create any more, a dollar system could theoretically work. Unfortunately, the temptation to print, spend, and inflate is way too strong for politicians to resist. And I’m not just pinning this on Obama (although his recent actions have been incredibly egregious.) Imagine if Bush had to drastically raise taxes in order to invade Iraq. Do you think we would have stood for that? And even if the population was whipped up into some sort of post-9/11 fervor and we opened our checkbooks, do you think they’d still be open 2,3, or 5 years later? Our government was originally set up so it could be “run by crooks.” this meant an ironclad system of check and balances and no authorization for any one individual to spend money on anything. We’re now at a point where someone like hank paulson has the audacity to write a bill saying he should personally be able to spend $350 billion with zero oversight or accountability whatsoever. Out of fucking control. So, maybe in theory we could just find honest people to run the government, but all history (and not just US history, but world history) suggests that we will never see those people in washington.
    35-
    I think you’re missing the whole point. The point is that NO ONE will be in charge of the money supply. No one will have the ability to expand or contract. Interest rates will be set by market forces, so that savers and investors are properly matched. When you try to hand over the keys to the money supply to an individual or a small group, they’re always going to fuck it up.

  40. Posted by guest | February 25, 2009 at 11:40 AM

    @38 … lol i was just about to say . .

  41. Posted by cy | February 25, 2009 at 11:41 AM

    Sorry, Hank P wanted to spend $700 billion with no accountability.

  42. Posted by guest | February 25, 2009 at 11:45 AM

    fuck . . . here comes tiny tim geithner . . the man is so mentally and physically frail, it’s ghastly

  43. Posted by guest | February 25, 2009 at 11:51 AM

    Maxine’s talking. She doesn’t understand the difference between spending and lending and is attempting to skewer Bernanke with something that isn’t actually a skewer. She and Big Red have the same hairstylist.

  44. Posted by guest | February 25, 2009 at 11:52 AM

    This whole gold standard thing is interesting — if we WERE on the gold standard, how would a “bail out” go down, since the gov’t couldn’t just decide to create more money? They would have to borrow from people that already had the gold, which they presumably would have difficulty with, since nobody would want to lend.
    That in itself is an interesting thought, because it shows you just how the whole “printing money” thing is a bit of a fraud, because its effectively forcing people that hold money currently to lend it to those that receive bailout money (lending in the form of making the current money they hold worth less).

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  45. Posted by guest | February 25, 2009 at 11:54 AM

    did frank just say “please freeze the COCK?”

  46. Posted by guest | February 25, 2009 at 11:54 AM

    are there any countries that don’t allow crossing dressing blacks to hold office ?

  47. Posted by merkin capital partners | February 25, 2009 at 11:56 AM

    maxine’s recent question to chief nasa physicist:
    “so mr. scientist, what can you tell me about using baking soda to make a volcano? AND VINEGAR?!!”

  48. Posted by guest | February 25, 2009 at 11:57 AM

    That pink blazer is blinding me.

  49. Posted by guest | February 25, 2009 at 12:00 PM

    When is this fucking cocksucker going to stop kissing his own ass for saving the financial system? Is he on crack. Doesnt seem to want to mention his moron policies got us in this

  50. Posted by guest | February 25, 2009 at 12:00 PM

    @40 “Interest rates will be set by market forces, so that savers and investors are properly matched. When you try to hand over the keys to the money supply to an individual or a small group, they’re always going to fu@# it up.”
    -Exactly. I think you’re missing the point. If one hands over money supply to market forces it will be dictated by an individual or small group of speculators who indeed will fu@# it up.
    Case in point: the oil market. Is the correct price at $11/brl pre-#43Bush, $147/brl @ 7/4/08 or $38/brl Obama? Now, I understand there are politics, geopolitics, demand/supply other issues that go into the price of oil, but if speculators can do this damage with oil, they could certainly do it with money supply.
    I used to believe in the gold bugs. Even though they are fallable, I’ve changed my thinking on this, but the Fed is the best of bad options.

  51. Posted by guest | February 25, 2009 at 12:01 PM

    CNBC is doing a wonderful job of not allowing us to have continuity in this hearing and Frank is aiding and abetting them. Plus the prez and Tim and the HUD Secy are also running interference here. So what is the point.
    Melissa had a good point when she said “I’m afraid we are going to be hit with more taxes and exactly the same time by big inflation.”

  52. Posted by guest | February 25, 2009 at 12:03 PM

    CNBC is doing a wonderful job of not allowing us to have continuity in this hearing and Frank is aiding and abetting them. Plus the prez and Tim and the HUD Secy are also running interference here. So what is the point.
    Melissa had a good point when she said “I’m afraid we are going to be hit with more taxes and exactly the same time by big inflation.”

  53. Posted by guest | February 25, 2009 at 12:05 PM

    Do you think Frank prefers a twink or a beard? Just askin..

  54. Posted by merkin capital partners | February 25, 2009 at 12:15 PM

    apparently family guy’s Cleveland serves on this committee…lighter skinned than he looks on the show.

  55. Posted by KevinB | February 25, 2009 at 12:23 PM

    @20 – I am putting together a seminar to teach kids about finance. One of the first concepts is “what is money?”. And I discuss all kinds of commodity money, like grains, salt, tobacco, etc., all of which have been used over the centuries. But all had serious problems (grain spoils, tobacco rots, etc.). Then came things like shells, gems, etc., but the problems with those are 1) no two diamonds are alike (for example), and 2) it’s hard to divide them (you can’t exactly chip off a sliver of your $1,000 diamond to pay for a $100 dinner, can you?).
    Metals are fungible, which is good, because it means they are easily divisible and because people are indifferent from one coin to another (assuming they trust the Mint!). Precious metals are especially prized because they don’t rust like iron, and because they are relatively scarce (compared to, say, tin), which means they stay in demand. That’s why gold and silver have been used for over 5,000 years as currency.
    And, you could look it up – when the US was on a metal standard from roughly 1800 to 1900, the cost of goods was cut in half (i.e. inflation of -50%). From 1913 to 2007 – that is, after the creation of the Fed, it was 2000% (westegg.com/inflation).

  56. Posted by guest | February 25, 2009 at 12:26 PM

    Ackerman = Clueless, condecending SCUMBAG !

  57. Posted by cy | February 25, 2009 at 12:26 PM

    45-
    Exactly.
    51-
    It looks like you need more help than I can reasonably expect to provide, but I’ll give it a quick shot…
    So if I understand you correctly, when the market sets a price, that price is acutally decided upon by an individual or a very small group? Does it not trouble you that ALL economic theory and evidence suggests exactly the opposite conclusion? When you buy groceries, who sets the price of apples? I can guarentee you that there is no one person or group who sets that price. The price is simply a function of supply (how many apples have been grown) and demand (how badly do people want appples, what are they willing to part with in order to get them). I can’t imagine that you’d dispute that.
    So let’s turn to oil. Again, I think it’s clear that oil recently experienced an asset bubble along with a bunch of other commodities. Where were all those new dollars coming from to drive the price of oil? Irresponsible central bank printing. It’s a lot harder for the free market to correctly price commodities when the substance they use to price (dollars) is being tampered with so furiously.
    Since the creation of the Fed, we’ve continually had systematic credit/asset booms followed by contraction/liquidation busts. How is the fed making things any better? Since its inception, the dollar has lost 98% of its real purchasing power. Why should this be? If you went to your broker’s office, and asked how things were going, and he said, “great…we’re only down 98%,” would you be happy about that? My guess is that you’d be fucking furious. The fed does exactly the same thing. Why should we allow ourselves to be continuously stolen from? The fed is the agent of that theft. It’s gotta go.

  58. Posted by guest | February 25, 2009 at 12:29 PM

    @15, I feel like i’ve read that comment somewhere before. Where was it?

  59. Posted by guest | February 25, 2009 at 12:35 PM

    Did anybody hear the three little piggies speech? WTF?!?

  60. Posted by guest | February 25, 2009 at 12:37 PM

    Lotta’ frat bois farting homophobia here today. Anyway, how do you guys know Barney gives head. You done it with him?

  61. Posted by guest | February 25, 2009 at 12:40 PM

    Does the guy speaking now know anything about the economy?

  62. Posted by guest | February 25, 2009 at 12:46 PM

    How much you guys want to bet that Matt Drudge is short the stock market….

  63. Posted by guest | February 25, 2009 at 12:48 PM

    @ 53 The big inflation Melissa was referring to is inside Erin’s blouse.

  64. Posted by guest | February 25, 2009 at 12:52 PM

    I’m a hedge fund manager. Why can’t I generate positive returns?

  65. Posted by merkin capital partners | February 25, 2009 at 1:14 PM

    Capuano played George Costanza in the early episodes of Seinfeld, yes?

  66. Posted by guest | February 25, 2009 at 1:26 PM

    @58 You make a compelling argument and I wont disagree that the value of the dollar has depreciated in over 95 years. However, most people don’t live to 95, and most productive people stop working around 69.5 (earliest to collect 401Ks, retirement etc).
    In terms of your apple example, I wont dispute the basis of demand & supply. However, let’s assume there are 100 people in the apple market. For simplicity, 5 people hold $5 each, and the other 95 hold $0.05 each. Thus, total market cap is $29.75 but the top 5% have a disproportanate amount of influence. If you hold all the apples, are you going to sell the buschell to the highest or lowest bidder? You’re probably going to sell the apples at a profit (if you want to stay in business). Thus, the top 5 will be able to corner the apple market and the other 95 will either not be able to afford apples or pay much higher prices!
    That’s exactly how the oil market worked. You had a few large nations, hedge fund managers, institutions, who wanted to bid up oil, not because of the printing of dollars by central bankers, but because they were motivated by economic growth and profit.
    Societies with a large discrepancy between the wealthiest and poorest individuals typically break down. In the above example, the 95 probably would have wanted a more fair system so that the top 5 could be taxed to give $2 each so that the other 95 could enjoy apples at reasonable prices.
    The Fed maintains a low rate of inflation 2% through monetarization, so that the productive (ages 21-69.5) can grow society in an efficient manner.

  67. Posted by guest | February 25, 2009 at 1:28 PM

    Here’s Frank Beard sitting in the back…
    http://www.youtube.com/watch?v=v5Gsc89TUXg
    –Calgary Schmooze

  68. Posted by guest | February 25, 2009 at 2:07 PM

    The best defense of free market economics I have read:
    http://www.fee.org/pdf/books/I,%20Pencil%202006.pdf
    If that doesnt convince you that the Fed doesnt know what it is talking about, I dont know what will.

  69. Posted by cy | February 25, 2009 at 2:10 PM

    67-
    I’m glad you agree the the dollar has depreciated tremendously. I also realize that most people don’t live to be 95, but why should we devalue the currency at all? As a society, we are consistently becoming more and more productive. This means that we can produce more things with less resources. Prices should be DROPPING. 56 points this out in his post. For 100 years, we had a period where the dollar was actually getting stronger as time went by, as it should. This is how we should all be enjoying the fruits of an expanding economomy. Unfortunately, our central banks steals these gains for us, telling us that they’re not, because prices are stable. Well, prices SHOULD be lower, so the difference is what the fed has stolen.
    I can’t find the continuity in the rest of your post. You propose a hypotheical situation as a basis for redistributive taxes, and then extend this hypotheical to the real life oil market. What does this have to do with inflation? Are you saying the gov’t should be stealing from us via inflation to redistribute to everyone else? Do you really think that is the most fair/transparent solution?
    Re: oil. I’ve heard this “speculators caused the oil bubble” arguement before, but I’m still waiting for someone to provide some actual evidence of this. If these hedge funds and institutions colluded and drove up the price, which institutions and which hedge funds? If they actually did this, why aren’t the doing it again right. Why aren’t they constantly doing it? If this conspiracy really exists, how come NO ONE has come forward to give an insiders account? Is the secret really guarded that well?
    Look, man, I don’t know what your personal situation is, but if you have a positive net-worth, how on earth can you go along with a program that systematically steals from you? If you have a zero or negative net-worth (not an indictment, you may be young) you probably would like some worth in the future or you have family members with money. How is it morally acceptable to say to the older people in our society, who have spent their lifetime working and saving, “sorry, but we’re steathily looting all you’ve worked to build up to finance our current wasteful spending.” (whether that wasteful spending comes via “stimulus” spending or war spending makes no difference).
    If you’re comfortable with this type of system, and prefer that to a system where an individual’s property cannot be stolen from him, and you like the way our government has been headed from 2000 till today (Bush and Obama are both doing the same thing: spending money we don’t have on things we don’t need) then I guess we can agree to disagree. If any of this, however, sounds remotely like a better way of doing things, I can direct you to some resources that make the case far better than I.

  70. Posted by guest | February 25, 2009 at 2:21 PM

    @ 69
    head to mises.org for more
    good essay. hadn’t seen that one yet

  71. Posted by guest | February 25, 2009 at 2:56 PM

    ATTENTION GOLD BUGS:
    We had liqudity booms/busts and inflation before the Fed–many times. The Fed was chartered in response to the panic of 1907, which was a liquidity crisis. The panics of 1873 and 1893 were liquidity busts and booms as well. Inflation has always been a problem and always will be, because even under a gold system, people have (and would once more) circulate letters of credit or alternative derivative instruments and use them as money. Soft money will always be around, because people will always outsmart a hard currency system and find ways to generate more liquidity. Because there is a DEMAND for that liquidity.
    With the fed, we accept a system of soft money but have institutions in place which are created with a mandate to address and check the problem of inflation–a problem which is admittedly one negative aspect of a soft money system which has a lot more positive going for it than negative.
    So all this bellyaching about how awful this system is because there is inflation is really short-sighted. Do you really think there were as many prosperous people 100 years ago living with the general living standards we see today? You’re arguing one portion of a counterfactual (I would be so much richer without inflation!!! WAAAAAAH!!!!) without looking at the whole picture.
    So many of y’all are in finance, how can you not see that our fractional reserve system is not the root of all evil, it is the source of most of your wealth and a pretty nifty way to allocate capital and create value? Would you rather go back to the good ol’ gold days of ultra-slow or negative growth and miserable living standards? Do you even realize what an enormous constraint on growth and liquidity a gold standard would be? Or are you just trolling this board hoping to get responses like mine?
    Fractional reserve banking and soft money, along with exchange rate systems, help ease liquidity restraints, which, under a system with central banking controls on inflation, allows growth to happen MUCH FASTER and prosparity to be spread MUCH WIDER than it would otherwise be under a gold-based or hard currency system.

  72. Posted by cy | February 25, 2009 at 9:43 PM

    ATTENTION 72:
    Admitting that there were inflationary boom & busts before 1914 does not make a compelling case for the Fed, considering the cycles now are just as frequent and even more dramatic. I agree that people found ways around old hard money policies, but, if anything, that simply means fractional-reserve banking should be outlawed, or we should have a system of “free-banking” where everyone realizes that a bank is to go bust the government will absolutely not step in to help it out. In that system, competition would force banks not to overextend themselves or else they’ll face specie withdrawals and eventually a bank run. Previous examples of inflationary bubbles and contractions (often provided by gov’t guaranteed loans) do not make it obvious that we should continue to do the same exact thing.
    “Would you rather go back to the good ol’ gold days of ultra-slow or negative growth and miserable living standards?”
    Are you fucking kidding me? Are you going to sit here and tell us that living standards were pretty much the same in 1800 as they were in 1900? Would you characterize the century that produced the telegraph, the telephone, the phonograph, railroads, chemical photography, thomas edison’s lightbulb, radio, and the automobile (Karl Benz’s patent 1879; the mass production of Oldsmobiles starting in 1902, Ford 1914) as a time of ultra-slow or negative economic growth? Bad news: the engine of free-markets and technology was driving us forward just as quickly before soft-money got involved. Are living standards better now than they were in 1914? Obviously, but there’s no evidence that soft-money had anything to do with that. Capital will still flow towards good ideas in a hard-money system.
    Finally, you (or other soft-money types) have to clear something up for me. If I go to a bank to borrow in order to start a business, I’m not borrowing “money”, so much as I’m borrowing a claim on real resources. If a bank can simply lend me money that’s been created out of thin air (whether via central bank printing or fractional reserve), I’m not getting the claim on real resources that I thought I was, am I? How could this system of fooling borrowers possibly be “a pretty nifty way to allocate capital and create value?” The inflationary banker is LYING TO ME about the state of actual resources. Is it not obvious that this will have to end in tears?
    Finally, despite all we know about the failures of top-down, command style economics, why would we think that a couple guys sitting around a conference room would be better at setting interest rates than a market process? Are “experts” better than markets in setting any other price? (In case you have to think about that, the answer is no.) How can twenty or so like-minded, middle-aged men possibly have more information about the economy than the aggregated transactions of millions of borrowers and lenders?

  73. Posted by guest | February 26, 2009 at 12:22 AM

    73.. you are correct.
    72 will learn the hard way when his paper dollars can’t by him his apples

  74. Posted by guest | February 26, 2009 at 10:02 AM

    73 Your head is on straight, and there is far too much common sense in your post. Please stop, so that I may enjoy the fruits of the coming stimulus.

  75. Posted by Jamel | March 2, 2009 at 2:28 AM

    Moments that we’ve shared, cannot be jotted down on paper,
    But nevertheless it was chemistry, not vapor,
    You walked into my life, and made the deepest mark,
    This ignited my fire, which gave birth to a spark,
    When you are here, I have the world with me,
    It is heaven; I wish it could be eternity,
    We walked side by side,
    Hand in hand, under the moonlight, http://www.indianchild.com/nisha.htm