Revamp the Federal Reserve


Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Guest Blogger

This past week the main stream media made a big deal about the unemployment rate declining to the five-year low of 7%.  While it was good news that over 200,000 jobs were added to the economy and that the unemployment rate decreased, the economy and main street are still lagging behind Wall Street.  The Federal Reserve has been attempting monetary easing strategies in an effort to stimulate the economy.  It may have worked for Wall Street, but the rest of us are still catching up.

“The Federal Reserve is the only central bank with a dual mandate. It is charged not only with maintaining low, stable inflation but with promoting maximum sustainable employment. Yet unemployment remains stubbornly high, despite four years of radical tinkering with interest rates and quantitative easing (creating money on the Fed’s books). After pushing interest rates as low as they can go, the Fed has admitted that it has run out of tools.” Ellen Brown 

Now that we have had years of low-interest rates, created by the Fed’s policies what is the next great idea from economists?  One economist, Lawrence Summers, who was a candidate to replace Ben Bernanke as Chairman of the Federal Reserve, came up with the big idea that since low-interest rates weren’t enough to bring the economy back and to spur job creation, he thought that negative interest rates would get the job done.

“At an IMF conference on November 8, 2013, former Treasury Secretary Larry Summers suggested that since near-zero interest rates were not adequately promoting people to borrow and spend, it might now be necessary to set interest at below zero. This idea was lauded and expanded upon by other ivory-tower inside-the-box thinkers, including Paul Krugman.

Negative interest would mean that banks would charge the depositor for holding his deposits rather than paying interest on them. Runs on the banks would no doubt follow, but the pundits have a solution for that: move to a cashless society, in which all money would be electronic. “This would make it impossible to hoard cash outside the bank,” wrote Danny Vinik in Business Insider, “allowing the Fed to cut interest rates to below zero, spurring people to spend more.” ‘ Ellen Brown

Yes, you read that right.  The big idea that a former Treasury Secretary and Fed Chairman candidate came up with would be to create negative interest which would cost depositors money, and protect the solvency of big banks!  That idea must have involved some serious scholastic research on Mr. Summer’s behalf.  I am guessing that Wall Street was involved in that idea because it would do little or nothing to help individual citizen depositors or to induce employers to create more jobs.

How would charging depositors for putting their money in the bank spur anyone to spend more?  It appears to be nothing more than an attempt to protect large banks from the ups and downs of the economy, while costing individual depositors even more money to have their funds in the bank.  And can anyone tell me how this negative interest idea would help spur hiring?

Don’t get me wrong.  I agree that we have to think outside of the box to find a way to help Main Street recover fully from the Great Recession. But charging customers money to keep their money in the bank seems ludicrous.  The Federal Reserve used to have the authority to loan funds directly to businesses and it seemed to work.  Of course, if it works for Main Street, Wall Street and the big banks get nervous.  Just what could we do to increase the Fed’s tools in order to actually benefit individuals and increase hiring?

“Bernanke delivered the money to the creditors because that was all the Federal Reserve Act allowed. If the Fed is to fulfill its mandate, it clearly needs more tools; and that means amending the Act.  Harvard professor Ken Rogoff, who spoke at the November 2013 IMF conference before Larry Summers, suggested several possibilities; and one was to broaden access to the central bank, allowing anyone to have an ATM at the Fed.

Rajiv Sethi, Barnard/Columbia Professor of Economics, expanded on this idea in a blog titled “The Payments System and Monetary Transmission.” He suggested making the Federal Reserve the repository for all deposit banking. This would make deposit insurance unnecessary; it would eliminate the need to impose higher capital requirements; and it would allow the Fed to implement monetary policy by targeting debtor rather than creditor balance sheets. Instead of returning its profits to the Treasury, the Fed could do a helicopter drop directly into consumer bank accounts, stimulating demand in the consumer economy.”  Ellen Brown

As I mentioned above, the Federal Reserve used to have the statutory authority to loan directly to businesses in their respective Districts, but the recent Dodd-Frank reform bill seems to have weakened that authority.

“In 2010, Section 13(3) was modified by the Dodd-Frank bill, which replaced the phrase “individuals, partnerships and corporations” with the vaguer phrase “any program or facility with broad-based eligibility.” As explained in the notes to the bill:

Only Broad-Based Facilities Permitted. Section 13(3) is modified to remove the authority to extend credit to specific individuals, partnerships and corporations. Instead, the Board may authorize credit under section 13(3) only under a program or facility with “broad-based eligibility.”

What programs have “broad-based eligibility” is not clear from a reading of the Section, but it isn’t individuals or local businesses. It also isn’t state and local governments.”  Nation of Change

If the Federal Reserve had the authority before Dodd-Frank to bail out individual businesses like AIG with over 1 Trillion dollars in loans, the Fed could have also loaned money directly to businesses and even to State and local governments.  Is it more valuable to the economy and to individual citizens to bail out AIG with Fed help, but not bail out Detroit or other cities that are still struggling with austerity programs created by Congress and policies that aided the shipping of jobs overseas?

I highly recommend that you read the entire Ellen Brown article that I have linked above.  By allowing the Fed to have the power that it used to have, we might be able to aid individual businesses and maybe even individual taxpayers.  I would suggest that giving the Fed revised powers, including some that they had in the past, might allow us to even the playing field between Wall Street and Main Street.  Of course, we would also need to stop making it profitable for corporations to steal more jobs from American workers.  What ideas do you have?

Do you think returning the power to the Fed to aid businesses and individuals directly would spur the economy?  I have my doubts whether Congress would go along with the idea of strengthening the Fed’s tool box knowing their Wall Street owners might not get as much taxpayer money, but I believe it is a fight worth having.  What do you think?

Additional Resources:  Could the Banksters Grab Your Deposits?

114 thoughts on “Revamp the Federal Reserve

  1. Currently completely politically unfeasible. And for good reason. The federal government and the federal reserve do not its powers expanded but contracted.

  2. Big subject and I have much to learn before making a judgement so I’ll keep it simple…

    if Bron is for it – I’m against it.

    Raff: It is not clear to me who is quoting Krugman as supporting the idea of negative interest rates. Can you provide more support that this is Krugman’s position?


  3. pdm,
    I have been looking for where Ellen Brown got that information. She is very reputable, but I haven’t found it yet.
    On what evidence do you suggest that the Federal government and the Fed do not want their powers expanded? Or am I misreading your comment. I can understand the political issues, but aren’t important issues worth fighting for?

  4. Great article, Raff!

    To Bron, Richard, and Eleazer:

    This is not high school. If you feel that we should do away with the Federal Reserve, then feel free to enlighten us with a replacement monetary policy or theory. A one sentence response is an insult to Raff’s (and Ellen’s) article.

  5. rafflaw,

    I had read a couple of online articles that touched on this subject a week or two ago. No names were mentioned at the time.

    I think the idea of negative interest rates is beyond absurd. That Larry Summers…what a guy! He helped do in Brooksley Born who had warned about the problem that unregulated derivatives might cause.

    The Case Against Larry Summers
    By Michael Hirsh

    The Federal Reserve chairman wields such enormous power, with so little accountability, that he or she is said to be the second-most-powerful person in government after the president. Decisions are habitually made in secret. The job requires a person of great personal tact, subtlety, and self-control. It requires someone who knows how to build consensus at the highest levels for the right kind of policies—someone who possesses the maturity and character to admit error and shift course when needed.

    But, according to numerous accounts from those who have worked with him, Summers has often displayed the opposite attributes during his long career. Behind the scenes, he has used his power, combined with intellectual arrogance, to bully opponents into silence, even when they have been proved right. He has refused to allow his dissenters a voice at the table and adopted a policy of never admitting errors.

    And Summers has made a lot of errors in the past 20 years, despite the eminence of his research. As a government official, he helped author a series of ultimately disastrous or wrongheaded policies, from his big deregulatory moves as a Clinton administration apparatchik to his too-tepid response to the Great Recession as Obama’s chief economic adviser. Summers pushed a stimulus that was too meek, and, along with his chief ally, Treasury Secretary Timothy Geithner, he helped to ensure that millions of desperate mortgage-holders would stay underwater by failing to support a “cramdown” that would have allowed federal bankruptcy judges to have banks reduce mortgage balances, cut interest rates, and lengthen the terms of loans. At the same time, he supported every bailout of financial firms. All of this has left the economy still in the doldrums, five years after Lehman Brothers’ 2008 collapse, and hurt the middle class. Yet in no instance has Summers ever been known to publicly acknowledge a mistake…


    Nobody who has spent so much time working in government has a perfect record, but Summers has rarely shown enough humility to wonder whether his answer may not be the best one—an attitude that has led him to sideline opponents no matter the merit of their arguments. “As everybody knows, Larry is very smart, and he likes to show it,” Alan Blinder, who served on Clinton’s Council of Economic Advisers and later as Fed vice chair, said in an interview a few years back. And Summers’s policy errors, when he’s made them, have been outright catastrophic.

    As deputy Treasury secretary under Robert Rubin in the mid-’90s, he dismissed those experts, such as Blinder and Nobel-winning economist Joseph Stiglitz, who wanted a more cautious opening up of global capital flows; in the years since, these rampaging tides of “hot” capital have caused asset bubbles in one economy after another, with too little institutional restraint on the part of deregulated banks. Summers famously—even brutally—fought efforts to regulate derivatives, which are essentially bets on the rise and fall of asset values and which, escalating into the multiple trillions of dollars, helped to put many financial firms at risk. And early in the Obama administration, he worked hard to marginalize a widely revered former Fed chairman, Paul Volcker, who pushed for greater financial regulation.

    Summers helped midwife a major series of policy errors dating back 20 years that led directly to what many economists now believe was the worst financial crisis ever. In particular, Summers’s opponents—he faces a phalanx of opposition among Democrats on the Hill—point to the Commodities Futures Modernization Act of 2000, which effectively deregulated the global market in over-the-counter derivatives and was Summers’s signal achievement as Treasury secretary. The final report of the Financial Crisis Inquiry Commission convened by Congress in 2009 puts the government’s failure to rein in these derivatives at “the center of the storm.”

  6. Rafflaw,

    Excellent, I’m glad you wrote this piece.

    I’ve been telling everyone it’s a bad decade to quit drinking! :)

    Is there anyone left that doesn’t understand Wallst/City of London Banks/Insurance co’s have declare open warfare on the people of the USA & our Govt on every level.

    **Yes, you read that right. The big idea that a former Treasury Secretary and Fed Chairman candidate came up with would be to create negative interest which would cost depositors money, and protect the solvency of big banks! That idea must have involved some serious scholastic research on Mr. Summer’s behalf. I am guessing that Wall Street was involved in that idea because it would do little or nothing to help individual citizen depositors or to induce employers to create more jobs.

    How would charging depositors for putting their money in the bank spur anyone to spend more? It appears to be nothing more than an attempt to protect large banks from the ups and downs of the economy, while costing individual depositors even more money to have their funds in the bank. And can anyone tell me how this negative interest idea would help spur hiring? **

  7. Ron Paul is the only man for the job. Put him in charge. Everyone to do as he says. Yes, he would abolish the Fed & Income tax & build a more prosperous country. Some of this might need to occur on a gradient.

  8. “It appears to be nothing more than an attempt to protect large banks from the ups and downs of the economy, while costing individual depositors even more money to have their funds in the bank.”

    Every change in nominal interest rates leads to some people being better off and some people being worse off. So long as interest is paid on accounts that is an unavoidable result.

    But Considering that banks and their managers also hold interest bearing securities, it does not seem likely that the suggestion is solely an attempt to protect large banks – since it would also cost them.

  9. “And can anyone tell me how this negative interest idea would help spur hiring? **”

    Well, for one, if the rate of return on financial instruments goes down, investment opportunities in plant and equipment might look better and lead to increased orders for capital goods and additional hiring both to manufacture the capital goods and to use the capital goods in production.

    This possible alternative would depend on differences in changes in the rate of return for financial instruments and changes in the rate of return in investment in plant and equipment.

  10. BFM,

    The sole purpose is to destroy the economy of the USA, distroy Capital, drive our govt into bankruptcy & then they can take their fake money & buy up our most valuable private/public assets.

    ie; Argentina, Greece, Spain.. Europe, etc.

    Go get the easy to read short book by John Perkins: Confessions of an Economic Hitman.

    It’s the same ole plan/scam that was run on South/Central America.

    But you & the people a supposed to believe the reason this nation is broke is because of your savings of wages, your private pensions, Social Security & heath care expenses.

    Yes those programs were all poorly managed & intentionally defraud by Wallst/City of London America hating scum.

  11. Here’s my “Happy Thought” for the day….

    Janet Yellen will be Fed chief.

    Now everybody (except Bron) say: Thank you, Mr. President!

  12. “Negative interest would mean that banks would charge the depositor for holding his deposits rather than paying interest on them. Runs on the banks would no doubt follow, but the pundits have a solution for that: move to a cashless society, in which all money would be electronic. ”

    There have been remarks about a change to electronic funds and banks charging depositors. But that is not in the offing – it is not what is going to happen.

    When mainstream economist talk about negative interest the context is inflation, nominal interest rates and real interest rates.

    Nominal interest is the rate paid on an interest bearing account, for example a savings account.

    Inflation is the general rise in prices for all the goods and services in the economy over a period of time.

    The real interest rate is the difference between the nominal rate of interest and the rate of inflation.

    The real interest rate is an important concept because under some economic conditions it seems the real rate of interest is a better explanation – correlates better – for economic activity than any other measure of interest.

    And finally under some circumstance the FED does have some control over inflation. The FED definitely has a target for inflation which is currently approximately 2%.

    In any case when economists talk of a policy that includes negative interest they are talking about targeting inflation to reduce the real rate of interest.

    Nobody is going to gather up all the paper money and hand out EBT cards. It is much easier to manipulate, that is, change the inflation rate.

    And there is nothing new about this. The economy occasionally has periods when the rate of inflation is greater than nominal interest rates which is just another way of saying that the real rate of interest is negative – negative interest rates. The late 1970’s and early 1980’s are an example.

    As a matter of fact, if I am not mistaken, over the past year or so, ten year treasures, that is treasury bonds with a 10 year maturity date, have paid negative interest – paid nominal interest less than the rate of inflation – several times. In effect bond holders of those securities were paying storage fees on their money.

    And, yes negative interest rates cause great unhappiness to those lucky enough to have large amounts of funds in interest bearing accounts.

    But the negative interest rates will not arise because of a charge from banks – negative interest rates result from inflation being higher than nominal interest rates.

  13. pdm, I mean Brownie, you’re doing a heck a job here son.

    100+ million capable USA workers setting on their thumbs producing next to nothing.

    Most every sector of the economy is in complete collapse.

    Next to zero percent interest on peoples saving is cheating them out of something like a trillion a year that’s going to Thieves on Wallst/CoLondon…

    Keep up the great.

  14. I don’t care for this guys approach on healthcare, but he 7 thousand of his peers do have some valuable insight into this Greatest Depression Ever.

    Ph’ing Nazis Prez/most congress clear back to least JFK!

    At some point you all we realize we have no choice but to run those aholes out of here & declare bankruptcy on “Their” Bad Debt!

    It damn sure isn’t my or the American Public’s Bad Debt!

  15. Read something about this in the weekly reader in second grade… 1965 … The flying cars haven’t happened here yet……

  16. ” the dollar today buys 5 cents of what one hundred cents bought 100 years ago.”

    When IBM splits it’s stock, stock holders care not at all that their stock is worth half as much because they then have twice as many shares.

    Similarly the value of the dollar matters little to consumers.

    What is important is the market basket of goods and services that their pay check will purchase.

    Do you think a typical consumer would rather have a pay check and market basket of goods and services from 1900 or 2000?

    The fact is that the standard of living is much higher today than it was when the FED came into existence. That is due, in part, to the fact that GNP of 2000 is approximately 16 times the GNP of 1900.

    Money performs several functions in the economy. One of those functions is to server as a medium of exchange – to facilitate trade.

    The appropriate amount of money in the economy is determined by those functions.

    The appropriate amount of money in the economy has nothing at all to do with things like how much gold is mined out of the ground, or whether a particular unit of money buys more or fewer items now than at some time in the past.

    Income and the market basket of goods and services it can purchase – the standard of living – are the true indicators of economic success – not the value of the dollar.

  17. @ron

    The article you reference seems to substantiate my point that it is the standard of living that matters:

    ” The average annual income in 1913 was only $800/yr. In 2012, the median household income was $44,389. and had 1.35 wage earners so if we divide $44,389 by 1.35 we get an average annual income of $32,880. Thus the average annual income increased by 4010% so even potatoes have become relatively cheaper i.e. our standard of living has increased.”

    I used 2000 data because it was easily available to me and illustrates the point I was making.

    The important question is revealing:

    “would anyone really choose a pay check and market basket of goods it would purchase from 1900 rather than a paycheck from today and the market basket of goods it would purchase.”

    I think not.

    The true measure of economic success has to do with the standard of living not the the amount of gold we mine, not the size of the monetary base.

    Money is just a tool that helps us accomplish economic activities.

  18. BFM:

    What good does the FED do? We still have booms and busts, the dollar is only worth about 2 cents compared to 1900. But a weight of gold or silver still buys what it bought in 1900 or close to it.

    What good does the FED do? It has inflated our money, it has caused the most recent panic by setting interest rates too low and other problems.

    So why are you for keeping it? The problem isnt the FED per se, the problem is the economic philosophy of our Harvard and Yale overlords.

  19. BFM,

    What Bron said.

    Tell us why you’re hanging onto the Federal Reserve & their theft of American’s value.

    Why shouldn’t there be competing currencies in the USA.

    Why shouldn’t we get rid of the FRS after the mess they’ve made of USA the last 100 years & return the issuance of currency back over to the US Treasury that was issued “Without Interest” attached.

  20. @Oky1 and Bron

    I think you and Bron have asked some interesting and reasonable question regarding the FED. I am really not the best to justify the FED. But I am taking some time to put together my understanding of what the FED does and why that is the right institution to perform those functions – I will try to be clear about that later.

    But I can respond to some of your remarks now – usually to request that you give a broader discussion of the point you support.

    “Why shouldn’t there be competing currencies in the USA.”

    What would be the advantage of competing currencies? I can only think of complications and disadvantages when multiple currencies are introduced to trade. So I would be interested in learning of the claimed advantages of such a system.

    “Why shouldn’t we get rid of the FRS after the mess they’ve made of USA the last 100 years & return the issuance of currency back over to the US Treasury that was issued “Without Interest” attached.”

    I do see some problems with the FEDs monetary policy at various times. And I do see some serious economic problems for the US.

    For example, you might have a case that Greenspan and the FED aggravated the run up in housing prices and the mortgage crisis in the early 2000’s. But I am not so sure that FED is equally responsible for the problems that followed in the financial industry and the ultimate meltdown around 2007 that we are still recovering from.

    But I don’t see that the FED has consistently made a ‘mess of the USA the last 100 years’ because of single principle or fallacy.

    And I don’t see that the FED is responsible for the major negative trends the I see over the past 30 years, or so – a major one being the decline in the share of income going to the middle class. For example it is not an accident, and not just due to hard work that accounts for the fact that 95% of economic gains since 2009 have gone to the top 1%

    Just to be clear, over the past 100 years, I see many different FED policies, and many different kinds of economic problems. Some of those economic problems can be traced to monetary policy, but most of them have other origins.

    If you see a single or a few negative trends over the past 100 years that can be traced specifically to FED policy, I would be interested in seeing you to expand on them here.

    Finally, I am just not as informed as I would like to be. Would you explain more fully what it means to ‘issue currency without interest attached’.

  21. WASHINGTON (AP) — “Americans’ wealth reached an all-time this summer, buoyed by record-setting stock prices and a healthy recovery in home values.

    The Federal Reserve says to U.S. net worth, a measure of household wealth, rose 2.6 percent to $77.3 trillion in the July-September quarter. Net worth reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts.

    Rising stock prices boosted Americans’ net worth $917 billion. Higher home values added another $428 billion.

    Greater net worth can create a “wealth effect,” which boosts economic growth by encouraging more households to spend.

    But the gains haven’t been equally distributed. The wealthiest 10 percent of households own about 80 percent of stocks. And home ownership has declined since the recession, particularly among lower-income Americans.”

    Interest rates are going up not down as the Fed begins to taper although Yellen will taper more slowly than Summers would have as she is more middle class friendly.,

  22. @Swarthmoremom

    By some measures the top 1% have captured 95% of the economic gains of the recovery since 2009 – which emphasizes the fact and compounds the problem that the middle class has been falling behind since the 1970’s.

    The overall distribution of income in the society is not due just to luck and hard work. I for one would not, and no one should, denigrate the hard work of the top 1%. But there are institutional reasons that also account for part of this disparity.

    Even Reagan himself understood that when the economic pie gets larger, every one should get a bigger piece.

    That important fact seems to have been lost on today’s conservative, affluent leaders.

  23. @ron

    Sure. The market basket of goods and services is a hypothetical that includes all the goods and services produced by the economy.

    BTW, you have touched on an interesting topic.

    Anyone concerned with long term deficits has to be concerned with health care costs. CBO tells us that the single largest driver of long term deficits are growth rates for health care costs that exceed projected growth rates for GDP.

    If growth in health care cost could continue long enough it is clear we would eventually using all resources in the economy to pay for health care.

    The fact is we will have to change the way we deliver health care in this country. The only question is will we manage that change and make something better.

    Right now the only mechanism we have in place to learn how to manage health care costs is ACA – Obamacare. The fact is that over decades the free market just did not do the job – which is understandable. There are pretty clear reasons why markets do not help discover prices when the product is health care.

    The bottom line is this: if we are to avoid being overwhelmed by debt over the next 50 years or so we have to use something like ACA or something better – the status quo is not going to help.

  24. BFM:

    Why cant you and I choose whatever medium of exchange we agree on?

    I guess we can, its called barter.

    Gold and silver retain their value and make it hard for the pols to devalue our money. Which they do so they can keep borrowing for the entitlement state to grow larger while we work harder and stand still. Or we are like hampsters on a wheel, going like heII but not getting anywhere.

  25. You BFM,

    After hearing about the Obama Nazis gunning that young guy down for nothing it seems, I don’t feel much like typing.

    You can most every answer to your questions following zerohedge or just go to youtube & type Ron Paul, Federal Reserve System.

    The Federal Reserve has been responsible for most every boom, bust & wars since it was created, including the great depression & this latest Greatest Depression.

    You can also google: The Creature of Jekyll Island.

    It’ll tell you how the criminal FRS was created & why.

  26. bfm,

    “I for one would not, and no one should, denigrate the hard work of the top 1%.”

    Not all of the top 1% work hard. There are some who don’t even have to work. Some of the banksters who made/have made many millions–both before and after the financial meltdown–didn’t break a sweat when they were selling crappy financial products to clients/pension funds.

  27. BFM said: ” Right now the only mechanism we have in place to learn how to manage health care costs is ACA – Obamacare. The fact is that over decades the free market just did not do the job – which is understandable. There are pretty clear reasons why markets do not help discover prices when the product is health care.

    The bottom line is this: if we are to avoid being overwhelmed by debt over the next 50 years or so we have to use something like ACA or something better – the status quo is not going to help.”

    Woah There Trigger!

    We don’t have a free market system currently:

    While I agree that the status quo of healthcare fraud will not help, I don’t think cementing it deeper into law is the solution. (If you think the ACA is lowering prices, I need to ask if you think water is wet!) We need to go back to the free market like this surgeon in Oklahoma, not full socialization that has no payment system:

  28. BFM,
    The trickle down theory has never worked for those below. The faucet is rigged by the wealthy and banksters. Why else would you have a lower tax rate for income derived from stock portfolios and why else would Social Security taxes not be collected over the $114,000 level?

  29. “The trickle down theory has never worked for those below.”

    If I left anyone with the impression that I am a proponent of the “trickle down theory”, much of supply side economics, of the Laffer curve let me disabuse you of that notion right now.

    But at least Reagan gave lip service to the idea that everybody deserves a bigger slice of the pie the the economy grows.

    Today’s affluent conservatives seem to believe that getting all the gains of a growing economy is some is some kind of moral of divine right.

    What many of us see is rules set up to favor the already affluent, crony capitalism or outright corruption.

  30. Then why did you call the ACA – which is in reality just a welfare program for the for profit health care insurance industry – a form of socialism, Bron? You’re right. Crony capitalism is a critical component of fascism. Fascism, however, is not socialism let alone democratic market socialism. There is a saying about “forest blindness” and “tree myopia” that applies here.

  31. ron:

    that MD whose blog you linked to is pretty good. Wow, he really explains some things in that post.

    If he is right, no wonder medicine is so messed up, there are no market forces operating or very few.

  32. Gene H:

    its all the same, it is just a matter of degree.

    “Sister McCarran refers to the “Fabian collaboration with Liberals, Tories, Fascists and Communists.” Bernard Shaw is quoted as saying “All Fabians have their price, which is always the adoption of Fabian measures no matter by what Party.”(16) Since Keynesism is the economic platform of Fabianism and it is also adaptable to Fascism it is obvious that a hairline separates the two collectivisms.”

    Keynes At Harvard

  33. Bron,

    As has been explained time and again, fascism and socialism are antithetical political philosophies, ergo not “the same [. . .] just a matter of degree”. One puts government in the service of an oligarchy and/or strong leader and the other puts government in the service of all citizens. And by their nature all forms of government are a collective endeavor. All of society is a collective endeavor. Unless you’re a lone wolf paleolithic hunter/gatherer.

  34. You do realize that is an oxymoronic notion, don’t you? What you’ve described is simply fascism. Serfdom is a anachronism and anathema to socialism. Democratic market socialism is for the hoi polloi with the hoi polloi being the primary stakeholders in which political power – and consequently political benefit – are vested. The Founders had a word for that. Democracy.

  35. Gene H:

    Oh, ok.

    It isnt oxymoronic at all, give the little people something to keep them quiet while the top tier is doing whatever it wants to whomever it wants.

    Just like feudalism but with a little better accommadations.

  36. Bron,

    Gene does pretty good with a proper definition below.

    **Gene H. 1, December 9, 2013 at 6:01 pm **

    There’s all deferent levels of socialism, from just roads & bridges to control over the entire economy.

    Nazis were different from the USSR & both are different from the current USS of Amerika. LOL The one thing they all share in common are Banking/Insur Trash & none have a problem with killing our follow citizens without a trial. At this time it’s only a matter of scale.

    Over time the USSA should have no problem ramping up left unchecked.

  37. Oky1:

    it’s all the same. Who cares if it is democratic or not. You can have democratic fascism too or democratic communism. But then if fascism and communism are democratic well, then they are called socialism.

    Socialism is just fascism without the nationalism and the dictator. But does fascism need a dictator? I would say no, the US government owned GM, oh whoops that is socialism when government owns industry.

    Who can keep it all straight, there are so many little nuances to keep the rubes guessing. Marx wasnt even sure since he sometimes called his abortion scientific socialism. Or was that Engels?

    Personally, I’d say either a moron or a true believer doesnt see the similarities. The moron because he cant, the true believer because, well, it doesnt fit with his rose colored world view and those fascists are just so gauche with their goose stepping and funny symbol.

    In the immortal words of Heir Goebbles:

    “Socialism is the doctrine of liberation for the working class.”

  38. Bron,

    I wish I’d had the time & energy to have followed along your, David’s & GeneH’s long debates on economic & “isms”.

    I’m pretty easy to figure out. I hate the Federal Reserve System, 16amd/ current income tax system fraud & I hate Wallst/City of London Bank/Insur co’s Trash & ant that aid or abet those criminals.

    Progess towards my positions is being made & it’s gain mo:

  39. Oky1:

    from your link:

    ““We farmers are on the streets to say ‘Enough!’ to the state, the government, the unions. We just can’t manage anymore,” Giorgio Bissoli, spokesman for the Azione Rurale protest group in the Veneto region told Canale 5 television, adding, “Our main priority is that they all have to go!”

    Discontent over fuel prices, globalization and the European Union’s draconian austerity measures are also expected to lead to a huge anti-EU backlash in next year’s European parliamentary elections.

    According to a flyer being handed out by the protesters, they represent, “the unemployed, casual workers, pensioners, workers in every sector, students, mothers and fathers,” who see it as their duty “to throw out the criminals who hold power.”

    The movement doesn’t appear to have any partisan political identity and represents a populist uprising against policies that have devastated Italy’s economy.”

    Sounds like it might be a libertarian movement?

  40. Oops typo:

    Unless SwM comes up with a Democratic candidate that’s a blond haired, blued eyed baby Jesus with a bull whip for the banks, packing a copy of the Bill of Rights & some extra large clips. lol

  41. Oky,

    Bron, despite his at this point seeming willful ignorance about different political and economic forms, knows that I’m not a fan of the Fed but that I do see the need for a central bank in a large economy in controlling inflation. My primary criticism of the Fed is that it is a private institution. Any central bank should be a public institution with a duty to the general public. This is evidenced by the many times over the years the Fed has taken actions that benefit a super wealthy and corporate minority over serving the best interests of the public in servicing their role in the general economy.


    “Socialism is the doctrine of liberation for the working class.”

    You say that as if it is a bad thing simply because a Nazi said it. Nazis, again, sold socialism and delivered fascism. See Night of the Long Knives, Hitler’s express modeling of the German economy on that of Fascist Italy, debate among the Nazis about the “Non-German-ness” of Italian Fascism, et al. Just because Goebbels was a fascist, don’t discount that what he said was in many ways simply true. He was, after all, Reich Minister of Propaganda. His day job was selling the Reich including selling the very wrong notion they were working in the best interests of working class Germans. That his lies were embedded in bits of truth only demonstrates how effective he was at propaganda, but it does not change the nature of the truths used.

    Consider the antithetical proposition.

    “Socialism is the doctrine of subjugation for the working class.”

    Could it be that your Libertarian ideology and Randian dogma embrace the idea that some animals are more equal than others and that subjugating others is not only desirable but something that you should be allowed to do but especially if maximizing profit is the motive?

    That’s the thinking of a sociopath, Bron.

    Why do you hate liberty, Bron?
    Why do you love oligarchy, Bron?
    Why do you support a philosophical and political view that inevitably leads to oligarchy and fascism by servicing the wants of the few over the needs of the many?

    Of course, I know the answer to these questions. Your spiritual mother (and that of the Libertarian movement, not to be confused with small “L” libertarianism as a concept) was a sociopath and her economic and political ideologies reflect that mental illness. That despite having this demonstrated to you many times by several people has not lessened your Ardor of Ayn only raises one key question.

    Why do you persist in putting individual gain above the necessities of maintaining and furthering civilization?

    Could it be the love of money.

    The root of all evil is the love of money according to one book.

    Putting the profits of the one or the few above the needs of the many certainly sounds both evil and sociopathic. I know you mean well. You just don’t fully grasp the implications of your ideology. I’m going to throw another German at you. Goethe said in The Sorrows of Young Werther (1774), “[M]isunderstandings and neglect create more confusion in this world than trickery and malice. At any rate, the last two are certainly much less frequent.” In your misunderstandings of where Rand and von Mises propositions lead by necessity of their function and your willingness to neglect society and your fellow humans if a profit is to be had, you illustrate that despite your espoused best intentions, they are pavers on the road to a fascist Hell of tyranny of oppression being sold under the guise of liberty and freedom.

    Your heart may be in the right place, but you’ve bought a pig in a poke every bit as disingenuous as Goebbels selling socialism.

  42. Gene H:

    Good response.

    I know I dont love money because it is low on my list of priorities. I need just enough to pay the bills and have a little left over for a couple of books and a couple of good cigars.

    What I really value is my freedom. I want to be free to fail based on my own judgments.

  43. **Gene H. 1, December 10, 2013 at 1:54 pm


    Bron, despite his at this point seeming willful ignorance about different political and economic forms, knows that I’m not a fan of the Fed but that I do see the need for a central bank in a large economy in controlling inflation. **

    My best financial adviser, a former fed insider, & friend, he doesn’t like much of what that FRS has been up to in recent decades.

    He actively writes against their policies.

    We all can witness from Iceland, their govt & what outsiders did to their currency to understand why a nation has to understand & defend whatever they choose for a currency & how to best manage it.

    Regardless of whether I like it or not my friend believes the FRS will survive.

    The question remains in what form will the FRS survive & what will be the scope of it’s authority.

    When it comes to Ron Paul, he has stated policy positions. They are write & video recorded policies that anyone can review/argue.

    But most don’t argue his positions, they just call him a racist & adhominum attacks.

    As I recall, somewhere among those RP policy positions are comments explaining that it would be a disaster to just throw this current system out the window this afternoon.

    That in order to correct this current economic mess we have to consider it took decades to put these current systems in place & that to unwind them it will take years if not decades to make the repairs.

    His suggestion was to start by unwinding the CMIC & withdrawing from the 750+ military bases around the world.


    Obama, Ron Paul, Rand Paul, Libertarian ideology, Ann Rand, Goebbels, Nazis, Use Car Salesmen.

    I’m supposed to treat them as a matter of my own policy, like in biz, all the same.

    I wasn’t at all a big fan of Reagan’s actions, but he did say something I’ve always tried to stick with:

    “Trust, but Verify”

    Besides Ron Paul’s state views that I agree with most/many of, one can also see many/most of my views by visiting the Wiki’s page on Professor Turley’s position.

    Odd thing, most of Turley’s positions I learned of & accepted them while attend a public school. (Before polecats destroyed them the last 30 years.)

    (Ot: Did everyone see the news yesterday, Obama has taken the USA into another unauthorized War in Africa! Impeachment, hell Ya!)

  44. **Could it be the love of money.

    The root of all evil is the love of money according to one book. *


    I could/would say God works in mysterious ways.

    Like with words, God gave me just enough money to live well, but not so much of either to hurt myself very bad. :)

  45. JT 101/Popehat 76

    Come on, we should be 4 times that many at least.

    Internet people amaze me. They’re afraid to give a dollar to help a website they like out of fear of identity theft I guess.

    Yet this aba poll is “Free” & they can use their internet handle with it’s junk mailbox address & they still are reluctant to do so.

    Just 5-10 minutes of your time to defend Yourself/Family/Friends/America…. Get your/friend’s butts over there if you haven’t already!

  46. Below is one of the main reasons we as Americans must Get Rid of the Federal Reserve System & the current Income Tax System!

    Just Who is it you “Trust” to Re-Distribute Wealth, from Whom to Whom, Gene H, Bron, Me, Professor, etc….

    “Trust, but Verify”

    Here we see in this video report “Sen Rand Paul” is said to be getting ready to hand out ice cream & cookies/ aka Govt Welfare to “The Special People”

    Like JT & others have mentioned before here at Animal Farm USA some animals are far more “Special’ then the rest of us.

    “Special Enterprise Zones”, “Enterprise Zones on Steroids”

    What, the rest of us in the USA are not good enough or have the “Insider Connections” to be declared our own “Personal Enterprise Zone on Steroids”?

    Should we all change our names to Mitt Romney, Nazi Bush Family, Ross Perot, Koch Brothers, Warren Buffet, Jamie Dimon to “Deserve” special treatment.

    As was said in those hearings last week, if the govt is not going to follow the Law how much longer before the citizens decide not to follow the Law?

    Hey Senator Rand Paul, Why don’t give Every American the Same Special Deal?

    The only special deal the govt should be engaged in is that this nation doesn’t abandon the children, the sick or the elderly.

    Every citizen should be getting the same deal as the next when it comes to taxes/regs.

    And Corporations, Banks/Insur Co’s should be paying homage/Rent for the privilege of operating in our territory.

    All monopolies, (Wallst Banks/Insur), should be split into as many ways possible, independently monitored, govt regulated & only allowed to retain enough profit for administrative cost, 7-8%.

    (Meet the new boss, same as the old boss. jeeezzes)

  47. Oky1:

    the big boys are buying Detroit up at fire sale prices, that is what is going on.

    But every American with a spare $5k can buy a home in Detroit.

    I wish I was 35, I would pack my bags and head there and start a construction business.

  48. Oky,

    The whole wealth redistribution argument is based on a specious premise. Taxing and spending is perfectly in line with the Constitution. However, unequal treatment by the tax codes, unequal enforcement against corporations and corporate skewed spending priorities are a real problem. None of which relates to the primary problem with the Fed which is lack of a public duty to the average citizen by merit of it being both private and in bed with the financial services industry which further exacerbates collusion to concentrate wealth.


    Well then if greed is not your motivator, why do you buy into an ideology that caters to greed? I know you recognize that no man is the law unto himself yet you adopt an absolute stance on individual choice as the fulcrum of determining those rights instead of recognizing the principles of democratic rule. You also have an ideology that caters to oligarchy which by its very nature is a classest system. Equal protection is about the law applying equally and fairly to everyone. The inevitable economic tyranny that results from von Mises and the political tyranny that results from Rand – who I remind you openly said some people were lesser valued than others – indicates that either 1) you are not really an Objectivist or a big “L” Libertarian no matter how much you like to think you are, 2) you are operating under false pretenses or 3) you are grossly misinformed/mal-informed/under informed about the logical consequences of your stated positions; all of which indicate you need to do some self-examination to determine whether or not your views comport with a desire for true liberty and freedom or if you have bought into a lie because it used pretty words but delivers something else altogether. Like Goebbels and the Nazis did to the German people. Do you want to be a “good German”, a “bad German” or would you rather understand you are being deceived and make up your mind on based upon critical examination and a sophisticated understanding of the political and economic realities instead of spoon fed propaganda catering to desire over rationality?

    A pig in a poke.

    It’s what you’ve got.

    What you claim to want – maximized individual choice, freedom and liberty – is an entirely different proposal that will require you to step away from both Rand and von Mises to accomplish. History shows time and again industry cannot self-regulate. History shows that not everyone is a good actor. Left to their own devices, an amoral profit motive encourages all kinds of abuses. Objectivism and the Austrian School inevitably lead to oligarchy and – depending upon how much you buy into the fantasy of laissez-faire capitalism as infallible – fascism, be it Italian, corporatist or other flavored. Human nature keeps laissez-faire capitalism from being a viable option in reality just as much as it kept Communism from being a viable option in reality. Both are extreme views on economics – one says let the market will be done and the other says command economy. Neither work. Logic dictates that either 1) we do away with economics and find a better way to discuss distribution and use of resources (not going to happen) or 2) find a happy medium that is viable between the two extremes. Democratic market socialism is that viable median solution or close to it. It leaves intact enough free market to allow for individual wealth accumulation based on skill or uniqueness and to determine pricing while preventing the abuses to socially critical systems like health care insurance (and other critical infrastructure like roads, sanitation, etc.) by removing them from the profit motive game altogether. It’s literally the best of both worlds; free markets and a maximally strong public infrastructure on areas critical to society.

    The needs of the many outweigh the needs of the few or the one.

    Any social construct like government that does not realize this fact will have a limited life as to not acknowledge that fact about society is a form of built in obsolescence. As Buddha noted, everything that has a beginning has an end. Should we not engineer societies to last as long as possible instead of building known fail points into those complex systems? Isn’t that in the best interests of not just a given culture, but in the best interests of the species to make sure societies are as stable (which I’ll stipulate means just, free and equitable) and long lived as possible?

    I think so.

  49. Bron said: “But every American with a spare $5k can buy a home in Detroit.

    I wish I was 35, I would pack my bags and head there and start a construction business.”

    Really? When was the last time that you visit some of those areas ($5k homes)? Do you really want to start a family in ‘those areas’? 45-50 minute wait for police and/or fire fighters to arrive? No street lights? Failing public school districts? High criminal activity? Not to mention poor city and state mismanagement of Detroit?

    Young families are not lining up to live in the City of Detroit (or those $5k priced homes areas)? Instead, they are working in downtown Detroit, and living in the nearby wealthy suburb of Oakland County. You probably need to do your homework. If do, then, you will find that the Owner of Quicken Loans is buying most of those areas. For some reason, he is not in a hurry to snatch up all of those properties: there are at least 78k vacant homes in Detroit, not including vacant properties.

  50. Gene,

    Well said! Exactly why I wanted Bron, and those who want to do away with the Federal Reserve, to come up with a replacement (realistic) economic/monetary theory or policies for the US.

    Currently, our econonmy will fall off the cliff if the Feds stop QE. Watch FBN or CNBC, and you will see that investors (aka: stock market disciples) become so ‘afraid’ if Bernake or the Feds have a meeting just to have discussion of when to end QE.

  51. RWL:

    investment, not to live or raise a family. Detroit will come back and those properties will be worth $50k plus in 10-15 years.

    Unless of course we continue merrily on our way down the road to serfdom which we are on and refuse to leave.

  52. Bron,

    Please visit Detroit, and those ‘interesting investment areas’. You will probably need a police escort. I am guessing that you plan to live nearby to conduct periodic inspections of your property/investment? If you purchase a property-in these areas-for $5k, you will probably need about $20k-$35k to make it livable, and then, who is going to purchase or rent in those areas, especially when half the neighborhood needs to be revitalized? Have you checked the property values in those areas? Do you actually think that you will be receiving or making a profit?

    Please do your homework on urban/white flight of the 1960s, and investing in ‘these areas.’ There is a book, “Dark Ghetto” by Dr. Kenneth Clark (1965), explaining these ‘investment areas”. These areas are not ‘coming back.’ Almost every major American city has experienced (or is experiencing) this phenomena. For the first time in decades, the city of Chicago is experiencing ‘white flight.’

    Detroit is only the beginning for the rest of America………..

  53. Bron says: What I really value is my freedom. I want to be free to fail based on my own judgments.

    We are all for you failing as much as you like, Bron, we just aren’t going to let you fail in ways that bring others down with you.

    Which is the issue you studiously ignore; that the “freedom” you really want is the freedom to harm others.

  54. Oky1: Don’t blame me if you cannot understand the difference between a corrupt government and a servant government.

    What I mean, about Bron, is his previously stated desires to do away with all regulation of any kind. No minimum wage, no safety regulations, no disclosure regulations, no building codes, no sexual harassment laws, no restraints on the free exercise of racism, religious prejudice, gender prejudice, intimidation, child labor, or even hiding the use of carcinogenic pesticides on food to make a buck.

    I presume you are the same kind of sociopath as Bron; you have zero regard for the health or well being of others; you advocate an ‘every man for himself’ ethos, and think any form of taxation is some kind of robbery.

    Feel free to read my many posts addressed to him as if they were addressed to you.

  55. I think Tyler Durden is a real hoot. I always read him right after I finish reading the Onion every morning.

    The only thing is I think he made a strategic career error when he stopped promoting after hours fist fights – or is he still doing that?

    What ever gave the man the idea that he could make it as a political or economic analyst is a mystery to me.

    But funny? – lord yes the man cracks me up every time.

  56. Oky1, I recall reading that there was some kind of general agreement reached for dealing with bank failures through bail-ins a couple of years ago but the specifics eluded me. Any cites you have would be appreciated.


  57. The September 2013 level of 3.1 is the lowest in the entire 100-year history of the Federal Reserve. Until the last five years, the money multiplier never dropped below the old historical low of 4.5 reached in late 1940. Thus, Large Scale Asset Purchases may have produced the unintended consequence of actually reducing economic growth. Indeed, 81.5% of money created through quantitative easing is still sitting there gathering dust, due to a conscious decision by the Fed to tie up the money and prevent from being loaned out to Main Street.
    Ziad K Abdelnour

  58. Oky1: What does your link say? I can’t watch whatever you posted. I was under the impression you are siding with the small government crowd here. Is that the case?

  59. “81.5% of money created through quantitative easing is still sitting there gathering dust, due to a conscious decision by the Fed to tie up the money and prevent from being loaned out to Main Street.”

    I thought QE was entering the financial markets to purchase long term securities to change the yield curve.

    One observation regarding the recovery is that corporations are holding large cash (or liquid) balances. Some suggest those balances are sitting there because low demand gives corporations little reason to invest and expand their business – leading to the funds ‘gathering dust’.

    Could you describe some of the techniques used by the FED to “tie up the money” and prevent it from being “loaned out to Main Street”.

  60. “This is your leadership on Crack.

    Yes, the USA leaders already have the regs in place to Ph you too.”

    Correct me if I am wrong, but since the 1930′ hasn’t the FDIC protected depositors only up to a limited amount. So if a bank has financial difficulties – and there is no bailout – owners, creditors, and deposits above the FDIC insured amount will all be lost.

    I may be wrong, but I think that is the usual pattern in this country – with the single exception of the recent WS bailout.

  61. lottakatz, et al.,

    I almost wish I hadn’t said anything as now I feel I should backup my words with a bit of writing, but that’s ok.

    I forgot the page/s from back then , but in the GW Bush 2005 Bankruptcy Act, (scam), the Banking section, All Depositors are listed, you & I, are listed as unsecured creditors. (Last in line to be paid if anything is left of value)

    Like with all insurance the FDIC is just another ponzi scam. Yes, they may promise to pay, but they decide when to pay. It could be the next week or a 100 years from now.

    I believe they only hold maybe 2% of the funds to pay depositors claims.

    I don’t wish to hurt anyones eyes or mine, so careful about getting hung up in the text. I haven’t found a good piece with the cliff notes, but looking in the right spot to find it.

  62. Ok, I went blind before finishing this one, but one thing of note:

    *Today I would like to take the opportunity to discuss one of those challenging issues – the orderly resolution of systemically important financial institutions ( SIFIs). The Dodd-Frank Act provided important new authorities to the FDIC to resolve SIFIs.*

    As you can see by their own wording they don’t give a damn about “We the People” as we are not “systemically important financial institutions”.

  63. ** Poll: Moronic Majority Want TSA Agents Armed

    Only group who oppose are Libertarians

    Steve Watson
    December 11, 2013

    A new poll indicates that a majority of Americans want to see TSA agents carrying firearms in airports, while the only grouping who oppose the notion are self identified Libertarians.

    The survey, conducted by Reason-Rupe, found that 59 percent of those polled favor arming TSA agents in the wake of the recent shooting at LAX airport where a TSA worker was fatally wounded.
    Poll: Moronic Majority Want TSA Agents Armed 020713arm

    Image: Wikimedia Commons

    Thirty-five percent of those surveyed said that they do not think it is wise to arms TSA agents, with 6 percent expressing no opinion one way or the other. **

  64. **Below are four excerpts from a April 2013 article to refresh the short term memory of your Canadian audience regarding Bail-Ins in Canada and the mindset of Canadian government to let banks deal with their own issues and use depositors savings to prevent their own failures.
    1. Mark Carney says policy-makers are working diligently to devise an international “bail-in” regime to prevent big bank failures, but he offered no guarantee global depositors would be protected under all circumstances.

    2. Asked if this would include non-insured deposits — those over $100,000 — Carney referred to a previous statement from Finance Minister Jim Flaherty’s office that depositors were excluded.

    3. The March budget announced that Canada intended to implement a “bail-in” regime for systemically important banks to ensure that in case of failure, there would be no need for governments to bail them out. In Canada, those banks are the Royal Bank, Scotiabank, the Bank of Montreal, the Canadian Imperial Bank of Commerce, Toronto-Dominion and the National Bank.

    4. In his comments, delivered before an audience in a one-on-one interview format with Reuters’ Chrystia Freeland, Carney said the idea of a bail-in would be to set up a queue of capital buffers that banks could dip into to avoid failure. It likely would include some types of deposits.**

  65. Is it an ole saying or something I just realized?

    First they shoot themselves in the foot & then they scream the USA needs to get rid of the 2nd amendment because to many idiots have guns. :)

    **White House Front Group Vows to Target Alternative Media

    Media Matters set to intensify attacks against Drudge, Infowars in concert with Obama advisors

    Paul Joseph Watson
    Prison Planet
    December 13, 2013

    White House front group Media Matters has vowed to target “alternative online outlets” as part of its new “strategic plan” to exert media influence in coordination with the Obama administration.
    White House Front Group Vows to Target Alternative Media 131213media

    Image: Media Matters CEO David Brock (YouTube).

    Claiming that its war with Fox News is over and that “to a large extent, we won” (despite polls showing Americans trust Fox News over any other mainstream network), Media Matters has finalized a blueprint which outlines a shift to focus on “new, increasingly influential targets, including Spanish-language media, social media streams, alternative online outlets and morning and entertainment sources.”

    In other words, Media Matters, whose employees brag about writing MSNBC’s prime time content and attending strategy calls with Obama advisors on a weekly basis, will now turn its big guns on the likes of Infowars, Alex Jones and the Drudge Report. **

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