If The Federal Reserve Is Abolished, What Then?

[ruger17hmr]

If The Federal Reserve Is Abolished, What Then?


What alternatives do we have?

We should be careful of what we wish for.

If The Federal Reserve Is Abolished, What Then? - Yahoo! Finance

 

[rambone]

If history is any guide, having some sort of central bank may have been better than none. Out of 100 years of Fed control, the country has had 22 recessional years, including one depression. The 100 years before the Fed saw 44 recessions and six depressions.

Wow, great logic. The last 100 years has also brought about complete devaluation of the Dollar, insurmountable amounts of debt, and a system that promotes unrealistic fiscal policies. All this is necessary to maintain the Welfare-Warfare State.

 

[rambone]

-Ron Paul

 

[ruger17hmr]

Wow, great logic. The last 100 years has also brought about complete devaluation of the Dollar, insurmountable amounts of debt, and a system that promotes unrealistic fiscal policies. All this is necessary to maintain the Welfare-Warfare State.

Don't forget about the rapid systemic growth the world enjoyed over the years, although, it seems the roof is about to collapse with the heavy burden of debt.

 

[Olive Drab]

Don't forget about the rapid systemic growth the world enjoyed over the years, although, it seems the roof is about to collapse with the heavy burden of debt.

You bring up a good point - debt. Let's look at our national debt after the passing of the Federal Reserve Act of 1913.

http://upload.wikimedia.org/wikipedia/commons/4/41/Federal_Debt_1901-2010_.jpg

 

[nicajack]

Rambone is right on! Our U. S. dollar has been devalued to almost nothing since the federal reserve was illegally started in 1913. The very story of how the bill was brought up and voted on in our Congress is all you need to know to see that it was a very crooked enterprise from the beginning.
In my lifetime I have seen the price of everything go up and up and up. But the real price of good has not gone up! The value of the dollar has gone down, down, down through inflation. Cokes were a nickel when I was a kid. Then they went to 10 cents, 15 cents, etc. The real price did not go up! The buying power of the dollar went down. I have followed the prices of a lot of common commodities over the years. It is a steady procession of increases across the board following the timeline. It soon becomes very obvious. Try it yourself....
Something else. Search the net for the names of the heads of all the biggest banking institutions i the world. Just look at the names, themselves and you can't help but see an unmistakable pattern there. That hasn't changed in thousands of years. The facts are undeniable....

 

[rambone]

Don't forget about the rapid systemic growth the world enjoyed over the years, although, it seems the roof is about to collapse with the heavy burden of debt.

I think that has more to do with free markets and the evolution of technology, mass production, paved roads & new travel methods, improved methods of communication, etc.

 

[ruger17hmr]

I think that has more to do with free markets and the evolution of technology, mass production, paved roads & new travel methods, improved methods of communication, etc.

It is a vicious cycle. Some form of financing made all of the above mentioned become real from someone's creative mind. When you have a right mix of greed, creativity, and forgiving system, then you are more than likely to end up with the mess we are faced with today.

Throughout the history the world has experienced the rise and fall of economic conditions. What makes the today's condition special is the sheer size and the supersonic rate at which the debt is ballooning to the point of exploding. We are indeed living in a special time in history.

 

[Whosyer]

Someone asked "If we End the Fed, what would you replace it with and I replied, When you remove a cancer, what do you replace it with?" -Thomas Sowell

 

[ikky68]

Someone asked "If we End the Fed, what would you replace it with and I replied, When you remove a cancer, what do you replace it with?" -Thomas Sowell

Nice one...

To the OP: It's fairly simple actually (not really, but idealistically it would be simple). Other banks can print money.

If you look at the current US dollar. It says that it's a federal reserve note. It's not actually a US dollar.

If the fed goes away, a bank can print its own money secured by what ever it has (gold, silver, platinum, land... whatever). To replace the fed reserve note.

If businesses, countries, or whatever think that the fed note is worthless, they can choose not to accept it. If enough people think the note is worthless, then it'll tank and never be seen again. And will be replaced with a note that has greater value, like a dollar backed by silver or gold.

I do not think that the gold standard can be re-established but something similar would be nice. Anything that could offset the inflation generated by printing too much money...

 

[CarmelHP]

Remember, a gold standard does not mean every single cent has a corresponding amount of gold. You merely need enough gold for convertibility. When there is a run on gold, you adjust the interest rate on the currency. When there is a run on currency, you adjust the rate downward until equilibrium. The process is discussed in "The Way The World Works" by Wanniski.

 

[ikky68]

Remember, a gold standard does not mean every single cent has a corresponding amount of gold.

Correct. The banks determine how much money they print in relation to their gold supply. I think it's called leverage.

 

[PeaShooter]

Nice one...

To the OP: It's fairly simple actually (not really, but idealistically it would be simple). Other banks can print money.

If you look at the current US dollar. It says that it's a federal reserve note. It's not actually a US dollar.

If the fed goes away, a bank can print its own money secured by what ever it has (gold, silver, platinum, land... whatever). To replace the fed reserve note.

If businesses, countries, or whatever think that the fed note is worthless, they can choose not to accept it. If enough people think the note is worthless, then it'll tank and never be seen again. And will be replaced with a note that has greater value, like a dollar backed by silver or gold.

I do not think that the gold standard can be re-established but something similar would be nice. Anything that could offset the inflation generated by printing too much money...

Actually if the fed was gone, then congress would have to do its job and actually coin money. The defered that responsibility to the fed back in 1913.

 

[buckstopshere]

speaking of coin, I try to hang on to as much change as possible, especially nickels. They're 75% nickel, 25% copper. The .gov is talking about changing it's composition right now to stainless steel.

Point being, continuing down the path of central banking/fed reserve will inevitably reach a point of having to rebase the currency. If that happens, it's likely they will drop off a 0 to all currency. Movies will be $0.80 instead of $8.00 as example. Short term, people think it's a steal without making the connection that their $85k salary is now $8500.

It's easy to reprint money, hard to make new coin. In fact, it actually costs $0.075 to make a nickel right now.

If/when our dollar gets rebased, coins become a good investment. At least that's my theory.

 

[ruger17hmr]

speaking of coin, I try to hang on to as much change as possible, especially nickels. They're 75% nickel, 25% copper. The .gov is talking about changing it's composition right now to stainless steel.

Point being, continuing down the path of central banking/fed reserve will inevitably reach a point of having to rebase the currency. If that happens, it's likely they will drop off a 0 to all currency. Movies will be $0.80 instead of $8.00 as example. Short term, people think it's a steal without making the connection that their $85k salary is now $8500.

It's easy to reprint money, hard to make new coin. In fact, it actually costs $0.075 to make a nickel right now.

If/when our dollar gets rebased, coins become a good investment. At least that's my theory.

I don't think we will get there, but I suppose never say 'never' reminds me to be on guard.

 

[Lex Concord]

speaking of coin, I try to hang on to as much change as possible, especially nickels. They're 75% nickel, 25% copper. The .gov is talking about changing it's composition right now to stainless steel.

Point being, continuing down the path of central banking/fed reserve will inevitably reach a point of having to rebase the currency. If that happens, it's likely they will drop off a 0 to all currency. Movies will be $0.80 instead of $8.00 as example. Short term, people think it's a steal without making the connection that their $85k salary is now $8500.

It's easy to reprint money, hard to make new coin. In fact, it actually costs $0.075 to make a nickel right now.

If/when our dollar gets rebased, coins become a good investment. At least that's my theory.

I've heard many people, experts and lay, talking about holding nickels. One thing I haven't heard discussed is the theory on converting them to "money" down the road.

While their value in commodity content is evident, who will want to buy them for their metal content?

Does anyone envision the ability to barter with a bag or even barrel full of nickels?

I would imagine a negative premium on nickels (relative to their metal "value") due to the resources required to revert them to their component parts, as well as a limited number of people/businesses willing to accept them for the same reason.

I'm not saying the transaction wouldn't still net the nickel holder positively, I just haven't seen that side of the equation addressed.

EDIT: Another thought...if we were to have a devaluation, possibly combined with a return to specie backing, the pre-64 silver quarter might again be worth $.25, and could thus be spent accordingly.

What about the laws against destruction of "money"...does that apply only to FRNs, or to coin as well? Would it even be legal for the nickels to be melted down? With devaluation, they could be pulled from circulation, and no longer be money; I would imagine FedGov would want them traded in so they could try to extract commodity value from them, similar to what happened with gold.

 

[Lex Concord]

If The Federal Reserve Is Abolished, What Then?

A greater chance at surfing the tempestuous sea of liberty.

 

[buckstopshere]

I've heard many people, experts and lay, talking about holding nickels. One thing I haven't heard discussed is the theory on converting them to "money" down the road.

While their value in commodity content is evident, who will want to buy them for their metal content?

Does anyone envision the ability to barter with a bag or even barrel full of nickels?

I would imagine a negative premium on nickels (relative to their metal "value") due to the resources required to revert them to their component parts, as well as a limited number of people/businesses willing to accept them for the same reason.

I'm not saying the transaction wouldn't still net the nickel holder positively, I just haven't seen that side of the equation addressed.

EDIT: Another thought...if we were to have a devaluation, possibly combined with a return to specie backing, the pre-64 silver quarter might again be worth $.25, and could thus be spent accordingly.

What about the laws against destruction of "money"...does that apply only to FRNs, or to coin as well? Would it even be legal for the nickels to be melted down? With devaluation, they could be pulled from circulation, and no longer be money; I would imagine FedGov would want them traded in so they could try to extract commodity value from them, similar to what happened with gold.

IDK. I haven't read anything on it. I didn't realize others did this.

It just seemed logical to me that if the currency gets rebased, printed money will be changed to a different note. I don't foresee the .gov reissuing coins which I would assume means they would keep their stated value on the coin.

If nothing else, a big ole bag of coins smacked over someones head would put the hurt on 'em!

Or maybe I'll just take them all in and pay for a family vacation or something down the road.

 

[CarmelHP]

IDK. I haven't read anything on it. I didn't realize others did this.

It just seemed logical to me that if the currency gets rebased, printed money will be changed to a different note. I don't foresee the .gov reissuing coins which I would assume means they would keep their stated value on the coin.

If nothing else, a big ole bag of coins smacked over someones head would put the hurt on 'em!

Or maybe I'll just take them all in and pay for a family vacation or something down the road.

Metals have always had some value. In times of crisis, copper coins or copper implements were widely bartered. I think your reasoning is sound. I also don't think that the G will ever willingly return to a specie standard so money will be further debased and copper pennies and nickles will appreciate in value.

 

[buckstopshere]

Metals have always had some value. In times of crisis, copper coins or copper implements were widely bartered. I think your reasoning is sound. I also don't think that the G will ever willingly return to a specie standard so money will be further debased and copper pennies and nickles will appreciate in value.

Thank you for that assessment CarmelHP. It's good to know I'm not crazy (well, at least for this).

Guess I should cancel that vacation....

I'd rep you but I just hit you up. I'll get back to you.