4 ms·

Whether it is borrowing or dilution is a petty point to quibble about. The government already consumes 42% of what the people create. The questions are: Are

Whether it is borrowing or dilution is a petty point to quibble about. The government already consumes 42% of what the people create. The questions are: Are you OK with you and your descendants being made more poor by government dilution? How much of your earnings are you comfortable forking over to government under threat of force?

mindslight 5y ago
It's not just quibbling. Government spending spending on social programs is the exact same taking/dilution that occurs when the Federal Reserve gives a bunch of new money to the banks by declaring that interest rates shall be lower. The former receives intense scrutiny, while the latter is politically uncontested. Furthermore, government spending at least creates direct price inflation, whereas finance industry infusion mainly causes asset inflation and thus doesn't trigger the Fed's criteria to ever slow down.
- tastyfreeze 5y ago
  If the government spent within its means of collected revenue on social programs there is no dilution only local price increases where funds are distributed due to increased demand of goods. To say that Federal Reserve (a private entity) actions are politically uncontested is dishonest. There have been plenty of voices against the Fed in the minority. Kennedy tried to end the Fed and there have been numerous congressional proposals to audit the Fed. None have ever achieved a majority.
  - dragonwriter 5y ago
    > To say that Federal Reserve (a private entity The Federal Reserve (whether you mean the Board of Governors, the system, or any of the individual federal reserve banks) isn't a private entity. (The Board of Governors is a federal agency; the rest are weird hybrids.)
    - tastyfreeze 5y ago
      Right, the system is a weird hybrid that isn't funded by government. It is funded by profits of their actions like a private entity. I'm not sure what else to call an entity that is funded by its own profits if not a private entity. From Wikipedia (https://en.wikipedia.org/wiki/Federal_Reserve https://en.wikipedia.org/wiki/Federal_Reserve): It is governed by the presidentially appointed board of governors or Federal Reserve Board (FRB). Twelve regional Federal Reserve Banks, located in cities throughout the nation, regulate and oversee privately owned commercial banks. The federal government sets the salaries of the board's seven governors, and it receives all the system's annual profits, after dividends on member banks' capital investments are paid, and an account surplus is maintained. In 2015, the Federal Reserve earned a net income of $100.2 billion and transferred $97.7 billion to the U.S. Treasury.[24] Although an instrument of the US Government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms."
      - dragonwriter 5y ago
        > It is funded by profits of their actions like a private entity. The USPS is an independent agency of the federal government receiving no taxpayer funding (except for services like postage purchased by other government agencies) that is funded by its own operational revenues. The parts of the Fed that aren't the Board of Governors aren't really like that, either, though. > an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms. The first and third are the typical things that define “independent” federal agencies, the second is true of some of them (e.g., USPS). The structure and composition of the Fed is special though, even in that context, but “private” seems to be misleading behind a false dichotomy. It is kind of (though this term is charged because of the role corporatism played in the fascist public ideology, though the term is much older and not generally associated with authoritarianism), something of a corporatist institution in and by which state and private power are aligned.
  - mindslight 5y ago
    Obviously there exist minority opinions on the Federal Reserve, including my comment right here. The point is between the mainstream of Democrats vs Republicans, neither one is calling to reign in the Fed with the vigor that Republicans harp on "government spending". Pointing out that the mainstream discourse completely ignores dilution done by Federal Reserve is not dishonest. What is dishonest is framing congressional spending in terms like "within its means" while also ignoring the Federal Reserve's ongoing dilution. Rather, monetary creation by the Fed and the Federal Government needs to be judged by the same standard. The pro-spending crowd calls this MMT, and the anti-dilution crowd calls this Austrian economics. I personally would prefer the libertarian philosophy of more sound money, less (centralized) spending, and growing distributed wealth. But since that seems to be off the table, MMT is the remaining consistent approach. It makes more sense than profligate welfare to banks while turning the screws on everyone else. And with the way the Fed's feedback cycle is set up, it will actually cause less inflation than what we're currently getting.

mindslight 5y ago

It's not just quibbling. Government spending spending on social programs is the exact same taking/dilution that occurs when the Federal Reserve gives a bunch of new money to the banks by declaring that interest rates shall be lower. The former receives intense scrutiny, while the latter is politically uncontested. Furthermore, government spending at least creates direct price inflation, whereas finance industry infusion mainly causes asset inflation and thus doesn't trigger the Fed's criteria to ever slow down.

tastyfreeze 5y ago
If the government spent within its means of collected revenue on social programs there is no dilution only local price increases where funds are distributed due to increased demand of goods. To say that Federal Reserve (a private entity) actions are politically uncontested is dishonest. There have been plenty of voices against the Fed in the minority. Kennedy tried to end the Fed and there have been numerous congressional proposals to audit the Fed. None have ever achieved a majority.
- dragonwriter 5y ago
  > To say that Federal Reserve (a private entity The Federal Reserve (whether you mean the Board of Governors, the system, or any of the individual federal reserve banks) isn't a private entity. (The Board of Governors is a federal agency; the rest are weird hybrids.)
  - tastyfreeze 5y ago
    Right, the system is a weird hybrid that isn't funded by government. It is funded by profits of their actions like a private entity. I'm not sure what else to call an entity that is funded by its own profits if not a private entity. From Wikipedia (https://en.wikipedia.org/wiki/Federal_Reserve https://en.wikipedia.org/wiki/Federal_Reserve): It is governed by the presidentially appointed board of governors or Federal Reserve Board (FRB). Twelve regional Federal Reserve Banks, located in cities throughout the nation, regulate and oversee privately owned commercial banks. The federal government sets the salaries of the board's seven governors, and it receives all the system's annual profits, after dividends on member banks' capital investments are paid, and an account surplus is maintained. In 2015, the Federal Reserve earned a net income of $100.2 billion and transferred $97.7 billion to the U.S. Treasury.[24] Although an instrument of the US Government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms."
    - dragonwriter 5y ago
      > It is funded by profits of their actions like a private entity. The USPS is an independent agency of the federal government receiving no taxpayer funding (except for services like postage purchased by other government agencies) that is funded by its own operational revenues. The parts of the Fed that aren't the Board of Governors aren't really like that, either, though. > an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms. The first and third are the typical things that define “independent” federal agencies, the second is true of some of them (e.g., USPS). The structure and composition of the Fed is special though, even in that context, but “private” seems to be misleading behind a false dichotomy. It is kind of (though this term is charged because of the role corporatism played in the fascist public ideology, though the term is much older and not generally associated with authoritarianism), something of a corporatist institution in and by which state and private power are aligned.
- mindslight 5y ago
  Obviously there exist minority opinions on the Federal Reserve, including my comment right here. The point is between the mainstream of Democrats vs Republicans, neither one is calling to reign in the Fed with the vigor that Republicans harp on "government spending". Pointing out that the mainstream discourse completely ignores dilution done by Federal Reserve is not dishonest. What is dishonest is framing congressional spending in terms like "within its means" while also ignoring the Federal Reserve's ongoing dilution. Rather, monetary creation by the Fed and the Federal Government needs to be judged by the same standard. The pro-spending crowd calls this MMT, and the anti-dilution crowd calls this Austrian economics. I personally would prefer the libertarian philosophy of more sound money, less (centralized) spending, and growing distributed wealth. But since that seems to be off the table, MMT is the remaining consistent approach. It makes more sense than profligate welfare to banks while turning the screws on everyone else. And with the way the Fed's feedback cycle is set up, it will actually cause less inflation than what we're currently getting.