What's the story with the Federal Reserve, anyway?

[marklang500]

From what I can tell, they came along in 1913 and systematically broke down the link between the paper we use for money and the precious metal that was backing it.

In a way, I don't blame them. Wealth isn't physical mass. Wealth is created by work. Plain and simple. People that work deserve some way of buying stuff from other people that work. Since a chicken and a horseshoe aren't exactly valued at the same amount of work involved, a monetary system was created to avoid a bartering system. That way, selling several chickens to several people gave one the capital to get thier horse "shoed" and still have some change left over.

As more people are born, and enter the workforce, more wealth is created by these people that do work, like shoeing horses, and rasing chickens.

The real trick, where the Fed messed up, is by printing more money than the amount of work that was being done and allowing people to use "non-work" to take that wealth - using interest rates, forming corporations and keeping the profits off the top for themselves (CEO thievery)

There is no way that our entire population could get anything done if we didn't have a monetary system to trade our work with one another. There is no way that gold and silver supplies could grow at the same rate our gross national product grows, considering a growing population and un-ending hours of work performed.

People always say, "well they can't just print more money!" Really? I think printing more money is inevitable. It must be done. To keep up with the growth of society and the never ending man-hours that deserve payment.

In the game Monopoly, passing GO represents getting paid for your 40 hours of work.

Imagine a game of monopoly that goes for 3 days, has a game board that is 10'x10' with tons of properties. Eventually, the bank will go broke. and all the players will have all the money. Is the game over? What happens when I pass GO again? Doesn't that represent payday at the end of a "work period". We need more money for the bank. WHat if someone wants to join the game halfway through. Don't they start to earn money? WHat if everyone hoards thier money and nobody builds any hotels?

The problem isn't the Fed. The problem is HOW the Fed OPERATES. How the US currency interacts in a world economy. A flawed method of injecting the new money into the economy, a flawed system of dealing with foreign debs, and possibly even a little corruption.

Set me straigh if I am glaringingly wrong here. I wish to learn.

[Gabo]

The value of any commodity is relative to its scarcity. When the quantity of any given commodity is lessened in comparison to the quantities of other commodities, that item becomes worth more.

The reason gold and silver were valued as currency is because they DON'T increase in quantity at very quick paces, so they retain or increase in value when held.

If more goods are created and more people want gold and silver, then those currencies become more valuable. You will need less to buy any given item, effectively increasing your purchasing power by an equivalent amount.

Limited supply does not prevent a working economy. It may be hard to understand that the value of all gold or silver can increase without adding more gold or silver to the economy, but let me give an example.


Say for instance that our production instantly doubles in size. Because there are twice as many of everything else, gold will be able to buy twice as many things. Every person could cut each piece of gold they own in half and they will have double the amount of currency.

[jimbos123456]

Its very simple you don't need enough gold and silver coins for every family in America. You just need gold and silver for the larger transactions, and use copper coins for the rest. There is more then enough copper to use as money, and that puts a price floor on the value of our currency based on the value of the metal. Simply eliminate all paper dollars rename the currency "American Trade Unit copper 1 oz" or something like that and let the new bi metallic currency float on the market.