quote:



Currency arbitragers then take advantage of this split. They buy cheaper dollars on the open market, then sell then to the Fed, which would be forced under its obligations to pay the arbitrary fixed price. This further devalues the currency, so arbitragers invest their profits in more dollars at the true lower value, selling them to the Fed at the fixed higher price, etc. etc., pumping more and more money out of the government under the value of the dollar becomes so out of whack that the Fed would be forced to devalue the currency----and then the cycle starts again, until the currency is almost worthless, and inflation is rampant.

quote:


The evidence of credit markets freezing is already there---banks are reluctant to lend to each other, so they are unable to continue their day to day business as usual, and must hold their assets (hurting profits, incidentally) instead of participating in the money market. Should this continue, banks may be reluctant to lend to business and consumers too, and banks unable to meet cash flow demands will cease to exist, obviously never loaning again. The fear mongering is great, yes, but the problem does essentially exist.

Yes, the bill sucks, is a band-aid, and manipulates the situation for the benefit of the wealthy elite. That's why I'm glad it failed in the House. But realistically, something will need to be done---preferably more at the consumer end. We'll see what "they" propose next.

quote:

ORIGINAL: Musicmystery

The Federal Reserve, our Central Bank, is not a "bank" the way you think. It controls money supply and regulates the banking system.

Nationalize it? It's the federal agency in charge of monetary policy. It's not a business, public or private.

And it can't "freeze up," as it has the power to create money at will.

The problem is that the actual banks are nervous about lending to each other, and yes, that puts the brakes on credit.

quote:

ORIGINAL: Musicmystery

You aren't understanding this.

The Federal Reserve exists by creation of Congress. It's Directors and Chair are appointed by the President. It's literally not possible to "nationalize" it---it's already an agency of the federal government.

If the government wants to extend credit, that would have to happen through the Treasury department--which is why the bailout bill puts handling this in the hands of the Secretary of the Treasury.

quote:

You seem think that without the banks we can't dispense credit. That's simply not true.We issue credit directly through the treasury, bypassing the banks.

quote:



And obviously private money exists too, but without the banking system, the transactions costs would soar.

That's true even working through the Treasury, incidentally.

quote:

McKinney: Nationalize the Federal Reserve September 25th, 2008 · Cynthia McKinney, who earlier put out a ten point plan to address the financial crisis, has now expanded on that to add four more actions, including nationalizing the Federal Reserve, auditing firms, prosecuting any criminal activity and eliminating derivatives trading.

Cynthia McKinney


A Gift for a Generation: A U.S. Financial System of Our Own
September 25, 2008 Last week, I posted ten points (that were by no means exhaustive) for Congressional action immediately in the wake of the financial crisis now gripping our country. At that time, the Democratic leadership of Congress was prepared to adjourn the current legislative Session to campaign, without taking any action at all to put policies in place that protect U.S. taxpayers and the global community that has accepted U.S. financial leadership. Those ten points, to be taken in conjunction with the Power to the People Committee’s platform available on the campaign website at (http://votetruth08.com/index.php/resources/campaignplatform), are as follows:
12. elimination of all derivatives trading;
13. nationalization of the Federal Reserve and the establishment of a federally-owned, public banking system that makes credit available for small businesses, homeowners, manufacturing operations, renewable energy and infrastructure investments; and
14. criminal prosecution of any activities that violated the law, including conflicts of interest that led to the current crisis. Ellen Brown, author of “The Web of Debt” writes at http://www.webofdebt.com/articles/, “Such a public bank today could solve not only the housing crisis but a number of other pressing problems, including the infrastructure crisis and the energy crisis. Once bankrupt businesses have been restored to solvency, the usual practice is to return them to private hands; but a better plan for Fannie and Freddie might be to simply keep them as public institutions.” Too many times politicians have told us to support the “free market.” The unfolding news informs us in a most costly manner that free markets don’t work. This is a financial system of their making. It’s now past time for the people to have an economic system of their own. A reading of the full text on the Congressional “Agreement on Principles” for the proposed $700 billion bailout reveals the sham that this so-called agreement truly is. Today our country faces an economic 9/11. The problem that is unfolding is truly systemic and no stop-gap measures that maintain the current bankrupt structure will be sufficient to resolve this crisis of the U.S. economic engine. Today is my son’s birthday. What a gift to the young people of this country if we were to present to them a clean break from the policies that produced this economic disaster, the “financial tsunami” that former Comptroller General David Walker warned us of so many months ago and instead offered them a U.S. economic superstructure that truly was their own.