# Movie: Fiat Empire - Why the Federal Reserve Violates the U.S. Constitution



## Kimosabi (10 June 2007)

http://video.google.com/videoplay?docid=5232639329002339531

Everyone needs to watch this movie


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## Jikx (10 June 2007)

awesome.. especially since I study macroeconomics. Buy gold?!


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## Kimosabi (10 June 2007)

OK, a question for all the Gold Bugs out there.

The question I am trying to work out is if the Gold Standard is re-introduced will those that own Gold now be better off than those that own Gold after a Gold Standard is re-introduced?


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## Kimosabi (10 June 2007)

Jikx said:


> awesome.. especially since I study macroeconomics. Buy gold?!




Now do they teach you in macroeconomics just how money is created?


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## BradK (11 June 2007)

I am half way through, and have seen a few videos posted on this site. 

Vote Ron Paul 

Cheers
Brad


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## BSD (11 June 2007)

Some preliminary comments (I am 8 minutes in) and need to go and do something else.

These arguments have been around for 34 years now and the world has somehow continued to operate (quite successfully I might add).


The fiat derived value of US dollars or any other paper currency is the same for gold. It is a pretty rock and has essentially no value beyond fiat. Why gold? Why not copper or diamonds or Sydney Waterfornt property?

 The arguments for gold standard would require currencies to be priced by politicians instead of the markets. The gold bugs who don't trust the politicians to run a balanced book are willing to trust them to price currencies and essentially lose control of monetary policy - this makes no sense

 The price of printing excessive amounts of money to sustain deficits is inflation. Devaluation of currencies has happened in the past and it will happen in the future. It just happens that the No 1 economy in the world has been run by idiots who are happy to put the next generation into debt. 

The USD will be worth less against everything - gold, AUD, Yuan, copper, LCD screens. Instead of having some tinpot dictator in Asia or South America to point the finger at; the Yanks will only have themselves to blame.

But life will go on.


Most of the arguments put forward by the goldbugs are US centric views based in the past of fixed everything and an inability to believe that the market can value currencies, bonds and commodities better than a group of politicians. The same politicians they blame for debasing their own currency. 

Fancy wanting to hark back to the 'good old days' of the 1800s where the population was happy to live to age 50.

Does anyone really believe the blokes who put together the US Constitution had a better understanding of the requirements of global (not just US) macro economic policy in 2007?

 Spare me...

Is anyone on-here frightened of holding Aussie Dollars which are equally not backed by gold?


At least under the current situation citizens earning US dollars have the free right to convert their funds to gold if they believe gold is going to be worth more than dollars in the future. 

Why should everyone in the world suffer from fixed rates of exchange, non convertibility and restrictive borrowing practices because the US refuses to balance their books?


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## Kimosabi (11 June 2007)

BSD said:


> Some preliminary comments (I am 8 minutes in) and need to go and do something else.
> 
> These arguments have been around for 34 years now and the world has somehow continued to operate (quite successfully I might add).
> 
> ...




What you need to understand is the manipulation of world economies by the turning on and off of the money tap.  The people who control money supply, control governments, economies, and your and my future prosperity.  At the moment, the worlds central banks have got a flood of money going into the world economy, Australia's current money creation tap(M3) is currently running at 13-14% a year(America's money creation is so obscene at the moment, their central reserve stopped publishing M3 figures, so no-one can tell how much money they are or aren't printing, everyone has gone crazy, getting huge loans for property they will have no hope of repaying, if anything changes the current status quo, ie unemployment, interest rates, sickness, etc, etc, these people are all going to go to the wall.  Business and private equity have all gone crazy buying businesses like there is no tomorrow with huge amounts of debt, and to make is stop, a central banker who probably isn't even Australian just has to say, we are going to stop printing more money out of thin air, and all hell breaks loose.

You might want to watch this video after the one above, which goes into real historical depth of the history of Money and it's manipulation (set plenty of time aside because it is 3 hours long ==>

Money Masters

Part 1 - http://video.google.com.au/videoplay?docid=-8753934454816686947&q=money+masters
Part 2 - http://video.google.com.au/videoplay?docid=-7336845760512239683&q=money+masters

After watching the video above, I'm not sure the Gold Standard would work if, as the video asserts, the IMF has most of the world's gold and 2/3's of the worlds gold is owned by Central Banks, and as was put forward in the video, he who owns the Gold, makes the rules.


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## BSD (11 June 2007)

Kimosabi said:


> What you need to understand is the manipulation of world economies by the turning on and off of the money tap.  The people who control money supply, control governments, economies, and your and my future prosperity




It is called monetary policy. 

You know, the intervention of the RBA into the debt markets with the objective of maintaining inflation between 2% and 3% over the business cycle. 

With the historically low inflation (created by the freeing of trade and markets in the '90s and the Asian economic boom) - why wouldn't money supply be booming in Australia?

The US printed money to dodge a recession after 2000 and sadly, to fund the dim-witted, world domination plans of Dubya Bush. An idiot in the office has created the US debt problem. 

Most economists pay little attention to money supplymeasures; the results are far more important, M1,M3 etc are dinosaur measures of the Keynesian era. 

The money flow boom has also been a result of the success of the developing countries in expanding their outputs and trading their way out of poverty. 

China, Brazil, Eastern Europe, South East Asia have all come to the party and started to create wealth - their funds are being cycled back into 1st world countries. Is this a bad thing? 

The Chinese may own the US soon, but who cares?

The gold bugs perhaps prefer the closed economy model that keeps poor people poor and USD strong?

Who is living in a fantasy world here? 

Why should the US not get a kick up the bum for not saving any money?



Kimosabi said:


> everyone has gone crazy, getting huge loans for property they will have no hope of repaying, if anything changes the current status quo, ie unemployment, interest rates, sickness, etc, etc, these people are all going to go to the wall.




So what?

Who should decide how much and for what people borrow?

You? The government?

There is no better lesson on value than losing money from buying an overpriced asset.

I personally believe that the markets (property, shares, debt) are awash with more overpriced assets than ever before. I personally wouldnt buy an investment property with a yield of 2% or an industrial share with no EPS growth and a PE of 25 or an LCD screen on 4 years no interest - but who am I (or you) to judge. 

If people don't make mistakes, they don't learn. 

The US tried to avoid their people getting hosed after the tech boom by dropping rates to 1% - look at the consequences. 




Kimosabi said:


> Business and private equity have all gone crazy buying businesses like there is no tomorrow with huge amounts of debt




Crazy?

Cheap finance, the lazy balance sheets of lazy Aussie companies run by lazy CEOs have created opportunities for deal makers to make heaps of money. Why is this bad? If they fail - they lose their money - so what?

The QAN deal was going to make the equity partners 60% in a year - crazy?

KKR have made an obsene amount of money taking advantage of cheap finance and lazy balance sheets - crazy?

Are you going to decide what the maximum debt/quity ratio is fo companies? Me? John Howard? Greg Combet?

It is called a free economy and we do better than all other models. 




Kimosabi said:


> He who owns the Gold, makes the rules.




Why?

No point having gold in a meltdown. 

I would prefer to have oil, wheat, water, whiskey, shelter, coffee, milk, ammo...


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## Jikx (11 June 2007)

Kimosabi said:


> Now do they teach you in macroeconomics just how money is created?




Yes they do, at least in simplistic form at Monash. The reserve bank buys bonds from the government (i.e prints it), and government spends it. Total increase in money supply is change in Mo (i.e amount printed) x 1/CRR, where CRR is the reserve ratio.

This increase in supply results in a decrease in interest rates (more money means you can borrow easer, and it's worth less), results in an increase in "investment" (i.e increase in asset prices), and finally feeds into inflation if we're not in the recessionary segment of the supply curve.

Probably not entirely correct, but it's only a first year subject. So in essence, yes we're taught how money is created.


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## Jikx (11 June 2007)

BSD said:


> With the historically low inflation (created by the freeing of trade and markets in the '90s and the Asian economic boom) - why wouldn't money supply be booming in Australia?




Why isn't this increase in money supply resulting in inflation? I suspect it has something to do with most of it going into imports, hence the humongous current account deficit. And of course, for some reason, the Asian countries are quite happy to accept this printed money, which we use to buy their goods. Something crazy is going on !


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## BSD (11 June 2007)

Jikx said:


> Why isn't this increase in money supply resulting in inflation?
> 
> I suspect it has something to do with most of it going into imports, hence the humongous current account deficit. And of course, for some reason, the Asian countries are quite happy to accept this printed money, which we use to buy their goods. Something crazy is going on !




Productivity

Cheaper labour and cheaper debt

We have gone from closed economies to open economies

In the last 20 years we have gone from buying clothes, shoes, cars, household goods etc from unionised tariff protected manufacturers to workers in Asian/South America that are earning 1/10th the incomes but still being better off than before they had a job. 

Our borrowings are now cheaper due to open capital markets and derivatives 

We have better systems, superior IT, better educated people. 

In essence, we work harder, smarter and cheaper - so the economy can go faster without putting pressures on price. 

This wont last forever and I am not a cheerleader. 

The greatest inflationary risk, in my view, is an appreciating Chinese currency. Just the thing the idiotic folks in the US government continue to barack for...


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## Kimosabi (11 June 2007)

BSD said:


> It is called monetary policy.




How can you have monetary policy, if the money is created out of thin air. Maybe it should be called the Thin Air Policy.

Money backed by nothing is the biggest scam in human history, 

Now I want to apologise for what I have done to your post BSD, I am in no way trying to upset you, I am just making a point.

I have replaced the references in your post to money with the word "*air*"

The point is, current money is printed out of thin air, the problem with this is it is too tempting to just print more and more money(thin air) to pay your bills etc, the only problem with this is that it just increases the price of everything, including commodities, stocks, real estate etc. and eventually as history tells us, all Fiat money systems eventually fail.

Now what is even worse, is when the money supply isn't controlled by the Governments of the world, but by small group of ruthless men. These men open and close the money tap to create the booms and busts, wars, social upheaval, etc, and continue the cycle of transferring wealth from the poor and middle classes to the Rich through these booms and busts.

I do agree with you on your last point however, we are definitely better off owning oil, wheat, water, whiskey, shelter, coffee, milk, ammo, etc.

Watch the Money Masters video, and then get back to me.



BSD said:


> You know, the intervention of the RBA into the *air *markets with the objective of maintaining inflation between 2% and 3% over the business cycle.
> 
> With the historically low inflation (created by the freeing of trade and markets in the '90s and the Asian economic boom) - why wouldn't *air *supply be booming in Australia?
> 
> ...


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## BSD (11 June 2007)

Sorry mate, I cannot dignify that with a response.


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## Jikx (12 June 2007)

BSD said:


> Productivity
> 
> Cheaper labour and cheaper debt




I understand that increasing money supply with increasing productivity gives us a low inflation rate. But what if we didn't even bother increasing money supply .. wouldn't we be even better off? We would have deflation, and everyone being better off wouldn't we?

Increasing money supply (from printing money that is) doesn't seem to serve a good purpose!


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## Kimosabi (12 June 2007)

Jikx said:


> I understand that increasing money supply with increasing productivity gives us a low inflation rate. But what if we didn't even bother increasing money supply .. wouldn't we be even better off? We would have deflation, and everyone being better off wouldn't we?
> 
> Increasing money supply (from printing money that is) doesn't seem to serve a good purpose!




Increasing money supply is part of the scam, it creates inflation, or as Ron Paul puts it "Inflation Tax", the value of the Money goes down, which results in the poor and middle classes paying higher prices.  It is a transfer of wealth from the poor and middle class to Big Business and the Central Bankers.


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## Macquack (29 April 2008)

Kimosabi said:


> Increasing money supply is part of the scam, it creates inflation, or as Ron Paul puts it "Inflation Tax", the value of the Money goes down, which results in the poor and middle classes paying higher prices.  It is a transfer of wealth from the poor and middle class to Big Business and the Central Bankers.




Kimosabi, you are a genius. You have cracked the capitalist's code.
Please give us more, and by the way watch your back. We all know what happened to JFK when he stood up to the FED.


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