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Thanks for transcript. I agree with what he says in principle, but think Ron Paul is a bit too dramatic with "central planning" comparisons.


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In this case I do not think it is a matter of drama/not drama. When the Fed tries to create certain results by artificially setting something like interest rates as opposed to allowing the market to price them - that is the definition of central planning.

The Fed is attempting to fix the cost of borrowing money. It is economic interventionism of a massively mind boggling scale (trillions) carried out with the idea that the central planning committee (Fed Board) knows what the proper cost of borrowing money should be. I do not see how it could be construed as anything but central planning.


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This is absurd argument - by such logic any influence on market is planned economy.

FED's mandate is to regulate economy, you can make a case that QEs are overstepping boundary of this mandate, but you CANNOT argue that any influence/regulation is "planned economy". I am well aware of Ron's opinions on FED, but when you stretch your argument past the breaking point it detracts from your argument, not adds to it.

Plus, I don't think "pure market economy" where only market dictates everything COULD work. It would corrupt almost instantly into oligarchy. Its unworkable, just like "planned economy".


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Absurd? I do not think you realize the magnitude of this type of meddling. This isnt capping the price of carrots for a week.

I am not arguing that "any influence" = planned economy. If you get that from what I said, you are showing a lack of understanding of the topic. What I am saying, is fixing the price of money is central planning - because it is. There are two ways to set the price of money, one is letting the market decide , and one is artificially setting it via policy. It is quite clear which is happening here. This is not a "nudge" or an "influence" , this is "we are going to produce X volume until price reflects Y" , and they are doing it because they believe that doing so will produce "Z effect".

If that is not central planning, then what is?

Secondly, the mandate of the Fed is not to "manage the economy". The Fed has two congressional mandates - one is to keep the dollar and inflation stable, the other is to strive for maximum employment. Neither of which objectives are being helped by this massive devaluation of the dollar/funneling cash to connected entities.

You want to talk about corruption and oligarchy... you have things backwards. The Fed is creating and maintaining oligarchy by handing out free money to a select group of.... oligarchs.

Go learn ye some economics before trying to call uncontroversial observations of fact "absurd".


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Originally Posted By: Derid


If that is not central planning, then what is?



Derid, you don't know what you are talking about. Central planning is deciding how many tractors per farmer should be produced in the next 5-year and building a factory to do just that.

Saying applying (arguably misusing) control is central planning is like saying brawl in the bar is a holocaust.


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Originally Posted By: Prism
Originally Posted By: JetStar
Stock market up over 7000 points


Ratings agency firm Egan-Jones on Friday downgraded the U.S.’s credit rating to “AA-“ from ”AA,” citing the Federal Reserve’s decision to go through with a third round of quantitative easing (or QE3).

The agency claims QE3, which is open-ended and unlimited, will drive down the value of the dollar, raise commodity prices, and do little to increase real gross domestic product.

Here’s the statement:


the FED’s QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality. Issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities (see the recent rise in the prices of energy, gold, and other commodities).


It takes longer than 3.5 years to come back from the great recession. We were losing 850,000 jobs per month when Obama came in to office.

I just wish the Republican House was more interested in turning around the economy than defeating Obama.


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Originally Posted By: JetStar
I just wish the Republican House was more interested in turning around the economy than defeating Obama.
First Things First.

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Last edited by Prism; 09/24/12 07:04 PM.

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Originally Posted By: sinij
Originally Posted By: Derid


If that is not central planning, then what is?



Derid, you don't know what you are talking about. Central planning is deciding how many tractors per farmer should be produced in the next 5-year and building a factory to do just that.

Saying applying (arguably misusing) control is central planning is like saying brawl in the bar is a holocaust.


Sinij.... sorry bro, but I have got to do this to you.

"Economic planning refers to any directing or planning of economic activity outside the mechanisms of the market. Planning is an economic mechanism for resource allocation and decision-making held in contrast with the market mechanism. Most economies are mixed economies, incorporating elements of market mechanisms and planning for distributing inputs and outputs.[1] The level of centralization of decision-making ultimately depends on the type of planning mechanism employed; as such planning may be based on either centralized or decentralized decision-making.[2]"

The entire Federal Reserve system is a system of *central planning*. That is what the Federal Reserve IS. They DECIDE HOW MUCH MONEY GETS MADE. What ELSE COULD THAT BE BUT CENTRAL PLANNING. Sorry for the caps, but before calling other people names you AT LEAST NEED TO LEARN THE BASICS OF WHAT YOU ARE TALKING ABOUT.

I did not say we live in a completely *planned economy* , if that is somehow what you are thinking - simply because your extremist liberal brain saw a "liberal trigger phrase - central planning " and decided to stop functioning , and start ranting against imaginary something.

We live in what is called a mixed economy, with elements of free market and central control.

The Federal Reserve is a mechanism of central planning. It decides how much money gets made. That is central planning. There is nothing else it can be. If it is not, you need to somehow figure out how to describe what it is... because it sure aint the market that decides how much money gets created.

Now The Fed is using this power to centrally plan how much money gets created, combined with their unregulated power to loan as much printed money as they want, to artificially set the price of loaning money and distort the market.

Like I said, unsold T-bills just go on their own balance sheet. The market is not deciding what it will pay for a T-bill. The Fed is now arbitrarily deciding what that T-bill is worth. This is an extension of central control, and an increase in the level of central economic planning found in our system.

This is not speculation, or political word playing, or even an argument - this is simply what is happening. Its not a matter of opinion, its not a matter of politics, its not a matter of perspective.

Judging from your wording, you seem to think that central planning is only present if the govt controls *everything*. FYI, it is not an all or nothing proposition. We live in a mixed economy, but the Fed is inducing a much ratio ratio of control in that mix, and bringing with it all of the malinvestment and misapplication of resources one expects in the face of higher degrees of central control.


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I am surprised you decided to double-down on this.

Planned Economy

Quote:
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency.

he most extensive form of a planned economy is referred to as a command economy, centrally planned economy, or command and control economy. Implementation of this form of economy is called planification.


When right uses "central planning" they refer to "command and control" economy. It is often even paired with "X is central planning and will lead to communism". Typical concern being that any government intervention will take us closer to communism. This is irrational fear from by-gone days of Cold War. When Ron Paul ranted that FED is "central planning", he wasn't complaining about controls, he was hitting common right's talking point with "and is communism" left unsaid but well understood.

You are right, US is mixed economy. Pure free market, just like command and control economies are highly inefficient. Some regulation always have to exist, some planning always have to be done and some decisions always better be left to free enterprise and market forces. Drawing ideological lines in the sand, instead of following pragmatic rules, is what causes most economic damage.

It is illogical to attack FED for exercising controls over economy, it is in FED's mandate. Equating such controls to "central planning" at best tautology, and at worst (with unsaid, but well-understood implications) gross misrepresentation and pandering to the illiterate right.


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So you are saying "when right uses the term" , instead of going by what the words and terms *actually mean*. I dont care what you think the "right means" when "the right" uses the terms. I used them properly, and accurately. So far despite your complaining you have yet to demonstrate accurate usage of the terms.

Like I said, you saw a certain phrase - and your brain shut down and you started ranting against imaginary somethings. You also go far afield and rant on "some economic blahbblah regulation always needed"..... so what? What has any of that got to do with the price of tea in China, or this discussion? (hint: it doesnt.. have anything to do with discussion. Perhaps it is relevant somehow to the price of tea in China though)


The problem at discussion here is not "some slippery slope" - the Fed decides how much money gets made. That is a mechanism of central planning. Sorry, it does not apply to only tractors. Our monetary policy is centrally planned. Incidentally, the fact that the Fed performs this function was not, in general, the target of the criticism here. The fact that they have been and plan to hand out so much free cash to certain entities, and artificially floor interest rates is. Its bad policy, and deserves criticism.

Mandate of the Fed-

In 1977, Congress amended The Federal Reserve Act, stating the monetary policy objectives of the Federal Reserve as:


"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates."


Regulating the economy is not what they do. The Fed sets monetary policy. As far as the logic of criticizing them, well the actions they are currently undertaking undermine the objectives laid out in their mandates - especially in regards to stable prices specifically. Perhaps you believe they should be handed a cookie for creating bubbles and causing inflation?

You speak in generalities, and try to make rational-sounding points as if you were making a rebuttal but I honestly and sincerely encourage you to actually go learn something about economics and the mechanisms at play here.

You are tilting at windmills my friend.


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