Why Policy Has Failed

Tyler Durden's picture

Put down the Sunday newspaper; grab a pot of coffee; and call 'mom' and tell her she has to read this. Doug Rudisch has written a far-reaching summary of the true state of the world and 'why policy has failed'. Simply put, there is no faith in the system; real underlying faith and trust in the system, as opposed to the confidence born from economic steroid injections or entitlements. There is more going on than a temporary lull in animal spirits that current fiscal and monetary policy will cure. If that was the case, it would be working already.

Something has to happen to restore our collective faith. And more short term fixes and empty promises during campaign speeches and the State of the Union addresses are not where to do it. Fed policy has worked with respect to increasing the values of liquid securities and real estate, and failed to date with respect to employment and capital investment. This latest massive and expensive effort by the government and Fed designed to encourage CEOs to increase risk-taking has done the opposite and scared them into a shell or at a minimum just not worked. Whatever CEOs are afraid of; ZIRP, QE, building more roads and bridges and paying out more entitlements is not making them unafraid of those things.

We have ended up with a system where the worst of the risk takers have the ability to take the most risk and are currently taking it at extreme levels. We wish we could be more prescriptive and offer more solutions for the problems. But in order to solve a problem, you must first realize you have one. With respect to the Fed, we don’t think the U.S. realizes it has a problem.


Via Michael Krieger of Liberty Blitzkrieg blog,

The essay below is courtesy of Doug Rudisch, a friend and former fund manager, who I have known and respected since my days on Wall Street.  I am extremely grateful that he took the time and effort to so insightfully write on some of the greatest issues facing our nation today and to provide this content to my readers.  What follows below are some of the most powerful passages from his piece and the entire thing is embedded at the end. The whole thing is simply excellent.

What I can say with absolute certainty is that I have lost a lot of faith and trust in the system. And I am not the only one. This sentiment is running at all-time highs amongst business leaders (their collective in-actions prove it) and guys on the street. It is both sides of the barbell and middle that are upset. Often it’s one or the other, but not all three. This time it’s not at an external state, it’s directed inwards. That is a tough problem to solve. Jingoism is not the answer either as we already tried that.


If there is no faith in the system, it has a really hard time working. And I mean real underlying faith and trust in the system, as opposed to the confidence born from economic steroid injections or entitlements. These are valid notions, but as a point of clarity I am talking about a something different. There also is a subtle but important distinction between faith and trust versus confidence. Faith and trust are longer term and more powerful concepts.


There is more going on than a temporary lull in animal spirits that current fiscal and monetary policy will cure. If that was the case, it would be working already.


However as the above chart shows, things clearly changed in the 2003 and 2009 profit cycles as corporate profits surged while employment did not. My explanations:


Starting with the 2009 cycle first. In the 2008 downturn companies eliminated a lot of jobs. The depth of the downturn forced them to make the tough decision. Normally that kills consumer spend due to wage loss. But the government plugged the revenue gap with transfer payments and direct investment. See the green line go nearly vertical and it is fascinating how profit growth has mirrored the trajectory of debt growth. The consumer has started to dis-save again as well. Thus corporations kept the revenue, lost the labor, and voila record margins. You could argue unemployment is being subsidized. Like anything else, when something is subsidized, you tend to get a lot of it.


For example, see the recent new investor activity in single family homes and farmland of all things, including equity hedge funds who apparently think homes are like stocks. Maybe it’s a sign that other asset categories (equities and credit) are getting toppy or inflation expectations are increasing when hedge funds begin to foray into the single family housing market and farmland (some having little or no prior experience in these markets). At any rate, it seems odd and not good to me when policy results in hedge funds buying single family homes and farms.


Sorry Mr. Greenspan we have seen where valuing assets solely on the basis of current rates got us. If we should do that, baseball cards and chewing gum would also be great investments today. My suspicion is from here baseball cards and chewing gum will hold their value over time better than the typical company trading at 15x earnings derived from profit margins that are twice its average levels. And in point of fact according to the CPI the price of candy and chewing gum increased 31% between the years 2000-2012, while the S&P index including this year’s rip is only up 6% since 2000. Yes it matters what the price is that one pays for an asset!


There is much more going on than technology replacing labor at an accelerating rate, globalization, or a structural mismatch of skills to available jobs. Sure they are part of the problem, but not a majority. They are a convenient excuse to rationalize failed policy. Productivity growth was always hailed as a good thing, both in terms of job creation and its ability to contain inflation.


The important similarity to both profit cycles is that they were driven by credit growth that supported corporate revenues above what consumer income alone would have. In both cases corporate profits were the offsetting asset relative to the liability of government and consumer debt. The credit growth of 2003 proved itself not only un-sustainable, but tremendously costly. That loss of consumer credit has now been shifted to the government balance sheet and that of the US Federal Reserve. By definition, this also is unsustainable in some form. Sure it can continue to grow, but if it does at some point I believe it has to resolve itself painfully through higher rates or inflation, some other form of taxation or confiscation, or something else I can’t think of.


Won’t it be interesting if going forward economic cycles are not marked by the supply of excess production capacity, but instead the supply of excess credit which creates asset bubbles as opposed to excess production capacity? I believe CEO’s have more rational expectations than certain classes of investors, namely the renters, who are a very big group collectively investing enormous amounts of capital. Thus policy causes a rice in price in certain asset classes (often as we have seen recently to irrational levels) more effectively than it stimulates investment by businesses in capital or labor. The costs and risks of monetary policy attempting to substitute for un-sound structural policy are much greater than the potential benefits! It just causes asset bubbles and does not drive employment.


Counter- intuitively Japanese gross fixed business investment over the last 10 years has averaged 13.7% of GDP versus the U.S. at 10.5% of GDP, yet Japan has still grown less quickly than the U.S. Monetary policy which doesn’t work perfectly to begin with cannot overcome structural, demographic, or political problems. Oftentimes monetary policy makes these issues worse for numerous reasons including causing capital misallocation and providing steroid boosts that enable politicians to ignore making the necessary structural change that needs to occur for an economy to become sustainably healthy. This may be the worst of all the negative side-effects of monetary policy.


Ultimately either price will decline to meet wages or wages will rise to meet price.


I am sure the Fed believes that if all the sudden this money starts to work its way into the economy and it begins to overheat they can remove money or credit at the exact appropriate time and rate such that excess inflation never happens. They probably also convince themselves this is the better problem to have. The same guys that get every forecast wrong, have missed at least 2 bubbles, and who have been flummoxed by QE and ZIRP not doing what they thought it would, think they can anticipate all the global knock-on effects of this policy action and also remove the stimulus at exactly the right time and rate and engineer a smooth landing?


Where I may be understating QE’s impact is the excess liquidity and consumption that has entered the economy through specialty finance companies (consumer finance, mortgage REITs, etc.). Specialty finance companies and mortgage REITs can access capital from banks via securitizations and the repo market incredibly cheaply now (30 day rate currently 15bp) because banks have excess reserves, and then turn around and lend it, which they have started doing aggressively again (and last time this did not end well). So some segments of the economy may have received disproportionate liquidity from QE. Here are some data-points and they are scary about the degree to which certain segments of the economy seem to have re-bubbled or over- consumed due to ZIRP and excess liquidity:


  • The average maturity for car loans to borrowers with blemished credit contained in asset-backed securities surpassed 70 months last year for the first time since at least 2005, according to Moody’s Investors Service, which uses General Motors Co.’s GM Financial as a bellwether for the segment. All loans longer than 72 months more than doubled to 14 percent as of April 20 from six percent in 2010, according to J.D. Power & Associates.
  • Auto loans which specialty finance companies crowded into that were made in 2012 are already running at a rate of non-performance that equates to the 2006 vintage which had the record rate of non-performance
  • Auto sales back to roughly 2007 levels when U-6 unemployment was about 8% and now it is 14%. How does that make sense and how is it good to once again pull a bunch a demand forward and put cars in the hands of people that may not be able to afford them, which previously helped bankrupt the industry and cost taxpayers $25b and counting
  • Covenant-light loans on pace to break 2007 record issuance, already at $88b YTD (April) versus 2007 peak of $97b.


The Fed has adopted wealth effect driven policy for a long time, but it is only making people poorer. As I pointed out real median annual household income is 8% lower than it was in the year 2000. And it is not creating jobs.


By way of analogy and not to belittle the severity of either event, 9/11 became an excuse to try to occupy two countries amongst other things. Now we are figuring out it didn’t turn out so well and was very costly. Similarly the financial crisis turned into an excuse for certain economists and politicians to uncork experiments and spend money like it is going out of style. Hopefully the latter turns out better than the former. But so far, both events have led to an enormous amount of wasteful and failed government expenditure and intervention which has ballooned our deficit and diminished our influence on the world stage.


We have ended up with a system where the worst of the risk takers have the ability to take the most risk and are currently taking it at extreme levels.


And by doing it to the degree it is, the Fed is acting as if it has 100% certainty it is correct when what they are directionally doing has a long history of ending badly.


It would be interesting if the American public were able to vote on Fed policy. Both sides argue their views in several very public debates, and the population votes. My strong suspicion is ex those in the financial industry, the vote would be a resounding no.  And it would be by a larger margin than by what the current president was elected with. So is the Fed having all this power and leeway a good structure? Maybe. Democratic? Certainly not.


And to be clear, I am not arguing the Fed should be politicized or even become a democracy. I do think part of the problem is it has become politicized. But I am arguing there needs to be a stricter limit on what the Fed’s powers are and how they are measured as the current governance mechanism (the mandate alone) and measurement system (the CPI and employment) has given them too much leeway.


The twelve members of the FOMC average 57 years of age with a standard deviation of only 4.5 years. The three members of the President’s Council of Economic Advisors average almost the same 56 years of age with a standard deviation of only 2.6 years. All PhDs, and a big overlap in academic institutions. Talk about a tightly grouped bunch. Now this does not guarantee they all think the same way (come from same school of thought), and self-selected themselves, but it sure increases the chances.


No system will work optimally if everyone thinks the same way, anchoring and confirmation bias will just take over. If there are twelve people in a room, and they all think the same way, you might as well just have one. As CEO if one pursues a strategy and it doesn’t work, you change it, or lose your job. In investing, if you make a bad investment, you sell it. In life, if you are in a bad relationship, you change your behavior, or end it. But apparently in economics, if a policy isn’t working, you sit in a room and agree with each other that it is great and do more of it and get promoted through the system?


As a reality test, how about a simpler basket comprised of actual home prices, college tuition (which by itself is interesting because a lot of cost factors are embedded in college tuition including labor), food (maybe just the prices of a Big Mac which are up 5.2% per year since the end of the recession and labor is also part of the price of a Big Mac) and energy (gas) and health insurance prices (includes labor). Look at how these actual prices have changed and then tell me whether or not there is inflation. Is it a perfect measure? Probably not. An interesting reality test and point of compare? You bet! And it is probably a fair bit closer to what the average consumer seems to be feeling now. This basket also would have set off giant red flags about Fed and Government policy long before the financial crisis reared its ugly head in 2008.


I wish I could be more prescriptive and offer more solutions for the problems. But in order to solve a problem, you must first realize you have one. With respect to the Fed, I don’t think the U.S. realizes it has a problem, so that is why I picked on that issue, and did my best to provide potential solutions.

Full essay is embedded below.  It’s most definitely worth your time.  Enjoy!

Why Policy Has Failed23_1

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IMA5U's picture

we are doomed 


buy some gold and a shotgun

freewolf7's picture

"And what would you like to DO?"

BoNeSxxx's picture

Step 1: We realize that we are powerless over propaganda and that our fiscal affairs have become unmanageable.

Pooper Popper's picture


Is that you Joey....Dont you have V.P. things to do?

sgt_doom's picture

Excoooooossse meeeee????

Risk takers??????

Is somebody on drugs again?

We've read articles here on how Goldman Sachs does the majority of trading on the NYSE, utilizing HFT in micro-second burst trades, while paying paltry criminal penalties for the consistent crimes of financial fraud, and that the NYSE is being purchased by the InterContinental Exchange (ICE) which is owned by Goldman Sachs, Morgan Stanley, the oil companies and Deutsche Bank, etc.  (And that double jeopardy in law has been discontinued where Goldman Sachs is concerned --- continuously suing Sergey Aleynikov for the same exact thing over and over and over again...)

We already know that the top banks own the largest hedge funds, and the next subset of the largest hedge funds are directly owned by the super-richest families, and that the top banksters and oil companies own all the financial exchanges and clearinghouses (NYSE, Goldman Sachs, JPMorgan Chase and Credit Suisse own DTCC, beginning to see the ultra-monopoly of interlocking ownership, doods?).

Where's the risk in an ultra-monopoly where they have the ultimate weapons:  (1) unlimited number of futures contracts bought and sold for financial manipulation and leveraged speculation; (2) unlimited number of naked swaps for financial manipulation of the highest order; (3) naked short selling thanks to DTCC's Stock Borrow Program and virtual capital for those stocks NOT EVEN IN PLAY, etc.; (4) unlimited number of investors allowed in hedge funds, highly opaque to begin with, etc.; and, (5) LIBOR rate and ISDA/Thomson Reuters' interest swap rate manipulation?

Risk taking my barbously hard ass. . . .

Breaking News:



francis_sawyer's picture

The ultimate laugh is that the 'hubris' of TPTB, in an effort to control everything, will eventually be the cause for dismantling themselves & the spheres of influence that they've stumbled upon & into...


The sad part is... That the 'watercarriers' of that effort aren't going to be treated very well by the disorganized mobs that follow in that wake...

Waterfallsparkles's picture

There will be no disorganized mobs, UNLESS they stop paying Food Stamps and Welfare.

q99x2's picture

Just about too late to send the money directly to the citizens. The big machine has already begun turning against them.

Hillary was a good example last week. Once this turns it will quickly gain momentum. As soon as Holder is ousted it is on.

Banksters you better git while the going is good.

JoeSoMD's picture

Sorry q... I didn't "get" your comment about Hillary... please explain.  Please also explain why you think Holder is on the way out.  I don't see it but I am interested in your perspective.

observer007's picture

Its becoming serious:

Deposits in Danger: BCG wants haircut for everyone of 11-30% to solve debt-crisis / US-wealth tax of 25%


Wealth and Savings In Danger: Bosten Consulting Group (BCG) wants haircut for everyone of 11-30% to solve debt-crisis. In the US a one-time wealth tax of 25% of financial assets would be required.


For most countries, a haircut of 11 to 30 percent would be sufficient to cover the costs of an orderly debt restructuring. Only in Greece, Spain, and Portugal would the burden for the private sector be significantly higher;


freewolf7's picture

When it becomes serious you have to lie.

orez65's picture

"... wants haircut for everyone of 11-30% to solve debt-crisis."


You have to be a fucking moron to believe that!!

They will just SPEND whatever money they steal from us

smartstrike's picture

There is no DEBT crisis----the problem is wealth accumulation.  Once wealth tax is set at 90%, there would be no DEBT.

Urban Redneck's picture

Only if you can collect on mark-to-myth accounting valuations.  

There is also a not-so-minor counter-intuitive issue with the (believe it or not) limited fiat money supply, not being large enough to absorb 30% liquidation, much less a 90% liquidation.


Rick Blaine's picture

For a second there, I thought your comment was about the still ravenous demand for good bolt carrier groups (BCGs)...

Bravo Company still can't make them fast enough.

GVB's picture

I think that BCG report was released in 2009. Correct me if I'm wrong

Rick Blaine's picture

Had I been in the room when she said that, I would have slapped her...actually, no...I would have punched her, criminal charges be damned.

I bet it would have mattered to her if one of those four people were her friends/family.

Although I never really liked her per se, I used to at least have SOME respect for her...

Now I think she's a waste of oxygen.

sethstorm's picture

Businesses also love unemployment since it provides the means to avoid competitive forces while using a different set of competitive forces (the proverbial "long line of labor outside the factory" on the national and global scales) to make things worse for the people that work for them(where monopsonistic forces are not just for the unskilled, but for many in the First World).

There is only so much that can be attributed to government(which is a lot) before the fault is on businesses that have an overdose of entitlement mentality - an amount that eclipses everyone else accused of having it.

It's one thing to say that policy is failing.  It is another for the private sector to stand up and *want* to solve the problem versus using it as a grindstone against the people that work in it.



kaiserhoff's picture

Of which business do you speak?  Your sister's lemonade stand?

The private sector is much smaller, but it still exists, and real business needs demand, not Bennie loans.

orez65's picture

"There is only so much that can be attributed to government ..."

Like spending $1.5 Trillion per year more than it collects in taxes and fees!

Like the Iraq, Afghanistan and Lybia wars!

Like fiat money and fractional reserve banking!

Doesn't leave much for the private sector.

chunga's picture

Financial predators at the top of the "private sector" are one and the same with govt.

Waterfallsparkles's picture

Who has confidence in a system such as Wall Street when you have HFT frontrunning every trade.  Insider Trading, including Congress and the Senate.  Early release of financial data to all Financial Insiders, prior to the public.

The FED itself "managing" the Market.  Or rigging the game so that all of the Money created goes to the Wall Street Crowd and the Bankers.

Wall Street waiting for YOU to put your Money in before yanking the cord and crashing every stock, so you become that "Long Term" holder waiting 10 or more years just to get your money back.  Tech Reck 2000, 911 in 2001, Financial Crisis 2008, Flash Crash, etc.

Doctor of Reality's picture

I agree, but when the "dollar cost average" line starts being talked... the sheep start to tune you out.

Does anyone know what $10,000 invested in the DOW index in 1971, with let's say $1,000 added each year, is worth today? Compare that to $10,000 in gold in 1971 with $1,000 in gold purchased per year.

I'm betting the guy with the gold has more buying power today... but I could be wrong.  

Waterfallsparkles's picture

I love when they talk about being a "Stock Picker".  That means to me that the Market is going down.

They try to indicate that by being a "Stock Picker" that "They" have the key to know which stocks will survive and do well and that you cannot be trusted with your own money and you have to give it to them to manipulate.  The problem is that all of those "Stock Pickers" will put your Money in the most Momentum Stocks and lose it all for you when the Market goes down.  Most people with common sense would not put Money in a Stock at the top, just because there is too much downside risk.  Kind of like where the Market is now.  But, Money Managers will plow your Money in like there is no tomorrow.  If you lose, oh well, they are sorry they did not see it comming.  But, who takes the loss?  YOU.

lotsoffun's picture

flash crash was a real cutie pie.  i remember watching on my bloomberg while i was at a small investment bank with junior members.  the rise was incredible. the money the big boys made had to be beyond belief.  nice stunt.  will be a long time before they play that one again, but, they got away with it.....  with zirp, they don't currently need it.


1C3-N1N3's picture


I believe it has to resolve itself painfully through higher rates or inflation, some other form of taxation or confiscation, or something else I can’t think of.

Something like war?

ekm's picture

Fed policy has failed because financial policy is useless if east asia producing everything we consume.

JoeSoMD's picture

Isn't printing the only way to counter this?

Waterfallsparkles's picture

I think the inflation index should be based on Food, Housing, Gasoline, Heating Oil, Health Insurance Costs.  Things that people use every day for living.

Bernanke says he has one of the best records for inflation but the index excludes everything that people use every day.  No wonder if you do not count the things that go up the most then the index will not reflect the true amount of inflation.

It would also be interesting if they also considered the lower income levels in the US to show the true loss of purchasing power of the American People.

akak's picture

Waterfall, you bring up an interesting point regarding the CPI.  As manipulated and lowballed as we all know the CPI truly is (all of us except JimmyJames, perhaps), it almost exclusively only includes and measures the prices of tangible goods such as food, gasoline, and clothing, aside from the cost of certain services and the laughable "owner equivalent rent" when it comes to housing.  But what about necessary costs, such as taxes, fees, and insurance --- particularly mandatory insurances?  Are those not just as much a "cost of living" as food or clothing as well?

Waterfallsparkles's picture

How about adding in the increase in Stock Prices into the inflation index?

As far as the way they calculate food it is deceptive.  They may say that a can of tuna is the same price but they do not take into consideration that you are getting 1 or 2 oz's less.  Same with things like ice cream.  The cost is about the same but instead of getting a gallon you get 1.5 pints.

Mineral-Invest's picture

"They may say that a can of tuna is the same price but they do not take into consideration that you are getting 1 or 2 oz's less."


Yes "they" do take that into consideration. "They" claim that the quality increase of that can of tuna is of such a great importance that it negates the fact that you recieve less tuna. Less bang for you buck? No, "bang" apparantly also means quality.


Dont forget that "we" are fat and shouldn't eat so much food. Problem is, we eat cheap and high energy food. Which in turn makes us fat. Which in turn lowers the CPI. Which in turn gives "them" incentive to give us cheap food.

Waterfallsparkles's picture

I agree with you.  I like to buy fresh vegtables and fruit.  It is just amazing how much they have gone up in cost.  Over a 4 year period a pound of  apples costs now as much as a T bone steak per pound 4 years ago.

I do not even eat beef anymore.  Switched to Port or chicken.  But, fresh vegtables being my weakness I pay up.

Diogenes's picture

They don't even count food, housing or gasoline anymore because, well, they went up too much. Because of hedonic adjustments, your cost of living has gone down. This means if your new TV cost more than the last one but has a bigger screen, really your cost per square inch went down. And if your new car is better than the one you trade in, it is cheaper even though it cost more.

So, your cost of living is not really going up as long as you eat your TV and live in your car.

phoolish's picture

Yea.  They take the risk but never have pay for their failure(s).

Everyone I know, even every J6P knows this deal is corrupted beyond repair and are definitely not happy about it.

There is a breaking point somewhere.  Joe won't take it forever.

The savers & prudent are being crushed.

W T F II's picture

All Great Stuff, BUT....It doesn't matter, because NWO is coming VERY SOON (and not the "kook-fringe" version..!!):



All Because:


Look for metals to get pounded...AGAIN

$ to SPIKE

S+P to tank

Then, "The Collaborators" will roll out the "SOLUTION" before year-end. Here is the template:


Mr. Hudson's picture

Good post! More people should be educated about the "Triffin Dilemma". I agree with you about metals and the dollar. Money is going to get very tight.

Dyhana's picture

if it gets any tighter i'll be living in my car and considering how my cat might taste marinated and roasted over a campfire.

JoeSoMD's picture

Yeah... great post... it's the type of post that makes wading through much of the pumping and other nonsense on ZH worthwhile.

sitenine's picture

I have plenty of faith in the system...


I have faith that the system is, and will forever be, centrally planned.

I have faith that the system will 'grow' its way into a corner.

I have faith that the system is a ponzi.

I have faith that the system is unsustainable.

I have faith that the system places more importance on financial growth than real growth.

I have faith that the system is now a means to its own end.

I have faith that the system will, one day (soon), stop growing.

I have faith that the system will die when growth stops (it actually already has).

I have faith that the system has conned a lot of people who will suffer greatly and still do nothing to change anything.

Gunga's picture

Did they think we would stay within the system despite the constant lies and outright theft ? Do they not realize that there is a point at which we have to " go Galt" to protect what we still have ?

smartstrike's picture

Going Galt is a neo-Liberitarian LIE.

Doctor of Reality's picture

"Going Galt" is deciding to lessen one's lifestyle so one can work less. Going Galt means living on $8/hr if you make $10 and on up the wage scale. Going Galt means not hiring another employee or buying more equipment that needs to be financially serviced; and either taking on less work or paying staff more for their additional labor. 

Consider a medical provider who charges for "office visits". What makes more sense for them individually:

Seeing 3 patients/hr at $50/visit = $150/hr CASH... 


Signing up for Medicaid and accepting $35/visit and then seeing 5 patients/hr = $175/hr

Sure, they get to make 17% more, while working 66% harder!!! Add to that their patients get 40% less time with them!!! Not to mention the regulations!

I'm in the process of "going Galt" my friend!

Hail Spode's picture

The problem is not that the Fed is too politicized, or not politicized enough.  It's not that all FOMC members are almost the same age.  The real problem is that government cannot be trusted with money.  Period. This is the obvious lesson of history since before the Romans started devaluing the denarius.  

Even if you ended the fed and brought back a gold standard, within a few decades they would start to look for ways to welch on it.   Since any issuer of money stands to gain when they violate the implied contract of maintianing the value of the money that they issue, it is clear that government should not be permitted to issue any money.  It can't be trusted to enforce a contract to which it is a party, not when the benefits from welching are so enormous.  Government should be banned from issuing money, and be strictly limited to enforcing the implied contract of the value of hard money between issuer and user.  That concept is a part of a philosophy of government called Localism http://www.barnesandnoble.com/w/localism-a-philosophy-of-government-achbani/1114141668

Let's remeber that for when this whole thing comes down and it is time to build America 2.0.  There are people reading this board that may be among the re-Founders.

sitenine's picture

"Government should be banned from issuing money" ?

I'm not sure I understand you here. Don't you mean the FED should be banned from issuing money at interest TO the government, and that the government should issue OUR own money? I get your local philosophy, and I appreciate the value of the argument - I'm just wondering whether or not you see a difference between privately issued money (which we have now) and government issued money (which is what the constitution mandates)?

Professorlocknload's picture

I think maybe the implication is 'money vs. honest money.' A whole 'nuther subject.

Minting gold and silver coin, by government for issuance is not the same as producing the raw material.

That said, I just don't see a distinct seperation between the FRB and the US Treasury these days.

Fiat Worlds are like that.