Hello Wayne,

[..]

 >> Griffin does not have a very good grasp on how things work.

 WH> It was you who recommended me the book. :-)

Highly. Very highly. It is the best. The very best. And I am not
the only one who recommends reading this book. It is a true classic,
and is extremely popular among many, including some US Senators.

https://tinyurl.com/st3feq3


 >> The Congress does not spend money. It appropriates funds. The
 >> Department of the Treasury is part of the Executive Branch, not the
 >> Legislative Branch. How can the Department of the Treasury sell what
 >> it cannot own?

 >> It's kinda like robbing Peter to pay Paul. There has to be a victim,
 >> even if that victim never realizes he/she is the victim.

 >> Paper bills and coins made of metal have no real value. People are
 >> able to spend it as "legal tender" only because government endorsed
 >> it. Otherwise, those paper bills and coins made of metal would be
 >> just as worthless.

 >> IOW, people spend it because they believe it has value. If they did
 >> not believe it had value, it would be used for something else.

 >> Some people like to save it rather than spend it. But what they
 >> are actually doing is allow other people to spend it since they are
 >> not spending it themselves.

 >> See how that works? Are you catching on yet?

 >> What Griffin calls the "Mandrake Mechanism" is his way of trying
 >> to put the blame on inflation as being the root cause of all evil.
 >> But if you take the time to analyze what is really happening, you
 >> will find deflation to be far more destructive than inflation.

 >> If you want to make money you have to spend money. Preferably
 >> other people's money. Saving money is losing money, since all money
 >> loses value over time. And you are talking about paper bills, which
 >> have no value to begin with.

 >> Austerity has never worked in the past. It will not work now.
 >> And it will never work in the future. What happens, is people just
 >> wait. And wait. And wait. For prices to drop. And drop. And drop.
 >> That is no way to build an economy.

 >> The idea of fiat money, or scrip, is nothing new. People place
 >> value on objects of their own choice, or what the leaders of their
 >> tribe have dictated. Even primitive societies use fiat money.

 >> We could just as well be using snake oil. The people of Yap use
 >> giant round stones as their currency. They haul these giant stones
 >> from island to island, hoping their canoe does not sink along the
 >> way.

 >> How much gold is stored at Ft. Knox? Or at any vault in the US?
 >> If Germany requested the US to return its stash of gold being held
 >> in US vaults, would the US comply? I doubt it.

 >> Suppose the US no longer has the gold it was storing for Germany.
 >> What would happen to whatever investments the US has in Germany?
 >> If I was holding your gold, and you wanted it back, and I couldn't
 >> find it, you would not be a happy camper.

 >> Back to the original question.

 >> How can the Fed give money to the Congress when the Fed has no
 >> money of its own?

 >> The Fed can print money. Or what it calls money. As much, or as
 >> little, as it wants. It can raise interest rates. It can lower interest
 >> rates. It can do lots of other things. It can create, and control, what
 >> is commonly called "money". But what happens when all the money that
 >> is printed gets out of control?

 >> We know what happened in Germany. People had so much money they did
 >> not what to do with it. Then came Hitler, who gave Germans everything
 >> he promised, and more.

 >> We also know what happeed in the USA. People had no money, and did
 >> not know what to do. Then came FDR, who gave Americans everything he
 >> promised, and more.

 >> Yep. If you want to make money, gotta spend money, preferably other
 >> people's money. Kinda like robbing Peter to pay Paul.

 WH> I appreciate your attention.  You're not answering the question, but I
 WH> take responsibility for it.  I didn't express myself well.  The question
 WH> has been snipped, so I'll have to recover it.

That's okay. The article I cited above does give a very concise, and
accurate, answer.


 WH> --88---
 WH>   On page 192 of the 5th edition, George Edward Griffin begins to describe
 WH>   the ``Mandrake Mechanism''.  I was warned that the process might not
 WH>   make much sense, but I'm not trying to find any sense in this.  My
 WH>   interest in only in clarity.

 WH>      ``First, the Fed takes all the government bonds which the public does
 WH>      not buy and writes a check to Congress in exchange for them. (It
 WH>      acquires other debt obligations as well, but government bonds
comprise
 WH>      most of its inventory.)''

 WH>   Let me take each step carefully.  The government issues bonds.  Some
 WH>   people buy it.  Some bonds are not bought.  How does Congress get
 WH>   involved in this?  Is it the case that Congress buys all those people
 WH>   did not buy?  With what money does Congress buy?  Is Griffin saying that
 WH>   the Fed itself ``writes a check to Congress'' so that Congress can
 WH>   afford it?
 WH> --88---

 WH> As I tried to convey above, I'm interested in understanding each step of
 WH> the process with a maximum of clarity.

The process is very simple. Robbing Peter to pay Paul.

I'll give you a recent example.

President Obama had to deal with a huge financial crisis when he
took office. One of the programs he initiated (through the Congress)
was his "Cash for Clunkers" program. People could trade in their
old cars that did not run for a few thousand bucks, no questions
asked. This program saved US car companies, which had been having
a very difficult time selling their new cars. See how that works?
Robbing Peter to pay Paul.

 WH> Child A slapped child B in school and there is no question as to the
 WH> fact --- it's been filmed by a security camera and many people have
 WH> already seen it.  Parents are making a whole fuss about it.  A meeting
 WH> has been scheduled.  Some claim it was an act of evil and others said
 WH> it's just normal children stuff.  These are all profound questions.  All
 WH> I'm asking is to see the video: it must show the fact and I haven't seen
 WH> it yet.

 WH> My own attempt at answering the question might clarify, but it won't be
 WH> as clear as I would like it to be, so please rewrite it or fill it in as
 WH> you can.

The writer of the article cited above answers your question in a way
that is direct and to the point.

 WH> Governments eventually find themselves having spent all the resources
 WH> they had.  More resources are coming all the time through the revenue
 WH> service, so when pockets are empty they could first check with the
 WH> Department of Treasury whether they've earned some more in the meantime.
 WH> Suppose the answer is no: the government has spent it all from their
 WH> ``last paycheck''.  They'll need a plan B.

There is no plan B. When government runs out of revenue, no services
can be provided. IOW, there is no government. All that is left is
"laughable bullshit". Nothing more, nothing less. Time to hang it up
and milk the cows. All by yourself.

 WH> As a plan B, the government decides to sell bonds.  Some people buy it
 WH> because it's considered by many a very good investment, after all it's
 WH> the treasury promising to pay it back with an interest.  However, after
 WH> selling all securities people were willing to buy, they still didn't
 WH> raise all they needed, so they need a plan C.

There is no plan C any more than there was a plan B.

 WH> As a plan C, the Treasury approaches the Federal Reserve to provide the
 WH> resources they couldn't raise by themselves.  The Federal Reserve
 WH> provides the Treasury with _something_ that allows the Treasury to let
 WH> government start spending, which they do.  From here on money starting
 WH> flowing hand in hand as payments are made and banks go on lending it to
 WH> whoever borrows and earning interests over their ``excess reserves'' ---
 WH> for sure the best business model there is.

The Fed does not have an army. And all armies need to get paid.
No money, no soldiers. No soldiers, no army. It really is that simple.

 WH> So, when Griffin says ``the Fed takes all the government bonds which the
 WH> public does not buy and writes a check to Congress in exchange for
 WH> them'', perhaps he means that the Federal Reserve buys all bonds the
 WH> public did not buy, letting the Treasury raise the resources they wanted
 WH> to, but couldn't do it themselves alone (because people just didn't buy
 WH> it all.)

Griffin is taking one kernel of truth and then adding a whole lot
of "laughable bullshit" to his argument. His ideas are unsupported
and unsubstantiated. No credence whatsoever. But his book is a very
fun read. Loads and loads of fun.

 WH> It should be clear now that I'm interested in the process.  I may not
 WH> know whether we are counting cats or dogs, but I should be able to see
 WH> the arithmetic in clear steps.  If I've counted 3 things already in day
 WH> 1 and then I count 4 more things in day 2, then putting these two days
 WH> together, I've counted 3 + 4 = 7, which I verify by looking up my
 WH> addition table, which is something I assume to be correct.

Oh, I am sure you and others are able to count just fine. Next post
I am going to roast Griffin's "mandrake mechanism" over very hot coals.
And see if there is anything left when the flames subside. Feel free
to comment on my upcoming analysis.

 WH> Thank you!

Griffin argues for abolishing the Fed, citing seven reasons in his
book. However, all his arguments are "laughable bullshit", as noted
by critics of his work.

According to Griffin, the real problem is ideologies and philosophies
such as collectivism (the group is more important that the individual).
His view is to get rid of anything and everything that even smells of
collectivism. Kind of like a John Bircher on steroids.

The Federal Reserve was created in late 1913 as a central banking
system in response to a string of fincancial crises. Then came WWI.
And the US entry into that war. Then the Spanish Flu pandemic of
1918/19.

Now, if only President Trump had a PhD like Woodrow Wilson, we might
somehow survive ...

--Lee

-- 
We're Great In Bed

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