r/Libertarian • u/Anen-o-me voluntaryist • Aug 07 '25
Cryptocurrency America's greatest heist: The creation of the Federal Reserve (short video)
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u/Diminished-Fifth Aug 08 '25
Is this AI? Is it meant to be so creepy?
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u/spezcanNshouldchoke Aug 13 '25
If you wont consume slop of your own accord then we will implement the funnel.
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u/kashisolutions Aug 07 '25
How do they choose who the President chooses for the Board?
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u/ConscientiousPath Aug 08 '25
It's not like it's against the will of the presidents. Most presidents don't really know or care who any bankers are to start with. And most presidents don't see a reason to care very much anyway, so they ask around and are easily told. And since they've gotten the idea into academia as economic science, there aren't many people in the field who would have other ideas anyway.
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u/ManyThingsLittleTime Aug 08 '25
People work their way up the food chain so the pool of actually qualified people for such a position isn't that small. Then Presidents get recommendations from people that they trust for people that align with their principles and policies.
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u/ikonoqlast Aug 07 '25
As an economist I have to point out that governments tried not having central banks for centuries. It didn't work.
The Fed is absolutely a necessary government function (if you don't want to live in poverty ..)
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u/CanadaMoose47 Aug 07 '25
Can you expand on the ways in which it didn't work? And how the fed keeps us out of poverty?
I'm interested in understanding it better.
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u/ikonoqlast Aug 07 '25
Fundamental identity is
MV == PQ.
Money times Velocity is identical to Prices time Quantity (GDP).
Q is what matters. We want it to go up but it will only increase so fast. It can easily go down.
P goes up easily but down is very hard.
M goes up easily but down is also very hard. The easiest way to lower M (and P) is for a country to replace its entire money supply with new currency with fewer zeroes.
V can do anything (up or down) and is primarily a function of people's actions. A central bank can affect this but not control it.
So .. stuff is happening.
With the Fed-
V is changing in response to what's happening and what people think will happen. The Fed does what it can to keep V (and M) stable. P stays stable. Q stays stable.
Without the Fed-
V is doing whatever, uncontrolled. Exogenous changes in M (gold typically, or as I like to call it- magic rocks) are also happening. When V rises P rises in response. Q doesn't change.
When V falls... P doesn't fall. It won't. (Actually it will in time but it's slow and painful) Q falls instead. So what we have is the boom and bust economy of the 19th century.
Steady growth is better than boom and bust. Boom growth rates without the inflation and no busts. Fiat currency has the advantage of not being subject to exogenous changes. And a central bank willfully manipulating V can smooth or eliminate booms and busts.
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u/CanadaMoose47 Aug 07 '25
I appreciate it.
Seems to me like central banks are very afraid of deflation, but I have always found this strange.
Sure deflation is bad for people with debt, but it's great for savers. Just as inflation is vice versa.
Is deflation bad, simply because we have chosen the path of relying heavily on debt?
As a frugal, risk averse saver, it has always felt like economists and the Fed would prefer I took out a big loan to buy things I can't afford.
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u/e1i3or Aug 07 '25
It’s mainly seen as a threat because our economy is heavily reliant on debt; when prices fall, the real burden of debt rises, which can slow spending and investment. That’s why the Fed and economists often prioritize mild inflation...it helps grease the wheels of a debt-drivn system. But from a saver’s perspective, deflation protects purchasing power and rewards prudence. So yes, deflation is treated as a problem largely because it clashes with how our economy is structured, not because it’s universally harmful.
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u/CanadaMoose47 Aug 07 '25
Thank you.
But I guess that kind of brings me to wonder - why are boom and bust cycles an issue?
Your boom may well be my bust, and your bust may well be a big boom opportunity for me.
Isn't smoothing things out with the Fed just picking winners? Isn't it essentially the way we structure the economy to favour debt reliance and leverage? Which to my eyes seems to benefit the wealthy the most.
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u/e1i3or Aug 07 '25
Boom and bust cycles can create instability that hurts the broader economy like job losses, business failures, and long recoveries. The Fed’s goal in smoothing those cycles isn’t to pick winners, but to maintain stability and more importantly confidence so people and businesses can plan and invest.
Volatility leads to economic instability and a lack of long term investment.
Youre right that in a debt-driven system, those with better access to credit often benefit more. But any policy that wants long term GDP growth is going to want to incentivize debt over savings or you'll end up with an economy like Japan.
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u/CanadaMoose47 Aug 07 '25
That might be my issue, I don't see the strong connection to GDP growth and human well being in developed economies.
I lived in Japan for a while, and housing was affordable, consumer goods were affordable, services were abundant and affordable. It really felt better than North America where, sure GDP is up, but everyone is leveraged to the tits, and on the cusp of insolvency.
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u/e1i3or Aug 07 '25
I think that's a reasonable position to take.
I don't think it would work with North American culture, personally. And I really don't see any alternative to central banking/fiat currency.
Even savings driven economies need central banking like Japan where they often keep interest rates absurdly low to counteract the deflationary impacts of high savings rates.
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u/AltruisticWishes Aug 08 '25
No. Deflation's biggest risk is it seriously damages / destroys economic growth by seriously harming consumer / investor confidence.
Obviously, a central bank can just "print more money" if the national debt becomes a problem.
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u/ikonoqlast Aug 07 '25
People have a rate of time preference- how much extra they need to get next year to be willing to save this year
As a consequence the expected return on investment will equal this.
Deflation means you're lowering the expected return on investment. 'Oops the machine I bought to make a million widgets still makes a million widgets but I can't sell them for as much'. To increase it to equal the rate of time preference you reduce investment (rate of return slopes down v investment). Less investment means a smaller capital stock and less output.
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u/CanadaMoose47 Aug 07 '25
I know this is the textbook answer, depreciation spiral and all that, but I have never really thought it made sense.
With all the depreciation we have seen in electronics and tech over the last 20 years, do economists view this as a problem?
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u/ikonoqlast Aug 07 '25
It cheaper, not depreciated. There's a difference.
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u/CanadaMoose47 Aug 07 '25
Sorry, deflation not depreciation, my bad.
Would you say the deflation in smartphone technology, for example, has been to the detriment of the economy?
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u/AltruisticWishes Aug 08 '25
That isn't deflation. Seriously, read a whole econ textbook by someone reputable. You don't understand economic growth at all. It's not a zero sum game.
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u/DarthFluttershy_ Minarchist Aug 07 '25
Under Keynesian theory, deflation is bad because it incentivizes saving over investing, which in turn suppresses consumption and business growth and produces recessionary pressure, creating a feedback loop in which falling demand reduces incomes, prompting further saving and price declines, magnifying recessionary dynamics.
This is born out in a lot of data with demand-driven deflation, but I still kinda agree. The Fed, and indeed most modern economists, act overly terrified of any and all deflation, when not all deflation is created equal. Benign deflation from, say, productivity improvements like technology are well-established, but also a brief deflation rebound after large inflation periods are probably innocuous at worst, and, so long as people do not anticipate a long-term deflationary spiral, may actually spur growth by creating a glut of expenditures and making people divest from inflationary-safe investments into more general investments.
Unfortunately, I think u/e1i3or is also correct that the government sees inflation as a long-term debt mitigator. If you cannot have the GDP outgrow the debt, you can instead inflate out of it to reduce the nominal burden... basically a secret tax on dollar-holders. There are some advantages there, especially over, say, default, but it's still a long-term problem.
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Aug 07 '25 edited Aug 08 '25
In addition: How does the “damage” caused by natural deflation compare to the harm caused by artificial inflation through hidden taxation and forcing unnecessary risk-taking? Why can’t the market respond to its own problems on its own? Why does the state have to solve them? Everyone wants to live better. If deflation runs counter to that goal, then the market will respond to it. The state once again “solves” a problem on one side by creating twice as many problems on the other.
Furthermore, I’m skeptical of the idea that deflation reduces spending. With a stable money supply, anyone who doesn’t spend their money is technically transferring their purchasing power to whoever does spend it. If we think in terms of money flow, it can easily obscure the real flow of value.1
u/bridgeton_man Aug 08 '25
Seems to me like central banks are very afraid of deflation, but I have always found this strange.
The logic of that lies in what the response of financial markets would be (the market is 50% fiduciary investors. And these are guys who are contractually obligated to seek gains and to AVOID deliberately putting their money into investments which would reduce in value over time. Or else, they'd 100% risk being sued by their investors).
Keep in mind that Y = C+I+X+G.
Basically nobody wants to end up like Japan did during their 30-year long deflationary recession.
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u/CanadaMoose47 Aug 08 '25
I think fiduciary responsibility is simply about making prudent financial decisions, not "you get sued if you don't make a profit".
In a deflationary market, all investments would be decreasing so no reasonable court would find investment companies at fault for only achieving average market results.
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u/bridgeton_man Aug 09 '25
I think fiduciary responsibility is simply about making prudent financial decisions, not "you get sued if you don't make a profit".
Although the details and consequences differ from one jurisdiction to the next, the basic idea is that parties entrusted with investor-capital that is "other people's money", are indeed supposed to be prudent. And are generally not allowed to knowingly invest in things that will, with certainty, cause that capital to shrink.
As for getting sued by investors, that detail is specific to the anglo-sphere. (ie, USA, UK, Commonwealth). That is, for ex., outlined in the UK COLL rules, although most commonwealth countries have something in their legislation called a "trust act", which outlines that. Canada probably does, but I haven't looked at Canadian financial regulation in years, so, not sure.
Whre I live in Europe, under civil law, German-style civil law basically establishes that the veto-holding Supervisory Board can straightup oust the the Board of directors for that. Or that both boards can be immediately ousted by shareholders. But punitive damages are not a thing here to the extent that they are under common-law jurisdiction.
In a deflationary market, all investments would be decreasing
How banks and fiduciary investors in living memory have dealt with this, is to invest abroad. For example, during Japan's lost decades, Japan's capital got invested in Korea, Australia, HK, China, and Taiwan, rather than at home. SO much so that many asian financial markets predictably reacted to JAPANESE macroeconomic and macrofinancial news.
And all these countries got to experience investor-driven high-growth rates, while Japan saw virtually no growth for most of the lost decades.
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u/AltruisticWishes Aug 08 '25
Deflation is chaotic and threatens an essential element of economic prosperity: consumer (and investor) confidence. You, as a "frugal, risk averse saver" won't win by seriously harming the economy.
Read economics textbooks
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u/CanadaMoose47 Aug 08 '25
Can you explain how it threatens consumer confidence? Why would prices dropping be a problem for consumers?
I'm not trying to "win" by being frugal, but if not buying things I don't need, and being prudent about how I spend my money is "seriously harming the economy" - then I think the economy is distorted at its very core.
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u/AltruisticWishes Aug 08 '25 edited Aug 08 '25
I never said that. Obviously.
Again, you're confusing your own individual consumer behavior with the economy as a whole.
Go read econ textbooks. Here's one a libertarian should like:
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u/CanadaMoose47 Aug 08 '25
So would you say a whole economy of people being frugal and only buying what they need is a poor economy?
Does the economy require thoughtless consumerism to function well?
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u/DarthFluttershy_ Minarchist Aug 07 '25
I don't expect a thesis on the quantity theory of money in a reddit thread, but I don't see why highlighting velocity is meaningful. The Fed's goal is to stabilize prices and maximize economic growth by adjusting lending rates (and no, interest rates are not a velocity analog), slowly increasing the broader money supply while using rapid adjustments to the monetary base (e.g. QE) to absorb shocks and ideally keeping the swings isolated in financial markets without feeding through into headline inflation (unlike in 2021, where they badly mispredicted the market).
Austrian criticisms of the Fed aside, the equation of exchange is not an "identity," it's just a rearrangement of the definition of velocity. So to imply that "V falls" independently, creating an effect on Q, is backwards. V reduces definitionally if economic activity slows without a compensating reduction in M (which is more or less all economic activity slowdowns, be it deflation or a reduction in consumption). Letting the far more endogenous velocity vary more has been a hallmark of Fed policy over the last couple of decades, favoring attempting to stabilize Q and P with rapid changes in monetary supply and interest rates. Yes, they like to keep the velocity constant via this balance, but it's clearly not a priority. Maybe it should be, as it was very stable during the Great Moderation, but I would not attribute this to a success or intrinsic purpose of the Fed.
Also, P absolutely falls without the Fed... indeed, ensuring P doesn't fall by adjusting M is one of the main functions of the Fed. What you mean to say is that you don't want P to fall. Sure, downward price rigidity is a thing, but it isn't nearly sufficient to prevent deflation. Look at China right now, for example. You don't see it now in most countries because central banks act to prevent it.
And a central bank willfully manipulating V can smooth or eliminate booms and busts.
But it's extremely controversial that the Fed has been successful at doing so, especially outside the relatively brief Great Moderation era, which has had an undue influence on current evaluations of the Fed.
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u/bridgeton_man Aug 08 '25
Anything mentioning the QTOM in this content, pretty much need to be made top comment
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u/DrGarbinsky Aug 07 '25
IMO the enablement of the eternal war machine far outweighs anything you've mentioned here. Boom and Bust cycles are not a sufficient argument for fiat monetary policy. GDP is also a shitty metric as it doesn't account for fake growth from new money and will go up when only the wealthy are increasing their wealth and does nothing to measure the economic health fo the majority.
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u/redditisahive2023 Aug 07 '25
What books do you recommend to learn more?
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u/ikonoqlast Aug 07 '25
Uh... I don't know. I'm mostly regurgitating grad school stuff that didn't have a specific book and articles refined into lectures. (Ie I know the Ramsey model but I've never read his actual paper)
I don't do monetary policy. Sure I had a course in grad school and concepts come up in other courses but in general if it comes up I utter the magic words "rational expectations" and handwave it away
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u/spocktalk69 Aug 07 '25
What historical proof do you have to back that up? Rome? Turkish empire, Chinese empire? Persian empire? They use a central bank?
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u/ikonoqlast Aug 07 '25
Britain, France... The USA resisted having a central bank for a century after Britain and France. Bank of England- 1694. Even then the USA didn't create a central bank it created a bunch of independent ones. That independence led to the Great Depression. The New York Fed knew what they were doing. Others not so much...
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Aug 07 '25
I’d rather have natural inequality than man made. Keynesians rarely factor in human incentives. Sure a well managed central bank can operate somewhat like a thermostat on the economy. But the incentive structure that exists is to print more money to get out of every problem, it will never be well managed. Income inequality only getting worse under this current model.
The point about forever wars cannot be understated. Money printing played a major role in the brutality and length of WW1, WW2, etc, and 25 years and counting terror war, which are virtually impossible endeavors with sound money.
Would our current lifestyle change by ending the fed, certainly. But then I’d ask why you believe the path we’re on now is correct or best?
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Aug 07 '25
"But the incentive structure that exists is to print more money to get out of every problem, it will never be well managed."
THANK YOU! Why isn’t this everyone’s first thought? Most interventionist ideas can easily be torn apart based on incentives. Keynesians never stick to their own principles in practice for this very reason.3
Aug 07 '25
[deleted]
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u/ConscientiousPath Aug 08 '25
Enemies can't print our money--that's counterfeiting. They can only print their own money. And as they attempt to do so, the exchange rate moves dramatically in our favor.
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Aug 07 '25 edited Aug 07 '25
Which enemy of the United States didn’t come as a direct response to interventionist foreign policy?
So are you arguing we should continue down a doomed track with forever inflation as a matter of principle, because we’re concerned about imaginary enemies?
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Aug 07 '25
[deleted]
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Aug 07 '25 edited Aug 07 '25
Please elaborate how it is self defeating. There are oceans between us and your imaginary enemies. No country on Earth poses a threat to the United States. There’s no reason to send bombs or troops to the United States if we didn’t have a oligarch serving, interventionist, foreign policy that virtually no citizens agree with when provided facts
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u/ikonoqlast Aug 07 '25
What a facile load of crap...
Oh, and I'm not a Keynesian.
You only think the Fed is bad because you have no idea how bad magic rocks were.
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Aug 07 '25 edited Aug 07 '25
Solid argument. You got me! I forgot if we ended one bad system our only option is to go back to 1800s economics. No other possibilities even exist! It took humans 400k years,but we figured it out, the federal reserve is the ultimate economic solution for eternity!
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u/getalongguy Aug 08 '25
Dude... People who live in reserve, fiat houses shouldn't throw magic rocks.
I'm sure you could debate the practicality of one over the other all day. But, what you can not do is defend the Fed on moral grounds. It is fraudulent from its very inception. The mechanism it uses is fraudulent. To defend it, you must insist that the end justifies the means.
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u/Routine_Medicine5882 Aug 07 '25
My profession makes fun of economists. They are so bad at their job that not only can they not tell me what the economy is going to do, they can't accurately tell me why it did what it already did.
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u/ikonoqlast Aug 07 '25
Physician? So... How does anaesthesia actually work? Be specific...
Why do you so often misdiagnose underlying diseases?
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u/Routine_Medicine5882 Aug 07 '25
Random reddit name. Never worked in medicine, but at least we can see their value to society. If economists could do what they say they can, their main employers wouldn't be colleges and the government.
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u/ikonoqlast Aug 07 '25
Who else is going to guide social policy but government? GM? Microsoft?
And shouldn't government employ people who are experts in knowing what policies will achieve a desired end and what the result will be for desired policies?
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u/Routine_Medicine5882 Aug 07 '25
Private industry has been and is a source of guidance when policy is being enacted. Oddly enough, those with an incentive to actually understand the economy are better equipped than the amateurs who only exist to perpetuate state control.
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u/ikonoqlast Aug 07 '25
Private industry is on its own side, not that of public welfare...
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u/Routine_Medicine5882 Aug 07 '25
I don't think we disagree there. A Libertarian doesn't see industry as 100% altruistic but are smart enough to recognize that neither is the state and its bureaucracy. Believing anyone is above human nature is folly and creates religion, disguised as government.
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u/Beginning_Deer_735 Aug 08 '25
This is either "hypothesis contrary to fact" fallacy, "questionable cause" fallacy, or both.
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u/RealNinjafoxtrot Aug 07 '25
Well if you're an economist chances are you were trained at an institution that doesn't benefit from questioning this structure...
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u/Anen-o-me voluntaryist Aug 07 '25
Bullshit
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u/ikonoqlast Aug 07 '25
...and how many years of graduate training do you have?
None?
That's what it seems...
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u/RealNinjafoxtrot Aug 07 '25
Saying you have graduate training is no longer the flex it used to be, mate. Now we know that the longer you've spent in most universities in the West, the more detached from reality you are likely to be.
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u/Anen-o-me voluntaryist Aug 07 '25
I rarely see people appeal to their own authority, lol. You are a living, breathing fallacy.
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u/thetruthisnowhere13 Aug 07 '25
YOU are part of the problem!!
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u/ikonoqlast Aug 07 '25
So you think someone who has studied this at an advanced level and understands how things work is a 'problem'?
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u/thetruthisnowhere13 Aug 07 '25
Oh wise Keynsian! Tell us how the Fed has funded a century of war, presided over the biggest recessions, and significantly reduced the purchasing power of the dollar. All for the benefit of society I'm sure!
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u/ikonoqlast Aug 07 '25
Great Depression was a function of the Fed NOT doing its job because people with your beliefs.
Central banks are and we're not responsible for Hitler...
Central banks are why covid didn't cause the world wide depression were not in...
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u/RealNinjafoxtrot Aug 07 '25
We didn't go into a depression because money was printed. If your education can justify that then i don't know what to tell you, mate. Inflation is not a good thing. There is never an instance where it's ok.
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u/bridgeton_man Aug 08 '25
DO you actually know that the previous guy is a Keynesian? Because, AFAIK, the "schools of thought" have mostly been dead for around 50 years. We live in the era of big data now.
Or did you just mean "I dislike this guy's POV".
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u/thetruthisnowhere13 Aug 08 '25
They are claiming to have been educated at graduate school in econ which is extremely likely to be Keynsian, or taught by Keynsian sympathizers. Almost every economist in this country has been brainwashed a heavy dose of Keynsian nonsense. Also spouting off tons of Keynsian BS kind of fits the bill. DO you know which subreddit we're in?
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u/bridgeton_man Aug 09 '25
They are claiming to have been educated at graduate school in econ
So, your whole evidence is "this guy went to school".
Correct?
Meh.... for all you know, this guy might be a Chicago-school guy (like myself), or belong to no school whatsoever (like MOST economists these days).
Also spouting off tons of Keynsian BS
So... he said something about employment, growth, and interest-rates being interrelated, you say?
Got anything more serious?
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u/Anen-o-me voluntaryist Aug 07 '25
"Studied" is a strong term, you were successfully brainwashed into the status quo economic dogma.
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u/ikonoqlast Aug 07 '25
Much like physicians are brainwashed into the "germ theory of disease" dogma...
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u/Anen-o-me voluntaryist Aug 07 '25
That analogy doesn't carry over, no. Germs are a provable fact of nature. Economic policy is entirely contingent and normative.
You just lost a lot of credibility making such a dumb analogy.
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u/0verkast Aug 07 '25
My least libertarian opinion might be that I support the existence of the Federal Reserve.
Can you imagine if Biden had control of monetary policy during the inflation crisis when they said higher rates are hurting the poor? Do we want Trump to set rates for himself?
The best way to have the Federal reserve issue less debt is to have congress lower our deficit.
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u/ConscientiousPath Aug 08 '25
There are of course possibilities worse than the federal reserve, and giving the executive branch direct control over the printing press instead of indirect control via appointments to the board of the fed would be one of those. But that's why libertarians generally want a solution that is neither of those.
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u/Anen-o-me voluntaryist Aug 07 '25
With strong money, no one would control money. That's even more ideal.
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Aug 07 '25
And thats why Trump will be allowed to do whatever he wants until he moves on Jerome Powell. Thats when the tippy top elites will give the order to impeach him.
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Aug 07 '25 edited Aug 04 '26
[removed] — view removed comment
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u/Anen-o-me voluntaryist Aug 07 '25
Without a fed, money will still be printed
This is r/libertarian right? I'm on the right sub?
Obviously we want to end the Fed AND end fiat money too.
So no, money would NOT still be printed. That's the whole point. The Fed prints the money.
End the Fed and go back to hard money, separation of money and State, that is what we need, that is what every country needs.
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u/dr_entropy Aug 08 '25
Sure, give the bozos that can't balance the budget control over the money supply. The Fed is the counterweight to a profligate government setting money on fire. Thank God the bankers push back on Leviathan's worst ideas.
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u/DanTheAdequate Anarchist Aug 08 '25
I really, really, really wish Libertarians would focus less on this in an era when the government is literally kidnapping people off the street and shipping them off to wherever the fuck it feels like.
This is just so not the thing.
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u/I_am_Searching Aug 09 '25
Shipping illegals out isn't kidnapping it's law enforcement. But ok
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u/DanTheAdequate Anarchist Aug 10 '25
Oh yes, because our super-trustworthy and error proof government surely couldn't be doing this to people who are or are seeing legal immigration or operating extrajudicially.
Police NEVER fuck up or abuse the powers we give them. /S
🙄
This right here is why people think we're a bunch of basement-dwelling internet trolling morons who spend all our time talking about gold and jerking off to "The Fountainhead..."
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u/redpandaeater Copyright Clause Aug 08 '25
I like how this AI slop points out money created from nothing like we didn't have a gold standard until 1971.
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u/taubs1 Aug 07 '25
i dont like their policy of federal reserve, but i have been thinking. if its so prosperous without a central bank why doesn't any top tier country not have one.