Hypothetical: Trump abolishes the Federal Reserve tomorrow...what is your take?

a reply to: Krazysh0t

Oh it wouldn’t be a simple hand wave. But the Congress could be bypassed by Constitutional Convention. Just takes 3/4 of the States to agree to do so. And then Trump would declare it was done. Checks and Balances in action.

a reply to: Ahabstar

If we can't get Congress to agree on anything, what makes you think that 3/4ths of the States will agree? Abolishing the Fed isn't even an idea with 50% popular support in the country.

a reply to: Krazysh0t

Presentation would be the key, if Trump wanted to do it in the first place. But since it was a hypothetical presentation, I gave the hypothetical solution to bypass a do nothing Congress. Same could have been done with Obamacare.

People tend to react positively to choice over edicts. And by kicking it to the states, there is A less of a disconnect between the citizens and the State legislatures. People, for the most part, won’t drive to DC to raise the pitchforks and light the torches. State capitals tend not to be as far a drive to make voices heard or felt.

Honestly, I am surprised communities that have those portable speed cameras are not finding them turned, moved or knocked over by using a 2x4 as a lever in protest.

The Op has asked about what would happen if the current sitting president was to eliminate the Fed. And it should be carefully thought about.

The first thing I would say look back at history, at before and after such an institution was put in place:

During the American Revolution, the Continental Congress, printed the nations first paper money. They printed it in a large quantity, leaving to inflation, mild at first though it grew, eventually it was deemed worthless, as people lost faith in the notes.

This led to the first attempt to a centralized banking, as proposed by Hamilton, that was found to be unpopular and people did not trust such. It was expired in 1811, as congress refused to renew it. This led to a second centralized bank, and then Jackson, ran against it and once again in 1836, it was shut down. This started the era of the Free Banking, where states chartered their own banks, printing and issuing their own currency, and offering various services. This would give rise to a Clearinghouse Association, to where the banks in New York could work and settle accounts with each other.
In 1863 the National Banking Act was passed, allowing for national chartered banks to be backed by US governmental securities. And it created a uniform currency, and it was popular. The following years, from 1873 to 1907, there was a problem with the stability of the currency, that would cause panics with banks, and the economy would become unstable. This would result in the 1907 panic, where the entire thing would collapse and there was differing opinions in how the banks should be run and regulated. Conservatives were more in favor of Trusts, and was opposed by progressives. If anything the general thought was that a central banking system was needed to ensure a healthy banking system, to provide for a stable currency.

The Aldrich-Vreeland Act of 1908 passed as a response of the panic of 1907, this would allow for emergency currency during a crisis. It also established a national Monetary Commission to search for long term solutions to the nations banking and financial problems. However, there were problems and controversies, where the leadership of such was debated on whose control it should be under, the bankers or the public. With the election of Wilson, the plan that had been in the works was killed and set the stage for the emergence of a decentralized central bank.
With the decentralized banks, the new Federal Reserve system was created, where it was suppose to balance the interests of the private banks and the populist sentiments. This would allow for the US to aid in times of both National and World crisis, like World War I, where money and loans could be lent out to European countries, the allies. Banks and the economy would expand and retract, as there were very little in the way of controls.

Now in 1929, the market crashed, this caused widespread panic and the world to go into a depression. The result of this, nearly 10,000 banks failed and the newly inaugurated President Roosevelt, declared a bank holiday, closing all banks, giving the government a chance to grapple with and remedy the natiionsl banking system. This lead to the Glass-Steagall Act, to prevent this from happening again, in short separating the Banks from the commercial and investments. It also established the Federal Deposit Insurance Corporation, to require banks to carry Insurance, to prevent runs on the banks. It was also then that there would be massive reforms and ended the use of metallic standards and gold for backing of a banks currency.

Now to the question:

If Trump were to eliminate the fed, it would be a disaster and chaos. It would cause far more problems, and cause far greater economic issues than what is now. Many of the protections that are in place, the laws and regulations would no longer be there, as such requires a centralized institution, like the Fed to ensure the remedy is present. With no centralized backing, the banks would engage in more risky ventures. We have all seen firsthand and heard about what the end results in some of those risky ventures, where the economy takes a hit or a bubble bursts, and then the public is either left holding an empty note or is left footing a bill, many of whom had nothing to do with it.

And each time, after each of the bubbles burst, the bill seems to get bigger and bigger that we are having to pay. Along with many of the industries that are affected, tend to tighten up policies, that lead to problems down the road for future generations, caused by well meaning intentions that end in disaster.

originally posted by: Ahabstar
a reply to: Krazysh0t

Presentation would be the key, if Trump wanted to do it in the first place. But since it was a hypothetical presentation, I gave the hypothetical solution to bypass a do nothing Congress. Same could have been done with Obamacare.

A hypothetical should still align with how things would happen in reality. Speaking of that, if Trump were to announce that he was going to undertake a series of steps to dismantle the Fed, I'd be SEVERELY dubious and distrustful of him about it. Trump would likely announce that it should be done then try to force Congress into action through some sort of ultimatum by holding another issue hostage, and if he attempted it in house within the Executive branch then I imagine it would just be half assed, poorly planned out, and implemented without prior warning or checks introduced to minimize the damage such an action would do.

People tend to react positively to choice over edicts. And by kicking it to the states, there is A less of a disconnect between the citizens and the State legislatures. People, for the most part, won’t drive to DC to raise the pitchforks and light the torches. State capitals tend not to be as far a drive to make voices heard or felt.

I seriously anticipate that no matter how you position this question it will be tremendously hard to get 50% of the US people to vote to dismantle the Fed, let alone the 3/4ths that you need. Most of the people who want to end the Fed are extreme Right Wing Libertarians. Moderates are perfectly happy with it existing and Liberals have no intention of dismantling it.

Honestly, I am surprised communities that have those portable speed cameras are not finding them turned, moved or knocked over by using a 2x4 as a lever in protest.

People tried that in Baltimore when they first started putting them up outside of schools. There was one I used to drive by every day going to work. One day I drove by and someone had taped a piece of notebook paper over the camera lens, so I cheered. The next day (and for many days thereafter) the paper was removed and there was a cop sitting there guarding the camera.

a reply to: Krazysh0t

The largest problems would be the Fear, Uncertainty and Doubt of old money losing their status. FUD is a huge motivator to avoid new situations. For the poor and middle classes, things really wouldn’t change much other than access to grow opportunities. The rich have the same opportunity only retain an advantage of more startup wealth (same as always) due to currency conversion in the transition. But under a jubilee, debts owed to them are gone. So not the same advantage enjoyed currently.

Political partisanship runs thin when you can be sold the idea of actually getting rich by the sweat of your brow. Thus the presentation is key.

Would it be ultimately good or bad for America? Those first 3-5 years would be rough. Supply routes would be a shambles. And forget about foreign exports because no country would want to deal with us until stability set in. But Iceland seems to be doing alright now after doing exactly that about 10 years ago over the Derivatives induced recession that hit the world in 2008.

As a side note: Civil and respectful intelligent conversation in the Mud Pit between two people. Man, must be ATS.

a reply to: Ahabstar

I can't imagine that whatever replaces our currency would be better than what we have now. The US dollar is traded world wide and backed up by the petro dollar. But even between business from non-dollar using countries will value American money for international trade. So we kind of have a monopolistic lock on the number one currency in the world. Something that would almost certainly be forfeited if we went to a different currency.

Also, I can't imagine a type of currency that would be preferable to fiat. Raw mineral backed (gold or silver backed currency) is easily inflated and creates an extra level of gatekeeping through the miners. Plus there isn't enough of it to supply the whole world. Then there is bitcoin, which is becoming unstable due to the tons and tons of offshoots and different type of bit coin currencies diluting the marketplace.

To be honest, I feel like the world economy and international stage is too intertwined and connected for anything good to come out of removing the FED. Iceland might be a success story, but keep in mind that Iceland landing on its feet was because it had intelligent and capable economists guiding the landing of their finances using patience and careful fiscal planning. They didn't just magically do well after kicking the world banks to curb just because they kicked them. I really don't trust anyone in the Trump administration to possess these needed qualities. So I would really prefer Trump not touch the Fed, even he were legally able to.

a reply to: Krazysh0t

Better for the world? Absolutely not. Better for the US because we do not owe interest on it, absolutely. As far as runaway inflation goes, US national debt is $20+ Trillion. There is only about $1.3 Trillion Federal Reserve Notes in total circulation. Each dollar is only worth about a nickel anyway if that. Backed or unbacked, a US Treasury Note (or coin) would be worth whatever Congress says it is.

And despite Wall St. trading values (or coin collector’s published books) a Euro would be worth whatever Congress says it is in exchange. Again, good for America. As for the rest of the world, they can accept it or not. My guess is their economies are too tied into the US conducting business for their exports to fight it or refuse. If they refuse, they better start some serious farming to feed their people.

originally posted by: bigfatfurrytexan
After seeing the dust up over the Russian visit, Im left with a question: what if Trump abolished the Fed? How would ATS feel about this?

Russia obviously isn't in the "club" (they don't have a federal reserve, they don't support the petrodollar, etc), and thus finds themselves on the outs. Meanwhile, we have nations like Saudi Arabia who use the federal reserve, have no notion of human rights, and they are our ally. Its obvious who we consider enemies. Libya, Iran, North Korea, Russia...of course we toppled Libya and installed a reserve bank.

It is readily apparent to me that the ire with Trump in Helsinki has more to do with the partnering with a non-club nation (same as NK) than anything else. Even FoxNews is losing their minds over.

So curious...regardless of your viewpoints....if Trump abolishes the fed tomorrow (along with the baggage that goes with it, like having to be allied with Saudi Arabia), how would you feel about it?

Side note: it occurs to me that Trump conducts himself without regard to "the club".

Start hoarding your bottle caps!

The end of fiat currency would be the single most important step towards equality, one could argue that it would be the most communist thing ever done 😉