Huzzah! Minimum Wage Increase Shot Down in Senate

[slipknottin]

Slipknottin,
What CAUSED the Market Crash of 29 and The Great Depression?

A number of reasons. Though Im fairly certain your going to give me a one line answer...

Inability of the fed to increase money supply (due to the gold standard)
Insane tarrifs
runaway optimism of the stock market

"Milton Friedman and Anna Schwartz argued in their book "A Monetary History of the United States, 1867-1960," that the highly conservative monetary policy followed by the Fed beginning in 1930, completely failed to counteract the tidal wave of bank failures in the early 30's.

Simply put, when a bank fails a large amount of money disappears from the economy, which has a depressing effect on prices and a stagnating effect on business activity. Depositors were not insured at that point, many losing all their savings. Business customers also lost their money and could not finance their activities; thus everyone linked to the bank or its customers was economically paralyzed in one way or another, including other banks! "

 

[tomm10]

I'm more curious as to what caused Beeker, a 252 post female to change to Beaker, a zero post male.

hmmmmm.

 

[Beaker]

What year was the Federal Reserve enacted?

 

[slipknottin]

What year was the Federal Reserve enacted?

1913, but we were still (and remained) on the gold standard.


"The essential feature of the Federal Reserve System, though, was its ability to pool the gold reserves of many banks and thereby make it easier for national member banks to issue notes. In simple terms, the Fed would allow banks greater freedom to inflate by giving them greater flexibility in skirting the restraints of the older gold standard.

In pre-Fed days, banks had to protect themselves against runs. They had to be careful of the amount of notes they issued and they protected themselves by carrying gold reserves. If a bank experienced a crisis, it had to find additional gold reserves by borrowing them from other banks—often at very high rates of interest. Problems emerged when you had economy-wide runs and all the banks tried to increase their holdings of gold at the same time. In the panic of 1907, for example, call money rates exceeded 100% (on an annual basis) on October 24 at the depth of the crisis. Many banks in cases like this would simply fail.

Bankers found this arrangement uncomfortable, since it crimped their ability to make profits—which they did primarily by inflating the currency. The Fed, then, was to be their safety net. The banking cartel was born. As Rothbard discusses in his A History of Money and Banking in the United States, the nation's financial elite mainly pushed for the creation of the Federal Reserve. They saw it as a "cartel device to enable the nation's banks to inflate the money supply in a coordinated fashion, without suffering quick retribution from depositors or noteholders demanding cash."

The Fed's early duties included the purchase and sale of gold (thereby influencing interest rates and money supply), the centralization of the banking system's gold reserves as discussed above, and acting as the lender of last resort, among other lesser activities.

Alan Meltzer, in his mammoth A History of the Federal Reserve, writes, "The Federal Reserve had little discretion. The founders intended the gold standard to work automatically…the rules of the gold standard limited the range within which they could set the discount rate." It was, at the outset, a small institution with little of the power and prestige that accompanies it today."

- http://www.mises.org/fullstory.aspx?control=1353&id=67

 

[Launcher]

Beeker (my fiance) gave me my own screen name so I don't get her in trouble. Don't get angry with her.

So, continuing with our conversation...

Thank you. You just made my case.

 

[slipknottin]

Already answered. It had nothing to do with the (eventual) elimination of the gold standard, as that was not the thought at the time...

Really, at the time the fed was created it had very little power to do much of anything.

 

[happychem]

I'm more curious as to what caused Beeker, a 252 post female to change to Beaker, a zero post male.

hmmmmm.

Good point Tom, and yet the new Beeker didn't pop up until post 47.

 

[jonathan03]

Do a lot of people actually make minimum wage? I'm really not sure if there are that many. Are there?

In any case, a price floor is only a factor if it interfere's with the lower limits of the price. For example, having a price floor for all cars of $10 would make no difference in the big picture since nobody sells them for that much anyway.

But about what percent of people are making minimum wage?

:OT:

Are you an economics major slipknottin?

 

[Launcher]

thank you for making my point but I'm not sure that you realize that you did. The Fed was designed to defeat the market discipline imposed by the gold standard. They could never have gotten it through congress in its ideal form. They had to get something through congress that they could change later on. Since 1913 the Federal Reserve Act has been amended over 100 times, and always to the benefit of the bankers.

 

[Harlock]

Harlock,
What is the purpose of legal tender laws?

What is the bearing of that and discussions of inherent/intrinsic value of gold? Answer, nothing, really. But, hey, I'm a nice enough guy and I'll bite. The purpose of the legal tender laws was to standardize a currency in the US and centralize production so that states no longer had the right to mint their own coinage and to make a money that must be accepted for payment of debts througout the US. That it was based on the gold standard at the time is of no real consequence to this debate. It could have just as easily been based on anything upon which people place value.