Originally posted by kmax87You're reading it the way you want to read... 😞
I think the point made is that CPI increases have been understated for at least a period of 20 years and with that understating, large slabs of society have slipped down a rung or two without anyone noticing it. The *basket of goods*, that make up the CPI calculation, if they have been *tampered* with over time by substituting cheaper items of lower quality s ...[text shortened]... iracy appears, ultimately is probably the best indicator of its enduring established nature. 😉
According to the Boskin report, CPI inflation was overstated. Would you say then that "large slabs of society have slipped [up] a rung or two without anyone noticing it"? Of course not.
Besides, it's not about tampering. It's about updating the methods of calculating the CPI to more advanced and correct ones.
Originally posted by PalynkaI already know all of that. I want to know if fractional reserve banking was practiced in the American colony with colonial scrip. Same thing with Lincoln's greenbacks before 1864.
Since, at least ,the 17th century there were forms of fractional-reserve banking. In London, it began shortly after King Charles I, basically decided to take (effectively steal) gold that was kept by the monarchy for safe-keeping.
Needless to say, people started to look for other places where to deposit gold and chose London's goldsmiths. These soon real ...[text shortened]... sory notes for payment of the debt) and in time paper redeemable in gold started to circulate.
The answer would tell me a lot.
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Originally posted by Metal BrainOf course you did. 😵
I already know all of that. I want to know if fractional reserve banking was practiced in the American colony with colonial scrip. Same thing with Lincoln's greenbacks before 1864.
The answer would tell me a lot.
Do you know when the 17th century was? It was just after the 16th and before the 18th.
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Originally posted by PalynkaYou are right thats what the author stated the Boskin report said,I suppose what confused me was the analyses that followed
You're reading it the way you want to read... 😞
According to the Boskin report, CPI inflation was [b]overstated. Would you say then that "large slabs of society have slipped [up] a rung or two without anyone noticing it"? Of course not.
Besides, it's not about tampering. It's about updating the methods of calculating the CPI to more advanced and correct ones.[/b]
:-http://www.capital-flow-analysis.com/investment-essays/fiddling_cpi.html
The Boskin Report also concluded that the CPI had been overstated by a similar amount in each of the last twenty years.
If this were true, it meant the government was doing an even better job controlling inflation and that productivity was higher than previously announced.
Since the government uses this index to adjust many statistics, such as GDP per capita, reducing the CPI improves perceived economic performance.
Boskin's Recommendations
The Committee recommended changes in the method of calculating the CPI that would increase taxes and reduce entitlements. This would make it easier for President Clinton to balance the budget.
The Boskin report reflected the political environment in which public servants in the Bureau of Labor Statistics followed the lead of their political bosses.
Although the recommendations of the Boskin Report to restate past CPI calculations were not adopted, the biases of the report have bored into the bureaucratic woodwork and influence the production of these statistics today.
The economists seem to have been willing to fiddle the CPI to harm the citizenry and achieve political goals.
Lowering the CPI reduces the correction for inflation on social security payments and veterans’ benefits and pensions.
The bureaucracy gains by increased income taxes from the slowing of adjustments in tax brackets and exemptions mandated under the Economic Recovery Tax Act of 1981.
The only way for these passages to have made any sense when I read them was if the Boskin report had determined that CPI was being systematically understated. I suppose I ran with the underlying argument/logic presented by John Oswin Schroy and took that to mean that poor economic performance was being hidden due to the CPI being *fiddled*. That that interpretation matched my own underlying cynicism on the subject, is probably no small coincidence.
Originally posted by PalynkaYou said fractional reserve banking was practiced since the 17th century. You did not say there were no exceptions. Was colonial scrip no exception?
Of course you did. 😵
Do you know when the 17th century was? It was just after the 16th and before the 18th.
Originally posted by PalynkaSee.
Since, at least ,the 17th century there were forms of fractional-reserve banking. In London, it began shortly after King Charles I, basically decided to take (effectively steal) gold that was kept by the monarchy for safe-keeping.
Needless to say, people started to look for other places where to deposit gold and chose London's goldsmiths. These soon real ...[text shortened]... sory notes for payment of the debt) and in time paper redeemable in gold started to circulate.
You said there were forms of fractional reserve banking. You did not say it was the only form of banking practiced. Why do you act as if I can read your mind?
Everybody seems to avoid talking about colonial scrip like it is the plague. It is as if people don't know what to think of it since the British Empire hated it so much.
Originally posted by Metal BrainI'm not talking about it because I'd have to do some research on it first. I'm not an economic historian. While I know some of what has happened in the past, there is much that I do not know. I would be very, very skeptical though that colonial scrip was a better system than we have today. It seems unlikely to even meet the needs of our modern world.
See.
You said there were forms of fractional reserve banking. You did not say it was the only form of banking practiced. Why do you act as if I can read your mind?
Everybody seems to avoid talking about colonial scrip like it is the plague. It is as if people don't know what to think of it since the British Empire hated it so much.
Originally posted by telerionDoes the Fed charge the US government interest for the creation of new money?
I'm not talking about it because I'd have to do some research on it first. I'm not an economic historian. While I know some of what has happened in the past, there is much that I do not know. I would be very, very skeptical though that colonial scrip was a better system than we have today. It seems unlikely to even meet the needs of our modern world.
Originally posted by Metal BrainColonial scrip has little to do with fractional-reserve banking so it cannot really be called an "exception". FRB simply relates to the ability of banks (or any other agent) to issue loans from deposits. This is irrespective of the currency type.
You said fractional reserve banking was practiced since the 17th century. You did not say there were no exceptions. Was colonial scrip no exception?
Originally posted by PalynkaSo are you saying there were banks taking deposits of colonial scrip and paying interest on it?
Colonial scrip has little to do with fractional-reserve banking so it cannot really be called an "exception". FRB simply relates to the ability of banks (or any other agent) to issue loans from deposits. This is irrespective of the currency type.
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Originally posted by Metal BrainNo, as far as I know there were no commercial banks taking deposits at the time. But anyone who conceded book credit or land banks giving out loans were also creating money. Also, as far as I know, nothing prevented merchants from creating money by taking deposits and lending out money from them (like London's goldsmiths).
So are you saying there were banks taking deposits of colonial scrip and paying interest on it?
Originally posted by PalynkaSo are you saying fractional reserve lending may have been taking place to a more limited degree?
No, as far as I know there were no commercial banks taking deposits at the time. But anyone who conceded book credit or land banks giving out loans were also creating money. Also, as far as I know, nothing prevented merchants from creating money by taking deposits and lending out money from them (like London's goldsmiths).
I get the impression that technically there was no fractional reserve banking system in place, but it is so hard to abolish the practice altogether that something similar was likely taking place. Is that what you mean?
Originally posted by Metal BrainNot exactly. I'm trying to convey the idea that there's nothing fundamentally unsound with fractional reserve banking.
So are you saying fractional reserve lending may have been taking place to a more limited degree?
I get the impression that technically there was no fractional reserve banking system in place, but it is so hard to abolish the practice altogether that something similar was likely taking place. Is that what you mean?
As long as there are no deposits, then there is no fractional reserve lending.
As long as there are deposits, then unless the depositary doesn't merely lock the money away then there will be fractional reserve lending.
Banks, by lending a fraction of the money deposited within them, convey resources from people who don't have the time or the skills to invest them properly. I don't see why the option of having to lock the deposit away is a better one.
Originally posted by PalynkaYou would think that the system, for it to be able to provide interest on deposits has to involve the creation of money through some form of fractional system. How else does a bank pay the interest on the deposit and make enough money to cover its operational costs and still generate a profit? And it all works fine it seems as long as depositors dont get nervous and all pull their funds at the same time.
Banks, by lending a fraction of the money deposited within them, convey resources from people who don't have the time or the skills to invest them properly. I don't see why the option of having to lock the deposit away is a better one.