On The Morality Of The Fed

[cypherdoc]

"Finally, we must question the morality of Fed programs that trick people (as if they were Pavlov's dogs) into behaviors that are adverse to their own long-term best interest. What kind of government entity cajoles savers to spend, when years of under-saving and over-spending have left the consumer in terrible shape? What kind of entity tricks its citizens into paying higher and higher prices to buy stocks? What kind of entity drives the return on retiree's savings to zero for seven years (2008-2015 and counting) in order to rescue poorly managed banks? Not the kind that should play this large a role in the economy."
 
...
 
"An environment where financial crises are seen to be a regular part of the landscape is one where people might actually take more precautions. People would maintain a margin of safety in all their decisions, investment and otherwise, regulations would be well thought out and diligently enforced, and the unscrupulous and the incompetent would quickly fail and disappear from the scene. Modern day attempts to abolish failure only serve to ensure it, as moral hazard - the likelihood that people's behavior changes in response to artificial supports or guarantees - surges. Attempts to prevent or wish away future crises only make them more likely. Only by allowing, even welcoming, episodic failure do we have a chance of reducing the likelihood and magnitude of future financial crises."

http://www.zerohedge.com/news/2012-12-21/morality-fed

[franky1]

and the point of this quote? it appears to be a quote from a blog which a guy named tyler durden quotes from. which i think is a bitcoin forum user also...

but wheres the original source and who originally said it?
edit here is the person that originally said it
http://www.gurufocus.com/holdings.php?GuruName=Seth+Klarman

here is a more detailed and slightly more 'from the source article
http://www.gurufocus.com/news/193825/seth-klarman-questions-morality-at-the-federal-reserve

but unless its a quote from the FED making an apology and admission of guilt or even outlining a plan of change then i still dont see the point in the quote..
we all know the FED is not 'for the people' so this quote reveals nothing new. nor related to bitcoin

[cypherdoc]

on the contrary.  this is "why" Bitcoin was invented.

[LightRider]

No monetary system is moral. Every currency favors an arbitrary group of people.

[CountSparkle]

I would hope that the retirees are saving their money in stocks and bonds, or something tangible, and not cash.

[reg]

I would hope that the retirees are saving their money in stocks and bonds, or something tangible, and not cash.

isn't the point that in a depression stocks and bonds become worthless as well as cash?  the only thing that authorities cannot take from you are BTC! reg.

[creativex]

I would hope that the retirees are saving their money in stocks and bonds, or something tangible, and not cash.

This does not work, because the stocks & bonds are denominated in fiat and are therefore subject to the same inflation tax(theft) as the underlying currency is. Ever see an inflation adjusted DJIA or S&P 500 historical chart? It ain't pretty.

Retirement funds or any funds not immediately needed for trade for that matter should be stored in real money. AU, AG, and possibly BTC. This means METAL, not paper sold to represent real money. If you don't hold it, you don't own it.

[cypherdoc]

I would hope that the retirees are saving their money in stocks and bonds, or something tangible, and not cash.

This does not work, because the stocks & bonds are denominated in fiat and are therefore subject to the same inflation tax(theft) as the underlying currency is. Ever see an inflation adjusted DJIA or S&P 500 historical chart? It ain't pretty.

Retirement funds or any funds not immediately needed for trade for that matter should be stored in real money. AU, AG, and possibly BTC. This means METAL, not paper sold to represent real money. If you don't hold it, you don't own it.

not to mention that stocks and bonds are hugely manipulated.  look at the great lengths Ben has gone to prop up the stock market with all the QE's and the extension of more worthless debt.  look at to what great lengths the ECB has gone to prop up sovereign debt bonds with money printing and the extension of even more worthless debt.  all financial risk assets are a ponzi scheme that are destined to crash once again and very soon.

[creativex]

Good point. Then there's the High Frequency Trading scam to contend with and the ever growing voices in DC that want to "socialize"(steal) retirement accounts. Pass.

Go metal. Get physical AU & AG and guard it with PB.

[CountSparkle]

OK, pretend I'm dumb here.
I'm a company with stocks based on my hard assets, inventory, and profits. My stocks are worth some set amount. Inflation hits, and prices go up. Won't the worth on my hard assets and inventory, and the prices of my goods and thus profits, go up as well? Intuitively, any nominal change in the value of the currency shouldn't affect the real value of the underlying assets(much), should it?

[myrkul]

OK, pretend I'm dumb here.
I'm a company with stocks based on my hard assets, inventory, and profits. My stocks are worth some set amount. Inflation hits, and prices go up. Won't the worth on my hard assets and inventory, and the prices of my goods and thus profits, go up as well? Intuitively, any nominal change in the value of the currency shouldn't affect the real value of the underlying assets(much), should it?

The prices for everything, including any new supplies you buy would go up. Yeah, it would pretty much float everything up, but it's uneven, and you'd have to pay more for food and such, as well. And god forbid you're a wage-earner. Wages don't automatically float with inflation.

[CountSparkle]

OK, pretend I'm dumb here.
I'm a company with stocks based on my hard assets, inventory, and profits. My stocks are worth some set amount. Inflation hits, and prices go up. Won't the worth on my hard assets and inventory, and the prices of my goods and thus profits, go up as well? Intuitively, any nominal change in the value of the currency shouldn't affect the real value of the underlying assets(much), should it?

The prices for everything, including any new supplies you buy would go up. Yeah, it would pretty much float everything up, but it's uneven, and you'd have to pay more for food and such, as well. And god forbid you're a wage-earner. Wages don't automatically float with inflation.

Please rephrase that in the context of having a retirement account invested in stocks be affected by inflation.

[Richy_T]

And if you're a company with cash reserves, the government's stealing those too. So the only sensible thing to do is leverage what you have and go into debt as much as possible. Which is great until you hit a hiccup then your suppliers aren't getting paid and that means they're having hiccups too and they're probably leveraged out the wazoo too.

Then there's the whole tax situation which means that it's better for companies to reinvest in themselves in an attempt to raise stock prices rather than pay dividends. That makes it hard to judge the value of a stock and means that the only reason to buy a stock is to hope to pass it off to the next sucker at a higher price, prime fertilizer for a bubble.

Basically, if you're invested in fiat, you're being robbed blind. Best thing to do is dump it as fast as you can and try and avoid the bubbles.