Towards the end of a recent thread, I tangled with a Federal Reserve conspiracy buff. Fortunately, someone else has done some of the heavy lifting on debunking the myths behind the Fed, debt, gold and money. I labeled this thread off-topic, but it the conspiracy theorists seem very well represented among the Y2K pessimists. For your reading:

http://www.cofc.edu/~flaherty/conspire.html#i

Interesting material and fairly well written.

-- Ken Decker (kcdecker@worldnet.att.net), October 14, 1999

Answers

do not feed the troll

-- dw (y2k@outhere.com), October 14, 1999.

it's the end game. get used to it or die trying. too little, to late.

-- so what? (who gives@shit.decker), October 14, 1999.

Mr.Decker,

Did I ever tell you that you are my hero? Whenever I get depressed at my job (Burger King) I think of you and a smile comes to my face. You are a hero to me. Maybe it is puppy love, maybe I have had one too many whoppers (if you know what I mean, wink wink, nudge nudge, say no more).

Y2K Pro

-- Y2K Pro (y2kpro1@hotmail.com), October 14, 1999.

That cannot be the real Y2K Pro. Can anyone imagine the real Y2K Pro writing a response without "Doomer baiting." Hardly.

-- Ken Decker (kcdecker@worldnet.att.net), October 14, 1999.

Please excuse my jumping on this thread but I don't know how to start a new one. Finally in this evenings local news WGAN Maine it was announced by Shop n' Savethat the new signs by the soup, beans. macaroni and cheese etc. does in fact say be y2k prepared. Their competitor in reply states they have a large stock and they don't need signs. Shop n' Save stores are one of the largest in New England.

-- rmoose (hybrmoose@ctel.net), October 14, 1999.

Gosh Mr. Decker... don't we find enough trot like that in our newspapers every day? For the truth on the fed, and the reason for such "CYA" blather, go here - http://home.inreach.com/dov/mcatalog.htm They have y2k debunking sites, too, and they are just as worthless. Try doing some of the "heavy lifting" yourself for a change, they're lifting your wallet with such propaganda.

-- Patrick (pmchenry@gradall.com), October 14, 1999.

Decker - this statement alone is remarkable. This IMHO is fraud made legal. The banking system does indeed create money BUT because the amount of money created is tied to the total deposits and interest has to be paid on those deposits, it is all OK !*!*!*!*

I have heard that a bank can create as much as 3 or 4 times more than what they have in deposits. Now if they pay out 3% or 4% interest on 1/4 and collect 15%-25% on 3/4 where does that leave them?? <-----THAT is the justification for "The banking system"

Whoa.......I think that I'm in shock.

Oh, here is the FACT: "Facts: The banking system is indeed able to create money with a mere computer keystroke. However, a bank's ability to create money is tied directly to the amount of reserves customers have deposited there. A bank must pay a competitive interest rate on those deposits to keep them from leaving to other banks. This interest expense alone is a substantial portion of a bank's operating costs and is de facto proof a bank cannot costlessly create money."

eyy, I's gots a goood bridge in Brooklyn for ya' to poychase. Real cheaps too.

Oh, and I like how this question is neatly avoided: "Myth #4: The Federal Reserve is a privately owned bank out to make a profit at the taxpayers' expense."

"Hypothesis: Each of the 12 Federal Reserve banks is a privately owned corporation. Like any firm, their main objective is to maximize profits. They do so by lending the government money and charging interest. They manipulate monetary policy for their own gain, not for the public good."

"Facts: Yes, the Federal Reserve banks are privately owned, but they are controlled by the publically-appointed Board of Governors. The Federal Reserve banks merely execute the monetary policy choices made by the Board. In addition, nearly all the interest the Federal Reserve collects on government bonds is rebated to the Treasury each year, so the government does not pay any net interest to the Fed."

ROTFLMA!!!!! "nearly all the interest the Federal Reserve collects on government bonds is rebated to the Treasury each year"

I find that so hilarious that I had to present it twice!!! THAT is supposed to be believable??? LOL

and here is MORE avoiding the question: "Myth #5: The Federal Reserve is owned and controlled by foreigners."

"Hypothesis: Major European banks and investment houses own the Federal Reserve. From across the Atlantic they dictate monetary policy for their own benefit."

"Facts: No foreigners own any part of the Fed. Each Federal Reserve bank is owned exclusively by the participating commercial banks and S&Ls operating within the Federal Reserve bank's district. Individuals and non-bank firms, be they foreign or domestic, are not permitted by law to own any shares of a Federal Reserve bank. Moreover, monetary policy is controlled by the publically-appointed Board of Governors, not by the Federal Reserve banks."

So the Fed is owned by the "commercial banks and S&Ls operating within the Federal Reserve bank's district." OK, WHO OWNS THOSE BANKS???

Hmmmmmmmmmmmmm, I wonder????

Decker, I had great enjoyment out of reading such an unassailable article....of course I actually THINK for myself instead of accepting what I'm reading as a given fact, just because it says it is.

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

Oh yeah. I almost forgot....bad proofreading of my own post.

On the part where the banking system collects 15%-25% on 3/4 of the money they "have". They also get to collect the 3/4. you know, the money that they made up on the books. The money that has to come from somewhere to pay them. But they were able to "just creat it."

Hmmm, I now see that I am in the wrong business. I need to become a banker and preach the truth. Only if next year is ok tho.... :) LOL

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

I notice the referenced site starts with this statement:

"efforts to debunk those beliefs are wasted ... because no true believer can ever be told otherwise"

I notice that this statement is being demonstrated in spades.

-- Flint (flintc@mindspring.com), October 14, 1999.

No need to THINK for yourself- eh, Flinty??

I mean, if it's a conspiracy theory than it's false, right?? If ANYONE is debunking a conspiracy theory then they are automatically correct by definition. Right Flinty???

Once again, Don't bother to THINK for yourself.

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

Flint,

Can you demonstrate that Brent James Bushardt's points are not worthy of further consideration? Or are you only capable of insulting us all?

Sincerely, Stan Faryna

-- Stan Faryna (faryna@groupmail.com), October 14, 1999.

Flint is a troll.

Liberty

-- Liberty (liberty@theready.now), October 14, 1999.

Here is a link to the article:

Link

(Yes, I know, I know, but it is still nice to have a link.)

78 days.

-- Jack (jsprat@eld.~net), October 14, 1999.

Stan:

You now speak for "us all"? I quoted from the article. If this insults you, I can't help it. I was also referring to the nature of Brent's "points". All he does is (also) quote from the article, responding to each quote NOT with anything resembling analysis, but with outright mocking rejection. I found the material at that site clear and well written. Just how would *you* go about responding to an "argument" that says "ya wanna poychase a bridge?"

Brent:

There is absolutely nothing wrong with thinking for yourself. But I find two difficulties here. First, I find few if any traces of actual "thinking" in your response. And second, the goal of thinking is to arrive at correct conclusions. Your methodology militates against this. I think if you were to spend a few years as a banker, both your presentation and your philosophy would be improved.

-- Flint (flintc@mindspring.com), October 14, 1999.

Er.... so... um... Red, why do you think Brent has got it wrong? Or do you think he makes some good points?

-- Stan Faryna (faryna@groupmail.com), October 14, 1999.

Flinty, do you mean to tell me that it does not bother you that "the banking system" just creates money, charges you interest AND expects you to find "real" money to pay back the principal!!

My grandfather called that "Ballsy".

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

Brent:

This is not my area of expertise, I admit. I do expect to return whatever I borrow, whether it be a book or a thousand dollars. And I expect those who borrow from me to return what I lent them as well. If I don't expect what I lend out to come back, I won't lend it, lest I soon have nothing left.

I also recognize that whoever lends me something pays a certain cost. The book lender no longer has that book to read, and the money lender no longer has the use of that money. So no, I'm not too upset to pay a reasonable fee for the use of someone else's property. If I feel the fee is unreasonably high, then I won't borrow.

Sometimes I find it to my advantage to borrow money. If I need transportation to get to work and don't have the funds to buy a vehicle, it's worthwhile to borrow those funds. This enables me to get to work, where I can earn enough to repay what I borrowed and even have some left over. And for this, I'm willing to pay a fee (again, within reason) for having deprived the use of the money from whoever I borrowed it from. This seems straightforward to me.

And it also helps you, if my job contributes to your well being. If you are using a PC, there's an excellent chance you are executing some of my code. So we can communicate.

If banking were as profitable as you imply, I'd expect to see many more entrepreneurs entering the industry. Yet I see many banks struggling and closing, even large banks like the one in West Virginia. Apparently being a banker is not a guarantee of great wealth -- you need to use good judgment. Is this wrong?

-- Flint (flintc@mindspring.com), October 14, 1999.

Flint- I fully understand the concept of lending and borrowing something of value. But this is just too remarkable to me....a bank can create wealth. That simple statement. I do not understand how that is proper and right and ....It seems very wrong to me.

I certainly have trouble bringing my thoughts onto this screen in an intelligent fashion or even one that would bring my point across.

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

RE:The second two myths that I comment on briefly in my original posting.

All I am doing there is pointing out that the debunkers answer of "Fact" does NOT address the question; it merely sidesteps the issue. (rather poorly too, since I picked up on it.)

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

Ken

While I have grown out of the "conspiracy theories" and care not for the history of the FED it maybe the case that you are not in your comfort zone here. It is interesting though to look at the Fed handling of the LTCM botch up and the unprecidented bailout of the fund. This to me goes against the US market principles of fair play. Why would they get preffered treatment over other market players? What kind of message does that send to those that over extend themselves? Are those that are responsible getting charged? What kind of responsibility does the Fed and the Banks share in this mess? These and other questions aren't being answered IMHO with the general public in mind.

As you may remember, I have offered to provide interesting documentation on this subject and you choose not to delve further into it. So why would you want to get mixed up in history when the present seems to have "odd behavior". Yet you have shown little interest in the current events and question those that have opinions that may well be correct (as mention this is not my bag). The recent gold fluctuations though do indicate possible inappropriate actions by the big boys, if they interviened with LTCM there is no doubt they may have with gold manipulations.

IMHO the international financial community is in sick shape and is in a quicksand ready for Y2K to knock it over. The testimony yesterday to the senate indicated as much. It is deriliction of duty to be ignoring the possible events in the near future. The US, England and Canada may have it well in hand but that is just a small portion of the world economy. Japan was discribed as a real threat, and where are the worlds largest banks? And it isn't the banks that are going to have the problem as much as telecommunications.

-- Brian (imager@home.com), October 14, 1999.

Gentlemen, (and you too, Flint), If you haven't studied the money issue in great depth, and in particular, this century, (as relates to our own situation), then the finest discourse you can muster is "lightweight banter." I mean no offense, to you as well, Mr. Decker. But the argument we had yesterday was going nowhere, as your assertions were based entirely on a flawed set of assumptions. This was not by accident. It was how we've all been taught since day one. If there was nothing to the position taken by the "anti-fed" crowd, do you really believe that an entire websight would have to be dedicated to dispel the "myths?" Make no mistake, our founding fathers knew the destructive powers of the banking cartel, and repeatedly warned of the consequences. Look into what Thomas Jefferson had to say about this. In the twenties, Henry Ford said that it was well enough that the people didn't understand money, for if they were to understand the nature of banking, there would be a revolution before morning. It isn't the borrowing or the lending that's so terribly wrong, that isn't usury. It is the INTEREST! The bank of a country should be set up to make money available to the people interest-free. Our paper currency used to promise gold or silver on demand to the bearer... I ask you, can PAPER become what it promises to pay by removing the promise? What is inflation? What causes the perpetual boom/bust cycle? When the money spigots are opened, you have a strong economy; when they are closed, you have a weak economy. It truly is, inarguably, that simple. To argue the point is one of two things - ignorance or DECEPTION.

-- Patrick (pmchenry@gradall.com), October 14, 1999.

Brent:

From what I have read, the FED does return interest to the treasury. At least it's on the books that way, and adds up, and gets audited. I cannot guess what demonstration of this would satisfy you. Certainly if this is not happening then not-necessarily-friendly agencies like GAO are being fooled.

And I understand that once you have more than one bank in a system, money is "created" through the lending process. But my understanding is that this happens only up to a known, calculable limit. That limit is a function of the currently mandated reserve fraction, combined with the rate at which the economy generates real wealth through the efforts of those who comprise the economy. At least I like to think that my work contributes genuine value. And the money supply can be throttled somewhat by control of interest rates. My understanding is that one goal of the FED is to try to keep the money supply in balance with the output of the economy.

I do not know the distribution of the profits (if any) made by the federal reserve banks themselves (as opposed to the publicly appointed board). I would assume they make profit, else why would the private sector choose to own them at all? If there are foreign investors who own shares of such banks, I'd expect them to receive their share of profits. It seems clear that the actions of these banks are determined by the FED, however, rather than the shareholders. Is this correct?

-- Flint (flintc@mindspring.com), October 14, 1999.

Patrick- Do you have any hints to throw out as far as what I could read to learn more about the money issue. I don't like being a "lightweight". ;^) TIA

Flint -Exactly. The Federal Reserve controls the economy. NOT the Federal Government. Some of our "founding father's" warned 'we the people' about the dangers of a central bank. I tend to believe their opinions because they formed a country and a 'New' form of government.

-- Brent James Bushardt (brentj@webt.com), October 14, 1999.

Brent,

You could start with "The creature from Jekyl Island by G. Edward Griffin; The secrets of the Federal Reserve by Eustace Mullins, (a site mentioned above). Go to freeamerican.com and look through some of his links, or jbs.org. Read The Federalist Papers, but not without The Anti-federalist Papers as well so as to get the gist of both sides of the argument on the ratification of our constitution. Read bios on Jefferson, Madison, J. Adams, Hamilton and especially Patrick Henry, but try to find the earlier than 1930's versions, as the authors weren't so readily able before then to lie, misrepresent facts, or use shoddy scholarship as the later versions did. (Particularly after John Dewey, the destroyer of modern education had his reign). Good luck, at least there's someone out there that's not looking for someone else to do their heavy lifting for them.

-- Patrick (pmchenry@gradall.com), October 14, 1999.

Gentlemen, It's seems most here see and agree the FED and the banking system CREATES money by lending. Correct? There are two real points. 1.What are the rules to lending? 2.Who makes those rules and who profits from them?

From talking with bankers that are friends, or even in the lobby of several, the current Capitalization Rate is about 15 or 16. That's what Fractional Reserve Banking is. Currently, a bank can loan out 15 -16 times what it has in reserve. For every Dollar it has it can loan out 15 Dollars. Now, if I put 1 dollar in - at the end of the year it will have paid me (lets say %5 interest) 5 cents. But it will have collected $1.50 from the people it lent the 15 Dollars to. (Charging them say, %10 interest) It's hard to see how a bank can fail! The problem is, notice that they never lend you the INTEREST. You can see that unless one paid back the money immediately, there IS NO MORE MONEY IN THE SYSTEM to pay the interest back with! Forgetting the "But I can trade my services for something I need" argument, because a Bank won't be interested in your services - they want the MONEY back, or they will screw up your credit and life etc. One then realizes that the only way to pay back the loan + the INTEREST is to BORROW MORE MONEY from somewhere. And then one realizes that ALL MONEY COMES FROM A BANK.

Eventually, everyone is in debt to the BANKERS - even Countries. That's why the IMF act's as the world's Chase Manhattan. When you owe the BANKERS money, they have a large influence on one's future. One might have to give them that collateral (Say in the case of Brazil or Indonesia - mining rights that you can give to some of your favorite boys because the favor you'll ask of them down the road is of value to you, etc. etc.)

Anyway, we become more and more in debt. I was looking at the Depression in the Encyclopedia Brit. - thought it would be nice to see what life was like then, and saw a graph of the debt of the U.S. since it's inception. Wouldn't you know it. The debt graph spiked -guess when? 1913 - the year the FED was created.

Flint, the FED to my knowledge has NEVER been audited. Constitutionally, only the U.S. Congress has the authority to print and coin money. Supposedly, this was ratified by the Federal Reserve Act of 1913. Yet, Wilson himself in 1916 realized he'd turned the Government over to a "Secret Government". You may read about it as well in the 1935 House Banking Committee's notes -I forget the Senator or Congressmen that was accusing the FED of stealing the U.S. people blind, and that they should give back everything, and we'd be out of debt and own our own stuff. By the way, I've tried to find the Federal Reserve Act of 1913 and it can only be obtained by writing the Board of Governors of the Federal Reserve, no Library has a copy!

So see the big picture, we have all traded our real wealth, our pink slips or title to our homes or whatever, for PAPER. The Central banks have most of the Gold, and title to most of what we own. (This is probably the best analysis of the Gold Play - to drive the mines out of business, take control of them. Therefore, unless there is a real Public Blowup re: Y2K, I think Gold will be hard pressed to clear 340.)

In the depression, where did all the MONEY come from to put everyone back to work building more crap than we ever had? We had to borrow from somewhere. Yes, the Rothchilds (and others). They were lending to Germany as well.

It would be possible to have a Credit Banking system instead of a Debit Banking System. One poster was right, there doesn't need to be a usury charge of money. The U.S. should have it's own Bank, one that lends to it's people and charges only administration fees (NOT FOR PROFIT), and maintains money supply that reflects production.

If one ever seriously starts to look in to the banking laws and regulations, it's clear that they have made it so complicated as to throw most people off the path. I have seen a shareholders chart showing the major players in the FED. Rothchild, Rockefeller, Morgan, Lehman, and some Foreigners.

By getting us (the people) to agree to use their MONEY (notice all bills have Federal Reserve Note - not U.S. Reserve Note on the bottom), the Bankers get a piece of everything we do, for economic exchange!!!!! All they are providing is the MEDIUM with which we transact - is that worth TRIPLE the Price of something?? (The interest on a House is about 3 x's the purchase price)

I don't care who owns the Banking system, it's fraudulent from the very concept the way it is currently practiced.

-- aasb (aasb@starting-point.com), October 15, 1999.

Gawd! Someone who actually UNDERSTANDS this stuff!! Sir, I for one am in awe.

-- King of Spain (madrid@aol.cum), October 15, 1999.

Wow aasb, I am awed by my lack of knowledge and at the same time, I believed that it was evil. Without a doubt, it bears further investigation. (excepting Y2K being an 8 or higher, then we get to start over)

Wow...I am shocked at the simplicity and the depth of it all.

Oh, and let's not forget that Robin Hood is evil- according to Ayn Rand. I think that she has something there...

-- Brent James Bushardt (brentj@webt.com), October 15, 1999.

As I understand it, banks lose money when those they lend to are unable to repay those loans. Aren't personal bankruptcies in the US at an all-time high? Haven't loans to third world countries often been non-performing? Banking would not appear to be risk-free.

-- Flint (flintc@mindspring.com), October 15, 1999.

Egads! Apparently only a few of the posters actually read the essays I linked. The essays answer in detail many of the issues raised here. The essays include facts... not just opinions. Perhaps the Fed haters can actually read the source materials including court cases before they sally forth.

Fractional reserve banking is practiced throughout the world. It is not forbidden by our Constitution... nor is the use of paper currency. The Federal Reserve is separate from Congress... much to the frustration of our elected officials. When countries allow their government to sway the central bank, there are inevitable problems including inflation. Governments, you see, have an inherent incentive to inflate currency.

As known by most sentient beings, the Federal Reserve is strongly against inflation... even to the point of Volcker's big rate hammer in the early 80s.

On to banks and failures. Lending money is a risky activity, as Flint aptly notes. Even "secured" loans can be troublesome. You have to sell the collateral... and this may or may not cover your investment. There are also costs involved in making loans, collecting payments, foreclosing, etc. In short, banks can and do fail on a rather regular basis.

Banks do not lend you interest? Hmmm.... Banks lend money for the purpose of consumption or investment. Let's take the common example of a small business. I sit on the board of director's of a small timber company. Let's say we take out a loan to buy a new mill. After analysis, we determine the new mill will increase productivity 20% and lower costs 10%. In simple terms, we will have increased profits. The loan is repaid, not through "borrowed" money, but from the increased corporate profits from our investment.

Our increased profits also results in increased wages and in hiring new workers. Some of these workers may choose to apply for a loan from the same bank... perhaps to buy a house. People realize we all need shelter. The worker has two choices... 1) rent a place and save until a house can be purchased for cash or 2) borrow the money to buy a house. The worker realizes rent prices will increase every year and after 30 years... the money spent on rent will yield nothing. He or she also realizes the mortgage interest is tax deductible, the mortgage payments will remain the same, and after 30 years, they will own the house.

You do the math.

Do banks create money? Yes. But all money does not flow through banks. The small timber firms receives money from customers. The workers receive money from the mill. Money circulates.

Money does not create wealth... productive capacity creates wealth. The mill produces wealth... so do its workers. Money is simply the medium of exchange for the production.

Not everyone is in debt. This is simply a foolish statement. Some firms are large enough to serve as their own bankers... raising funds through issuance of bonds, etc. Smart companies know debt makes sense only when it increases productivity capacity where the increased profits are greater than the costs of borrowing.

Debt has always existed... including in the days of our forefathers. The pilgrims bought land on credit. There is a new book on the history of debt I plan to read... more on this later.

The Federal Reserve has been audited. Congress can delegate the authority to print money... or do you expect to see Senators working the presses? (laughter)

Congress is always annoyed with the Fed... see my comments on inflation.

The comments on a conspiracy to "buy" gold mines... foolish. Show me proof.

As to the rest of this jumble... if you want to abolish the Federal Reserve, take action under the laws of this country. I don't think you'll talk people (or businesses) out of fractional reserve banking anytime soon. Even if you do, we'll just borrow money from another country... large corporations will send bonds. You'll just move the business of banking off shore... where the profits will be taken by the Europeans or the Asians. If there were a conspiracy for a New World Order, destroying the Federal Reserve would be a natural course of action. Hmmm... food for thought (laughter)

-- Ken Decker (kcdecker@worldnet.att.net), October 15, 1999.

Mr. Decker- you say "On to banks and failures. Lending money is a risky activity, as Flint aptly notes. Even "secured" loans can be troublesome. You have to sell the collateral... and this may or may not cover your investment. There are also costs involved in making loans, collecting payments, foreclosing, etc. In short, banks can and do fail on a rather regular basis."

Ok, but please explain to me how lending money that was just created on the books is "troublesome." I fail to see how it is a problem to just erase it off the books. I fail to see how it physically, materially hurts the bank to not have that loan be repaid.

Oh, granted some banks fail. A good con game will not be run "perfectly". You cannot let the marks know they are being taken in. If they ever catch on, that's the end of the confidence game.

I am under the belief that you cannot and will not get my point, Mr. Decker. I am sorry if my inability to expound upon and prove my point is the cause of that.

-- Brent James Bushardt (brentj@webt.com), October 15, 1999.

There is a distinction to be made between "banks" & "the fed" - Mr. Decker, as I said above, you are operating on a flawed set of assumptions. You post that debunkers website and claim victory, yet you haven't lifted a finger to investigate the allegations of those who oppose a central bank, (which is the 1st plank of the communist manifesto, BTW). This is a pretty strong indication of intellectual laziness. You say the fed is against inflation? Now there's a hoot! You throw these simple terms around without even understanding their source. The fed creates inflation simply by expanding the money supply, then they "decry" the problem of inflation so that the masses accept THEIR solution, i.e. higher interest - read Hegel. You and your speculation on the topic of money are completely out of your league, you don't even know the definitions of the terms you utilize; "money doesn't create wealth," you say? How do we know this when there hasn't been any "money" in circulation since 1933! I'm afraid, sir; that if you comment upon the y2k with as little knowledge as you so cavalierly pipe up on this issue, where your knowledge base is so obviously deficient, it's no wonder these people hammer you so badly.

....One other thing before I close with you, you referred to me as "another conspiracy theorist from the lunatic fringe," it's no wonder that people get that label so easily when they're holding conversations with those so devoid of a true knowledge base on a subject upon which they so willingly offer opinions, and they have yet to master the definitions of the terms they so carelessly toss about. The website you offer as refutation is as pitiful as your perception on what is being said to you... good day, sir.

-- Patrick (pmchenry@gradall.com), October 15, 1999.

Brent:

Let me give you a simple answer, and maybe we can get to the bottom of this.

Start with two banks, A and B, neither of which has any money yet. Let's say I deposit $1000 in bank A. Now, let's say you borrow $900 from bank A (which keeps $100 of my deposit as the fractional reserve). OK so far?

Now, you take that $900 over to bank B and deposit it. Bank B then lends Ken Decker $800, keeping $100 for the reserve.

At this point, the system has created money -- I have $1000 (in the bank), you have $900 (in the bank), and Decker has $800 that he borrowed, for a total of $2700, all from the original $1000.

But neither bank really created money out of thin air -- neither bank by itself could lend more than was deposited, and neither one did. You and I can start writing checks against our balances, and the bank will honor those checks. The banks honor those checks on the assumption that your loan and Decker's loan will be paid back.

And that's where you seem confused, at least to me. A bank cannot lend out $15,000 simply because I deposited $1000. The bank is not able to lend in excess of deposits minus the reserve. Them's the rules.

And this whole system is fine, so long as loans are paid back. If anyone defaults on a loan, the bank is left holding the bag. Too many of these defaults (in dollars) and the bank fails. But for sure some loans will default. In fact, there is an optimal default rate > 0, because if a bank is so conservative it never makes a bad loan, it will be refusing to issue too many (profitable) good loans.

If interest were not charged, the bank would be unable to cover any defaults. Since any loan *might* default (acts of God happen), therefore without interest no bank would be willing to lend at all. Without loans, there's no banking system.

It's not all that complicated.

-- Flint (flintc@mindspring.com), October 15, 1999.

Flint- you say "And that's where you seem confused, at least to me. A bank cannot lend out $15,000 simply because I deposited $1000. The bank is not able to lend in excess of deposits minus the reserve. Them's the rules."

Well Sir, you are incorrect. That is exactly what the banking system does. The Fractional Reserve System allows them to create money based upon their deposits. If they have $1000 in deposits, they can make loans from $3000 up to $15000; depending on the rules. As for proof, please look for anything about the Federal Reserve's Fractional Banking System- you can start by going to your nearest branch and getting all the books and pamphlets they have. That's exactly what I did to start. You will be amazed at what they have to say.

-- Brent James Bushardt (brentj@webt.com), October 15, 1999.

Brent:

You are confusing a bank with the banking system. Individual banks cannot lend in excess of their deposits. I illustrated how multiple banks together can end up lending more than was originally deposited -- bank A lent $900 and bank B lent $800 from the original $1000. But neither bank, by itself, can lend in excess of deposits minus reserves. The banking system creates money as a side-effect of debt, since money borrowed from one can be deposited in another, in a chain of loans and deposits from bank to bank. But no individual bank can lend what it does not have.

-- Flint (flintc@mindspring.com), October 15, 1999.

Flint- Please read something on the subject.

"Free your mind and the rest will follow."

-- Brent James Bushardt (brentj@webt.com), October 15, 1999.

Brent:

I am only quoting Paul Samuelson, who wrote my Econ 101 text. If you cannot accept Econ 101, this is not my problem.

-- Flint (flintc@mindspring.com), October 15, 1999.

Brent:

You would probably spend your time more profitably telling your theories to a real banker. He would be impressed.

-- Flint (flintc@mindspring.com), October 15, 1999.

Flint, You know even less than Mr. Decker... the reserve rate is 1.7% as we speak. That means for every $100.00 on deposit, there is a whopping $1.70 available. What is it with people that wish to speak to subjects for which they have no clue? Go play Sherlock Holmes with some of the above references I've listed... until you do, you'll continue to sound more like Larry Holmes.

-- Patrick (pmchenry@gradall.com), October 15, 1999.

Patrick

The Creature from Jekyl Island is facinating reading. The Federal Reserve Board sounds so much better than The Bank Monopoly. The reasons for the founding of the Fed and the manner in which it was done leaves me in awe of the power of money.

The creation of wealth is a flawed process and the many are about to pay the piper for the greed of the few. Perhaps the saddest thing is the many will never understand the reason for their pain.

-- Mike Lang (webflier@erols.com), October 15, 1999.

Flint - I am impressed as usual :)

WHAT a maroon...

There is a financial war going on with the Europeans in cahoots against the dollar as the world reserve currency.

The only way to make sense of what is going on, with oil, gold, silver etc. is to realise this fact.

The rest of the world have had enough of american dollar debt arrogance - it's pay back time...

Look for another gold announcement on Sunday in the wee hours...

China is making a move now to usurp London (the LBMA) and trade gold independently of the Cabal...

I feel the gold producers will announce a gold cartel a la OPEC...

Greenscum and the Fed have BLOWN IT big time.

-- Andy (2000EOD@prodigy.net), October 15, 1999.

Andy, Quite incisive... I hope you're right that they have blown it, but I'm not so sure that blowing it wasn't their motive all along. The house of cards has proven remarkable resilient in the past with the behind-the-scenes machinations managing to hold things together, seemingly with duct tape and baling wire, until the collapse falls in line with their timing. Y2K or not, it will come undone. What Mr. Decker, et al fail to realize is that history has demonstrated that any and all countries that have ever embarked on the fiat experiment have gone the way of the German mark... which reminds me, I have to get a new wheel for my wheel-barrel.

-- Patrick (pmchenry@gradall.com), October 15, 1999.

Fairs use etc.

A superb piece by Journeyman...

Journeyman (10/15/99; 19:47:38MDT - Msg ID:16513) WHY GOLD HAD TO GO: Yellin' @ Oro Yellin',

You have very interesting theoretical considerations for instituting (or re-instituting) the so-called gold standard. It'll probably take me quite awhile to think them through. However we have a long, successful track record with the previous gold standard here in the US which suggests your theoretical considerations may be, well, mostly only theoretical.

The united States grew and prospered on a gold standard for over a century with only one hiatus during the Civil War. This would indicate, theoretical objections aside, that a gold standard is eminently practical and highly conducive to economic growth, prosperity, and, propaganda to the contrary not withstanding, stability.

The gold standard was killed, not because it didn't work, but because the bankers and their cronies in the political cliques couldn't profit from gold as money as they could from paper money. The excuses normally cited to indict the gold standard, such as massive bank failures, etc. were greatly exaggerated, and in the context of the depredations caused by paper money, pale to insignificance. The quality of such whinings can be deduced from the ultimate indictment against gold, which is no more than calling it names such as "barbarous relic." [SEE subsequent post, "BARBAROUS RELIC".] It wasn't that the gold standard didn't work; it worked too well, automatically protecting people's savings and making large banking institutions peripheral rather than central. Hmm! "Peripheral Banks." Has kind of a nice ring to it don't you think? {Shumpeter & "Fiscal State.")

Originally at least, this profit for the bankers and their political cronies was based on the seigniorage (profit) from the manufacture of money. Even now it costs only about $.05 to manufacture a paper bill of any denomination. Thus the profit for manufacturing a $1.00 bill is $.95 or 1900%, while the profit for manuracturing a $100.00 bill is $99.95, a whopping 199,900% profit. This makes the drug dealing business look like starvation wages. How much do you think it costs to create a "megabyte" (electronic book entry) dollar? Compare this with the miniscule profit for minting a gold coin, expensive because of the cost of the raw material, gold. Incidentally, the seigniorage for manufacturing paper money goes to the Federal Reserve (which is a cartel of private bankers NOT a branch of the US government -- ask me) while the much smaller percent seigniorage for manufacture of coins goes to the U.S Treasury -- which by law, ironically, manufactures both coins and all U.S. paper bills.

An essential part of making fiat currency work (and thus maintaining the seignorage profit) is to take away the alternatives, usually gold and silver. This is necessary because when hard currency is circulating along side fiat currency, as soon as banks and/or governments begin creating too much of the fiat -- which is ultimately their purpose -- same denomination fiat (or "concept") money will begin to buy less than same denomination hard currency. This sparks the workings of inverse Gresham's Law, that is "good money drives out the bad" because those traders receiving "money" for their part of the trade will only accept the fiat at less than face value, if at all. [Oro, as long as there aren't legal tender laws and gold and silver are available, inverse Gresham's will take care of controlling debt, which as you point out, is "natural" to free markets.] The value of "paper" begins to diverge from the value of physical. Circulating gold acts as a highly visible barometer making it obvious to everyone what's happening, which accelerates the erosion in confidence. This brings the fiat scam to an end much more quickly. The only tactic the inflationists have once this starts happening is legal tender laws, which don't work very well at all:

"It [the French ruling body, the National Convention] decreed that any person selling gold or silver coin, or making any difference in any transaction between paper and specie [gold and silver coin], should be imprisoned in irons for six years; that anyone who refused to accept a payment in assignats, [paper money not convertable to gold or silver] or accepted assignats at a discount, should pay a fine of three thousand francs; and that anyone committing this crime a second time should pay a fine of six thousand francs and suffer imprisonment twenty years in irons. Later, on September 8, 1793, the penalty for such offenses was made death, with confiscation of the criminal's property, and a reward was offered to any person informing the authorities regarding any such criminal transaction. To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of "having asked, before a bargain was concluded, in what money payment was to be made." -Fiat Money Inflation in France by Andrew Dickson White, p. 78 & 79

The escalation in tactics demonstrates that even such draconian "legal tender" measures as tried by the French simply don't work. White goes on to tell us however, "The great finance minister, Cambon, soon saw that the worst enemies of his policy were gold and silver. Therefore it was that, under his lead, the Convention closed the Exchange and finally, on November 13, 1793, under terrifying penalties, suppressed all commerce in the precious metals."

The real answer for the inflationists is, then, to get the alternatives to paper out of circulation so they can't work as automatic barometers, exposing the inflation scam. This is one root cause as to why the "central banks," vehemently opposed by giants like Thomas Jefferson and Andrew Jackson, still hold such a large percentage of above ground gold --- it's not so they can use it, it's so we can't.

You can see the footprints of the U.S. legal tender laws by looking at any current $ denominated bill. On the face to the upper left you will find, "This note is legal tender for all debts public and private." The invisible ink reads, "Whether you like it or not, sucker."

The Federal Reserve Act set up a banking cartel composed of what had been competitors. (For a well researched, eye-opening expose of how this was engineered, read "The Creature From Jeckyl Island" by Ed Griffin) The Fed promised to stop "bank runs." Previous to instituting the Federal Reserve in 1913, the very worst year for bank runs had seen less than a 5% bank failure rate. Twenty years later in 1933, thanks to the Fed, about HALF of the nation's banks were unsound. To bail them out, it was "necessary" to declare a bank holiday -- and incidentally, to make gold ownership by Americans illegal.

Remember the "great" French finance minister, Cambon, recognizing gold and silver as his greatest enemies? The American banksters obviously did. In 1933 they and the U.S. government made gold a controlled substance. Like cocaine or heroin, they made it illegal for Americans to own gold -- and they got away with it.

Since Roosevelt pulled the trigger on stealing the gold on April 5, 1933 (by issuing infamous Executive Order No. 6102), less than three months after taking office, it seems obvious to me that he was merely a cats-paw and the gold-stealing had been planned and set in motion much earlier, probably with the passage of the Federal Reserve Act 20 years earlier.

On January 14, 1961 beloved president Dwight David Eisenhower extended the ban, making it illegal for American citizens to own gold even if held outside U.S. jurisdiction. Enforcing such a law, was as in most cases, impossible without the cooperation of the victim. As late as 1969 Americans, "the freest people in the world," were still being jailed for owning too much gold without a license. Collusion between banks and government? What do YOU think?

... Though an indispensable requirement for the functioning of an extensive order of cooperation of free people, money has almost from its first appearance been SO SHAMELESSLY ABUSED BY GOVERNMENTS THAT IT HAS BECOME THE PRIME SOURCE OF DISTRUBANCE OF ALL SELF-ORDERING PROCESSES in the extended order of human cooperation. The history of government management of money has, except for a few short happy periods, been one of incessant fraud and deception. In this respect, governments have proved far more immoral than any private agency supplying distinct kinds of money in competition possibly could have been. -Economics Nobel Laureate F. A. Hayek, _THE FATAL CONCEIT The Errors of Socialism_, [Cap. emphasis added] (Chicago: The University of Chicago Press 1988), p. 103.

When there was a gold standard, people weren't forced to put their "hard earned" in the hands of banks, fund managers, or other professional gamblers in order to just beat "inflation." On the gold standard, there WASN'T any "inflation." Rather than putting your savings in the hands of those professional gamblers, you had the option to bury your gold currency in a coffee tin in the backyard, etc., and have it gradually appreciate in value without their help. When I explained this fact of the gold standard era to a friend lately, he simply didn't believe me. Amazing!

In short there was not, as people commonly assume, a failure of the gold standard, in fact the reason it was done away with is that it was too successful at protecting people from currency depreciation ("inflation") caused by the banker-government axis.

Originally this was a straight forward scheme to institute paper money to the benefit of banksters and their government cohorts, and at the expense of everyone else. Various intellectuals signed on (Maynard Keynes) or were bought to justify and explain -- without telling the truth, of course. Keynes, I believe, was his own dupe. He, among other well-meaning "economists" of the era really believed they could improve on having that "barbarous relic," gold, as a master. Many probably believed they could improve on the economic process, which no one knew at the time was a "complex phemomenon," not ameniable to understanding, let alone central control. The ultimate proof that such attempted control screws things up was the complete disintegration of the "centrally planned" Soviet economy, which is still in process.

But even lesser control attempts, as practiced in US "capitalism" (currently a "gentle" fascism) doesn't work very well either, as I believe, we're about to find out. The well-intentioned failed to take into account the stubborn "inflation" (currency depreciation) which bankers and governments simply can't resist causing as they incessantly create just a little extra "for the gipper."

COMING (perhaps) PART II: Godzilla! (What is the result of the creation of a gargantuan accumulation of so-called "megabyte money" that has now dwarfed the relatively puny supply of physical PAPER money?)

-- Andy (2000EOD@prodigy.net), October 15, 1999.

[snicker!] A fascinating way to anthropomorphize market forces. If you predict them wrong, the conspiracy is out to get you. Guess right, and you've understood the conspiracy's deep motivations. A wonderful insight into the intellectually disenfranchised. Keep up the good work.

-- Flint (flintc@mindspring.com), October 15, 1999.

Clueless as ever I see Flint.

keep up the good work :)

-- Andy (2000EOD@prodigy.net), October 16, 1999.

Patrick and Andy,

Just one thought... will you be around to debate this after the rollover? When the economy is still functioning?

-- Ken Decker (kcdecker@worldnet.att.net), October 16, 1999.

It's not functioning now

YOU DUMBASS!

See CNBC today?

Uh, the DOW[N}... it's called "a clue"...

-- Andy (2000EOD@prodigy.net), October 16, 1999.

Oh and by the way Decker - I know you believe gold is a barbarous relic...

=============================================================

THIS COMES HOT OFF THE PRESS! THIS COULD BE IT!!!!!!!

Good luck all...

Got Gold?

======================================================================

12:55a EDT Saturday, October 16, 1999

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy tonight sent this dispatch to his subscribers at www.lemetropolecafe.com and asked me to send it to you because it is of general interest.

GATA is calling all friends of gold to their battle stations for a special announcement at 7:50 a.m. Central Daylight Time this Sunday -- tomorrow. This is going to be war, and we're going to win it.

Please post this as seems useful.

CHRIS POWELL, Secretary Gold Anti-Trust Action Committee Inc.

* * *

GOLD PRODUCERS ARE DIVIDED BUT OUR 2 HEROES ARE EFFECTIVE

By Bill "Midas" Murphy www.lemetropolecafe.com

Friday, October 15, 1999

This past week I told you that some of the major gold producers had agreed to an unwritten, but formal agreement, to cut their gold production, a la OPEC. My information came to me from the best of sources in the gold producer community.

I just received this email from GATA Treasurer, Chris Powell. It quotes an a usually informed source who posts on the Interet:

"It's illegal to form cartels in America. The government prohibits any such organization. But outside America, it's perfectly legal. Just take a look at OPEC.

"Since the British gold sale, South Africa got real angry and, led by Anglogold, it has been pushing full- steam into creating an international gold cartel made up of non-USA gold producers.

"The rumor buzzing out of London tonight is that an agreement has been reached and will be announced at a big press conference soon.

"If non-USA mining companies announce even a 25 percent reduction in global gold output, it's gonna ignite the gold price beyond description."

This confirms what I have been told.

I also have reported that there are rifts in the World Gold Council. This explains the rift. The overly hedged shorts do not care for a cut in production; their shares will not perform well if the gold price explodes. This also explains why Gold Field Ltd. announced today that it has now covered most of its hedges.

Chris Thompson of Gold Fields and Bobby Godsell of Anglogold have been the powerhouses on behalf of gold. They are standing up to the Hannibal Cannibals and are quietly changing the gold world in behalf of their companies and the gold industry. Gold shareholders, they are your angels. They should be applauded.

Carpe diem is in. Hannibal Lecter is out.

By now you all know that the U.S. Producer Price Index figures released today were far more bullish for gold than anyone imagined. The dollar was beat up and the equity markets were trounced around the world, yet gold was allowed to rally only $2 by certain malign forces. If that did not hit you over the head today about what we are dealing with, get a checkup with a top brain surgeon.

Our camp has been victimized far too long. I would like to echo our sentiments:

WE ARE MAD AS HELL AND WE ARE NOT GOING TO TAKE IT ANYMORE.

The Gold Anti-Trust Action Committee certainly will not stand for the government bailout of the cartel that has ruined so many companies, shareholders, and miners to suit its own greed.

At 7:50 a.m. Central Daylight Time on Sunday morning GATA and the "right flank" will make an important announcement to every gold company shareholder in the world.

-END-

-- Andy (2000EOD@prodigy.net), October 16, 1999.

And after all that, Rick chimes in with a hint. The ONLY way to stop the current administration to continue, is a poor economy.

-- R. Wright (blaklodg@hotmail.com), October 16, 1999.

Uh DDecker,

Is this the "economy" you were talking about...

======================================================================

The four possible, nay five possible outcomes and their probabilities:

1. Grand Super Cycle crash from here to triple figures: 20%

2. Sideways Greenspan/Yardeni Bear for 3.5 years: 10%

3. "Reversion to Mean" crash (Super Cycle?) c/w dowside overshoot to ~3000 and recovery to ~5000, erasing "New Era" moral hazard: 67%

4. Final Blow-off to New Highs: 3%

Oh yes, and lest we forget:

5. PC really does change Human Nature, thus creating the New Paradigm: 0%

And now a few words from ex-AK-Broker

Current Market News

10-15 Welcome to the promised land. Ive always been amazed how years of analytical work come to fruition at once. Now is just such a time. Take your phone off the hook. Put up the "do not disturb sign." Call in sick, and pay attention to this.

The PPI was released this morning. It was up an astonishing 1.1%. Thats over 12% annualized. The core rate -- the one Wall Street was telling you would not be affected -- soared 0.8%. All the b.s. weve seen in the PPI reports has finally come to roost.

Consumer foods prices were up 1%. Energy goods, up 2.2%. Gasoline was up 2.2%. Heating oil, up 6%. But this is not energy-based inflation. Passenger cars soared 2%. Thats after all those months where I screamed that prices were soaring. Finally, they couldnt hide it any longer. But this is not the part of the report that is causing panic at the Fed.

Inside information I have says Greenspan got an advance warning of the report. Here are the sections that triggered his astonishing warning yesterday. Intermediate energy goods were up 1.8%. But crude goods were up a whopping, gone-crazy 5.1%. Crude goods less food and energy, up 2.2%. Non-food materials, up 7.6%. Incredible numbers, my friends. But it gets even better.

Let me give you the unadjusted numbers. They are staggering economists the world over. Unadjusted finished goods, up 3.2%. Thats an incredible 40% annual inflation rate. Not in Brazil, but in the United States. Less food and energy, up 1.7% unadjusted. Even more staggering, crude goods unadjusted were up 16.1%. Non-food materials unadjusted up 30.2%.

Theres no inflation?? BULL. Inflation is out of control. Its now embedded. Its bubbling to the surface, and the U.S. economy is going to hell. Already, as I write this report the Dow is down nearly 200 points.

U.S. business inventories and sales were also reported today. From July to August, this number was up 1.3%. From August 1998 to August 1999 it was up an astonishing 9.2%. Inventories were only up .3%. Which means businesses are unable to keep up with the runaway economy.

The August stock to sales ratio is now at 1.32. The lowest amount of inventory to sales, American business has ever held.

Greenspans warning last night, to American bankers, was the most incredible speech any central banker has ever made. Greenspan will go down in history for making one of the gravest mistakes of any Fed Chairman. He did not raise rates early, when he still had a chance to stop this runaway bubble economy.

Greenspan needs to stop cocking around here. He needs to raise rates. Now, fast, and repeatedly. He has a flat-out crisis on his hands. The least of which is the stock market collapse. Hes on record warning American bankers about a stock market collapse. Truth is, Greenspan is petrified the crash will melt down the U.S. financial system. So he took a greater risk. He allowed inflation to become embedded in the U.S. economy.

For over ten years, Ive warned about the danger of a U.S. stock market bubble crash. Its here. You need to trade this. Im not screwing around. More important, the Fed and the markets are not screwing around. By the time everyone else realizes the U.S. economy is going down the poop shoot, it will be too late.

10-15 Today the stock market suffered its biggest trading loss in over a year. The dollar plunged against the Euro, German Mark, and Japanese yen. T-bonds were up, yields were slightly down, on a flight to quality. Panicked traders sought a safe haven.

The Dow fell 267 points. 2.6%. The S&P500 cash fell 36.01 points, to 1247.41. That is a 2.8% drop. The NASDAQ plunged 75 points, to 2732. Down 2.4%. For the week, the Dow fell 630 points. That is its biggest weekly decline ever. Declining stocks outnumbered gainers by nearly four to one. 2400 stocks fell. 687 were up. We saw an equal number of falling stocks to rising on the NASDAQ.

Early indications I have say this week saw the biggest dollar outflow from mutual funds ever. All this action took place on huge volume. 908 million shares traded on the NYSE today.

I was in the market the entire day. The only way to describe todays trading activity is "panic". Huge losses were booked. I mean huge. This is not the end of the move. It is the start of the Wall Street wipeout you and I have been planning for.

At one point today, the Dow was below 10,000. Only panicked, manipulated buying by club members kept the Dow above 10,000 at the close. I dont care what kind of spin you see. This is an unmitigated disaster. It is truly round one, in what will turn out for us to be the most glorious event of our lives.

This weeks losses on Wall Street rippled around the world. Stock markets in Europe, Asia, and Latin America all fell, as Greenspan warned about the bubble stock market wipeout. In the coming days and weeks, the market will not go straight down. There will be rally attempts. But as you see, buying for the long haul, regarding every dip as a bargain hunting opportunity, is no longer the psychology of the market.

How serious is this drop? One indication is that the White House felt the need to reassure the markets that everything is great. Not once, but several times. White House National Economic Counsel Head Gene Sperling said he expected "quite solid U.S. economic growth in the 3rd quarter of the year." Hey, Gene, I have news for you. 3rd quarter is done past. The stock market looks forward, not backward. He said, "the U.S. remains in a sound growth and low-inflationary environment." Obviously, besides all his other problems, he cant read. Wall Streets and the Clinton administrations response is pitiful.

More important, despite these record-setting downturns, the stock market is still grossly overvalued. It has a long, long way to fall.

10-15 Diamond Offshore Drilling, worlds biggest, reported 3rd quarter earnings fell 65%. This was just in case anyone thought there was a recovery in the oil patch. OPEC has put up prices, but has not changed the market fundamentals. Which are that oil should trade at $7 a barrel.

10-15 First Union Bank reported 1st quarter operating earnings fell 21%. They are the U.S.s fifth-biggest bank. First Union is representative of the problems that are buried deep in the balance sheets of Americas banks. They have bought everything in sight. Their books are full of stock market bubble economy loans. Those loans will soon turn worthless. You can imagine why Greenspan is so concerned. Japan still hasnt dealt with all the bad loans its banks made during its bubble stock market. And its now over a decade later. Thats why these bubble stock markets are so devastating. They damage economies for years to come.

10-15 Sun Health Care, one of the giants in the business with 186 affiliates, filed for bankruptcy. The list of firms they owe money to is very interesting. Bank of America. General Electric Capital. Credit Lyonnais. Bank of New York. Bankers Trust. To name just a few. Wall Street seems to forget to report the companies that are doing really lousy. But remember, Wall Street is nothing but paid salesmen for stock. They make it appear that they give a balanced view. But their job is to sell stocks. Thats their business. This one fatal mistake -- of not understanding how Wall Street works -- will cost mutual fund investors trillions of dollars.

10-15 Drilling contractor Global Marine, another biggie in the industry, reported earnings dropped by over 67%. Revenue nearly fell in half. Way to go, oil patch. Wall Street was predicting that oil service companies would make a rapid recovery. Thats not going to happen.

10-15 Not only the U.S. is inflating. Canada reported its annual inflation rate climbed 2.6% in September alone. Thats a 30% annual rate. England reported its inflation is also climbing. Inflation is a global problem. It has far-reaching implications for the world economy. Especially since central banks are well behind the power curve in stamping out inflation. Wall Street is quick to ballyhoo increases in profits, no matter what larceny is committed to create those increased profits. They dont like to report downturns. And the media gives the downturns only limited coverage.

10-15 Caterpillar reported 3rd quarter earnings fell 35%. That was on an 8.9% drop in sales. I guarantee you, if Wall Street millionaires wanted to drive around Caterpillar bulldozers, they would have reported a great increase in profits. If only Caterpillar had diversified into consumer trinkets that catch the fancy of Wall Street insiders. Their profit story would have been a lot different.

10-15 Pacific Gas & Electric reported 3rd quarter earnings fell 13%. Yet operating revenues increased from $5.31 billion to $6.38 billion. A 20% increase. The decline took place because regulators have found a way to make their constituents happy. Just order utilities to decrease rates.

10-15 Sun Trust Bank sold its portfolio of personal credit cards for $1.5 billion. When banks shed their very profitable credit card business, its normally because some other problem is lurking in their portfolio. I cant wait to see what comes out here in the future.

10-15 The U.S. dollar got trounced today, as the stock market crashed. The dollar fell 1.75% against the yen and 2.3% against the Euro. Theres no way the dollar can stay strong. Remember, the trade deficit report is due out. It should show the biggest trade deficit ever. I say "should", because God only knows what fiction the Clinton administration will create. Especially with the stock market starting to tank.

10-15 Double Click, one of those Internet darlings, reported its loss widened from $4.7 million to $5.4 million. Thats on revenue going from $20.8 million to $44.9 million. Internet companies are a pathetic joke. They more they sell, the more they lose, and the more Wall Street peddles them. Few of them have business plans that are workable now or in the future. Theres little reason to believe they will even be in business in the future.

10-15 Cleveland Federal Reserve President Jerry Jordan urged banks and financial institutions in his district to set aside more money to prepare for a sharp downturn in stocks and financial assets. He followed Chairman Alan Greenspan in giving a Fed one-two punch. I have to tell you, folks. It doesnt get any better. Key bankers the world over -- including nearly the entire Fed -- are warning about the stock market wipeout, and its effects on financial institutions. This Wall Street party is over.

10-15 Archer Daniels Midland (ADM) reported 1st quarter profits fell 70%. Another former Wall Street darling, that is now in the dumpster. Every time I hear about the great earnings on Wall Street, I wonder what reports they are seeing. Im looking at a batch that -- even when they are up -- are not good once you dissect them. As the market goes lower, people are going to have to take out their pencil and calculator, and run the numbers. They will discover what generation after generation has found out. Wall Street has stampeded them into grossly overpaying for stocks.

Let me repeat. One of the great lies of this business is that you can make money paying outrageous prices for something, just because someone else will come along and pay you even more. It just dont work that way. The secret to making money on Wall Street is buying stocks when they are undervalued, and selling them when they are overvalued.

-- Andy (2000EOD@prodigy.net), October 16, 1999.

Andy the Idiot and his beloved Prudent Bear (BEARX) Since inception (December 1995), Prudent Bear DOWN 18.92%

In the last year, Prudent Bear DOWN 42.81%

This compares to the category average of UP 16.92%...

and the S&P 500 UP 39.81%

In the last three months, Prudent Bear UP .24%

Expense ratio, a WHOPPING 2.36%

If you doubt the data, check into Charles Schwab's online research section. So, Andy, I have to conclude you were lying your ass off when you talked about making "several grand" in Prudent Bear. Unless you have already lost tens of thousands.

So, weasel boy, are international banking cartels falsifying the Prudent Bear returns? (laughter)

P.S. I can tell the econonmy has been terrible... this record expansion, low unemployment, low inflation, good investment retursn... (laughter)

-- Ken Decker (kcdecker@worldnet.att.net), October 16, 1999.

To recap for this simpleton ddecker...

entered bearx a few months back at $3.90 a share with $66,000 invested... 16,076 shares to b preise :)

after 1 month on etrade mutual funds are marginable at 50%... work it out kenny baby you SUCKER...

so now bearx is at $7.84 a share

hmmmmm now approaching $200,000 in value...

bearx will clean up on monday and over the coming weeks as the markets tank...

have a nice day double-decker you utter moron

[laughter]

-- Andy (No6InTheVillage@webtv.com), October 16, 1999.

Top - youa sshole ddecker [laughter]

-- Andy (No6InTheVillage@webtv.com), October 16, 1999.