Investing In Inflation

I know very little about US constitutional history but a couple of general points:1) Central banks (whether US Fed, European Central, British national, or any other national central bank) are in place to stabilise economies, control the money supply to avoid runaway inflation and act as a last resort supply of funds to private banks in times of crisis (such as now). In themselves central banks make no profits and pay any excess funds into the governing body of the nation (or nations) to which they are accountable. Any central bank surplus is therefore either money which does not have to be raised through taxation or extra money for public expenditure.2) The current crisis is a direct result of the short term greed of unregulated private investment banks practising the sort of pure unchecked freemarket capitalism that is so ideologically inherent to the current US administtation. Practises which have resulted in investment bankers and their advocates/investment partners in the Bush administration making billions of dollars in untaxed income whilst simultaneaously plunging the US economy into unprecedented levels of debt.Are you really saying that the current crisis is the result of some sort of socialist secret plan slowly taking place under the very noses of the 8 year Republican administration?Is it not true that the last democrat administration left the finances of the US in relatively good order as compared to the current administration?

I am no economist but is this not all a bit limiting?
What if it is necessary to go to war, for example? Should the ability of a nation to defend itself rest on the market value of the gold reserve it holds at any given time?
Less extreme cases can be made regarding the need to borrow in the short term in order to invest in the infrastructure of a nation such that it can be prosperous in the long term future.To put it into context I would never be able to purchase a property in which to live without borrowing. As long as I am able to pay back that loan and do not borrow more than I can afford to repay over time the investment I have made will hold me in excellent stead in the future.Likewise a developing nation that may not be able to build a transport infrastructure, for example, without borrowing but whom will never develop or be prosperous without such a transport infrastructure in place, would surely be doing the prudent long term and sensible thing by borrowing in order to invest. No? This is all very well for a nation that starts off with both a surplus of wealth and a fully functioning industrial and social infrastructure in place. But anywhere less fortunate that requires investment to be made in order to have any chance of prosperity in the future will be so hamstrung that a deadly spiral of decay will inevitably ensue. This inequality and hopelessness will in turn arguably create global mass migration issues from the countries unable to prosper to the countries that do have wealth. Extreme inequality with no hope of improvement or investment in the future is also arguably a root cause of international violence. Well central banks are not put in place by governments to make profits and central bankers are not employed to illegally benefit from insider knowledge. If this is what is happening and, as you seem to be implying, the Bush administration knew that this was happening then this would seem to be a failing of the administration to regulate, control and apply the law such that the central bank actually does it's job and meets it's intended purpose.Here in the UK the big money in banking is made (or at least it was until recently) by investment bankers. Not central bankers. Central bankers, whilst I am sure they are well remunerated, are effectively civil servants and cannot expect to benefit from the sort of practices you speak of. Unless of course they are doing so illegally. In which case the law needs to be applied by the government of the day. If the US central bank is as corrupt as you suggest it seems a rather major failing of a government that has been in power 8 years to have presided over this state of affairs. Especially given the catastrophic consequences of not dealing with such a situation. If the administration knew then they are complicit. If they did not then they are incompetent. Which do you think it is? If the Bush administration knew all this why did they not do something about it? Is the administration in power really so powerless regarding the state of the nations finances? Again either they are complicit or incompetent. Which is it? Did not Reagan leave the US in the same sort of debt that the present republican administration is about to leave the country in?It seems that you are not applying your own harsh borrowing ideals to your favourite president I’m sorry but if an administration presides over the country primarily responsible for the sort of financial meltdown the world is currently experiencing for the 8 years preceding that meltdown then it is either directly responsible or grossly incompetent in allowing the institutions that are responsible to act in such a way without taking any action.Talk of socialist plots just smacks of blame game aversion tactics or deep rooted delusional paranoia. Or both. Either way it does not inspire much confidence in the ability of the present administration, or those directly related to it, to successfully rectify the current woeful situation.Edited by Straggler, : No reason given.

If you are suggesting that central banks should be non-profit making institutions charged with maintaining the stability of a nations economy rather than pursuing their own selfish interests then I wholly agree.The thing is that this appears to be already the case in most instances. In the specific instance of the US central bank I am not really in a position to argue this point as my knowledge of it's working practises is very limited. So I will follow with interest what others, such as Subbie and yourself, have to say on the matter. As discussed in my previous post I think this would lead to some very undesirable international outcomes.

Aha!! That wily old Buz is actually a secret Maoist socialist in disguise. I knew it. God bless China.

Surely that is the point?The question is whether or not they are doing this to make profits for their own employess, shareholders, chief excutives etc. etc. etc. or in the interests of the country whose currency they attempt to manage.What ultimately happens to all this money that you say the federal bank makes? Who ends up with it?

I have no doubt that there are unscrupulous bastards who are bankers. Investment bankers in particular.But your accuasations seem to amount to more than that. You seem to be suggesting that the US central bank specifically is institutionally corrupt. You have also suggested that the system is almost setup to enable this institutional corruption.Are you saying that the Fed is acting illegally?
Are you saying that the laws that the Bush administration has the power to change are inadequate to stop this "corruption" occurring legally?
Which is it?What exactly is the Fed doing that you object to and is it illegal or not?Edited by Straggler, : No reason given.

But is that not their job to do just that? To seek to control the currency in the best interests of the nation that they serve? Are you saying that they are not doing that? If not who are they doing it in the interests of? Why has the Bush administration not acted to make the central bank achieve it's intended aim? If it is not doing so. Who arranged the conditions of these loans? The fed? The government? Here in the UK there is a lot of debate about how much say the government now actually has over those banks that it now has a financial stake in. Is that debate not going on in the US too? I agree to some extent but on the other hand if one major high street banking institution goes down how many people's savings, mortgages and jobs does that take with it? It is that sort of meltdown it is hoped can be avoided.

Are you saying that the US central bank should be nationalised? Buz you pinko commie!! Whatever next?The UK central bank is state run and does not seem to have the problems that you are saying that the US central bank does in terms of siphoning off profits to it's shareholders and chief execs.However I am just not convinced that your assertions regarding the Fed are actually true. You have still not provided any evidence that they are making major profits at the expense of the nation. Erm I am no experet but I know for a fact that the above is just not true. Factually untrue.Edited by Straggler, : No reason given.