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As Frank Shostak predicted in his podcast last week or so on mises.org, the banks are now holding excess reserves. The bailout package authorizes the Fed to start paying interest on bank reserves, and they have announced a plan to do so. If you look at the numbers, the banks lately have had around $40...
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Central banks perform a number of functions; basically they act as the government's own bank, holding the government checking accounts and collecting tax receipts, facilitating the issuance of bonds, etc. They are also frequently given regulatory functions, such as the enforcement of fractional reserves...
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I've long been convinced that the real threat Iraq and Iran pose is to the hegemony of the dollar. See: http://en.wikipedia.org/wiki/Iranian_Oil_Bourse Now read this, but skip all the 'whereas'es and read what it specifically calls for: http://www.govtrack.us/congress/billtext.xpd?bill=hc110...
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[quote user="donmc"] Also, the main reason that the fed lowers rates is to increase borrowing and thus increase spending/consumption (to "stimulate the economy" in news fedspeak). [/quote] Note that this is a smokescreen put up by John Maynard Keynes in 1935, well after the Fed was...