Bernanke

Gonz said:
Here's a novel idea. Let's just drop the whole central banking idea.

[chants]NO MORE FED!!
NO MORE FED!!
NO MORE FED!!
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If you drop the Central bank, who'll print the money, control interest rates, lend money to other banks and to the GVT, who'll manage the national debt, who'll regulate the banking sector and set monetary policy?

Who, who, who?
 
Gonz said:
derivitives....from what I can gather, are paying today for what may happen tomorrow.

So, we think it'll be a good year for soy. We buy futures on soy & wait for the outcome.

Hey, look, isn't a mortgage a type of derivitive? The lender assumes the house will increase in value...thus keeping the borrower more motivated to pay?

It looks like the US is going to have a decent year, GDP-wise, let's buy some dollars....

Outside of potentially artificially increasing the value, which is what speculation trading is all about, I'm failing to see the down side. People take thewir money & bet on tomorrows outcome....say, isn't that the Dow Jones?
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Ya came close..but no cee-gar.

You defined futures..kinda, but that's more a way of using derivatives as opposed to the definition of derivatives.
 
ResearchMonkey said:
Sounds like value that you cannot hold in you hand.
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A bit more complex... there has to be an asset in play. (ie. a house, 10 tons of wheat, land, 2 bars of gold etc..)

Okay...

Manufacturer A makes gidgets. Manufacturer B takes those gidgets and makes a finished product.
B needs 10,000 gidgets/year...but he can't stock more than that...but he wants to secure a price for the next 5 years.

The gidgets are the asset backing the derivative. The derivative is the promise to buy from B AND the promise to sell from A.

If the price of those gidgets goes down after the first year, B still has to buy them at the agreed price...his loss. If the price goes up, B saves money and A loses. They both have a certain amount of risk...how that risk is measured affects the buying price of the derivative.

A sells gidgets for $1/each in 2008..and thinks that they'll be worth $1.50/each in 2012...so he sets the price at $1.25/each for the next five years. If B finds that reasonable..he secures his price. If not, they haggle it down to something both can live with.

Now..imagine that on a Trillion$ scale...with people who are not involved with A or B getting into the betting on the derivative price.
 
Sounds like gambling.

Sounds a little like the polar opposite of liberal gov't entitlement expectations, Capitalist gambling entitlement with investors money. Some guy who collect money and makes money off of using it, but doesn't really have much to lose if he fucks it off. (one of those private bureaucratic invented jobs of doing nothing)

While I understand the concept of inventing slick ways to make money by pushing a pencil in a glass office with a view; I much prefer the older business model where people put their own ass on the line and have seemingly limited resource.

Can't pay for what you want today? Sorry 'bout your fucked-up-luck, come back when you have the cash.
 
MrBishop said:
A bit more complex... there has to be an asset in play. (ie. a house, 10 tons of wheat, land, 2 bars of gold etc..)

Okay...

Manufacturer A makes gidgets. Manufacturer B takes those gidgets and makes a finished product.
B needs 10,000 gidgets/year...but he can't stock more than that...but he wants to secure a price for the next 5 years.

The gidgets are the asset backing the derivative. The derivative is the promise to buy from B AND the promise to sell from A.

If the price of those gidgets goes down after the first year, B still has to buy them at the agreed price...his loss. If the price goes up, B saves money and A loses. They both have a certain amount of risk...how that risk is measured affects the buying price of the derivative.

A sells gidgets for $1/each in 2008..and thinks that they'll be worth $1.50/each in 2012...so he sets the price at $1.25/each for the next five years. If B finds that reasonable..he secures his price. If not, they haggle it down to something both can live with.

Now..imagine that on a Trillion$ scale...with people who are not involved with A or B getting into the betting on the derivative price.
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That looks like what I said was the definiton :shrug:

Again, economics ain't my strong point but I have a general sense.

As for you question...the same people that printed & controlled for the first 150 years.
President Jefferson said:
The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.
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I was just listening to the rino Judd Greg.
He was defending TARP.
He really is an idiot sheeple imo.
 
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