https://dailyreckoning.com/central-bank-can-never-run-money/
Why a Central Bank Can Never Run Out of Money
“We can’t run out of money,” economist L. Randall Wray said. The U.S. government spends through keystrokes that credit bank accounts, he continued. The money comes from nowhere. The government doesn’t need to finance itself with taxes. And it doesn’t borrow its own currency. It can afford all that is for sale in dollars.
Despite laying out an incontrovertible set of facts, Wray’s audience often is aghast. He says he gets four reactions when he tells people about how the government spends:
Incredulity: “That’s crazy!”
Fear: “Zimbabwe! Weimar!”
Moral indignation: “You’d destroy our economy!”
Anger: “You’re a dirty pinko commie fascist!”
Wray is one of the architects of Modern Monetary Theory, or MMT. In essence, it is a description of how our monetary system works. The implications are profound. And Wray is very good at explaining it simply. Below are some notes from a talk he gave at the Post Keynesian Conference in Kansas City, which I attended.
To begin, I like how Wray emphasized he’s not really saying anything people at the Federal Reserve Bank don’t already understand. First, there is a great quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
Bernanke gets it. “The Fed can’t run out of money,” Wray said. “As long as someone at the Fed has a finger and they have a key to stroke, they can’t possibly run out of money.”
Second, there is this statement from the St. Louis Fed:
“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
And yet it is not uncommon to hear people say the U.S. is bankrupt or that the Fed itself is somehow in trouble. People on the inside know differently. As Wray emphasized:
Government can never run out of dollars. It can never be forced to default. It can never be forced to miss a payment. It is never subject to whims of “bond vigilantes.”
Money… is simply the way we keep score in a modern economy. Banks are the scorekeepers.
Thus, there is no need to balance the budget, heresy of heresies! As Wray says, “The necessity of balancing the budget is a myth, a superstition, the equivalent of old-time religion.”
“Whoa!” I hear you say. Let’s back up.
To understand how modern money works, it may be best to start with the banking system. Wray began with a simple model of a bank, a firm and a household. “So a firm approaches a bank and says it would like a loan,” Wray says. “Where does the bank get the money?”
It creates it out of thin air, out of nothing. It keystrokes it into existence. It creates a loan (an asset for the bank) and offsets it with a deposit (a liability for the bank). The firm gets a credit (an asset) and an offsetting debit (the loan). No prior deposits needed. As Wray says: “Loans create deposits. The bank lends its own IOUs. Can they run out?
“Of course not. They can’t run out of their own IOUs.”
This is important. If you don’t get this, banking will forever remain a mystery to you....
more at the link
:: The U.S. government spends through keystrokes that credit bank accounts ::
Sounds like BitCoin....
It’s true that money is just a way to keep score. That’s why creating it at interest is old time religion. The government could simply create the money, as Lincoln did in the civil war - the greenback dollar.
I told you I was done with this conversation.
There are all kinds of experts spouting different theories. So a person can always find someone to agree with stuff like this.
Your solution to Triffin’s Dilemma would be the only thing of interest to me.
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While technically true, this is a gross oversimplification.
The value of the keystrokes can and will become worthless if the FED exercises the power too much.
Why?
Simple: Nobody will accept U.S. dollars in payment for goods or services if they think there is going to be a firehose of new dollars created.
The value of the dollar is based upon supply as well as demand.
Without demand, all you've got is so much Monopoly money.
This is why OPEC oil is so central to the USD. It CREATES DEMAND, because you have to have dollars to buy it.
Oh yes ... and TAXES create demand (hence value). There is only one currency in the world that can be used to pay U.S. taxes.
Management of the currency is in fact a balancing act. The base thing we (the great unwashed) have going for us is that the FED does not want to destroy the goose that lays their golden eggs.
This assumes electronic funds and no need to keep physical cash on hand.
It requires that depositors can only remove a certain amount of physical cash at any given time based on whatever the minimum holding requirements are for the bank.
It explains why there is a drive to go to all digital currency...no physical reserves required at all at that point.
Given this scenario anyone should be able to become a banker overnight. The only requirements would be 1) an appropriate accounting system to track debits/credits and 2) someone to take the first loan.
Therefore what . . . I guess . . . remains to be seen. Seems to me like the globalist oligarchy will still use whatever pontifications, manipulations, propaganda etc. to squeeze the citizens every way they can toward their tyrannical serf & slave goals.