Posted on 12/02/2010 4:51:18 PM PST by Errant
Unlike Zimbabwe, the U.S. can easily get the currency it needs without being beholden to anyone. But wouldn't that dilute the value of the currency? No...
...If the Fed were to follow the lead of Japan and hold federal debt equal to the country’s gross domestic product, the Fed would be holding $14.75 trillion in federal securities, enough to refinance the ENTIRE U.S. federal debt of $13.8 trillion virtually interest-free.
The federal debt hasn’t been paid off since the 1830s under President Andrew Jackson. It is just rolled over from year to year. An interest-free debt rolled over indefinitely is the functional equivalent of the government issuing money itself.
Andrew Jackson would have said the government SHOULD be issuing the money itself, rather than borrowing from banks that issue it. If Congress gave itself the right under the Constitution to issue money, he said, “it was conferred to be exercised by themselves, and not to be transferred to a corporation.”
Indeed, that may be why the U.S. dollar has been going UP since QE2 was initiated, while the Euro has been going DOWN. EU governments are doing what the inflation hawks want them to do: cut back on services, privatize their pension money, and otherwise engage in austerity measures to balance their budgets. The effect has been to depress their economies and throw them deeper and deeper into debt, with nowhere to get the extra cash needed to pay the expanding debt and interest burden.
(Excerpt) Read more at marketoracle.co.uk ...
The Fed is trying to increase inflation. When both inflation and high unemployment exist, we get stagflation. Just leave things ago IMHO. The markets will work themselves out without costing you and I more for gas and other goods.
Bogus. The Fed doesn’t hold USA government deficit, interest free. It holds the worlds largest block of USTs with interest being paid by taxpayers; huge amounts of interest. Total national gov. interest payments must be in the hundreds of billion dollar per year. Total gov at all levels, in USA, must be huge. It is beyond belief that this Pied Piper scheme ever got rolling. We the taxpayers paying interest of gov debt.
The article deliberately obfuscates Fed. buying assets(actually debt) _not_ being like Jackson’s constitutional government issuing national currency. National currency issue in deficit to tax earnings would require _no_ interest. There would be resulting inflation _either_ way, so the difference is paying interest, mostly to banksters.
For those that would hear via ex-Pres. Lincoln:
“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes.
+
I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe. [As a most undesirable consequence of the war...] Corporations have been enthroned, and an era of corruption in high places will follow. The money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is
destroyed.”
— Abraham Lincoln
Underlying meaning:
Lincoln prepared for his presidency by studying mathematics. During the Civil War, bankers harassed Lincoln to accept an unlimited loan to finance the North against the South. Pondering the costs of mere evidence of debt the country could have issued to itself without interest, Abraham Lincoln too ventured the rectification of economics. Lincoln avoided the usurious national debt the country would have been subject to ever afterward had he instead accepted the mere paper or records of debt of the bankers. He printed the money himself.
Bankers and “economists” have since denounced the currency he issued as “inflationary”. It was of course no more inflationary than the currency the bankers would have created at virtually no cost whatever. Lincoln’s currency lacked only the “interest,” by which the bankers would have profitted perpetually. He was soon assassinated ? from _the_rear_.
I think the following applies:
“Men occasionally stumble across the truth, but most of them pick themselves up and hurry off as if nothing had happened.”
— Winston Churchill
Well said. Being an MBA student who just completed a paper on this topic, I could have used your insight.
And, why the need to tax the populace if a government could simply print the money it deems necessary to fund its activities?
“EU governments are doing what the inflation hawks want them to do: cut back on services, privatize their pension money, and otherwise engage in austerity measures to balance their budgets. The effect has been to depress their economies and throw them deeper and deeper into debt, with nowhere to get the extra cash needed to pay the expanding debt and interest burden.”
Couple things here. That a currency is rising and falling simply means one thing, that the Euro is considered to be overpriced wrt the dollar. That’s it, nothing more or less. The Euro has been at par to the dollar before.
That the US is taking steps to weaken the dollar and the dollar is strengthening against the Euro doesn’t tell us much about the inherent strength of the dollar. Looking at gold, does.
The problem with the inflation hawks is that they may or may not recognise that there is significant structural deflation, particularly in Europe. The net effect of a cut here, will simply bring about the deflation spiral.
The US, on the other hand, seems to understand that the problem is deflation and is trying to devalue the currency faster than the massive unwinding of debt.
And, why the need to tax the populace if a government could simply print the money it deems necessary to fund its activities? Creating money out-thin-air must be balanced against the actual wealth which needs to be represented by the money, or the money is debauched. Some would say taxes help offset gov over-creating (right) or over-borrowing (wrong) money.
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