Posted on 12/25/2020 4:25:26 PM PST by Blood of Tyrants
In the past during normal times, to raise money for the federal government, the Treasury would sell government bonds. However, in recent years, they have abandoned any pretense of selling bonds and have instead just printed more money. Which raises the following question)s); 1. If the fedres is just printing money, is the US actually borrowing it? And can we just print more money to pay it back?
And the scary thing is that once the government discovers that when it needs more money it can just print it, it eventually does. The problem is runaway inflation which will destroy your life;s savings unless you have it invested in hard assets like gold, real estate, brass casings and copper jacketed lead, etc.
If it was a tax system, we’d seen a one to one correlation between taxes taken/stolen and government spending. That horse left the barn ages ago.
Isn’t a key issue with all of this, that the vast majority of the “money supply”, is simply debits and credits in accounting ledgers?
For example, I understand banks have only a small amount of actual currency and coins on hand at any given time. But the bank has “assets”, which are loans made by the bank, which are to be repaid in the future.
When we all get paid on payday, I don’t get actual currency. I see that the bank credits my account based on an electronic transfer from my employer’s account.
I’ve watched that video several times over the years. I’m surprised you’re the first one to comment on it.
Money is a social contract,
a means to exchange my goods and services
with your goods an services,
by a mutually agreed upon measure of “worth”.
All commerce above the level of barter is dependent on it.
All heck breaks out when the measure of “ worth”
is discovered to be an illusion based only in the
trust in the social contract.
Belief in the social contract is unraveling right before our eyes
Please give us the right answer I don’t have to read through dozens of posts of nonsense.
Thanks.
“Isn’t a major issue, that our currency is not backed by tangible assets, such as gold or silver or any other actual physical asset?”
Not an issue at all, Since it is now based on the future Slave Labor of the entire US population.
Serious question. If we’re getting 1.68 out of every 1 then why is debt to GDP increasing so dramatically in the 21st century?
Excellent post.
Historically speculative money sits in real estate and equities. When consumer necessities inflate, people immediately cut those purchases. Those commodities aren’t going to inflate forever without buyers. Real estate and stock valuations can stay high for a much longer period.
When actual deflation hits, something we haven’t felt since the 1930’s. The speculative values evaporate and pricing reaches an equilibrium for both labor and capital. Another economic expansion will eventually unfold.
About 80 percent of this year’s deficit was provided (a bit indirectly) by newly printed money. The other 20 percent came from the sale of bonds to the public.
This WILL result in inflation. (Consider moving money from fixed income to equities, also consider equity REITs and the CPI-indexed bond.)
Following the financial crisis of 2008, the Fed engaged in “quantitative easing,” alternately “expanding the balance sheet.” This referred to buying “non-traditional securities” (non-traditional, that is, for the Fed). These were mostly mortgage-backed securities. Those mortgage-backed securities eventually recovered their value, and the Fed was able to sell them at a tidy profit. The money it created never left the banks and, so, never got inflation started, and then was dissappeared.
Trust me, this time it’s old-fashioned conversion of government debt into cash. We can get away with this for a time, because the economy is down the toilet, and - as pathetic as we are - our government bonds look better than a lot of the rest of the world. But, the inflation is coming. There’s a psychology to this. It’s like the Road Runner cartoon. Wile E. Coyote has run off the cliff, but won’t start falling until he looks down and realizes it.
Biden will rule during a time of inflation and unemployment, war, worldwide hunger, contagious disease, religious persecution, corruption, perversion, and idiocy.
Joking will be banned. Hamburgers will be made of tofu. There will be football games that both teams lose. California will put up a wall to keep taxpayers from fleeing. The voting machines will say Biden wins elections from Mayor to state representative in which he isn’t even a candidate. Chaz Bono will be named Miss America. Gravity will be cut off for two or more hours a day. Cans of fresh air will cost more than bottled water.
Don’t say I didn’t warn you.
Short Answer:
They create it out of thin air and give it to the Treasury to spend. You and several generations of your progeny WILL pay back every penny through taxes spent on nothing but servicing this “debt” to a private corporation that created the principal out of thin air.
A couple years ago Trump said something about the Fed Reserve system. I don’t remember the exacts but he probably drew the ire of Deep state. The money is all it’s about. Trump knows major reform is needed to stymie the corruption. Now the steal is on.
They print it out of thin air and then lend it to the US Treasury at interest.
[Those commodities aren’t going to inflate forever without buyers.]
And then there’s the job-killing coronavirus fear porn sold on the news every day.
I do not think this ends well. But I have a tendency to be a bit negative these days.
Frankly, I think it really got going (got into high gear) when Dubya started spending like a drunken sailor (no offense to drunken sailors). Then we got the 2008 crash, then we got the 2008 Manchu............
That being said, there’s plenty of things in our history. Lyndon Johnson, for example.
I think we’re on a runaway train, these days. It’s going to be more stimulus payments, etc. from now on.
Weimar Republic, here we come.
Frankly, I think it’s going to be world-wide.
It is sort of like WorldCom
Debit asset
Credit income
Or
Credit equity
If it made sense .... it wouldn’t be .... nonsense.
But it is “for your own good”.
Bwaa haaa haha haha haaAAAAAH!
Here’s the thing though. If you’re right (and I don’t think you are) that 80% of the money is purely printed and not a result of borrowing from the Fed then that means that Trump has finally broken the back of the Fed. Their power is the power to print money based on bonds for which we owe interest, and to create cash as a result. If Trump has been bold enough to straight print money from the Treasury, which he should be doing, then that emasculates them and robs them of their interest payments. Let’s hope you’re right, because that’s the only way out of this mess.
The only reason we get away with this is that the US Dollar is the world reserve currency. At some point that will come to an end and then no one will be willing to buy our debt. The government will devalue the dollar. The result will not be pretty. See: The Weimar Republic.
Then maybe you also remember real silver dimes, quarters, halves, and dollars.
Federal Reserve Notes dominated US Notes SFAICR. My memory of these things dates back to the mid-50s. In 1965 or so I was robbed, and one of my bills was a US Note. The police caught the guys; and then asked me if I could identify anything they had taken from me. I told them about the US Note. They didn't understand. So I told them about the red seal. They nearly passed out when they saw that red seal in the things they had confiscated from the robbers.
Isn’t [it] a major issue, that our currency is not backed by tangible assets, such as gold or silver or any other actual physical asset?
I think it's a MAJOR issue. Eventually we're going to go the way of Zimbabwe. Right now, inflation isn't too bad because the velocity of money is low; but watch out if the economy ever revives.
The nice thing about hard assets (gold and silver) is that they do not rely on some third party to maintain a value respected by buyers and sellers. If the US ever disappears, all those Federal Reserve Notes will have ZERO value, just as Confederate currency does now. But those pre-1965 US coins will have just as much buying power as they did when they were issued. (Obviously the scrap metal coins issued since 1965 will have no value either.)
ML/NJ
They just give them it to themselves. Out of thin air. That is why they call it printing money.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.