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.
Yes. We pay interest on all the debt. Whether it's bought by China, Fidelity or the Fed.
Thin air.
Your humble understanding is a good one.
With the addition that the Fed creates off-book ‘dark’ dollars for intel activities around the world and they do this from computers; they create digital funds and they have thousands of accounts worldwide to sent these funds to.
I do not know the rate of time this is happening.
Thin air.
Fractional reserve lending.
Its still fiat. Just most of it isnt in paper form, but digital.
Gold did not do so well during depression. After Biden & Kamala send all manufacturing jobs to China, I will not be surprised US economy tumble bigly.
There is small chance US economy experiences a boom any time soon. Our problem will not be inflation because there will be no shortage of goods from Asia. Our problem will be unsustainable debt combined with shrinking economy.
When the #1 creator of wealth, manufacturing, is shipped to China & Kamala, US economy will shrink.
What does the Fed do with the profit?
That was government printed money created to ensure liquidity in the marketplace. There was no interest.
I have a $20. Who do I owe the interest to.....how do they get it?
It conjures it up from bookkeeping entries. It’s not much different that running a printing press, except the printing press couldn’t run fast enough even if it was printing $1000 bills.
I read part of it. The massive errors made me realize it was a huge waste of time.
Wow. This is just dawning on people now?
The Fed can create money out of nothing. The treasury can produce money out of thin air. There is nothing “backing” the money.
It’s like the damned matrix. Nothing is real.
And we get Venezuela.
“The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject’s oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8 Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system—for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.”
Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002
If anyone cares to check, he’s right, the price of gold did move relative to dollars.
“We can guarantee cash payments from here on out, what we cannot guarantee is the purchasing power of that cash.” -Alan Greenspan during remarks on Social Security, Feb 16, 2005
Closer to 54%. The Fed held about $2.3 trillion in Treasuries on 1/2/2020 and about $4.6 trillion on 12/17/2020.
The debt held by the public went from $17.16 trillion to $21.45 trillion on the same dates.
2.3/4.29 = 53.6%
IMO when W Bush became President we were at the tail end of a business cycle run-up. W got some tax cut through that actually benefited people, but that got erased with the commodity and real estate speculation between 2005-2007.The Federal Reserve also started raising interest rates, while Bush continued his arrogant above the fray attitude, which made him a Democrat ‘punching bag” for his last 4 years. Bush would’ve destroyed the Republican Party as a brand for at least a decade, without the Trump insurgency in 2015-2016.
Clinton got credit for an economic expansion that his policies had nothing to do with. Democrat administrations since Carter make incremental cuts to defense while taxing domestic producers for their political payoffs. They then brag about future government surpluses that disappear as they “nickle and dime” the private sector.
Jerome Powell tried to start clawing back interest rates early in 2017 (Obama had basically had no interest hikes during his 8 years.) Trump neutralized those attempts by attempting to put allies on the Federal Reserve Board, and criticizing the Fed policies publicly. Capital remains cheap because Trump isn’t some ‘economic rube’ like Clinton and Obama. Those two guys bought what ever Robert Rubin and Timothy Geithner were selling.
These stimulus injections aren’t going to last forever, but they have to be done till we recalibrate our economy in a different direction. The American voter who has benefited from the system for the last 40 or 50 years, apparently can’t see that what “worked for them” is completely unsustainable for the future.
The government securities purchased by the Fed are counted as assets and used as backing to print more money. Kind of like someone buying up credit card debts from others and since the money owed is eventually payable to him, he uses it as collateral to secure a bank loan to buy a mansion. You don’t have to be an economist to know how that will work out.
Oh there is plenty of educational claims that it is based on fractional reserves and other conjuring illusions.
When you snap out of this trace: it is thin-air.
Everywhere in the world this game is played, interest earned hardly matters. Those creating money from-thin-air, make the principle! You borrow 3 trillion, they make 3 trillion and interest.
If you or I tried this we would go to prison. USA is absolutely selling itself info slavery.
Just like our fathers in Egypt. Just like...
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