[Toddsterpatriot]

Let us say, in this example, that it is $1,000,000 in $20 bills. That is 50,000 $20 bills. The FedGov sells these 50,000 notes to the Fed for aproximately $1500. (4¢ each.- Roughly the cost of printing) The Fed then loans these back to FedGov at face value, thus creating a debt $998,500.

Now I understand your confusion. The Fed loans $1,000,000 to the FedGov. Now the FedGov has a liability of $998,500 and an asset of $1,000,000.

Doesn't sound like such a bad deal. You have a better objection?

Thanks for the link. I'll take a look.

[zeugma]

Now I understand your confusion. The Fed loans $1,000,000 to the FedGov. Now the FedGov has a liability of $998,500 and an asset of $1,000,000.

I don't see where you get an asset out of this. One of the fundamental problems with the way this is done is that the debt is essentially created out of thin air, but the money to pay the interest never is. Banks do the same thing every day. Let's say you deposit $1,000 in a bank. The bank can put that $1,000 in a vault, and then loan out $10,000 because of the way that bookeeping works for banks. The bank creates $9,000 out of nothing, which has to be paid back, but again plus interest. I wish I had a license to print money.