To: JasonC
Because of a very large and robust US government debt market, the FED can increase the money supply as fast as it wants to and the private markets have no power to stop it until merchants and contractors stop taking US$ as payment for services rendered to the US government.
To: AndyJackson
Nonsense, if men thought the dollar in which federal debts are denominated and will be repaid, themselves worthless, no market in existing nominal debt would have the slightest bearing on what men accept as money. The reality is the other way around. Bank debt is an extremely successful and convenient form of money that everyone wants, and no one is willing to tolerate less useful forms. Men are willing to use different specific currencies, but accept dollars because they are the single most liquid asset on the planet, and can be traded with nearly anyone for nearly anything. Money's primary role is as a medium of exchange. It is a poor store of value, always has been in any form, compared to sound investment in productive capital.
110 posted on
04/29/2008 11:13:05 PM PDT by
JasonC
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