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Old 01-03-2013, 06:29 PM
 
5,931 posts, read 5,563,990 times
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Simple question? Why money creation is privatized (i.e. private (and very secretive) entities are given the right to create public money and charge interest on it), why US government "borrows" money that private entities create out of thin air? Why US government must pay interest on the money those private entities create, in other words, why I must work and apply very real efforts in order to pay taxes, so US government would make interest payments on the money private entities just created out of thin air without exertion of any kind? Why we must cut tax spending on the sick, old, poor and destitute in order to make interest payments on the "debt" to the obscenely rich parasites, the debt I don't feel we owe? As far as my knowledge goes, this money creation scheme is too absurd and parasitic to be real, it puts dystopian world of "They Live" (They Live (1988) - IMDb) to shame.

Of course, lesser question is - why I (personally) must pay interest on the money bankers just pull from the thin air? Why talk radio is too busy barking on the poorest and the most unfortunate among us (who ate working class' cake) and it's absolutely mum on this monstrous welfare scheme for ubber wealthy?
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Old 01-03-2013, 08:21 PM
 
Location: US Empire, Pac NW
5,008 posts, read 11,260,774 times
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Take a look at Congress.

Questions answered.

Would you really want those parasitic, spoiled children to have control over the money supply and our economy? It would go south faster than a duck in winter! I, personally, am glad that private entities have a large say in our economy functioning. At least they're in it to get rich and ensure the engine of the economy is running (and after the Great Depression you'd have to agree this latest recession is a walk in the park). And a great majority of them are smarter than the slack-jawed parrots we have in Congress.

Between Congress and rich bankers, I'd take rich bankers any day.
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Old 01-03-2013, 09:22 PM
 
5,931 posts, read 5,563,990 times
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Quote:
Originally Posted by eskercurve View Post
Take a look at Congress.

Questions answered.

Would you really want those parasitic, spoiled children to have control over the money supply and our economy? It would go south faster than a duck in winter! I, personally, am glad that private entities have a large say in our economy functioning. At least they're in it to get rich and ensure the engine of the economy is running (and after the Great Depression you'd have to agree this latest recession is a walk in the park). And a great majority of them are smarter than the slack-jawed parrots we have in Congress.

Between Congress and rich bankers, I'd take rich bankers any day.
You mean that private entities that bankroll elections of those parasitic, spoiled children in Congress are more to be trusted than their front men? It doesn't make any sense. US government runs deficit budget anyway. It doesn't make any sense for the private money creators to say NO to such a big and wonderful customer as Uncle Sam, the customer who has all that repressive machinery of the state needed to chase me down and shake me for all the tax money I owe.

I would much rather have Uncle Sam making money out of thin air without secretive middlemen charging astronomical sums of money for ... for.. for nothing that Uncle Sam couldn't do himself. If we cannot elect responsible people to Congress who would not run amok with inflation powers, we should just stop this election circus, what's the point? Uncle Sam making money himself could create "Interest free" money thus decimating inflation and making financial system much more stable and transparent.
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Old 01-03-2013, 10:45 PM
 
1,699 posts, read 3,839,065 times
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Quote:
Originally Posted by eskercurve View Post
Take a look at Congress.

Questions answered.

Would you really want those parasitic, spoiled children to have control over the money supply and our economy? It would go south faster than a duck in winter! I, personally, am glad that private entities have a large say in our economy functioning. At least they're in it to get rich and ensure the engine of the economy is running (and after the Great Depression you'd have to agree this latest recession is a walk in the park). And a great majority of them are smarter than the slack-jawed parrots we have in Congress.

Between Congress and rich bankers, I'd take rich bankers any day.
In essence, Congress already does have control over the money supply because of unlimited deficit spending funded by the "smart" bankers. Presently the Federal Reserve is buying $40 billion per month of mortgage backed securities from the primary dealers in treasuries. Those banks then take that money and reinvest it in treasuries, cleaning up their balance sheets of toxic assets (which they made a killing on before this "walk in the park"), and at the same time funding $480 billion of new debt for the government. Since debt is money in this twisted system, that is $480 billion of new money in the economy.

Also the Federal Reserve is buying $45 billion dollars per month in treasuries directly to keep interest rates low and function as a buyer of last resort. Previously they were doing this by selling short dated treasury paper (for which there is still a market) and buying long term treasury securities that no one else wants (who wants to lend the US government money for 30 years at near zero interest). They had to stop this because they sold all of the short dated paper on their balance sheet, so now they just buy the long term debt outright with freshly printed money. This is now another $540 billion per year in new debt money in the economy.

The point is, even with the smart benevolent bankers in charge, we have out of control money creation. One thing that makes the system worse is that they are not accountable to the people in any way. Members of the House of Representatives (where all spending bills have to originate) can be voted out every two years, so if they don't do a good job at their Constitutionally mandated responsibility of coining money, they can be voted out. On the other hand, the chairman of the Federal Reserve could legally create a hyperinflation or a deflationary depression tomorrow, and be accountable to no one.

Another problem, as the OP pointed out, is that we have to pay interest on the currency that the bankers create, since it is lent into circulation. Of course, they only lend the principal into existence, not the interest. Therefore, in order to be paid back, more debt money needs to be lent into existence in order to pay the interest + principal on the existing debt money. Eventually the money creation has to stop and massive defaults will occur, leaving the bankers owning all of the collateral. If the money creation never stops, it will lead to exponential growth in the money supply and wipe out all existing savings that is not in tangible assets (land, stocks, commodities, etc). In the process the bankers will probably buy up as many assets as they can with the new money that they create, leading to the same endgame as the deflationary result. That is the scheme, actually.

The bankers have a very poor track record of morality, so I don't trust them too much. Take a look at the Crime of 1873 (leading to the worst depressions in the history of the United States and millions dead around the world) for one example. You could also take a look at the banking collapse in 1341 which created the conditions that allowed the Black Plague to occur in Europe. This is what bankers do when they are in control of the money supply - it turns out this way 100% of the time under their system.

A system like the OP described could work - debt free government money worked in England for hundreds of years (tally sticks). Additionally if gold and silver or other tangible monetary instruments are allowed to freely float (free from taxation, etc) against the debt free government money, people would be able to hedge against the bad behavior of their representatives until they can be voted out. We're already experiencing the negative effects of massive money creation, but at least if Congress didn't outsource it we wouldn't have to pay interest and we could vote the scoundrels out of office.
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Old 01-04-2013, 12:51 AM
 
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When you saying "buying x amount of securities in Treasuries" do you mean they are exchanging treasuries for securities?
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Old 01-04-2013, 09:26 AM
 
19,301 posts, read 16,826,295 times
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Quote:
Originally Posted by eskercurve View Post
Take a look at Congress.

Questions answered.

Would you really want those parasitic, spoiled children to have control over the money supply and our economy? It would go south faster than a duck in winter! I, personally, am glad that private entities have a large say in our economy functioning. At least they're in it to get rich and ensure the engine of the economy is running (and after the Great Depression you'd have to agree this latest recession is a walk in the park). And a great majority of them are smarter than the slack-jawed parrots we have in Congress.

Between Congress and rich bankers, I'd take rich bankers any day.
Really? Then tell me what is the difference other than not being able to vote the rich bankers out? What do we do when we have greedy and slack jawed bankers, you know like we have now.
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Old 01-04-2013, 09:38 AM
 
19,301 posts, read 16,826,295 times
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Quote:
Originally Posted by RememberMee View Post
You mean that private entities that bankroll elections of those parasitic, spoiled children in Congress are more to be trusted than their front men? It doesn't make any sense. US government runs deficit budget anyway. It doesn't make any sense for the private money creators to say NO to such a big and wonderful customer as Uncle Sam, the customer who has all that repressive machinery of the state needed to chase me down and shake me for all the tax money I owe.

I would much rather have Uncle Sam making money out of thin air without secretive middlemen charging astronomical sums of money for ... for.. for nothing that Uncle Sam couldn't do himself. If we cannot elect responsible people to Congress who would not run amok with inflation powers, we should just stop this election circus, what's the point? Uncle Sam making money himself could create "Interest free" money thus decimating inflation and making financial system much more stable and transparent.
Every time I mention the government needs to start printing the money I am told how nuts I am. Its as if I want the government to print money as opposed to the benevolent money fairies. Its either the government does it or the banks. And this last little crisis we had of housing bubble and depression? Banks were very much involved. The only alternative is something like physical gold and silver. Backed by gold isn't gold. Paper gold? Not gold. So that alternative looks pretty grim.

What is really insane here?

* A person buys a house and a home owner and a private banker prints up some credit to expand the money supply

* Yet when the state wants to build a bridge in a referendum with a majority in agreement they go to the bond market?
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Old 01-04-2013, 01:14 PM
 
1,699 posts, read 3,839,065 times
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Quote:
Originally Posted by NJ Brazen_3133 View Post
When you saying "buying x amount of securities in Treasuries" do you mean they are exchanging treasuries for securities?
The primary dealers trade directly with the Federal Reserve. The Federal Reserve is buying mortgage backed securities from the primary dealers. The primary dealers also trade treasuries. So they use the cash from the sale of the mortgage backed securities to buy treasuries. It's a way for the Federal Reserve to indirectly fund the government debt.
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Old 01-06-2013, 02:44 PM
 
Location: DEN > COS > ATL
3,791 posts, read 3,128,425 times
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The entity which creates money in the US is the Federal Reserve, or the Fed, and not anyone else. They create money by buying government bonds and making money to pay for it. When the economy overheats and inflation goes up, the Fed sells bonds and destroys money which drives inflation down. Why do they do this? To keep the US's economy in balence. In my opinion the Fed has been one of Americas success stories. They have kept inflation from spiraling out of control in the 80's and have kept the US economy more balenced (which means more successful) than it would have otherwise. The Fed is 10000 times more effective at adjusting and balencing the US economy than Congresses fiscal policy could ever be as they can act immediatly and without political bias.
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Old 01-07-2013, 02:54 PM
 
19,301 posts, read 16,826,295 times
Reputation: 7497
Quote:
Originally Posted by Phil P View Post
The entity which creates money in the US is the Federal Reserve, or the Fed, and not anyone else. They create money by buying government bonds and making money to pay for it. When the economy overheats and inflation goes up, the Fed sells bonds and destroys money which drives inflation down. Why do they do this? To keep the US's economy in balence. In my opinion the Fed has been one of Americas success stories. They have kept inflation from spiraling out of control in the 80's and have kept the US economy more balenced (which means more successful) than it would have otherwise. The Fed is 10000 times more effective at adjusting and balencing the US economy than Congresses fiscal policy could ever be as they can act immediatly and without political bias.

I really don't think the Fed means nearly that much. In fact whenever they stimulate, they end up drying up saving income and bond yields. No one thinks a dollar's worth of cash is better than a dollar's worth of treasuries. In other words the money is mostly created when the government goes into debt.

The Fed has a political bias and one you can hardly vote against.
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