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Thread summary:

Public debt: mortgage, credit card, government bonds, investments, loans money.

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Old 01-13-2009, 03:13 PM
 
18,324 posts, read 16,266,226 times
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Quote:
Originally Posted by N.Y.Traveler View Post
A one hundred dollars bill is about 0.0043 inches think!
A trillion dollars, in $100 dollars bills, are about 678.66 miles long!
Going from New York to Philly is about 110 miles!
The U.S. debt is about $11 trillion now!
Obama will add another one trillion dollars!
Totally, if they were $100 bills, $12 trillions will be equal to 8144 miles long!
Anybody else wanna to say national debt is good!

Hi N.Y.Traveler,

I would gladly convert those 11 trillion to treasury notes so that it would no longer be confused as debt. That way it would not sound so strange to say we need to prevent deflation by increasing treasury notes. I am not too sure you understood the OP.
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Old 01-13-2009, 03:30 PM
 
18,324 posts, read 16,266,226 times
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Quote:
Originally Posted by Dd714 View Post
I understand the OP's original syopsis and I agree with it. I believe that borrowing, as long as the return (the increased productivity caused by the infusion of funds into the economy) is positive. The key is the phrase TO A POINT.

Like anything, there is a deminishing curve to this. A government wants to borrow during bad times and pay back during good times. That's obvious and it works, to a degree. Cut taxes (don't increase entitlements, that's not productive) and economy will improve with the infusion of funds to a certain degree.

You really need to apply basic finance to this equation, companies do this everyday - debt vs equity, return on debt, etc. As of last year Debt vs GDP was still lower than, for example, the 50's and 60's. That is not the case now. And we have yet to measure any returns from the last $800 billion infusion. No company will invest another $800 billion without measuring the effect of the first $800 billion. No company would do the first $800 billion without knowing exactly what it will do anyways. Only politicians will do that.
Hi Dd714,

Actually the return on investment on debt is still yet another topic.


The key to understanding what I am saying is understanding the basis of our money supply. We either have Federal reserve notes back by government securities(the national debt) or the majority of fractional reserve created money(bank loans).
The problems with fractional reserve created money are many. For one it creates money often secured by collateral which tends to go up on its own momentum as a monetary base. People buy houses with bank debt( a process which creates money) which tends to increase the money supply which cause houses to go up in value etc. Secondly most money in circulation tends to be rented out instead of having an interest free existence. This means we must constantly increase debt simply to keep up with interest payments.
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Old 01-13-2009, 03:56 PM
 
12,997 posts, read 19,207,366 times
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Quote:
Originally Posted by gwynedd1 View Post
Hi Dd714,

Actually the return on investment on debt is still yet another topic.


The key to understanding what I am saying is understanding the basis of our money supply. We either have Federal reserve notes back by government securities(the national debt) or the majority of fractional reserve created money(bank loans).
The problems with fractional reserve created money are many. For one it creates money often secured by collateral which tends to go up on its own momentum as a monetary base. People buy houses with bank debt( a process which creates money) which tends to increase the money supply which cause houses to go up in value etc. Secondly most money in circulation tends to be rented out instead of having an interest free existence. This means we must constantly increase debt simply to keep up with interest payments.
I understand your post but not your point - is it to replace private (bank) debt with public (national) debt? I understand the benifits to that but also remember the drawbacks. The government will take the place of financial institutions, an area it doesn't belong in except as a governance and regulatory body. It's the anti-thesis of a free enterprise system. But...for better or worse it looks like we are heading in that direction.
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Old 01-13-2009, 05:26 PM
 
Location: Sitting on a bar stool. Guinness in hand.
4,429 posts, read 5,802,480 times
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Quote:
Originally Posted by Humanoid View Post
Well you can take such a poll, but the results are going to be obvious. The vast majority of people don't understand our monetary system and think of the federal deficit in the same way they think of a household deficit. For them personally "debt is bad", so in their thinking that should also extend to the federal government.

But the federal government finances are nothing like a household......for one it has to run a deficit.
Well I did to show that the larger population for the most part disagrees with gwynedd1. Or is ignorant of his/her (I don't know what your are) view. To be honest I don't think the statement (shown below) should be posted on this board. While it is business and economically related, the problem is that I think believe that it reaches a very limited segment of CD. And while I do know that the P & C board has it fill of........let say colorful characters. I think there would be a larger audience and possible converts there. Now let me just say for the record I'm still not in gwynedd1 camp of deficits and national debt not mattering (so I guess I'm vulture food). But it is a concept that should not be trapped only on one sphere (business). It should be explored also in the political, historical, and intellectual realms as well. Especially with today's turmoil.
Hmmm...I wonder. If this subject should be under the great debate forum. Not sure on that one. But it would be something to expand the audience.

But it up to gwynedd1 to decide if he/she feels like opening the subject to a wider audience or not. Yeah there will be plenty of forum troll and rednecks but there is a possibility of converts as well.

Quote:
Originally Posted by gwynedd1 View Post
I have tried to get this across but I will try again. I see some people are concerned that they will leave their children saddled with debt. Because of a growing national debt?

The average person owes some 30,000K plus. That sounds just terrible. However these same children will be saddled with 300,000K in mortgage auto and credit card debt at interest. The fun part is they need to be in debt 300,000k because their own debt circulates as money. When they try to pay it off(collectively) a depression must occur.

That 30,000K public debt is not at interest(unless it was sold to China). So we are happy to pay banks for the use of 45 trillion of the money supply with interest while 10 trillion is interest free?(assuming a total 55 trillion money supply). That sounds like financiers have been peaching about how bad the national debt is. Good for them, bad for us.


Certainly if the government kept cranking out government debt to excess then we would have an inflationary problem. However if all commercial credit to the tune of 45 trillion were to be replaced by this then we would "owe" the Federal Reserve a total of 55 trillion(if of course no one held bonds). That would be at 0 interest and never needs to be paid back. Thats fine by me.


Now if banks need to be compensated for their services then let them charge up front for this service instead of the hidden inflation and foreclosure tax by the scam fractional reserve system. If its a 5% rate then that 45 trillion is costing us about 2 trillion a year just to pass around electronic tokens.

Ron Paul won't save you. He wants a gold backed fractional reserve currency which is another scam. A gold backed fractional reserve currency its still more than 90% fluff of thin air created bank notes. That sounds like the financiers have another friend indeed as fiat currency is a scapegoat for the fractional reserve scam.
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Old 01-13-2009, 05:40 PM
 
Location: Los Angeles Area
3,306 posts, read 3,552,724 times
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I'm sure gwynedd1 will give up soon and realize you can't teach morons new tricks.

Not everyone is good at dumbing down what they think so the sheeple can understand it. I don't completely agree with gwynedd1 either, but most he/she is talking about factual matters so there isn't much to disagree with.

Anyhow, good day. I should be banned shortly (taking them forever....).
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Old 01-13-2009, 05:42 PM
 
Location: Texas
4,933 posts, read 6,966,693 times
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Screw it. Let's just go back to barter. Beats being a debt slave to the government and the bank.

Might have to do some more reading on full reserve banking as well. It's the system of fractional reserve banking that's the real scam, particularly with the federal reserve in place (the moral hazard for every banking institution in this country). Could you imagine loaning out money you didn't even have to begin with and then forclosing on the asset when the borrower was unable to pay back the balance? Has anyone ever thought about opening up their own honest bank? You'd probably get labled a terrorist and have it raided by the FBI if you did.

Last edited by Philosophizer; 01-13-2009 at 05:52 PM..
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Old 01-13-2009, 07:21 PM
 
3,853 posts, read 11,847,837 times
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Yea inflation is good until people start losing faith in the dollar and stop buying up bonds. When that happens the currency collapses, people rise up, the police get overwhelmed and the nation falls into a violent revolution. Also inflation is good when you aren't the one holding dollars because it gets people to spend their fiat instead of save it up.


YouTube - The Ascent of Money 02 Human Bondage 5/5

We are on a crash course for a currency collapse in this nation and as far as I am concerned, the coffin has already been sealed. Just waiting for the coffin to be placed in the ground.

Last edited by killer2021; 01-13-2009 at 07:33 PM..
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Old 01-13-2009, 09:32 PM
 
Location: Sheepshead Bay, Brooklyn, New York
195 posts, read 690,753 times
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Quote:
Originally Posted by killer2021 View Post
Yea inflation is good until people start losing faith in the dollar and stop buying up bonds. When that happens the currency collapses, people rise up, the police get overwhelmed and the nation falls into a violent revolution. Also inflation is good when you aren't the one holding dollars because it gets people to spend their fiat instead of save it up.


YouTube - The Ascent of Money 02 Human Bondage 5/5

We are on a crash course for a currency collapse in this nation and as far as I am concerned, the coffin has already been sealed. Just waiting for the coffin to be placed in the ground.
It is going to be deeper than 6 feet under! Bring some flowers, just in case, you need to be reminded!
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Old 01-14-2009, 04:34 AM
 
706 posts, read 1,186,834 times
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While I don't think most of the readers are morons as Humanoid suggests, I do feel that most of us don't really understand our monetary system deeply. I appreciate gwynned attempts to educate.

Thks
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Old 01-14-2009, 01:55 PM
 
18,324 posts, read 16,266,226 times
Reputation: 7081
Quote:
Originally Posted by Dd714 View Post
I understand your post but not your point - is it to replace private (bank) debt with public (national) debt? I understand the benifits to that but also remember the drawbacks. The government will take the place of financial institutions, an area it doesn't belong in except as a governance and regulatory body. It's the anti-thesis of a free enterprise system. But...for better or worse it looks like we are heading in that direction.
Hi Dd714;,

Banks use Federal Reserve notes as reserves for loans, and Federal Reserve notes are backed by government securities. Financial institutions already trade in Federally backed debt. However they now magnify these reserves which are accepted as Federally backed notes. Federally backed notes are backed by tax payers and a potentially 90+% of this credit worthiness is enjoyed by banks.
Full reserve banking does not change the need for credit or management of loans. It simply does not allow banks to manufacture money that is backed by us the tax payer.
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