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Thread summary:

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

 
 
Old 01-14-2009, 02:27 PM
 
13,059 posts, read 19,245,751 times
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Quote:
Originally Posted by gwynedd1 View Post
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.

Yes I understand the federal reserve system, benifit of a BSBA degree in finance and a few alphabets behind my name. I guess I am still missing your point. Is it to do away with the fractional reserve system or are you just saying you are a propoent of the FRS? Are you answering a previous post where someone wanted to go to a full reserve system? Some argue for a full reserve system, which would be crazy as it doesn't allow the government to expand and contrast monetary supply based on current economic needs. I think you want a no-reserve system but I don't seeing that having much of an impact but it would give more of a risk on bank runs. Not a big deal because it is all government secured anyways.
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Old 01-14-2009, 04:18 PM
 
18,353 posts, read 16,306,069 times
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Quote:
Originally Posted by Dd714 View Post
Yes I understand the federal reserve system, benifit of a BSBA degree in finance and a few alphabets behind my name. I guess I am still missing your point. Is it to do away with the fractional reserve system or are you just saying you are a propoent of the FRS? Are you answering a previous post where someone wanted to go to a full reserve system? Some argue for a full reserve system, which would be crazy as it doesn't allow the government to expand and contrast monetary supply based on current economic needs. I think you want a no-reserve system but I don't seeing that having much of an impact but it would give more of a risk on bank runs. Not a big deal because it is all government secured anyways.
Hi Dd714,

I am certainly for a full reserve system. I am not sure why you believe a fractional reserve system is the only way to contract or expand the money supply. With taxing and spending, its easy. The Treasury could simply write checks to expand it or increase taxes to contain it. The problem with expanding it for "current economic needs" is that it often turns out to be a heavily leverage estate in Palm Springs. That should not be a bases for a money supply which is what it is now and as we can see is completely unstable. The money supply can be and should be stable. What we essentially have now is a housing backed currency via bank loans for housing.
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Old 03-05-2009, 10:48 PM
 
Location: Charlotte, NC
2,193 posts, read 4,616,152 times
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Quote:
Originally Posted by gwynedd1 View Post
Hi Dd714,

I am certainly for a full reserve system. I am not sure why you believe a fractional reserve system is the only way to contract or expand the money supply. With taxing and spending, its easy. The Treasury could simply write checks to expand it or increase taxes to contain it.
When you say write checks to expand the money supply, would they just write a check to everyone for an equal amount?
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Old 08-24-2011, 06:30 AM
 
Location: Sitting on a bar stool. Guinness in hand.
4,429 posts, read 5,807,967 times
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Default Analysis: No tripwire making government debts "unsustainable"

Analysis: No tripwire making government debts "unsustainable" - Yahoo! News (http://news.yahoo.com/analysis-no-tripwire-making-government-debts-unsustainable-062602810.html - broken link)

Quote:
"CHORUS OF REPETITION"

But liberal U.S. economist and University of Texas professor James Galbraith argues the key mistake made by the CBO is to assume the U.S. must offer a real interest rate on public debt higher than the projected real growth rate.

This, he wrote in a recent paper, is unnecessary for a country that will never default on debts denominated in the currency it can print -- debt ceiling wrangles aside -- and where average real returns on public debt were negative in 18 of 36 years from 1945 to 1980.

As runaway inflation is a "fringe fear," it was possible for the U.S. to run modestly negative real interest rates on public debt while sustaining a large primary budget deficit almost indefinitely as long as Treasuries offer a liquid, safe market for the world's monetary assets, Galbraith added.

"The concept of "sustainability" is often invoked, rarely defined, never criticized; things are deemed unsustainable by political consensus, backed by a chorus of repetition from the IMF, headline-seeking academics, think-tankers, and, of course, the ratings agencies," he wrote in an angry response to Standard & Poor's removal this month of the Treasury's AAA credit rating.

Far from fleeing U.S. debt, investor behavior since the credit and growth downgrades have neatly introduced Galbraith's negative real returns.

Ten-year U.S. debt yields fell almost a percentage point to just above 2 percent in a month -- more than a point below the 3.3 percent headline inflation. At just 0.2 percent, two year borrowing rates are deeply negative in real terms.
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Old 08-24-2011, 07:32 AM
 
Location: western East Roman Empire
7,445 posts, read 11,234,793 times
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Whether debt is good or bad is determined by efficient use, or not, of the money supply.

Did the US economy make efficient use of the money supply in the 2003-2007 period, for example?

Did interest rate policy (and other economic and social policies) efficiently allocate (long-term) capital in the 2003-2007 period?
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Old 08-24-2011, 09:35 AM
 
18,353 posts, read 16,306,069 times
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Quote:
Originally Posted by bale002 View Post
Whether debt is good or bad is determined by efficient use, or not, of the money supply.

Did the US economy make efficient use of the money supply in the 2003-2007 period, for example?

Did interest rate policy (and other economic and social policies) efficiently allocate (long-term) capital in the 2003-2007 period?

Hi bale002,

When volatility is the enemy of efficiency, how can it ever be efficient? We built Mcmansions, hardly an efficient use of capital. That's the physical evidence.

Since its been awhile :

When you pay someone in dollars, all you are doing is exchanging a personal IOU for da guberment backed one. All our money is in the form of da guberment IOUs as a monetary based expanded by bank IOUs. If there is no debt, there is no money supply at all. This actual money is IOU. Is that stable promoting efficiency?


I'll give a dated example from Gen-x childhood.

Johny and Billy are friends and Johny likes Billy's baseball cards. So Johny says, "I'll owe you". But Billy doesn't trust Johny's IOU. So we have a liquidity problem. Yet , Johny has the amount agreed upon in arcade tokens. All those tokens mean is the arcade owes a video game to those who hold the IOU. Billy trusts this IOU more. Now we have liquidity. Billy and Johny then begin using arcade IOUs as money. However a month later, one of them spends it at the arcade thus the debt has been paid. This destroys their established money system and the liquidity. That's how debt/money whiplash works folks. The so called flexible currency is really just code for volatility that makes the insiders rich.

Its so rare I see someone speak clearly on this matter.

Save the Gambling Bankers | Michael Hudson
MICHAEL HUDSON: Well, not even paper. It’s electronic. We’ve sublimated the whole thing. The Federal Reserve can create a deposit, just like a bank does. If you go into a bank, you sign an IOU, and the bank adds money to your account. It’s done on a computer keyboard. That’s what money—how it’s created these days. And the government can do exactly what the bank can do. They can create the money on their own computer keyboards. And that’s—usually, they do that by running a budget deficit. That’s why the economy needs a budget deficit to grow. When the government runs a budget deficit, that puts money into the economy and helps us recover from the recession. That’s pretty obvious.
Correction, it should be obvious.

When times are good, people go into debt. When times are bad, they will not, can not go into debt. Yet people who don't want more personal debt have been coached to pressure da pelicans/politicians into balancing da budget by the media arm of the cartel. Where's the money going to come from?

Using this pschological plutonium as a basis for a money supply is insane. It means volatility. Inflation or deflation does not impoverish. Its secrete option number 3, volatility. You may as well use ice chips as money. Winter is boom time, and summer is bust but the banksters control the seasons and Washington. Using debt generated by banks simply isn't stable.


All da guberment had to do was run huge deficits to make up for the bank loan freeze to restore Americans to halt deflation. Instead of stupid programs of da guberment, tax holidays, especially the SS withholding, would have done this. Instead they made 0 interest rates to keep the banksters in the loop which is more like a noose.

Its real simple once you know the game.
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Old 08-24-2011, 09:40 AM
 
18,353 posts, read 16,306,069 times
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Quote:
Originally Posted by sheenie2000 View Post
When you say write checks to expand the money supply, would they just write a check to everyone for an equal amount?
Hi sheenie2000,

You may be long gone but to answer, they would just pay for things and modify the tax rates to adjust the money supply. It should typically be slightly inflationary to prevent currency hoarding. That was the reason behind stamp currency during the long depression, and why gold standards lead to depressions. Those who think Ron Paul is god seem unawares, and that he is likely just a propped up controlled opposition to the Wall Street complex. The money pump is volatility.
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Old 08-24-2011, 09:56 AM
 
5,090 posts, read 10,044,464 times
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Quote:
Originally Posted by gwynedd1 View Post
Those who think Ron Paul is god seem unawares, and that he is likely just a propped up controlled opposition to the Wall Street complex.
Yep, gives the clowns a rally point (in this case with an (R)) behind the name, so that when it comes the real (s)election time, the masses dutifully choose only between the approved corporate teams.

Gotta admire the top end on this.

Evil, but clever.
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Old 08-24-2011, 12:16 PM
 
Location: San Diego California
6,797 posts, read 6,484,473 times
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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.
And what would be the fastest growing part of the Federal Budget?

That would be interest on the debt.

Kind of shoots a hole in your MMT theory doesn't it.

The debt based inflationary economy is a bankers creation, that benefits no one except the bankers.

A gold standard would slow inflation to a crawl, and encourage savings over credit, which would cost the money brokers dearly, but hey screw them, vote for Ron Paul and tell the banks and the Fed to pound sand in their backsides.
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Old 08-24-2011, 12:33 PM
 
5,090 posts, read 10,044,464 times
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Quote:
Originally Posted by jimhcom View Post
And what would be the fastest growing part of the Federal Budget?

That would be interest on the debt.

Kind of shoots a hole in your MMT theory doesn't it.
No.

It just reinforces that if the interest at that level were set at zero -- the interest on that debt would be zero.

Zero = Zero math aint THAT hard.

Quote:
The debt based inflationary economy is a bankers creation, that benefits no one except the bankers.
. . . IF and only IF they collect interest on that debt . . .

Quote:

A gold standard would slow inflation to a crawl, and encourage savings over credit, which would cost the money brokers dearly, but hey screw them, vote for Ron Paul and tell the banks and the Fed to pound sand in their backsides.
In what fantasy land election do you think you are going be allowed to vote for a "Ron Paul" character?

They are tolerated as a circus sideshows -- so the knuckle-draggers can hoot and hollar -- and stay out of the Great Corporate Way.

Even if you could get a Ron Paul character elected, tell me why the Supreme Court would not just nullify the count and declare a Corporate Candidate the winner? (not like that would ever happen, right?)
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