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Old 01-16-2009, 08:59 PM
 
3,853 posts, read 11,862,236 times
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So, how, exactly are we going to finance this thing?

Print T-bills - result in dilution of value of t-bills. Would require people to believe that inflation will stay low after the issuance of the bills. If people don't buy into it t-bills become massively devalued.

Foreigners - China holds 500bn, we need 2 trillion. Expecting foreigners to buy into the scheme might scare them into selling their old securities.

Get the fed to monetize the bonds - In other words, the fed prints money to buy them which causes inflation.

We are now walking the tight rope. Argentina did the EXACT same thing. When their bond market collapsed they resorted to printing. When the new money hit the streets massive inflation was felt. The economy collapsed and revolution started shortly after. The bond market makes and breaks countries.
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Old 01-16-2009, 09:21 PM
 
18,353 posts, read 16,333,820 times
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Quote:
Originally Posted by killer2021 View Post
So, how, exactly are we going to finance this thing?

Print T-bills - result in dilution of value of t-bills. Would require people to believe that inflation will stay low after the issuance of the bills. If people don't buy into it t-bills become massively devalued.
Hi killer2021,

The Treasury sells them to the Fed. If the Fed does not sell them it will not dilute Tbills.

Quote:
Foreigners - China holds 500bn, we need 2 trillion. Expecting foreigners to buy into the scheme might scare them into selling their old securities.
We don't want anyone to buy them. Fed open market operations during deflation involve buying bonds, not selling them.

Quote:
Get the fed to monetize the bonds - In other words, the fed prints money to buy them which causes inflation.
During a depression that's what you want.

Quote:
We are now walking the tight rope. Argentina did the EXACT same thing. When their bond market collapsed they resorted to printing.
The primary cause was Argentina went through a structural adjustment which devalued their currency. They also had their dollars converted to Pesos by American banks, even though they had dollar denominated deposits. This is not even close to our problem.


Quote:
When the new money hit the streets massive inflation was felt. The economy collapsed and revolution started shortly after. The bond market makes and breaks countries.
When all of the sudden everyone was holding pesos instead of dollars yes they were sitting on a bunch of pesos only good in Argentina.
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Old 01-17-2009, 09:06 AM
 
Location: Beautiful Lakes & Mountains of East TN
3,454 posts, read 6,727,344 times
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Our grandkids will foot the bill. No problemo.
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Old 01-17-2009, 09:50 AM
 
18,353 posts, read 16,333,820 times
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Default Since nothing else works try this


YouTube - Where does money come from? (Money As Debt part 1)
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Old 01-17-2009, 11:11 AM
 
19,123 posts, read 20,697,215 times
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Its like the song, Do you believe in magic? Cause the federal government hopes you do... they don't want to tell you the real costs and who pays... you might not know this, apparently a lot of Americans do believe in magic...
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Old 01-17-2009, 12:13 PM
 
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During deflation:

1 tax cuts and stimulus checks transfer wealth to tax payers with no ill effects to tax payers.

2. Government spending transfers wealth to those that win bids on contracts with some trickle down to workers and those who might benefit from the use of the project.

3. Bailouts benefit those being bailout. Bailing out banks transfers wealth to banks from tax payers.


As we can see we have done 1 benefiting the Wall street class currently running the government. As I predicted they have done a good job scaring people into not accepting direct stimulus(option 1) which is at odds to the financial class. Number 2 is marginally better than 3.
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Old 01-17-2009, 01:57 PM
 
Location: Seattle, WA
209 posts, read 549,319 times
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Quote:
Originally Posted by killer2021 View Post
So, how, exactly are we going to finance this thing?

Print T-bills - result in dilution of value of t-bills. Would require people to believe that inflation will stay low after the issuance of the bills. If people don't buy into it t-bills become massively devalued.

Foreigners - China holds 500bn, we need 2 trillion. Expecting foreigners to buy into the scheme might scare them into selling their old securities.

Get the fed to monetize the bonds - In other words, the fed prints money to buy them which causes inflation.

We are now walking the tight rope. Argentina did the EXACT same thing. When their bond market collapsed they resorted to printing. When the new money hit the streets massive inflation was felt. The economy collapsed and revolution started shortly after. The bond market makes and breaks countries.
Yep, we are going to "try" and borrow our way out of this. lol
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Old 01-17-2009, 08:02 PM
 
3,853 posts, read 11,862,236 times
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Originally Posted by BankREO View Post
Yep, we are going to "try" and borrow our way out of this. lol
lol I guess so.

Anyone looking to sell their silver eagles?
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Old 01-18-2009, 06:24 AM
 
20,377 posts, read 18,393,843 times
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They're going to print lots and lots of money.
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Old 01-18-2009, 07:45 AM
 
3,646 posts, read 9,883,824 times
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Or perhaps the Feds will take a note from California and just not send out tax refunds this year, and delay payments to all those receiving military retirement, disability and Medicare. No one responsible is likely to become homeless from it (if it affects everyone, then perhaps landlords and the banks would all wait and consider a delayed payment).

Just a thought. Of course, it's 7:30am and I haven't finished my first cup of coffee.

Okay, I've had my coffee. I feel better now.

It strikes me that the anecdote pulled from the story (in the thread about the California taxes thing) is about a woman DESPERATE for COFFEE. Not food for herself or her children, not toilet paper, not drinking water or anything else that is NEEDED for survival.

DESPERATE for coffe.

I say... let them eat cake.

Last edited by sskkc; 01-18-2009 at 07:59 AM..
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