Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I don't know if anyone is even an expert on economics but I will qualify myself as being experienced shall we say. Government debt is the entire basis of our money supply. We have created the government ability to tax and pay and used that as the basis for money. We have monetized government debt. Treasury bonds back the dollar. Paying down the national debt will cause one the following:
1. A depression.
2. Increased business debt at interest to banks.
3. Increased consumer debt at interest to banks.
Do any of those sound good? The more we pay down the national debt the more we pay interest to banks which can only be paid by default or more debt. If you make debt the money supply you can't pay it off. If we made garbage the money supply we could not toss it out. It makes sense to pay off debt and it makes sense to toss out the garbage but when you monetize it you can't. Its the money.
Who mostly benefits from the taxing power and credit of the United States? Commercial banks. They get to create money from value they don't create. They create up to 90% of the money supply by fractional reserves. Banks don't loan money, they create it.
If we put a saver in office without reforming the monetary system he would destroy us all.
Oh, if you want to pay off the national debt just take the system into the treasury print up 11 trillion in treasury notes and pay off every treasury bond in existence. Done. We are debt free and we no longer have a debt based currency. Would that cause inflation? Not if you raised the reserve requirements to 100%. As a matter of fact they would need to print trillions more. No more business cycles either. Why is this not done immediately? Because there is a loser in this scenario and its the financial industry who has all the money to educate and elect.
if your scenario was correct, the economy would already be turning around, which it is not! ithink you are missing the big picture which i think is summed up pretty well in this blog: Bernanke Inserts Gun In Mouth - The Market Ticker
We've got over a trillion in trash on our balance sheet now, which we promised would fix the problem but it didn't do jack.
Last edited by floridasandy; 03-21-2009 at 05:55 PM..
if your scenario was correct, the economy would already be turning around, which it is not! ithink you are missing the big picture which i think is summed up pretty well in this blog: Bernanke Inserts Gun In Mouth - The Market Ticker
We've got over a trillion in trash on our balance sheet now, which we promised would fix the problem but it didn't do jack.
Hi floridasandy,
I explained what those bailouts meant. Most people don't have understanding of the banking system and thus misunderstand what actually happened. It had nothing to do with money circulating in the economy at all and it was done to excess to prevent banks from fearing insolvency. When those bailouts took place I predicted continued depression and have been since October on this board. All those bailouts did was repair balance sheets to conform to bank accounting rules. Thats also why I predicted they will suggest changing them because that was its purpose. The money created from noncollectable loans is already gone. The bailouts are post inflationary until such times money is loaned into existence.
Here some of my comments from early October. I was also mauled in that thread since I did not go along with hyperinflation at that time. Thats because I know money is loaned into existence and no one is taking on debt. Not so many people are taking on my deflation forecast I made 6 months ago now.
Bailing out banks will NOT cause hyper inflation. We are POST inflationary. Oil prices, stocks and real estate is contracting. When hyper inflation does not happen or if it does not happen you will completely miss the scam. Let me show you the difference
As of now, you can forget about consumer debt or business debt and the only one that can or will grow is government debt. The only way this will change is if they tamper with bank accounting rules or find some other sink hole for speculation bubbles none of which seem plausible now. The Fed purchase of bonds was the first inflationary act I identified(by government debt) but the systemic problem still exists and we will see stagnation instead of depression. I figure that 300 billion bought us a year.
Inflation is up? Year over year from last year its 0 on the CPI. About the only thing that is up are some food items. I notice I am paying more for dry beans. Its probably for the same reason I stocked up on them 2 years ago.
That does not even include asset price deflation and especially housing. So I don't know what metric you are using but we are at 0 for a year. In this money system we need about 5% inflation and debt growth to stay ahead of it.
I have probably asked this ten times in this forum. Who, I say who is going to go into debt? I have paid off debt and will probably be paying down my mortgage. I sure hope everyone else is not like me thats for sure.
The first real money supply injection was when the Fed decided purchase 300 billion in treasuries, not the book keeping money that had nothing to do with the goods and services economy. I doubt its enough. Either way something other than consumer credit will need to circulate as money in this economy.
With this system there is little else to be done. All our money is debt. Which debt do you want?
Consumer debt? Thats the road we have been on to doom.
Business debt? Sure, but banks are not loaning to them and who knows whether they can grow the money supply at a rate we had grown consumer debt and grow equity.
Whats left? Government debt. Fast forward to Japan with a 180 debt to GDP ratio. Japanese citizens don't want to go into debt so....
We could pay off the nation debt tomorrow if we wanted to. I can't think of anything more simple than to pay off the nation debt.
99 out of 100 people have no idea what the national debt is or what it means and its costing us trillions.
Please explain to me how we would play off our national debt tomorrow? I would like for you to provide some specifics on how that would be done. Obviously I ask this because I realize you will be unable to do so.
Please explain to me how we would play off our national debt tomorrow? I would like for you to provide some specifics on how that would be done. Obviously I ask this because I realize you will be unable to do so.
Hi businezguy,
I will answer this with a question. How is that the US just creates interest bearing treasury notes? Also have a look at what gives value to what.
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities.
If I may paraphrase Thomas Edison, if the government can create a dollar bond, it can create a dollar note. What ever makes the bond good makes the dollar good also. Instead of creating interest bearing treasury bonds just create non-interest bearing treasury notes. That should give you enough information on how we could easily pay of the national debt.
I will answer this with a question. How is that the US just creates interest bearing treasury notes? Also have a look at what gives value to what.
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities.
If I may paraphrase Thomas Edison, if the government can create a dollar bond, it can create a dollar note. What ever makes the bond good makes the dollar good also. Instead of creating interest bearing treasury bonds just create non-interest bearing treasury notes. That should give you enough information on how we could easily pay of the national debt.
See, that was very easy to do so.
So what happens in the system now with the national debt? Is it paid down with interest by us through taxes? And this money then goes to the bondholders?
So what happens in the system now with the national debt? Is it paid down with interest by us through taxes? And this money then goes to the bondholders?
Greetings sheenie2000,
Well we don't really pay down the national debt much now but if we did it would be through taxes but to a point. If it were paid down too much there would be no collateral for federal reserve notes. All the national debt is is seed money for the money supply and we give most the inflation tax to banks and they sure are glad to get it .
Americans complain but they overwhelmingly re-elect the same people over and over. Look at the seniority of the senate and house.
If a viable real change agent like Ron Paul starts talking honestly, you immediately tin foil him and move on.
Obama will destroy what little is left of our economy. Obama has sucked off the public trough his entire life. He is conditioned to believe money just appears from DC, no work required.
Ron Paul has been tinfoiled because a majority of us have no desire to see Libertarians near any position of power. Its not that many people havent considered his ideas, its that those people dont support his ideas or positions.
I guess, the 40% of people in the bottom two quintiles would rather preserve their limited chances at ever getting out of poverty (wage floors and public education), then allow for big business to suck the remaining life out of them, and distribute it to the top quintile.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
