Quote from achilles28:
First, FED debasement via monetization keeps rates artificially low, which fuels Government deficits and asset bubbles. Are you going to tell me that the Nasdaq and Banking Bubble didn't hurt the average American?
Well, arguing about monetary policy is like arguing religion. There's just no point. In my view, Fed is not monetizing debt. Furthermore, even if they were, the assumption that monetization alone can keep rates low is total nonsense. As to the bubbles, how do you know that you or Congress or the Supreme Court or whatever other random entity you would trust with making monetary policy decisions would have done any better?
Second, debasement (inflation-tax) is real since Government + contractors spend borrowed money first. But the inflation tax is present if the FED monetizes with interest, or without.
Third, the interest charge is a cost to Taxpayers because they have to pay it, and it's the Government + contractors who enjoy the lower prices, because of it. Basically, in effect, a Government subsidy or an additional tax levied on citizens to finance Government deficit spending (a great idea).
None of this makes any sense whatsoever. Let's take a hypothetical example. Let's say I am the government and I borrow money to fund a new school that will educate the population in basic principles of economics, so that they don't make stupid decisions. It's likely to be a productive investment. What possible negative "debasement" or whatever comes of this? To me, it sounds like what you're protesting is the inability of your govt to allocate resources into productive endeavors. What does that have to do with the Fed?
Last, if you really think borrowing from ourselves - at interest - is no different then just printing the money without interest, then why not just print the money without interest?
Let's go back to my original question pls. I would like to understand exactly what you're referring to when you say "printing with interest". Is it just QE you're referring to (i.e. the outright treasury/MBS/agency purchases) or is it something else?
The FED is part of the dysfunctional Government. This is not an either-or argument. Congress and FED are the problem. The FED loves Congress because they keep it's charter and secrecy intact. And Congress love the FED because it finances endless bubbles and deficits which keep political whores elected. The problem is two-headed. Well, actually three-headed when the IRS is considered (collection-wing for the FED).
I have no comment, this is all too far out and paranoid for me...
Nice straw man. I don't love income taxes, nor the IRS. We didn't have either before 1913, yet the Country grew remarkably. Why is that?
The claim we need a Central Bank for any money-based economy is wrong. Gold and silver are unified methods of exchange without the need for a Central Bank. In fact, that's how most of the worlds economies operated before fiat money and Central Banking - gold and silver. Last, if you don't want to talk, that's fine. I'm not forcing you to discuss anything.
This is not a straw man, but rather an analogy. As to what used to work in the past, that's just silly. Slavery and serfdom, at one point, were used to generate a lot of pretty remarkable growth. Why not advocate that we go back to that, given how well it worked?
As to gold and silver, like seashells, they're fiat commodities and, as such, are little better than fiat paper money. That's my view.
Lastly, it's not that I don't want to talk. I am just suggesting that we may be having this interminable discussion like the one about science and religion.
