My thought experiment:
I borrow 100 dollars from the bank, and I pay the bank back with freshly issued government money that I earned from working for the government. The debt at payoff, due to interest, is 110 dollars.
But what is money created by the government? It is debt. Just look at any US bill. Used to be, they were called "certificates" because they were redeemable for gold. Now, they are called "notes" because they are really debt. Look at today's US currency and you will see the description: Federal Reserve Note. A note, is a promise to pay, an IOU.
So, I pay off the loan, but if you think of it, the debt never really goes away. It is merely transferred. I paid that loan off with a newly created debt from the US Gov't. The interest still accumulates.
The only thing that changed was the ownership of the debt. Whereas I borrowed 100, and owed a total of 110 dollars, now the federal government, by creating 110 dollars, now owes 110 plus more interest.
It compounds. It has to. If it doesn't the system crashes.
QE's purpose is not to stimulate the economy. That's a lie. It's to keep the economic debt based monetary system from imploding. There is a huge deflationary force countered by the Fed's QE and Fed Gov'ts stimulus spending.
I borrow 100 dollars from the bank, and I pay the bank back with freshly issued government money that I earned from working for the government. The debt at payoff, due to interest, is 110 dollars.
But what is money created by the government? It is debt. Just look at any US bill. Used to be, they were called "certificates" because they were redeemable for gold. Now, they are called "notes" because they are really debt. Look at today's US currency and you will see the description: Federal Reserve Note. A note, is a promise to pay, an IOU.
So, I pay off the loan, but if you think of it, the debt never really goes away. It is merely transferred. I paid that loan off with a newly created debt from the US Gov't. The interest still accumulates.
The only thing that changed was the ownership of the debt. Whereas I borrowed 100, and owed a total of 110 dollars, now the federal government, by creating 110 dollars, now owes 110 plus more interest.
It compounds. It has to. If it doesn't the system crashes.
QE's purpose is not to stimulate the economy. That's a lie. It's to keep the economic debt based monetary system from imploding. There is a huge deflationary force countered by the Fed's QE and Fed Gov'ts stimulus spending.
