Quote from Haroki:
Ok, so the Fed buys govt bonds and gives our G back the interest.
But they turn around and loan the money out to.... who again? The consumers perhaps? What's the problem here?
The problem is two-fold:
1) Fiat money creation and fractional reserve lending empower banks to earn enormous profits on counterfeit money.
2) The end effect of all that bubble lending is massive *price* inflation which further enriches the Parasitic Elite by eroding the monetary savings of the average American. Their gain is our loss.
Quote from Haroki:
Care to enlighten us, my liege, with your views of inflation vs a long term debtor - like on a home loan?
One sided pandering doesn't help your cause.
Your first mistake, ROOKIE - wage inflation never rises as fast as price inflation (CPI). Wage inflation is what makes homes cheaper over time. Wages might rise at 1/3rd the rate of price inflation -- if your lucky (until the economy enters a recession).
So the whole "inflation-saves-the-day" nonsense loses its steam, right there.
Second. Over a lifetime, the average person loses more to inflation then gained from decreased mortgage payments. Do the math.
Third. Massive money bubbles EXACERBATE economic cycles. That power to inflate you laude as "economic genius", is the same force that will propel scores of your beloved working poor into bankruptcy when the eventual recession hits and they have no savings to fall back on. Why? Because it was inflated away during the bubble. Idiot.
Fourth. Historically, fiat money systems ALWAYS fail because the temptation to spend beyond a Nations means (and steal public wealth through debasement) is too great. Any trader or economist worth their salt can see the United States is well on its way to fiscal bankruptcy. Far more commitments, social programs and wars than our country can afford with creditors threatening to dump. When the piper comes calling, either our social commitments go, we hyperinflate (and eventually go into depression), or we go into a depression immediately.
All because your wonderful tool, inflation.