Don't forget the assassinations of Garfield, Lincoln, and the two attempted assassinations of Andrew Jackson. Anyone who gets close to putting the Fed out of business seems to either get shot or get shot at. If Ron Paul were elected president I suspect he would be the next in line who gets a bullet heading in his direction.
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Printing $....simple answer please.
- Thread starter Stosh
- Start date
Quote from scriabinop23:
The level of ignorance here astonishes me.
Money supply is a seperate measure, and can be arbitrarily created or destroyed. The fed creates money by creating a currency liability and buying an asset (usually treasuries) on its balance sheet.
The fed could print 6T-7T right now and arbitrarily gift it to the US govt, effectively paying off the total national debt. That would of course be very inflationary...
Also... All profits the Fed makes off the banking system etc are then distributed to the US treasury. There is no fraud or scheme here. It is collectively the US govt balance sheet.
I recommend you spend some time on econbrowser.com ... you are massively confused and should immediately stop giving out your perception of 'knowledge'.
When you say the fed could print money and pay off the nat'l debt, I presume that the accounting for this would be that the gov't would then owe the fed that same amount....and consequently the fed would owe whom for that amount of money that they printed and loaned the gov't to pay off the nat'l debt?
Thanks, I'm just trying to get the big picture without getting confused by the details. Stosh
What I mean is the fed printed the money and gave it to the government. The government then has to pay interest at the prevailing rate of government bonds on that debt REGARDLESS if the money was printed. It is well understood and reported on that the fed is printing much of the bailout/ stimulus money. The printed money will show up on the national debt, owed to the fed. 20% of taxes go to paying down this debt, much of which is printed. There isn't enough Chinese/Japanese/etc to fund our borrowing, just look at the entire Chinese FX reserves (largest in the world) versus the $ amount of bailouts and stimulus package passed recently.Quote from Stosh:
I don't understand......you say it will show up as national debt, but then you say it is owed to no one. Isn't it borrowed as bonds and notes from citizens, Chinese, Japanese, and other purchasers of our debt worldwide. My question is whether the gov't can just print money without it becoming debt that the government owes to somebody? Thanks, Stosh
So if much of the money is printed, taxpayers should be getting a big break and we shouldn't have to pay a good % of interest on the money that was printed? Just the interest on the money that was borrowed by the issuance of treasury bonds? Guess again, we have to pay the same interest rate on the money regardless.
It is fraud on top of fraud on top of fraud.
Quote from scriabinop23:
The level of ignorance here astonishes me.
Money supply is a seperate measure, and can be arbitrarily created or destroyed. The fed creates money by creating a currency liability and buying an asset (usually treasuries) on its balance sheet.
The fed could print 6T-7T right now and arbitrarily gift it to the US govt, effectively paying off the total national debt. That would of course be very inflationary...
Also... All profits the Fed makes off the banking system etc are then distributed to the US treasury. There is no fraud or scheme here. It is collectively the US govt balance sheet.
I recommend you spend some time on econbrowser.com ... you are massively confused and should immediately stop giving out your perception of 'knowledge'.
separate
Quote from Stosh:
Lot of talk about gov't paying for stimulus, etc. by just printing money. The gov't can't just print add'l money without it showing up as add'l gov't debt, can it or does it?
there are 5 parts to this starting here
http://www.youtube.com/watch?v=_dmPchuXIXQ
Quote from Stosh:
When you say the fed could print money and pay off the nat'l debt, I presume that the accounting for this would be that the gov't would then owe the fed that same amount....and consequently the fed would owe whom for that amount of money that they printed and loaned the gov't to pay off the nat'l debt?
Thanks, I'm just trying to get the big picture without getting confused by the details. Stosh
The fed would owe no one. The Fed holds the power to dilute or strengthen the currency at will (and because of this, the notion that deflation is technically unavoidable is incorrect). All the Fed needs to do is print ... The additional currency printed just comes at the expense of the current currency holders. The stock dilution analogy is a decent analogy.
If the Fed printed to buy all US debt, the interest payments from the government to the Fed would then appear on the asset side of the Fed's balance sheet. The treasury would then take those 'profits' back in the form of government revenue. In the end, they balance each other out - thus any obligation the government owes the Fed is effectively zero coupon.
ie:
Fed buys 3.5% 30 year bond. Asset on Fed sheet.
Fed creates equivilent currency entry on Liability side. Liability on Fed sheet.
Government sells 30 year treasury to Fed. Liability on Govt sheet.
Then...
1- Government pays interest for 30 year treasury to Fed.
2- Fed receives interest from Government.
3- Government (Treasury) takes back interest income from the Fed (since those are the Fed's profits, entitled to the treasury).
You could really stretch it out...
4- At end of 30 years, Fed gets its 'principal' cash back. Fed can just use that to buy another 30 year bond, or it can merely cancel the currency liability against its currency asset (opposite of money creation). The government gets this cash to pay the fed back by selling more debt or pulling from reserves (lets say the government runs an operating surplus by then).
As you see, the Fed really has absolute power over valuation of the dollar - in both directions.
Quote from kxvid:
Excellent q. No they can't. If the want to print 700bn for example, they have to go to the fed and ask for it. It will show up on the national debt, even though it is printed money and owed to no one.
The incredible thing is our government has to pay interest to the fed to print money. This the greatest fraud in history.
Wrong.
The treasury can issue debt, but that debt competes for the the available cash out there (although Steve Keen might disagree on who controls the money spigot (Bank credit vs Fed money base)). Issuance of new debt by treasury is NOT money printing. [just as issuance of new debt by a private corporation is not money printing] And the treasury does not need the Fed to do anything. The argument is that excess government borrowing takes savings/cash that otherwise might be allocated privately and limits private investment. Crowding out effect.
If you want a simplistic example, if the treasury wanted to borrow $100T tommorow, it would not be able to simply because there is not $100T of cash out there to lend to the government. If the Fed decided to print $100T to help out (diluting the value of the dollar), then it would of course be possible.
Last - there is no 'fraud' in the government paying interest to the Fed, since the Fed by mandate has to pay its profits right back to the government.
The only arguable moral dilemma the Fed creates is that its policies effectively subsidize banking profits. Its policies and funding mechanisms basically determine how much money will be injected to banks over time.
In the end, the arbitrary ability of the Fed to create 0% interest perpetual notes (debt) out of thin air is what makes the Fed unique. No bank or any other member of society has the ability to do it, and the law is the reason for that. Maybe one could argue fed's only true debt to the holder of the note is implicit faith to manage its value well.
Quote from kxvid:
OP, don't listen to this idiot. He is the confused one.
http://www.silverbearcafe.com/private/JFK.html
http://www.dissidentvoice.org/2009/02/president-obama-nationalize-the-fed-and-create-our-own-money/
I rest my case.
You can't post 2 links to conspiracy theorist web sites and then claim "end of argument". Post some coherent and fact bast opinions if you want to win your debate.
Quote from scriabinop23:
Wrong.
The treasury can issue debt, but that debt competes for the the available cash out there (although Steve Keen might disagree ...). Issuance of new debt by treasury is NOT money printing. And the treasury does not need the Fed to do anything. The argument is that excess government borrowing takes savings/cash that otherwise might be allocated privately and limits private investment. Crowding out effect.
If you want a simplistic example, if the treasury wanted to borrow $100T tommorow, it would not be able to simply because there is not $100T of cash out there to lend to the government. If the Fed decided to print $100T to help out (diluting the value of the dollar), then it would of course be possible.
Last - there is no 'fraud' in the government paying interest to the Fed, since the Fed by mandate has to pay its profits right back to the government.
The only arguable moral dilemma the Fed creates is that its policies effectively subsidize banking profits. Its policies and funding mechanisms basically determine how much money will be injected to banks over time.
Are you saying that when the Fed prints money it is as if they had struck a gold mine in their back yard.....they are creating the money out of thin air. If so, that really pisses me off. Let's say a counterfeiter were printing billions of dollars and spreading it out among the poor or building roads with it.......would that be similar to what govt does? So, I suppose the only restraint on the govt financing itself this way would be the complaints from savers and fixed income folks when inflation results. Otherwise, they might as well just finance this way and forget about all the complexities of borrowing and taxing. I'm rambling, but would appreciate your comments since it does appear that you know whereof you speak. Thanks, Stosh