USD backed by nothing?
Except the most powerful Army (Navy, Air Force, Marines) on the planet
Except the most powerful Army (Navy, Air Force, Marines) on the planet
This coin I heard about called USD
- Thread starter Illini Trader
- Start date
Lets also not forget that the money supply has to be increased as the population grows. You can't have more and more people chasing the same amount of dollars from centuries ago. The idea of having a max number of coins that can be mined, as in BTC is nice, but its utility is absolutely hampered. So yes, the FED can't create too much and too quickly, but they absolutely have to create.
BTC therefore, in my opinion, has very little utility, if it was to ever be adopted for regular transactions, and not much in terms of a "storage of wealth", since it isn't backed by anything.
For all the problem that USD might have, its still far superior, and the world economy can and will ensure that it remains fairly priced.
Your naive sarcasm made me smile.
Will you be able to recover your coins if your wallet is lost?
Remember that everything should be based on responsibility. There is no reliability in purely electronic system, at the end there should always be a human at the ruling keyboard
And if there is a human there is a control and power and no idealistic financial freedom for all.
Cheers
Make that - the most powerful printing press on the planet. Spreading "democracy" hahahaha.
What gives the USD stability and value is that it is the only legal tender for paying U.S. taxes. If you need to pay U.S. taxes you will have to do something to acquire USD. And the Government has the power to enforce its taxation. On the other hand, the Government can both create and spend USD (fiat money). Government spending is the source of the fiat dollars that you will use to pay taxes. If the government taxes more than it spends their will be a shortage of USD to pay taxes and we, in aggregate, will have to dip into savings or sell assets to meet our tax obligation. On the other had if the government wants to encourage net savings (investment) in aggregate then it can intentionally create deficits, i.e., spend more than it taxes. If the government expands the money supply too rapidly via deficit spending, inflation can be the result. The amount of deficit spending that can be absorbed into the economy will depend on economic conditions and how much bank reserves can be allowed to grow. The Fed traditionally controls the Fed funds rate by controlling reserves. If reserves are too high, the funds rate will fall, if reserves are too low, the rate will rise. The Fed keeps a close eye on reserve accounts and can drain excess reserves by selling treasuries or increase reserves by buying treasuries, This has been a main tool of the Fed for regulating the fed funds rate. Treasuries offer an interest paying alternative to cash. The Fed does not normally pay interest on reserve accounts. (At least in the past they haven't) If the fed paid interest on reserves it would establish a bottom for the Fed funds rate, i.e., any bank that wants to borrow will have to pay in excess of the reserves interest rate. )
For a modern nation with its own fiat currency, moderate deficit spending is the norm. The best it can do over time is to balance the budget, but depending on economic conditions, deficits can not only be too large but also too small.
I think it would be a mistake to replace Yellen as Fed Chair if she would agree to stay on. A steady, experienced hand at the tiller is best. The worst choice would be a political hack, the second worst would be an investment banker without prior Fed experience. Just my opinion. I think we need someone with a very broad and deep under standing of Macroeconomics and Central Bank operations. I am always concerned when Republicans are in power because they are basically businessmen who have a horrible grasp of macroeconomics and are proponents of the worst possible elements of neo-classical economics.
For a modern nation with its own fiat currency, moderate deficit spending is the norm. The best it can do over time is to balance the budget, but depending on economic conditions, deficits can not only be too large but also too small.
I think it would be a mistake to replace Yellen as Fed Chair if she would agree to stay on. A steady, experienced hand at the tiller is best. The worst choice would be a political hack, the second worst would be an investment banker without prior Fed experience. Just my opinion. I think we need someone with a very broad and deep under standing of Macroeconomics and Central Bank operations. I am always concerned when Republicans are in power because they are basically businessmen who have a horrible grasp of macroeconomics and are proponents of the worst possible elements of neo-classical economics.
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Wow that's a doozy.
Indeed, it's a little disconcerting at first. I should have checked to make sure you were sitting down before posting that. Of course tax obligation is by no means the only think that gives the USD value and stability. It is exchangeable for U.S. made goods and services, and because it's an exchange currency you can exchange it for goods and services around the globe. Pretty kool, huh!