Quote:
Originally Posted by TacticalEvilDan  Okay, fair enough. Our sense of history does tend to begin with our own birth.
Okay, here's a brief summary of a few key frauds being perpetrated today:
1) The government calculates deficits by adding up every dollar it takes in, even dollars which are not intended for inclusion in the general fund, and then figuring out how much it wants to spend, and taking the difference between the two. |
Not quite that simple. What the government often calls a "deficit" is really the formula you use, but includes surplus SS taxes, and does not include "off budget" items like the cost of the Iraq war. With such gimmicks, the Bush administration bragged that the deficit was "only" about $160 billion last year when in reality the govt had to borrow $1/2 trillion to keep afloat.
Quote:
|
2) The government finances deficits through the sale of treasury bonds, which is not Constitutional. The Federal Reserve often buys a portion of these (the size of the portion varies each time) with a check. That check is drawn against a bank account with no money in it. The money is invented at the time the check is deposited in the Federal government's bank account.
|
I'll skip the debate as to whether it is constitutional; whether it is or not it happens. The Fed owns about 1/10 of outstanding debt. It does use the process of buying Govt securities such as T-Bills and bonds to expand the money supply.
Quote:
|
3) The Federal reserve is not the only entity to do this. Any time a bank loans money here in the United States, it does so by creating it out of thin air. If any of us did that, it would be called counterfeiting. |
Yes, it is the Fed's function to control the money supply, and buying T-Bills (as well as lending thru the discount window to member banks and other means) is one way the Fed injects more money into the system.
Conversely, when the Fed wants to contract the money supply it sells Govt securities.
Quote:
4) The bank tells you, when you deposit your money in a savings account, that you can have it back whenever you want. This is not true. If everybody went and yanked their money out of the bank, it would destroy the banking system. You are told this lie because bankers are operating on the principle that if you think you can get your money whenever you want it, most people will leave it in the bank.
They're right -- most of the time.
|
It is true that banks take their deposits and lend it out. That is they way they operate and stay in business.
If there was a run on a bank that broke its reserve (10% of deposits) it might not be able to pay you your money right away. However, if your deposit is with and FDIC insured bank, it is backed by the Govt and you will get your money.
Quote:
|
5) The government used to clearly define the criteria for measuring inflation and recession. The criteria for both of those important terms has been redefined to be as vague as possible so that it can be argued exactly how much inflation there is or whether or nor we're in a recession -- because ambiguity is the only way you can pretend everything's ducky when, in reality, it sucks.
|
Please explain.
Few are saying that thing's are ducky now, because we can see from Govt statistics that real GDP growth is just barely positive and inflation is increasing.