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This whole "making new money" thing (1 Viewer)

costnerri said:
where does the funding come from then? and what gives the dollar any value? just because 'they' say its worth this or that doesn't give anything much value. just because I say my vehicle is worth a million bucks doesn't mean it is. and already asked but ill ask again this money that comes out of 'thin air' why cant that be used to pay off our nations debt? instead of not worrying about the debt because we could always pay it off with this 'thin air money' why not just get it over with and pay it off. obviously these papers flying around must not be worth mut if anything.
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It can be used to pay off the debt, the only reason the debt exists in the first place is political. In order to be able to pay off the debt the Treasury would have to assume the money-creation role that the Fed currently has. These were separated to prevent that power from being affected by politics. All that would need to happen is that a law would need to be passed authorizing the treasury to add the required money to the treasury general account for the purposes of paying off the debt through an appropriations bill, and then it would be used accordingly as bonds come due. No new bonds would be issued so when outstanding bonds mature the debt is extinguished. Currently that's illegal and so the laws would need to be changed to be able to pass such a bill.

Because the Treasury's job is to cover the TGA, the way that the funding system works now is that congress passes appropriations bills that spends money in the TGA, and it's the Treasury's job to make sure it doesn't go negative. They do this via deposits from tax revenues (IRS) and issuance of debt. The debt issued is bought by private investors, but also by the Fed, who creates money out of thin air to do so, almost like what banks do when they lend.
 
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JohnfrmClevelan Our nation's "debt" is not really a debt, it's dollars that have been previously earned and exchanged for U.S. bonds. China and Japan have earned many billions of dollars over the years through trade surpluses, and they choose to buy bonds with those dollars rather than spend them. The U.S. government does not have to borrow the same dollars that they can create for free. Bond issuance is a matter of choice; the U.S. chooses to continue issuing bonds, and the world chooses to continue buying them. So "paying off" the debt should not be an issue. Dollars, just like bonds, are liabilities of the U.S. govt., and paying off the bonds would not change the total number of those liabilities.[/CENTER]
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im confused even more now. so are you saying we basically don't owe any other countries anything? and our nations "debt" is just a ledger for how much money we have earned on the world market?:confused::confused::confused: if that is the case then why is called a debt. my personal debt is what I owe someone. whenever I earn money its called a profit not debt. is government really that a** backwards????!! haha
 
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what I don't like the most about this is the fact that the us can and does create dollar bills out of thin air. the bills themselves aren't worth anything they are essentially just an I.O.U. and promise from the federal reserve. so why are they allowed to create as many pieces of these papers as they want? are they making promises they cant keep by making more federal notes than they can back by the reserves?:shock:
 
costnerri said:
im confused even more now. so are you saying we basically don't owe any other countries anything? and our nations "debt" is just a ledger for how much money we have earned on the world market?:confused::confused::confused: if that is the case then why is called a debt. my personal debt is what I owe someone. whenever I earn money its called a profit not debt. is government really that a** backwards????!! haha
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I'm saying that creating dollars does not cost our government any real resources; no gold, no bushels of corn, no oil. That is a government's privilege. It can be taken too far, of course, but as long as the economy can meet the new demand, government deficit spending is not only not a problem, it is a benefit. That money is (generally) spent into the economy, and businesses produce in order to earn it.

Our nation's debt is a measure of how much we have spent (net); add up all of our federal deficits (many) and surpluses (few) and you will get the "national debt," plus MB. On the other side of that, dollar/bond savings is a measure of how much other entities (China, Japan, Saudi Arabia, banks, businesses, people, etc.) have saved (in dollars) over the years, from their earnings. All of that is available to spend; some people just choose to save their dollars instead.

Why is it called a debt? Political stupidity. That started a long time ago. I prefer to call it "bonds outstanding."
 
costnerri said:
what I don't like the most about this is the fact that the us can and does create dollar bills out of thin air. the bills themselves aren't worth anything they are essentially just an I.O.U. and promise from the federal reserve. so why are they allowed to create as many pieces of these papers as they want? are they making promises they cant keep by making more federal notes than they can back by the reserves?:shock:
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Dollars are backed by the economy's production, and the bills are worth whatever they can buy.

All money is debt. Bank-created money is just formalized I.O.U.s that are transferable. When you want to borrow money that you don't have, you promise to pay back the debt. Since your I.O.U.s probably don't mean much to other people, you go to a bank, whose I.O.U.s are readily accepted. You promise to pay the bank, the bank gives you some of it's rock-solid I.O.U.s (dollars), and you are able to buy, say, your house with those I.O.U.s.

What we are left with is a big pile of assets (dollars) and a big pile of liabilities (debts still owed), and these provide most of the dollars that our economy operates on. Lots of these I.O.U.s never even get "redeemed." There is no harm in the government buying in to this with some of their own dollars.
 
would you or anyone recommend a book, website, movie, or anything of the sort to learn more about this? its all confusing to me but id like to learn about it.
 
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