Originally Posted by Scrappy Jack
(Post 774583)
I am not sure what you were going for, but you actually just described a very important aspect of modern, free-float sovereign monetary systems quite elegantly. :D
I was not advocating theft in order to payroll bad ideas. |
Originally Posted by blaen99
(Post 774615)
He's got great points! He chose poor ways to make them :(. Quite honestly, lying via omission pisses me the fuck off.
Originally Posted by Braineack
(Post 774551)
1. If there was no money behind the demand, the product will not be created.
2.
Originally Posted by Braineack
(Post 774671)
I meant people buying what others produce.
I was not advocating theft in order to payroll bad ideas. Schiff seems to be operating under the belief that there is "no money" to be lent. That is demonstrably false on multiple levels. :idea: Sorry; I have monetary systems on the brain. When you said "no money behind the demand," you meant that "if there was no expectation of profit." I am with you now. :facepalm: However, there can be expectation of profit and creation of product without actual demand. Again, it's nuance but worth disentangling. |
Originally Posted by blaen99
(Post 774615)
or simply lying via omission (My biggest problem being the last).
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Sorry; I have monetary systems on the brain. When you said "no money behind the demand," you meant that "if there was no expectation of profit." I am with you now. :facepalm: |
Originally Posted by Scrappy Jack
(Post 774699)
I still can't figure out if people like Schiff use
Schiff seems to be operating under the belief that there is "no money" to be lent. That is demonstrably false on multiple levels. "It was bad enough that the Fed held rates far too low, but at least a fig leaf of uncertainty kept the most brazen speculators in partial paralysis. But by specifically telegraphing policy, the Fed has now given cover to the most parasitic elements of the financial sector to undertake transactions that offer no economic benefit to the nation. Specifically, it will simply encourage banks to borrow money at zero percent from the Fed, and then use significant leverage to buy low yielding treasuries at 2 to 4 percent. The result is a banker’s dream: guaranteed low risk profit. In other words it will encourage banks to lend to the government, which already borrows too much, and not lend to private borrowers, whose activity could actually benefit the economy" He is saying that banks are borrowing money from the gov't at a low rate, then turning around and buying treasuries and making a guranteed profit from the same vessel they borrow from. If this practice stops, how will the banks have any profit since they've stopped lending to the ecomony. They are simply being propped up by debt and printing presses. This is hurting the recovery and benefiting a few at the cost of many.I like hyperboles. I will point out more form video: “One of the riskiest things you can do in America is hire someone.” “Demand doesn’t come from things that aren’t produced.” “Regulations substantially increase the cost of employing people.” “Infrastructure spending drains the economy of resources.” “You can always see . . . the jobs government creates. What you can’t see are the jobs they destroy.” “All the government can do is rearrange the resources, it doesn’t create any wealth.” I think this sums up the video nicely: "Republican presidential candidates would be wise to watch the video of Schiff’s Congressional testimony. They could help put an end to the idea that government simply needs to pick the right winners and losers, and more importantly that more money is what this country needs. Stimulus is great for those who get to play with other people’s money, earned through hard work, creativity, efficiency, ingenuity, and innovativeness. It’s easy to sit on a committee and take wealth from the places that produce the most of it and pass it out to your cronies or dependent constituents, and then threaten to cut the services people rely on most, like police and fire departments, as soon as someone suggests cutting the size of government" |
I think Schiff has a lot of broad concepts correct and I don't dispute his banking concept in its entirety, but he either glosses over (via rhetorical laziness) or misunderstands some critical elements of the way the current USMS actually works. From what I gather, he seems to think that bond auctions and taxes fund government spending.
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Another lier that hates America:
Coca-Cola chief criticises US tax rules http://www.ft.com/intl/cms/s/0/071f9...#axzz1Z9usaTGu |
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Originally Posted by Scrappy Jack
(Post 774930)
From what I gather, he seems to think that bond auctions and taxes fund government spending.
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Originally Posted by Scrappy Jack
(Post 774930)
I think Schiff has a lot of broad concepts correct and I don't dispute his banking concept in its entirety, but he either glosses over (via rhetorical laziness) or misunderstands some critical elements of the way the current USMS actually works. From what I gather, he seems to think that bond auctions and taxes fund government spending.
Originally Posted by JasonC SBB
(Post 776590)
??? Pls. explain why you don't think this [bolded] is correct.
The government bond market, as it exists today, is a monetary tool used to control interest rates. We spend first, then issue bonds to affect the level of reserves. I do understand there is a Congressional mandate which utilizes this as an accounting tool, but operationally, under the current US monetary system, it is not a funding tool. Likewise, taxes serve to regulate aggregate demand not as a fiscal funding mechanism. Again, we spend first and tax later. I will try to come back to cite some specific primary sources for this. |
Lol, we spend first huh? With what money?
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Originally Posted by jacob300zx
(Post 776895)
Lol, we spend first huh? With what money?
They spend first and then bonds are issued to drain reserves. When a currency user wants to spend money, they either use savings or credit which is obtained first. If you (as a currency user) want to buy a car with a bank loan, you have to obtain the credit first. You fund first, then spend. The loan creates a deposit. which is a liability for the bank and the loan is an asset. You have an asset (the deposit) and a corresponding liability (the loan). Net new financial assets? Zero. The USA does not operate the same. It's the difference between vertical and horizontal money creation. When the USA spends, the Treasury credits bank accounts (transferring reserves from their account at the Federal Reserve to the recipient's bank). There is no corresponding liability at this point. This is an increase in net financial assets. We do not ask China to approve our spending. We spend first. With China, Japan, et al, they send us real goods and services and we send them electronic 0s and 1s. |
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Originally Posted by Braineack
(Post 776912)
AKA monopoly money:
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No $100 trillion banknote for us? how are we going to give the Zimbabwean dollar a run for its money.
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Originally Posted by Scrappy Jack
(Post 776909)
When a currency user wants to spend money, they either use savings or credit which is obtained first. If you (as a currency user) want to buy a car with a bank loan, you have to obtain the credit first. You fund first, then spend.
The loan creates a deposit. which is a liability for the bank and the loan is an asset. You have an asset (the deposit) and a corresponding liability (the loan). Net new financial assets? Zero. The USA does not operate the same. It's the difference between vertical and horizontal money creation. When the USA spends, the Treasury credits bank accounts (transferring reserves from their account at the Federal Reserve to the recipient's bank). There is no corresponding liability at this point. This is an increase in net financial assets. To claim that printing more currency (via electronic deposits) actually increases financial assets is misleading. No wealth is being created. |
Originally Posted by mgeoffriau
(Post 776950)
No wealth is being created.
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The government doesn't create wealth.
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Originally Posted by Braineack
(Post 776935)
No $100 trillion banknote for us? how are we going to give the Zimbabwean dollar a run for its money.
Originally Posted by mgeoffriau
(Post 776950)
The phrases I bolded are my biggest problem with your explanation.
To claim that printing more currency (via electronic deposits) actually increases financial assets is misleading. No wealth is being created. However, if the government does not spend the money in to existence first, there is no money for tax collection, bond purchases, etc. |
Which brings us right back to the issue of an unbalanced budget and deficit spending: either the debt obligations are not met, or we inflate the currency in order to do so.
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