Credit comes from latin Root: Credere - To Believe One needs to believe or trust since there is really nothing tangible there. Just a repayment promise to believe in and the legal power to seize assets (for those who don't trust quite enough.) Without a legal system, there is no monetary system. When the legal system gets corrupted excessively and stops defending the common people, bad things happen to the rulers of societies. At least that was true in ancient Rome I think. Common people seem only to tolerate a certain level of corruption before they react. Together the people hold the real power but only when they act together towards the same end. Rulers know that. They like to keep them messed up with news shows, honey boo boo, and bachelorette - things that really matter to most of us. You know - bread and circuses. The more things change, the more they stay the same!
I hope the Fed knows that we are close. There was a trading book which stated that the people revolted when taxes got over 20%. Between taxes and the inflation tax... I sense hard working people are close to the breaking point. Its time the Fed causes their democrat puppets to fall in line and cap spending while we inflate into a balanced budget. Thats my view. I am not currently anti Fed... but I am anti this immoral debt... crushing our kids future.
Just for get all the economics its all for donkeys... God controls the seasons and it comes on all by self... I had a 4.0 in college in economics, than I dropout knowing that it do jack for trading. If you study universal laws you will know that the S&P 500 is in a bull market up until a couple of years. Sitting here debating philosophy, proverty, wars, greed, and have any it of ever stop entirely or period? Follow the nature of the cycles and the signs of the times to forecast and plant your seed today. I am going to be long the SP500 you can either be in or out, but I am in long for the quarter is going to be like Spring. CL
no kidding, two people you wouldn't think would be commenting on it, Leon Penetta and Hilary Cliunton both, when asked what the greatest threat to USA was, replied, "The debt." Apparently they dont like us because we are really good moral people. They liked us (or feared us) because we had money.
Achilles28 explained it the best. For more detail on the Federal Reserve System and fractional reserve banking, read "The Creature From Jeckyll Island." Fuck Keynes and the Fabians (look it up.) Of course the other problem is that our money is fiat currency. For a stable banking system (although slow growth), we need to be on the gold/silver standard, and do away with fractional reserve banking, and go with fee banking.
True, but only by a fractional amount - i.e. the fractional reserve system. What most people don't understand is $1 can be lent at a fraction over and over, thereby creating leverage in the system. Example.....some guy deposits a dollar. The bank can turn around and lend 90 cents (10% reserve) of that dollar, then 81 cents of that dollar (10% of 90 cents), then 73 cents (10% of 81 cents), and keep repeating up to their allowable level of leverage, which is different depending on the type of bank you operate. This is why the banking system collapsed in 2007/2008. There were reports that LEH was leveraged as high as 70x and couldn't be saved. Bear? Same deal. BAC had to swallow MER, can't recall what happened to MS, and, of course, GS came out looking like the Golden Child because they were "hedged" against such risk because they are so much smarter than all the rest. It wasn't until a few years later that the truth about GS came to light. What a depressing period in the history of US Capitalism (Greed).
If the USG runs a $2T deficit and net debt rises only $1T, then it's printing $1T. It doesn't matter how that discrepancy comes about, through monetization or not, it's dollar printing either way. So this "money from debt" argument is bogus or definitional. Either way, wrong.
The government prints all kinds of "tangible stuff" that isn't money. Money is different. It represents an obligation, commonly expressed as a debt.
There are no stable banking systems. Non-fiat currencies go down just as hard and just as frequently as fiat currencies. It's in our nature as humans to blow shit up - there is no definition of "money" that will prevent us from doing so. Evolution is clearly selecting for fiat...obladi oblada...