Martinghoul you are a wise and very knowledgable trader and an expert in sovereing bonds and interest rate products and what you say is true. I would hate arguing with you. In the end living under a philosopher king or philospher banker is only as good as the philosopher.
Not sure about the third item, but I'm quite sure that the first two are not correct, and probably the third isn't either. But this in no way invalidates your point.
Thank you for the compliment... And yes, indeed, the problem is that money and debt doesn't ever exist in a vacuum. It's almost always more about the politics than economics.
I want to make a small, but important point here. Panthers posted is correct,i.e., 'money is created out of debt', It is very important to recognize that this is, to an extent determined later by economic conditions, a reversible process. When actual printing occurs the money created is not tied to debt, and the process is irreversible. Even economists who know better use the term 'printing' to describe the reversible process in which the Fed facilitates expansion of the money supply by buying bonds using money it has just created 'out of thin air'. (The money has to get into circulation in the economy, before it can have an inflationary effect. so if it just sits in banks reserve accounts as unused excess reserves it won't be inflationary.) This kind of 'money printing' is very different from irreversible printing of money that is not tied to debt. For example, what Zimbabwe did was actual irreversible printing of money not tied to debt, and then Zimbabwe used, or tried to use, that money to pay on debt. That kind of thing, once it is discovered, leads to hyperinflation. The Fed can both expand and contract the money supply according to macroeconomic conditions and the inflation rate. The Fed works closely with the U.S. Treasury, but is required to buy its bonds on the secondary market so the price discovery mechanism can work. The Fed controls the inflation rate via manipulation of the money supply indirectly by controlling interest rates. The Fed usually does this mainly via control of the rates that banks pay to borrow money. If a bank has to pay more for the money they borrow, then quite naturally they will have to raise the rates they charge their customers. Briefly, during Paul Volcker's tenure as Fed chairman, following a recommendation of Milton Friedman, the Fed experimented with trying to control the inflation rate by direct regulation of the money supply. It did not work as well as anticipated, and the Fed returned to indirect control of inflation via interest rates.
Not confused at all. The entire world uses a fractional reserve currency system. Since switching to a fractional reserve system, the world has experienced unprecedented growth in pretty much any quality of life metric you care to measure. It appears that some here see that as bad and want to return to a system where we tie our currency to an entirely arbitrary mineral that we extract from the earth? Or perhaps you all want to go back to a barter based economy? If fractional reserve=bad then what equals good? To paraphrase Churchill's take on democracy, fractional reserve is the worst form of currency except all those other forms that have been tried from time to time.
Translation, I don't have a good answer for you so I just tell you it's "not worth my time". Then throw in a "comprende" in there as a good final insult, because that's the way Achilles28 rolls. Every country in the world uses a fractional reserve program, so criticizing such a system as being somehow responsible for offshoring is rather nonsensical. Again I ask you what you think everyone in the world should switch to and why that will make life better overall?
If it weren't for the $19,000,000,000,000 in debt the markets would be 50%+ lower...all the debt is to prop up a worthless economy ....there is zero growth in the US, everything you see in the stock market is a prop job...an illusion to make you believe everything is peaches and cream but in reality it's all a fairytale.... Nothing but a fairytale .....
I first didn't get where the debt was coming from... It's like playing a poker game with 100 people. Everyone is down... So... Who's the winner?????? Where did all the money go?!? If every country is in the red, than it's a poker table where everyone is down which makes no sense.