That's a very popular idea, the idea of downsizing government. I don't know of anyone who doesn't like that idea other than those whose jobs would be cut. Even our neighborhood cat likes the idea, because she knows her job is safe. I'm just not convinced that a liar selling $50 printed-in-China Bibles and $225 Tennis shoes* with his name on them is the right person to lead us in downsizing. I would prefer someone who doesn't start new government agencies and departments on a whim; someone who actually reads something other than "Hitler's Collected Speeches" and would therefore have knowledge of the history of Tariff's, Censorship, Political Payoffs and mixing government with religion. I am a relatively rare species of capitalist who isn't promoting policies that wreck capitalism, Tariffs are a wrecking ball. Fasten your seat belt, it's going to be a bumpy four years of "downsizing" that isn't. _______________ *Who would buy this overpriced junk? Only someone who can't figure out they're being scammed. And those poor folks are Donald's voters! God help us all.
I read your statement above as saying, in essence, that Bitcoin is a superior monetary system in comparison to the monetary system used by the United States. If I have interpreted your statement correctly, I would have to question your reasoning, since Bitcoin lacks nearly all of the features required of a complete monetary system anything like the complete monetary system represented by the U.S. dollar. Bitcoin does, however, share a few features with the U.S. monetary system in that both have a mechanism for determining how many new money units will be created, and both depend, in part, on supply and demand to determine buying power per unit. Both can be used within the private sector for payment, but only one is legal tender. It would seem that's where the similarity ends. I would argue that to call Bitcoin the unit of account of a monetary system one has to use a very broad definition of monetary system; one so broad as to be completely useless in defining a national currency. Here are a few of the features bitcoin lacks in comparison to the U.S. monetary system: a. Bitcoin has an indefinite time associated with creation of new Bitcoins, whereas Dollar creation is per U.S. fiscal year. b. There is no mechanism for removing Bitcoins from the private sector without first converting Bitcoins to Dollars, and that conversion is in the hands of the private sector rather than the government. The Dollar, on the other hand, has both a government controlled mechanism for its removal from the private sector, i.e. taxation, and government enforcement of the mechanism. This is the fundamental feature of the U.S. Dollar that gives the Dollar value beyond any other value it may acquire. We will always work to obtain Dollars to pay our taxes, as the government will not accept any other currency, including Bitcoin, in payment of taxes! c. Bitcoin has no matching bond, let alone a bond with 100% liquidity and virtually zero risk of loss from non-payment of interest and principal. So Bitcoin cannot be conveniently and directly protected from loss of buying power due to price inflation without, again, first converting it to the currency of an entirely different monetary system. d. Bitcoin is useless as a tool of the Central Bank, whereas the private sector ratio of U.S. Dollars to U.S. Bonds is an important tool of our Central Bank used in conjunction with interest rates to control the Money Supply and hence inflation... The total of U.S. money in the private sector includes coin, currency and Treasury Securities whereas the Money Supply represented by M2 does not include Treasury Bonds. Dollars (other than bank reserves and a few other exceptions) add to the private sector's money supply, whereas converting otherwise circulating dollars to Bonds reduces the money supply. e. Only Dollars, not Bitcoins, are used by Banks to make fractional reserve loans which are the source of what's called "inside money". At any given time, inside money dominates the Money Supply. There are undoubtedly still other differences between Bitcoin and the money created by Congress. What I have listed should be enough however to convince you that Bitcoin is very far from being a "superior monetary system" in comparison to the monetary system of the United States. So, if it is not Bitcoin's feature as a "superior monetary system" that gives Bitcoin value, what feature is it that gives Bitcoin value? The answer to that question should give pause to anyone planning a long-term investment program around Bitcoin. I see Bitcoin as a, so far, quite profitable trading instrument, but one whose value, like that say of penny stocks, is subject to potentially large and rapid swings in demand. I see its value coming mainly from what traders refer to as self-fulfilling prophecy against uncertain demand and supply. As such, I would caution anyone against buying Bitcoin as a long term investment. Certainly not an investment that does not need to be closely monitored. I know you are a Bitcoin enthusiast, and I wish you well. I hope you make a boat load of money and get out with impeccable timing. Edit: I realized after I completed this too long post, that I had left off what is perhaps the single most important feature of the U.S. Monetary system that Bitcoin lacks entirely. And that is Congress's ability to create new money at will via deficit spending. To understand this, one has to understand that the U.S. no longer borrows from the private sector to cover Treasury overdrafts. Rather Congress simply prints the money it needs to pay its bills if there is not enough revenue... When Congress decides on the level of taxation and the level of spending they are deciding at the same time how much new money will be "printed". We say the Fed prints money, but this is actually only in the trivial sense, as the Fed has no control whatsoever over how much will be printed. The Fed does however exercise control over what form money in the private sector takes.
I didn't even read your post because its mostly going to be garbage.. sorry.. not sorry. But this has got to be the biggest joke. You call the ability of congress to steal from every single person who holds and uses USD to be a benefit? What do you think new money creation is? Do you think this is fair to everyone who is holding and using dollars? Your ramblings about the monetary system are such a joke. If you believe in the shit you actually say then I feel very sorry for you that you have been brainwashed and can't use your own brain. You probably also want to sacrifice your children and throw them into a volcano because someone told you this will appease the gods. Think for one second how this makes you feel. You work all day for $100 and you line up to receive your pay. Then you see 5 guys beside you who did fuck all the entire day and they also gets $100. Every single time you spread your bullshit about the monetary system, this is in fact what you are fighting for.
NoahA, you're a good person, you mean well. I ask you only to consider where the money you use every day comes from. You would have no U.S. money at all were it not for Federal deficits. 100% of the money used by the private sector comes from deficits. Now imagine what happens if U.S. population grows and/or U.S. productivity increases. Then, without further deficits we would have deflation! You would pay back dollars worth more in buying power to your lenders than the dollars you borrowed! The U.S. must control the amount of its deficits, but it must produce deficits from time to time to survive. Too large an aggregate deficit is what should concern you; not deficits per se. If you ask, I'll be happy to recommend helpful reference material to you. Work on your education and you'll be fine. You're not the only one that believes what you believe! You have lots of company, just as those during the middle ages that believed the Earth was flat had lots of company. Oh, and don't worry about the National debt, there isn't any. There used to be, there isn't now. There is, in my opinion, a slightly too great growth rate in non-investment related total private sector U.S. money (includes bonds). I also believe since 1981, i.e., since Reagan, the U.S. has been making a grave mistake by not taxing at high upper marginal rates. This failure to tax sufficiently at high marginal rates endangers the long term survival of our democracy.
Sorry I was a little harsh in my reply. The money is mostly created from bank lending. Federal deficits weren't really too bad until after 2008. So where did money come from before 2008? Most money out there is lent into existence by banks because this is how fractional reserve banking works. Its a totally flawed system, but I know we are on oppose ends so no need to get into it. Thanks again for taking my hard reply quite well.
Of course you are absolutely correct. Most of our transactional money in the economy is coming from bank lending. Let's not forget. however, that this is temporary money and it disappears when a loan is paid off. This is the money that economists refer to as inside money, meaning, I suppose, that it is created within the private sector economy. Of course our Fed influences the amount of inside money created by controlling the wholesale interest rate that banks have to pay for the money they lend, i.e., either the Fed funds rate or the Fed discount window rate which is normally a little higher than the Funds rate. I have been more interested in Bitcoin recently. I think it is quite an interesting phenomenon. I was initially quite negative, but I have changed my view.. Now I believe that those that can get in early can make money, even a lot of money, by investing in Bitcoin. I have neither time nor space to go into much detail as to why I have changed my opinion. I used to think bit coin was backed by nothing at all except demand created by its promoters. I now realize I was wrong. Bitcoins are backed by the buying power of the number of dollars they can be converted to. The conversion rate, however, is subject to volatile market forces and does not seem to be stabilized by any true monetary system such as that that stabilizes the U.S. dollar. With regard to deficits, a deficit or surplus is of course the differences between tax revenue and money spent by government into the private sector economy. If the government's budget is "balanced", money spent into the economy will have first been taxed out of the economy. (However, there will be no money to tax without first creating a deficit!) If it is desired to leave any money in the economy after taxes, the government will have to tax less than it spends. This can be expressed as a simple mathematical identity, and this identity explains why all of the money in the private sector we citizens use to carry on commerce has its origin in deficit spending by the government. Money that passes from the government to the private sector, and vice versa, economists refer to as outside money. After taxes, there can be no net outside money remaining in the economy without government deficits. And without outside money remaining in the economy, there can be no inside money created by fractional reserve bank lending. Thus from time to time, deficits are essential. Our concern needs to be with the size of deficits and what type of spending created them. Government finance has very little in common with private sector finance. This is something our parents didn't understand. They told us that government had to "live within its means" just like they had to. This misconception is the source of a lot of political chaos we are forced to put up with. Both Democrats and Republicans harbor incorrect views of government finance. But, ironically, it is the party of "businessmen",i.e., the Republicans, that is the absolute worst when it comes to understanding Government finances and the origin of our money. America's businessmen believe government should operate under the same financial constraints they operate under. This is absurd. Although both private sector businesses and government must operate under certain financial constraints, government's constraints are worlds apart from those of the private sector.
We each earn (from whatever our occupation is) money by expending time and energy (mental or physical). Not from Congress running up deficits.
Your observation that it takes an expenditure of time and energy to earn money leads to the distinction between what the U.S. does when it finds it does not have enough money and what we in the private sector must do when we find ourselves short of money.. When we borrow we must expend time and energy to pay back our lender. The U.S. does not borrow however; thus it doesn't have any loans to pay off. Neither does it have to expend significant time or energy to create the money it needs to cover its deficits or buy back the bonds it issues.* If you want to know whether a nation is borrowing or just printing to cover its deficits all you have to do is determine whether that nation is expending commensurate time and energy to cover it's deficits. Nations that have engaged in real borrowing using instruments denominated in another nations currency, e.g. Russia, Argentina, etc., have to expend commensurate time and energy to pay off their loans. ________________ *in the case of the U.S., and a number of other nations too, the money to buy back the bonds it issues has already been created and spent into the economy before the associated bonds are issued. Consequently, when the U.S. auctions bonds it is simply swapping a bond for money it previously printed and spent into the economy. Once this is understood it is immediately obvious that when the U.S. auctions bonds it is merely swapping an interest paying form of money (the bond) for a non-interest paying form (money deposited in a demand account at a bank). Private sector parties see this transaction as "lending" money to the government in exchange for interest. When viewed correctly from the perspective of the U.S. government however, there is neither borrowing nor lending occurring but instead simply a swapping of one form of U.S. money for another. Both forms were electronically originated as will be the interest owed later. There is no substantial expenditure of time and energy on either party's part. You might wonder why the Treasury routinely swaps bonds in the amount of its deficits for the private sector's demand deposits. It's partly because if Treasury didn't reduce the size of demand deposits swollen by deficit spending, M2 would grow too rapidly; thus fueling inflation. By routinely swapping new deficit money for bonds, which are not part of M2, deficit spending is less likely to fuel inflation. Using open market operations, the Fed can, and will, later adjust the mix of M2 money and bond money in the economy according to its money policy. From just the little bit I have posted here it should be obvious how absurd it is to characterize Bitcoin as being a "monetary system". Some here have even gone so far as to suggest bitcoin could replace sovereign currencies. That's ridiculous of course!