By citing that link I think we are mixing what has been done with what may be done. Note.. The treasury issues the checks and the Fed buys them up. Nothing unusual about that. It is no different than what happens now. The only difference is the treasury will not be floating bonds or treasuries. There are myraid ways this can be accomplished which are not are not clearly prohibited by the law. All this will be a case of first impression. However some ways of doing it would be more likely legit than others. But, again... the private banks which own the federal reserve are not going to want this to happen.
No. The Treasury is not issuing checks that the Fed buys up. The Fed cannot do this. The Treasury is issuing bonds and the Fed has been buying them up in the secondary market with QE's. Since the Fed intends to sell these securities back to the maket in better economic times they are not "monitizing" the debt at this point.
who issues social security checks etc and makes payroll and pays defense contractors etc? you are confusing bonds with checks or electronic payments. The U.S. Govt writes them - the banks in the banking system take them in... and the fed credits the money out to the those people. In the past the govt then would float a bond if they paid out more than they took in. So now they don't float the bond. get it. its all an illusion. We do not really need to float the bond. We have the sovereign right to print money. Essentially the fed purchased the franchise (bought our politicians) to have the right to print money and be our banker. You think the fed is not going to honor checks because the Treasury did not borrow the money by floating a bond. That is the least likely scenario.
It just doesn't work that way. If you think it does, site a credible source. During the Gold Standard days, a "Gold Certificate" could be issued to the Fed by the Treasury for some cash but that was then. And it was offset with the hard asset. I presume that is why Ron Paul was always wanting to audit the Fed and Fort Knox for the gold.
Read your dollar bill. Federal Reserve Note. When I worked for the federal govt in college... my check looked all powerful and if I recall it was issued by the treasury. I am sure there must be a federal worker or some other overpaid person (joke) with a govt contract who can confirm that they gets checks or payments from the U.S. Treasury and then when the go to cash them at a bank like Chase or B of A... someone makes them good. The question you have to ask yourself is who makes them good. I will tell you right now... its the Federal Reserve. How do I know that.. I read my dollar bills.
LOL If that were the case we wouldn't have a $16.4 tillion debt now but a loaf of bread would cost about $200.00. It may be the Treasury's account at the Federal Reserve but just as our banks don't keep our checking acounts funded if we overdraw, neither does the Fed keep the Treasury's account funded if it overdraws.
1. Its no laughing matter. That is exactly the case. In a sense its seigniorage and the U.S. has a lot of it. 2. The only point you are missing... is that would be up to the Fed. I would bet the last thing the Fed would do is not honor the checks or the payments. That would lead to a crisis which might end their franchise.
1) If your dollar becomes worth only 1 cent it will be a laughing matter. I don't think you meant to use the term 'seigniorage' above. 2) I do think you need to go to the Act creating the Federal Reserve to satisfy yourself of the facts of what the Fed can and cannot do under the law.
1. I think it is exactly what I meant. The Fed creates money out of thin air because it is backed by the United States. It therefore gets to take in a massive amount of assets with that money - those federal reserve notes. http://en.wikipedia.org/wiki/Seigniorage Seigniorage (pron.: /ˈseɪnjərɪdʒ/, also spelled seignorage or seigneurage) is the difference between the value of money and the cost to produce it. The term can be applied in the following ways: Seigniorage derived from specieâmetal coinsâis a tax, added to the total price of a coin (metal content and production costs), that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.[1] Seigniorage derived from notes is more indirect, being the difference between interest earned on securities acquired in exchange for bank notes and the costs of producing and distributing those notes.[2] 2. I just did a lot of reading. I have no idea what your are referencing... do you care to explain? here is a good place to start. so far I see nothing which would restrict the federal reserve for paying out federal resere notes for people who were in possession of checks from the treasury. http://www.federalreserve.gov/aboutthefed/fract.htm I enjoy learning more. But, I think it is time for you to explain why you are arguing the the Treasury must create bonds or debt obligations before it spends the money. I need to see this code or act in context. I have seen no such limiting language.
That will shrink to nothing as the dollar devalues due to over supply. I don't think the Fed wants to turn us into Zimbabwai which is what you are implying. But, that's not the point of the discussion. It is what the Fed can and cannot do. It cannot just deposit money into the Treasury account. There is a process involved that keeps it from working like that. That process has been legislated by Congress who holds the power granted to the Fed to create currency. And, there is no point in having an endless debate like the one's you and stu have. Just check the law. A link was provided to you in an earlier post.