If the government was a household budget...

Discussion in 'Economics' started by peilthetraveler, Feb 9, 2012.

  1. i think many are confusing fiat money with commodity money.

    take the household budget

    you forgot to include the price of paper and ink

    we can create as much money as we need, the only constraint is inflation

    there is however another issue, and that is faith in the dollar, more importantly the world's desire to use it as a reserve currency
     
    #11     Feb 11, 2012
  2. dtan1e

    dtan1e

    if history is any lesson, inflation always lead to total collapse
     
    #12     Feb 11, 2012
  3. 377OHMS

    377OHMS

    I'm telling you what I was taught in 5 semesters of economics at USC (a minor in economics) while getting my engineering degree.

    What is your formal education in economics?

    You may not like my words but I assure you that they are an accurate representation of what is taught.
     
    #13     Feb 11, 2012
  4. clacy

    clacy

    So are you suggesting that our debt to GDP ratio is low? I think the ratio you spoke of is getting near dangerous territory.

    With that said, we obviously have the advantage of reserve currency, which for the time being, doesn't appear to be in danger in the fiat system.
     
    #14     Feb 11, 2012
  5. yes, As the issuer of currency the debt is never a problem as long as the debt is in the issuer's own currency. Inflation is a potential problem, but I don't see how turning 1 dollar worth of treasures into 1 dollar (or any amount) is inflationary, as treasury holders can do this anytime and the fed will accommodate. Technically China CB has a interest account (treasuries )at the fed and a checking account. All the fed would do is move money from the interest (savings) account to the non-interest (checking) account. I guess it could cause an emotional reaction in the dollar, becoming a self fulfilled prophesy.


    http://www.elitetrader.com/vb/reply.php?s=&action=newreply&postid=3444909


    With the exception of Russia ,China and maybe a few others, weaker nations always seem to be "violating human rights" or "harboring terrorists" whenever they try to ditch the dollar. Like Gaddafi's Pan- African currency project

    If you're going to monetize the debt best to do it when your guns can still dictate the terms of trade, but that window might be closing
     
    #15     Feb 11, 2012
  6. 377OHMS

    377OHMS

    I didn't offer any opinion on the debt to GDP ratio, I just pointed out that it is the relevant measure of the debt of a country.

    If you're asking, I think we are at insane levels of debt-to-GDP ratio. I'm a conservative and don't think the debt should be anywhere near 100% of GDP. I think the current administration is beyond irresponsible with spending and I don't think taxes should be increased to solve the problem. I'm also violently opposed to the Fed printing money and keeping rates low as it just sucks the savings away from anyone who has managed to prepare for retirement.
     
    #16     Feb 11, 2012