Hahaha. "After all, the mayor says, Italy was once made up of dozens of principalities and dukedoms." Detroit mercenaries in service of Florence at the gates of Siena?
Market makers make promises on behalf of the corporation they work for. I make promises to the corporation that is my broker. I think you missed the point, DontMissTheBus.
Okay - apologies - because I don't really understand what you mean "Only living beings can make promises of course." Given what you said, and that every trader is supposed to be an authorized agent of the entity they work for, how is it different from today? Also, you haven't yet responded to my post asking you to explain why specifically there's no consideration in treasury bonds. Specifically, "Except, in this case, the Fed is an agency of the US government (despite whether you think it is or not) with delegated powers; Its relationship with the Treasury and the government is not contractual, but legal. As to your specific claim, I have no idea what "Treasury when the Federal Reserve accepted the $100k bonds" means; The treasury issues bonds. The Fed conducts open market operations separately. Money is paid or received when the Fed trades in the open market. Isn't that money and the flow of coupons/principals mutual consideration between the buyer and sell of a treasury bond?"
All of legal comes down to contracts. And yes I agree. The Fed's open market operations have value conveyed. And you might have a point there. Purchaser of T-bond gives the Fed $100k. Fed passes that to the Treasury. However, the Fed also makes a short side of the market in their open market operations. That is floating paper and basically counterfeiting T-bonds the Treasury did not authorize. So, making that point it seems it would be useful to imagine the inception of the Fed's first day of open market operations.
They did not have computers back then, so it was paper. The gold in Fort Knox comes to mind. Treasury must have owned that for its coining operations. Offloaded to the Fed? With notes conveyed? It's useful to dissect that original process, however, I think that with the gold default of 1933 and international default in 1971, operations at the Fed are quite different today.
You got the problem correct, ie the FED, but the process you're outlining is not correct. First off, printing money is not OK. Secondly, if the government prints money "with no interest attached" doesn't make it ok. I assume you are proposing a government which prints money and spends it itself, instead of going through the FED system. Well, this is no more right than the current system. If the government were to simply print money and spend it, it is not magic free money, it is a simple tax. Instead of taxing the public outright, it is merely taxing the public through dilution. Assume there are 10 people in my nation and i'm the government, each individual has $1. This is the money in circulation, the 10 people use it as a medium of exchange, they trade with each other using this money. Now, assume that I simply create an extra $1 and spend it. The production in the group is the same, but the money which is now representing that production has increased by 10%. The 10% increase, does not come with an increase in production. All this does is that it dillutes the other $10 in circulation. That's a tax. Also, it is a flat tax, meaning that everyone gets hit the same. This is a very basic example but the principles are true regardless of the complexity of the society. Another reason why your example does not work is that the FED is responsible to return all its "profits" (the interest they get on the bonds or other assets they now purchase with the money that they print, minus their expenses) to the government. They actually return it to the treasury. The reality is far more complex. The FED is a private corporation, and it is a leech on society. But the reason it is so is far more complex than the "problem" you outline.