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In reply to the discussion: So France bounces Sarkozy and Greece bounces them all. A morality play for US austerity proponents. [View all]jeff47
(26,549 posts)19. Still wrong
Where did the money come from in the first place, Jeff?
Literally? It was printed by the Fed or coined by the Mint. Then banks received money by withdrawing it from their account at the Fed, or using one of the various ways the Fed loans money to banks. One of the more "famous" ones is the "Overnight Funds window".
This is exactly the same mechanism that was in place when we were on the gold standard. Your constant harping on fiat currency is quite irrelevant. It does provide excellent clues on where you got your erroneous information.
The government has to spend money first before it can be taxed or "borrowed".
Only when you don't have a central bank. We do. As a result, it can provide funds to banks based on their deposits or loans. No purchase necessary.
This is partly because the destruction of fiat via taxation acts as a check and drives demand for dollars
You should really spend less time reading Paulite fantasies about how currency works.
First, as demonstrated in my post above, money is not destroyed by taxes. Neither literally or figuratively.
Second, the system worked exactly the same when we were on the gold standard. So again, chanting "Fiat currency" is irrelevant.
It's absurd to compare the US to the Weimar Republic. Weimar owed its debts in gold and foreign currencies
So if the Fed printed enough money to pay off our entire debt tomorrow, you don't think that would be inflationary? And you want us to take you seriously about how currency works?
Btw, you forgot to chant "Fiat" in those two paragraphs.
True, good condition dollars might be put back into circulation, but much of the money the IRS takes in is simply shredded.
Again, utterly wrong. The IRS can not legally shred currency. Only the Fed can. Taxes do not destroy money unless you are in right-wing fantasy land.
If you like, you can imagine someone transfers these digital sums over to an account somewhere at Treasury and that the government couldn't spend if this act did not occur, but, come on... get serious, Jeff. We all know it doesn't really work this way.
So, in your universe, the debt ceiling crisis last year didn't happen?
The fact that you're a goldbug and don't trust virtual money doesn't mean everyone else is. My "paycheck" only exists as an electronic transfer from my employer to my bank account. I then use a debit card to electronically transfer funds to merchants in return for goods and services. As long as you can use it to buy stuff at Wal-Mart, it's real enough money.
Interest rates are not the issue. Both the long and the short rate can easily be managed by our central bank.
Again, you are completely wrong here. Interest rates on sovereign debt is set on the open market. The treasury says "we'd like to sell $10M in bonds." and purchasers bid on what interest rate will be on those bonds. The central bank can not control that rate, because they have to find somebody willing to buy.
Now, Japan, the US and other countries with lots of debt in their own currency are able to borrow at low rates, and will for the foreseeable future. But that's because the market is willing to loan money at that low rate, not because the central banks have any control.
Perhaps you could explain exactly how the central bank could force people to loan them money at below-market rates? I'm sure the central banks of Ireland, Spain and Greece would love to know. (And it should be noted their issues are caused by not being able to inflate their currency)
Printing money is not inflationary under all circumstances, or we would be facing high inflation right now.
You only think this because you're wrong about us shredding and printing money.
Increasing the money supply is always inflationary. It may or may not change headline inflation based on other pressures.
For example, population increases are deflationary - more people are trying to use the same money. So you print more money to counter that deflation with inflation, and get zero net inflation.
Printing more money just 'cause you feel like it is inflationary. Printing more money to pay off debt is also inflationary. Whether or not that is a good idea depends on a host of factors.
Once people understand that we can invest in education, energy, infrastructure, jobs and pro-growth programs without raising taxes they are generally much more agreeable to the spending. Bush understood this concept. Why can't Democrats?
Because Democrats have to deal with Republicans who insist on fighting the deficit when a Democrat is president, and ignore the deficit when a Republican is president.
And again, you are utterly missing the political bonus of Democrats proposing very popular tax increases and Republicans proposing very unpopular spending cuts.
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So France bounces Sarkozy and Greece bounces them all. A morality play for US austerity proponents. [View all]
Stinky The Clown
May 2012
OP
Venezuela, Ecuador, Paraguay, Uruguay, Peru, Bolivia, Brazil, Nicaragua, El Salvador...
DutchLiberal
May 2012
#10
Absolutely. There are plenty of examples of the failures of austerity. If they (the corporations)
jwirr
May 2012
#30
Unfortunately, this presumption is not accurate in our present framework.
girl gone mad
May 2012
#12
Winning the election while making promises of a great life is easy. Producing those results is hard.
dkf
May 2012
#5
When there is a referendum on whether the economy is in place to serve the citizens (or vice versa),
Snarkoleptic
May 2012
#7
Greeks gave 8% of the vote to neo-nazi party; for first time in 4 decades they'll be in parliament..
DutchLiberal
May 2012
#9
The Greeks will be going back on the drachma with a 50% cut in the standard of living.
FarCenter
May 2012
#22
After a period of chaos, they will get a dictatorship of either the right or the left
FarCenter
May 2012
#24