Alternatives For Funding The Government

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The national debt is about to hit $20 trillion (and a debt ceiling along with it).  The US has not paid a penny on its debt in decades and shows no ability to do so anytime soon.  Moreover, the US is issuing new debt to cover interest payments on the old debt.


The reality is that the US will never pay this debt down to an appreciable amount.  Since the US prints its own currency it has several alternatives all with risk.


First, just keeping issuing debt and "encourage" the Federal Reserve to never normalize interest rates.  Right now the annual budget is around $2.5 trillion of which about half is covered by issuing debt.  Just keep adding a $1 trillion plus each year to the debt.  If investors stop buying the debt have the Federal Reserve buy the debt by having the Treasury digitize the money and hand it over to the Federal Reserve.  Since the US is the world's reserve currency this option would work until other countries began to dump the dollar.


Second, simply forgo issuing treasuries and have the Treasury Department create money in which to plug all gaps.  There would be no interest because debt would not be issued.  Again, this works until the dollar collapses.


Third, force a massive 75% write down in the debt to bring it to a manageable level.  Investors would take a severe haircut.  However, this would likely impact our ability to issue debt at low interest rates in the future.


Whatever way we go each option poses significant risk.  Flood the country with dollars and we begin to look like Germany 1920s.   Monetize the debt through the Federal Reserve or simply digitize money out of thin air to pay for budget shortfalls and the dollar risks a total collapse on the world stage.


However, any belief that the US will ever pay down a penny of debt is just a fantasy.  Finally, with real productive economic growth barely moving hoping or planning for inflation will not happen.  Forced inflation could occur in the event the dollar falls significantly but that scenario would bring on an entire different set of problems. 


Dino Manalis Added Jul 7, 2017 - 9:38am
Leroy Added Jul 7, 2017 - 9:59am
What we need is a voluntary tax.  One of the Scandinavian countries tried it and raised ~$1,300.  A tax like that won't work.   I am talking about a different tax, a surefire way to raise money to pay off the debt if the politicians don't spend it.
A lottery.  Even the poor will pay this tax gleefully.  Open it up to the world, and it will gleefully pay off our debt.  Maybe they get a visa instead of money. 
The states already do it.  Let's do it on a national or even international scale.  Let the fools be parted from their money.
Jeff Jackson Added Jul 7, 2017 - 10:23am
Auction off citizenship. The Chinese millionaires are buying up real estate in California like kids in a candy store. The reason the Chinese millionaires are doing this is because they know that at any second the Chinese government can take every cent that they have with few legal options to recover the money. They know their money is safe in the U.S. Why not make them pay for that privilege?
Base accepting immigrants on what they can contribute to paying off our national debt. Bring in the rested and the wealthy, and not the tired and poor, at least until we get things paid off. They can pay off our debt, the fill our banks with money, they spend money here, they hire American workers. Good lord George, I think we've finally found a use for the rich, and I'm beginning to like them even more now.
Leroy Added Jul 7, 2017 - 10:28am
Amen, Jeff.  But maybe not citizenship.  That way we can get them over and over again.
Jeff Jackson Added Jul 7, 2017 - 10:57am
Yes, Leroy even better, rent citizenship, say, a million bucks a year and a surcharge to keep their money in our banks. Yup we'll put a cash register at the feet the the Statue of Liberty. I love it Leroy.
The Burghal Hidage Added Jul 7, 2017 - 12:28pm
We have long since reached the stage that the collapse of the dollar is no longer a question of if, but when. It will happen.
You are correct that this debt is never going to be retired.  There is a saying in the world of finance. If you owe the bank $10,000 and you don't have it? You have a problem. If you owe the bank $10 million and you don't have it? The bank has a problem. This is the place at which we find ourselves, albeit on a much grander scale.
Although for the short term this would have horrendous consequence, for the long term the only real solution to this problem is let it fall and get it over with. Anything else is only forestalling the inevitable. When all of the dust settles you start over. How? I don't have the answer to this, but somehow this is what will have to occur.
As far as funding the government goes it must begin with a rethinking of the government's mission.  There is much assigned to the province of government which does not belong. A great deal of the expense involved would be reduced simply by removing government (specifically the federal government) from the equation altogether. 
Here is a thought to consider. Write and pass legislation that would completely negate all of federal taxing and borrowing authority. This would be step one.  Do likewise with the tax codes and borrowing authority of the individual states. Step two.
With these two steps accomplished the states would then establish a sales (consumption) tax. This applies uniformly to all who engage in the economy regardless of scale. If the wealthy spend more they pay more. If the poor spend less they pay less. This would be the only form of taxation. No income tax, no estate tax, no capital gains tax, property tax, payroll tax. All gone.
It would be left to the individual states to determine what rate their sales tax would be.  If places like New York or California still had a majority of their citizens willing to continue funding their version of a fool's paradise then so be it. It would be on them, no other states would subsidize their spending. In places where people decide they want more from government then they can pay for it. In places where people would prefer less from government then the tax rate would be less.
This system in turn would properly entrust the authority where it belongs, with the individual states. It would also spur competition between the states.  A business owner could find themselves in a high rate state, like New York, and see that in neighboring Pennsylvania, for example, the tax rate was considerably less. This would leave the option to relocate to Pennsylvania where A) the cost of doing business would be less, and B) where more opportunity would be found by virtue of the increased commerce commensurate with the lesser rate.
The final part of this plan would be the funding of the federal government. The federal budget would be predicated on a collection of say 2% of the states' revenue. I'm picking a number arbitrarily. That rate could be more, it could be less, but whatever it is set at is the cap. The federal government works on what it takes in, no borrowing. If states are doing well then this increases their contribution to the federal budget. If states don't do well they either plunge into ruin or they change their ways. In this plan the market dictates what happens and the federal government is dependant upon the states, not the other way around.
If the federal government were properly restricted to performing those functions for which they are constitutionally empowered only it would live on this diet.  Add a constitutional amendment requiring the approval of two thirds of the states to raise the cap for federal collections  and you just might have a system that is sustainable.
George N Romey Added Jul 7, 2017 - 1:01pm
First of all I think its time for a debt jubilee all around. The lenders took the chance let them take the severe haircut.  Just maybe if lenders take an 80% cut on all debt they will stop handing it over to politicians, corporations to complete usually disastrous long term acquisitions, and multiple credit cards, eight year car loans and lines of credit against personal real estate.  Finally we might learn the lesson of thrift again and have more normalized rates that reward savings.  Its not only the government debt that is unpayable so is most consumer debt and lots of corporate debt.  In the 1950s, 60s and 70s massive consumption was driven by savings and income, not a Visa or MasterCard. 
Second, withdrawal from all wars, conflicts, skirmishes, coos, regime change and meddling.  If it doesn't threaten our borders its not our business.  Why are we spending several times over compared to Russia?
The problem is that if the government collects any kind of special tax it will just get spent.  Only when the punch bowl gets taken away would there ever be any change? 
Finally, too many in Washington DC in both parties see no problem with adding billions of dollars a day because hey we can issue our own currency and isn't our debt someone's asset anyway? 
Autumn Cote Added Jul 7, 2017 - 1:18pm
Please note, the more personal responses you offer the more likely your article will remain popular and commented upon.  As always, many thanks for your participation with Writer Beat!
Bill Kamps Added Jul 7, 2017 - 1:56pm
The demise of the dollar has been predicted for about 50 years.  It may well happen some day, but that some day may be a long time in the future.   People have been predicting runaway inflation from the creation of more dollars for decades, but that hasn't happened yet either.  The smart money has been on the side of low inflation.
The problem Greece has  is that they cant issue their own currency, and they cant change its value relative to  gold, or  other currencies.
Currently we see gold at several year lows, interest rates at generational lows, and so the lenders are content that their interest will be paid.  Lenders can collect on their principal simply by selling bonds, and since they aren't selling at a discount, the lenders are content with the  risk.
It is unknown when or if the markets will decide there is a problem with US debt.  Right now there isnt.  At some point there might be. Decades worth of predictions have all been false.
George N Romey Added Jul 7, 2017 - 3:00pm
Bill think we've  doubled the debt twice in the past 16 years.  Think about how much we added from 1900 to 2000.  Can we continue to double the debt every decade? 
Add to the fact that Russia/China/Iran are starting to see a world in which the US does isn't a complete hegemonic.  The Fed hasn't been able to normalize interest rates or unload its massive balance sheet because both could crash the economy.
Its a new day.  Its assuming that in 1900 people wouldn't ultimately accept automobiles because they had been riding horses for centuries. 
If the government monetized the debt we have no assurance of what would happen to the dollar. The US will be in new territory.
Bill Kamps Added Jul 7, 2017 - 3:16pm
George, the truth is we dont know the answer.  In most situations a pile of debt is not a good thing.  However, this is a situation where the government can create its own money to pay the interest, and what are the limits on that?  The limits are what the world will accept, not what makes sense, in some rational sense. Since the dollar is the best currency of the lot, there is a lot of tolerance built into the system.
There is no law that says the Fed has to sell its bonds at any particular time.  Of course if  they dumped bonds on the market it would not be a good thing, and interest rates would rise unacceptably.  By  why cant the hold the bonds for a long time? what harm does it do?
Sure some countries dont like that the dollar is a reserve currency.  However the countries you mention, dont even have freely traded currencies.  Try to get the Ruble exchanged somewhere outside of Russia, you cant, it is more difficult than the Mexican Peso.  The  Chinese currency is the closest of the lot, and no one really wants that either. 
You are correct there are no assurances, none on life either. 
The best measure of whether there is too much debt, and inflation, is the interest people want for holding  the bonds.  Right now  they are at generational lows.  In the late 1970s interest rates were in the mid-teens on US bonds, those were more iffy times.  However, right now if people want  to loan the US gobs of money at low interest rates, why not take it ?
Nothing that is happening now is as bad as giving everyone holding bonds a haircut.  That would set off a worldwide depression.
John G Added Jul 7, 2017 - 3:52pm
Economic illiteracy. The US government is self funding. It creates $ in the private sector by spending.
The net government 'debt' is the net non-government savings. Treasuries are just existing $ lodged on a different column in the spreadsheet of federal liabilities.
When they mature there is a double ledger entry and the number returns to the reserve accounts column.
John G Added Jul 7, 2017 - 4:16pm
Kamps. However, right now if people want  to loan the US gobs of money at low interest rates, why not take it ?
Nobody is loaning the US government anything. people buy treasuries with existing $ that they can see no more profitable use for.
Any country that runs a trade surplus with the USA accumulates $. They will still want to export products to the USA regardless.
It really doesn't matter whether the the $ is the so called reserve currency.
For proof see Japan.
John G Added Jul 7, 2017 - 5:01pm
Your system would crash in 5 minutes flat. You don't understand money at all.
Donald Swenson Added Jul 7, 2017 - 6:18pm
The debt of $20 trillion can never be repaid. That is my view. Keynesian economics is a one-way street. Money gets created as debt and debt grows automatically with the creation of new money. As long as the 'value' of an asset exceeds the debt the game continues. Think of your house. The issue, for me, is when will VALUES decline and deflation take hold. I sense that this is coming for all our markets (especially America). When the cycle changes into deflation then is when debt gets liquidated. All our debt could eventually get liquidated if the coming deflation is server enough. Watch for a cycle change in the near future. D
John G Added Jul 7, 2017 - 6:21pm
The Basics of Modern Money
George N Romey Added Jul 7, 2017 - 6:28pm
Donald throughout man there have been debt jubilees.  Once good credit possibilities are exhausted the urge is to consider more risky endeavors.  Think about consumer debt 50 years ago compared to now.  Eventually the system becomes overload and fails. If the Treasury and Federal Reserve had allowed for (control) failure of the financial system it was started anew.  However, they only ginned it up and kicked the can down the road.  The result today is that there is more leverage and higher risk than 2007-2008.  Everything in life is finite and so is credit expansion.  There will be another failure, likely far worse.  Its like a drug addict that keeps injecting heroin and going to rehab but failing again. Eventually the addict dies, and not in a very comfortable way.  
The question is will the Treasury again issue trillions in bailiouts and the Fed go on another bond buying spree taking their balance sheet into the tens of trillions?
Donald Swenson Added Jul 7, 2017 - 6:35pm
George: If a serious deflation develops, I don't think our Fed will (or wants) to gin up the QE to change this result. The last serious deflation was during the Great Depression era. With today's unpayable debt being recognized by nearly everyone of understanding, I think that our authorities will allow the SYSTEM to cleanse. Cleansing the system is needed after the past 85 years of inflation. I think this will start later this year. Watch for the cycle to change this fall. David Stockman and many others are also thinking that this cleansing crash is coming this year. D
John G Added Jul 7, 2017 - 6:36pm
You two seriously want people damaged, don't you? Sick really.
Donald Swenson Added Jul 7, 2017 - 6:40pm
Cycles are not caused by any one or two people, John. Cycles are part and parcel of the system. The coming deflationary cycle has been delayed but I sense that it is soon here. The fall of this year is my prediction. Today is July 8. Think around October, 2017. D
John G Added Jul 7, 2017 - 6:46pm
Credit cycles can be flattened out by countercyclical fiscal policy.
Your problem and your failure is that you can't differentiate between government 'debt' and private debt.
You simply don't understand the system.
Nor does that lunatic Stockman that you quote.
Government debt is merely the credits that the government leaves out in the private sector at any given time. It is non-government savings.
Donald Swenson Added Jul 7, 2017 - 7:38pm
Government debt is merely the credits that the government leaves out in the private sector at any given time. It is non-government savings.
Comment: What are your talking about. Government debt is the accumulation of deficits over time. Spending deficits produce government debt (now $20 Trillion). Your understanding is VERY confusing to me. But you are probably from another planet. D
John G Added Jul 7, 2017 - 10:18pm
How do $US enter existence in your universe, Swenson?
John G Added Jul 7, 2017 - 10:25pm
The deficit is the difference between government money spent (created) and government money removed (extinguished).
Those dollars accumulate as reserves in the payments system. Government (by convention only) issues bonds (misleadingly called debt) in the amount. All it does is change the form of liability from a reserve balance to a securities balance.
When the bond matures the ledger entries are reversed and the balance returns to reserves.
You can whine and squeal and scream all you like but that is how the system works.
And you don't get it and probably never will because you have a closed mind.
Katharine Otto Added Jul 7, 2017 - 10:49pm
That government spending is out of control, and the government is desperate to "stimulate the economy" by "creating jobs" only tells me that the government is hard up for cash to meet its ongoing obligations. Probably most of the US debt is to ourselves, like retirees.  The international and state government bankruptcies and near bankruptcies coming down the pike are generally caused by public pension obligations. The government needs to quit making promises if it wants to retain any credibility.  
Contraction is already occurring, with business and personal bankruptcies, glutted markets, and regular people in so much debt already that they can't afford to buy more.  
It occurs to me that no one has the right to promise other people and expect to retain credibility.  I contend the US government does not have the right to obligate the unborn to fulfill its promises.  If the government can't live within its means, why should anyone else do it, and why do taxpayers put up with it?
Donald Swenson Added Jul 7, 2017 - 11:06pm
John, the deficit results from government spending in excess of tax revenues. Our Treasury then issues bonds in the amount of the deficit. Primary dealers then buy these bonds. The Fed buys bonds from the Primary Dealers (say Goldman Sachs). Why is it done this way? D 
John G Added Jul 7, 2017 - 11:26pm
Otto. If the government can't live within its means,
The federal government as the monopoly issuer of $US has unlimited financial means. 
You have it all wrong.
If the Feds tried to have a neutral fiscal balance the economy would crash and unemployment would sky rocket.
And the deficit would be greater.
John G Added Jul 7, 2017 - 11:30pm
Why is it done this way?
It is a hangover from the gold standard era and it gives the big money powers interest on their risk free accumulations. It does allow the Treasury to hit their interest rate targets but that can be done by paying interest on excess reserves.
Bond issues are (functionally) unnecessary in a modern currency system but the corporates would scream blue murder without them.
It happened in Australia.
Katharine Otto Added Jul 7, 2017 - 11:42pm
John G, If the government were to collapse, so would the debt. Who would be obligated to pay?  That's why these bankrupt countries' governments are allowed to remain in place, to collect the taxes that feed the central bankers.  Yes, I know I have it all wrong, but so does everyone else.  Government finance is a shell game, intended to confuse, since its inception.  Call it a conspiracy.
John G Added Jul 8, 2017 - 12:01am
Nope. Taxes don't pay for anything. It's just extinguishing the money that the government had created by spending into the private sector.
You're worrying yourself over a falsehood. A falsehood that benefits the very rich people that you think you've rumbled.
Things are bad due to too little government spending.
As long as people think like you do, they can keep starving the economy and the people of the real goods and services that they need.
You're your own worst enemies.
John G Added Jul 8, 2017 - 4:33am
Like all the wacky extremist right wing ideologues, Swenson can't/won't answer the simple question of how a $US is created.
Like Corey, Romey, Haluska, Sutrina etc before him. What a dishonest bunch of illiterates.
John G Added Jul 8, 2017 - 5:49am
The Basics of Modern Money
Stop being victims for Fs sake.
Donald Swenson Added Jul 8, 2017 - 1:38pm
I like Katherine's response, let the system collapse. New honesty has my solution, let's start over from zero. D
George N Romey Added Jul 8, 2017 - 2:00pm
Donald throughout mankind there has been "jubilee" or a total debt forgiveness to cleanse the system.  I agree, its time to start from zero.
Katharine Otto Added Jul 8, 2017 - 3:12pm
New Honesty, Donald and George,
You speak my language.  And John G., You've made a lot of statements about what idiots and victims others are, but I don't see you offering any better alternative. You say increase government spending?  Do you work for the Fed?  The more government spends, the more damage it does.
Donald Swenson Added Jul 8, 2017 - 3:17pm
With a digital money system (all in cyberspace) the concept of starting over is feasible. All the digits can be erased via the punch of a computer key. We need to do this for the entire planet. D
John G Added Jul 8, 2017 - 4:43pm
Otto. Government spending is private sector income. So if you want recession and unemployment and deflation keep wishing for less government spending.
I really don't understand why this is so difficult to understand.
John G Added Jul 8, 2017 - 4:45pm
New Honesty. No government 'debt' means no money. Government 'debt' is private savings.
So ..........
Doug Plumb Added Jul 8, 2017 - 6:30pm
re "Since the US prints its own currency it has several alternatives all with risk."
Bad premise. The US does NOT print its own currency.
John G Added Jul 8, 2017 - 6:33pm
Plumb, the Federal government is the issuer of the $US. It issues them via computer keystroke.
Your 'Fed is a private bank' spiel is, and I hate using the term, a conspiracy theory with no basis. The Fed does not lend the government money it is just the other side of the ledger from the Treasury.
Donald Swenson Added Jul 8, 2017 - 8:28pm
Doug: The Fed does not print our money. This is done by the Bureau of Engraving and Printing (now merely 4% of total money transactions). The Fed does create 'Digital' $$$ via punching numbers into their computer at the New York Fed (now 96% of money transactions). Today, digital $$$ can be created merely by a key stroke of the computer. It is illegal, unconstitutional, and would be abolished if tried within our court system. But our Fed is a 'private' institution (operationally). Yes, it was created by the Federal Reserve Act of 1913, but the legal structure makes it a 'private' corporation (institution). John has no idea what he is talking about (ignore his rendition of events). I think he is from another planet (can't prove this, however). Ha! D
Donald Swenson Added Jul 8, 2017 - 8:30pm
Our commercial banks (those who are members of the Fed system) create most of our deposits. It is done my merely creating a LOAN (out of nothing) and setting up an account for the borrower. I call it money from heaven as today's money does not technically EXIST. It derives from the 'consciousness' of those who run the corrupted system. Ignore John and his ranting. D
Donald Swenson Added Jul 8, 2017 - 8:32pm
To verify that our money today is imaginary just ask John to provide you with a 'unit'. Ask him to go into his computer screen and pull out a 'unit' of money. Given that John knows all, he should be able to do this for you. D
John G Added Jul 8, 2017 - 8:35pm
Prove that the Fed is a private corporation, Swenson. And show us what purpose in the real world that would serve?
Of course you'd rather listen to s fellow lunatic like Alex Jones than an actual economist.
Donald Swenson Added Jul 8, 2017 - 8:41pm
Go read the Federal Reserve Act, John. It was set up as a private corporation so it could act independently. Go do your homework, John. It is private (operationally), but reports to Congress who set up this process back in 1913. Woodrow Wilson regretted his signing for this institution prior to his death. Go check out the history, John. I think you may discover that is it PRIVATE (operationally)! D
George N Romey Added Jul 8, 2017 - 8:45pm
Donald don't argue.  John is a troll. He's been told that the Federal Reserve is about "federal" as Federal Express.  Anyone that thinks the US can print money eternally or simply monetize government shortfalls without the world seeing the end of the US economic empire isn't playing with a full deck.
Donald Swenson Added Jul 8, 2017 - 8:49pm
I would agree, George. I think John needs to reinvent his memories and his personal educational history. Is he from our planet??????? D
John G Added Jul 8, 2017 - 8:50pm
Yet again, you duck answering the question.
You haven't read the act.
It specifically states that the Fed governor is junior to the Secretary of the Treasury.
What private corporation would have its chairman appointed by the government and return all its profits to the government?
It cannot fulfill its primary function of overseeing the payments system without acting in tandem with Treasury.
If you understood the system you would know that.
I'd say "go look it up, Swenson, do your research Swenson" but it would be pointless. You have a closed mind and you'd rather believe your fairy tales.
John G Added Jul 8, 2017 - 10:43pm
Tax payers don't owe the national 'debt'. They own the national 'debt'.
It is their savings.
Donald Swenson Added Jul 8, 2017 - 11:21pm
The Fed is owned by stockholders, John. The government bureaucracies are not owned by stockholders. Also all government bureaucracies are funded by appropriations from our elected Congress. The Fed receives no appropriation. The Fed creates money out of nothing (this is unconstitutional). It buys virtual bonds and then funds the Treasury. It's profits are derived illegally as it has no real assets. It's a pure Ponzi organization. I would declare it unconstitutional and a sham on American values. Your understanding must be from a Fed economist. D
Donald Swenson Added Jul 8, 2017 - 11:23pm
Taxpayers own zero, John. Taxpayers are being enslaved by an unconditional Ponzi organization which should be abolished ASAP. D
John G Added Jul 8, 2017 - 11:33pm
The Fed is owned by stockholders, John.
Then link to the certificates of these transferable stocks.
You can't because they don't exist. What you imagine are stocks are part of the member banks' capital reserve lodgement requirement.
You're just regurgitating Alex Jones/ Edward Griffin drivel.
Anyone calling it a Ponzi scheme is clueless.
John G Added Jul 8, 2017 - 11:34pm
The Fed receives no appropriation.
It derives income from lending reserves to commercial banks. It returns all of its profits to Treasury.
John G Added Jul 8, 2017 - 11:36pm
Taxpayers own zero
The so called 'national debt' i.e. government liabilities is the net non-government savings in $US financial assets.
How can you claim to know anything about this when you can't understand simple double entry book keeping?
Donald Swenson Added Jul 9, 2017 - 12:05am
John: Your education is obviously from a Fed insider. Your concepts are all bogus and based on word manipulations (mostly). Who is our Secretary of Treasury, John? What is his name? What role does he play with our Federal Open Market Committee, which runs the Fed? Do you comprehend your absurdities. Our current Treasury Secretary has little to no understanding of how the Fed operates (he is a Goldman Sachs flunky) and this makes his input mostly impotent (meaningless). The Fed Governors do not include this person called the Secretary of the Treasury as a decision-maker on the FOMC. Yes, this person has input (on behalf of Trump), but his input is marginal (at best). Show me otherwise, John.
Trump also has little to zero understanding of how the Fed operates. Who runs the Markets Group, John. Who is in charge of the SOMA? Do you know? Who operates on the BIS and manipulates all our digital markets, John. Does Janet Yellen work for Americans or the BIS? What is your perception, John. Where are the trading desks for the Fed and the other Central Banks, John? Do you know? I think you better go back to your Fed insider and tell this person that the whole system is a Ponzi Scheme and Unconstitutional! D
Donald Swenson Added Jul 9, 2017 - 12:07am
After you go to your source, John, tell him/her that your efforts to education me or others on this site are not fruitful. Your word manipulations are not working. Maybe your source can provide some new ones. D
John G Added Jul 9, 2017 - 12:19am
Pathetic ad hominem.
You can't come up with any factual evidence, you can't read a balance sheet, so you resort to abuse and nonsense.
FYI I'm not a fan of the Fed. It should be an office within treasury.
But it doesn't do what you imagine it does.
That's what the argument is about you arrogant nutter.
Donald Swenson Added Jul 9, 2017 - 12:31am
John: Go visit this site for a few hours to get updated on how a Central Banker operates: Check out the videos and the various inner official policies. We live UNDER a dictatorship of Ponzi banksters, John. The BIS is the Central bank for all the Central banks. See if you can discern their role with our Fed (the Central Bank of the USA)? I think this education will help you comprehend why our Treasury Secretary and our President are mostly IMPOTENT as decision-makers on issues of digital money! D
John G Added Jul 9, 2017 - 1:44am
No it won't. You don't understand how the monetary system works. 
You are a fraud.
All your responses are dodges, red herrings and feints.
The BIS has no power over the Congress which has the monopoly on the fiscal powers of the US government and executed by Treasury.
It is fiscal operations which create and extinguish state currency.
I've given you several links to steer you in the right direction and you've not explored a single one.
That makes you an ignorant hypocrite by definition.
John G Added Jul 9, 2017 - 1:46am
The 7 Deadly Innocent Frauds of Economic Policy
Not that you'll read it this time either.
John G Added Jul 9, 2017 - 3:23am
John: Your education is obviously from a Fed insider.
LOLz. My 'education' comes from people who believe, as I do, that there is no need for the role of the Fed to be a separate grandiose operation outside the Treasury.
The payments system is a spreadsheet operation that can be easily run as a sub office of Treasury. 
There is no effective independence. That is a smokescreen that hides the malfeasance of the political class who actually hold the purse strings.
It's all a big hoax and you've fallen for it.
But you think you've discovered a conspiracy.
Doug Plumb Added Jul 9, 2017 - 6:26am
George re "John is a troll. He's been told that the Federal Reserve is about "federal" as Federal Express.  Anyone that thinks the US can print money eternally or simply monetize government shortfalls without the world seeing the end of the US economic empire isn't playing with a full deck.  "
I don't know what it is that makes people believe this kind of nonsense or develop this unhealthy trust for government that almost borders on idolatry. Maybe John is an agent, paid to do this. There are millions of those online everywhere. Their repeating mantra is probably the only way of detecting them.
Katharine Otto Added Jul 9, 2017 - 9:56am
Thank you for confirming and taking concepts that I've also embraced further.  I don't claim expertise but have read widely in an effort to discover what went so wrong with the so-called American Dream.
The Federal Reserve System is listed among "independent agencies" in the Library of Congress' list of government agencies.
Among the list of "independent agencies" are also the CIA, EPA, FCC, FTC, National Railroad Passenger Corporation (Amtrak), SEC, TVA, and the USPS, to name just a few.  While these agencies ostensibly operate under Executive and Congressional oversight (such as appointment of directors), their operations are shrouded in mystery.  
I agree the Fed is a Ponzi scheme, sanctioned by Congress because it gives Congress the ability to spend without restraint, as we are seeing.  A major function, I believe, is for it to fund Wall Street, as in "quantitative easing," when the money churners run short of cash.  Thus, American taxpayers, who are heavily invested in Wall Street for retirement and other nest eggs, don't want to see the Fed de-fanged. They distance themselves from knowing how their investments in high-dividend stocks are contributing to worldwide war, pollution, deforestation, oil, and other corporate-driven travesties.  The US government is the hand-maiden of Wall Street, as Alexander Hamilton intended it to be.
George N Romey Added Jul 9, 2017 - 12:27pm
Donald and Katharine the Fed was set up this way.  The bankers wanted to operate outside of the control of the federal government. Wilson was duped into the hogwash that he was given.  Why is unlike the Post Office or Amtrak the Fed is not required to open its books to the Congress or the American people?
John G Added Jul 9, 2017 - 3:45pm
The Fed is not outside the control of the government.
The Fed does not give Congress any power to spend. Congress has that power in its own right.
There is no such thing as a debt free currency.
The Fed loans member banks reserves on demand at all times. QE has nothing to do with it.
Plumb, what makes me believe it is that it is the truth. You don't understand money.
Donald Swenson Added Jul 9, 2017 - 8:19pm
A debt free currency was what Thomas Jefferson created in 1792. Without a Central bank a minted silver coin was our first currency. People could bring silver to the mint for minting into Coinage. Their was zero debt in this original system. Debt emerged with the creation of a Central Bank. Hamilton was the culprit. D
Donald Swenson Added Jul 9, 2017 - 8:22pm
Today, all our digital money gets recorded as debt. Silver coins have been abolished. Our system today is a Ponzi scheme. Let's let it collapse. D
Donald Swenson Added Jul 9, 2017 - 10:23pm
Yes, Danni, the ship is equivalent to the Titanic. People on partying on the deck unaware of the hole in the hull. D
John G Added Jul 10, 2017 - 1:21am
There's no such thing as a debt free currency. For every debt there is a credit.
That what money is.
Dave Volek Added Jul 10, 2017 - 1:06pm
I went to John G's link and found some interesting perspectives on this topic. I can't say I agree, but this part of macroeconomics is a mystery to me. Many governments should have gone broke two or three decades ago---if we are thinking in classical terms.
Governments have certain tools that allow them to have vast amounts of debt--and yet not go broke. Even the biggest corporations could not operate for very long with this debt load and inability to pay it back.
I always wondered if there will be a time when a country defaults on its loans simply because it is cheaper to walk away from those obligations--including whatever  economic dislocations occur--than to continue to pay interest.
And who in the hell is holding those government loans?
Donald Swenson Added Jul 10, 2017 - 5:05pm
Foreigners hold some $7 trillion or more. Americans hold some $7 trillion. Our national debt is now nearly $20 trillion. Our total consumer, business, local, state, debt is nearly $66 trillion. Americans hold most of this debt and it will be liquidated at the next financial crash (probably later in 2017 or 2018). Check out: D
George N Romey Added Jul 11, 2017 - 8:04am
Governments do not have the profit pressure to perform like public corporations.  Governments are not bound by the same accounting standards.  Governments that issue their own debt will never need to go begging for another loan from the bank.  The big issue is that if those foreigners decided to dump their securities or stop buying treasuries the entire global economic system would collapse.  The US being the largest economy in the world scares the hell out of everyone.
Dave Volek Added Jul 11, 2017 - 10:17am
Donald: If $7t is being held by Americans, which economic classes are holding that debt. I can see the poor, working poor, or even middle class owning government bonds to earn some interest.
George: I think you are raising an interesting point. "Money" is an artificial concept. It only works if people believe it will hold its value in the future. When that belief is gone, it won't matter if money is in the form of currency, zeros and ones in a computer software, or government debt.
George N Romey Added Jul 11, 2017 - 10:26am
Most held by Americans are mostly large corporations (particularly those that have bought back billions in shares and turned it into treasury stock), institutional investors, plutocrats.  The average American buying at what time were savings bonds is well over.
The truth it that global debt is at a level well beyond what man has ever known.  Few things can go into infinity.  My belief is that eventually there will need to be a global jubilee but it won't be a pretty time for mankind.  I think people are nuts if they think the US can just continue to print a $1 trillion plus each year even if have our own currency.  Nowadays a trillion gets batted around like its a buck.  Think of this if you haven't heard it yet, if you gave some $1 million in the time of Jesus and continued to give that person and their subsequent heirs a $1 million a year since then their heirs still would not have a trillion. 
Donald Swenson Added Jul 11, 2017 - 1:54pm
Dave: The history of money reveals that money is a 'confidence' game. When confidence goes, money vanishes. Why are the authorities suppressing silver and gold prices? Think. They want you to believe in digits so they can enslave you. Personally, I sense that the Mark of the Beast (digits for money) is emerging rapidly. D
John G Added Jul 11, 2017 - 2:03pm
Why can't the US government mark up bank accounts by a $trillion each year?
Money is maths.
John G Added Jul 11, 2017 - 2:04pm
Money 'works' because everyone needs it to pay taxes.
Donald Swenson Added Jul 11, 2017 - 5:08pm
Money should be a proxy for 'value', John. A proxy is a substitute in physical form (as 'value' is inner/metaphysical). Gold can be a proxy for 'value'. Silver can be a proxy for 'value'. Beads can be a proxy for 'value'. All these are physical items which people can exchange from hand to hand. A Digital/virtual unit is not a valid proxy for 'value' as it has no physical existence, John. Think about the history of money and value. D
John G Added Jul 11, 2017 - 11:08pm
You don't decide what money 'should' be. Money is an accounting entity.
Donald Swenson Added Jul 12, 2017 - 12:18am
Money never starts out as a 'accounting entity', John. Capitalism started with private property, production, exchange in a marketplace, negotiation of value between counterparties, and then a selection of a money item to represent the markets view of 'value'. This is what our history reveals, John. D
John G Added Jul 12, 2017 - 2:09am
No it didn't.
John G Added Jul 12, 2017 - 2:09am
Your 'history' is a bunch of made up bullshit.
Saint George Added Jul 16, 2017 - 5:04pm
Your 'history' is a bunch of made up bullshit.
Your 'history' is a pile of real bullshit.
Donald Swenson Added Jul 16, 2017 - 5:41pm
John: How about revealing your personal profile. Where were you born? When? What college did you graduate from? 

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