Money supply

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Vivian Day's picture
Vivian Day
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Money supply

One of the recurring issues is whether or not the US "prints money". The two views are: either we print money to keep our economy afloat thus I assume engaging in inflation or whether we "print" US paper-treasury bills and other forms of US guaranteed paper- the sort of items that the Chinese have been purchasing. My questions are: Aren't these similar in effect? And what is the difference if not? It seems to me that the money supply is not static i.e. we don't have the same number of $s floating around today as we did in the 1800s so where does the additional paper money come from? Given that I am in no way an economist I view the money supply as being increased by printing thus decreasing the value of each $ in circulation- whether you print actual $s or print promissory notes you are in effect doing the same thing with the caveat that the promissory notes require an interest payment as well so where does that come from if not by "printing" more money. I assume there is a difference in what Argentina did when it increased its money in circulation thus causing hyper -inflation, but frankly I don't really understand the difference except perhaps in the time frame they used-quick- versus ours- slower. If one looks at the value of the $ on the currency market it is hard to believe that we haven't "printed" money as its value continues to decrease over the long run. I have been watching the economy do pretty much as you forecast.

Johnny Oxygen's picture
Johnny Oxygen
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Re: Money supply

Hi!

Welcome Vivian Day. nice to have you aboard.

 

Thomas Hedin's picture
Thomas Hedin
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Re: Money supply

The U.S. Governement creates no money.  The actual creattion of money only and always involves an extention of credit by the private commercial banks.

DrKrbyLuv's picture
DrKrbyLuv
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Re: Money supply

Vivian Day wrote:

The two views are: either we print money to keep our economy afloat thus I assume engaging in inflation or whether we "print" US paper-treasury bills and other forms of US guaranteed paper- the sort of items that the Chinese have been purchasing. My questions are: Aren't these similar in effect? And what is the difference if not?

I think you have asked the most important question regarding our economic crisis.  Whats the difference between printing dollars and printing bonds?

Thomas Edison answered this question almost 90 years ago:

“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also...Both are promises to pay, but one fattens the usurers and the other helps the people.

If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges..."

The United States has "sovereign credit" which empowers her to issue and control money free from any government debt.  In 1913, we gave up this power as part of a financial coup by the international banking cartel.   They already had Europe and Great Britain caught in their web, we were the big one that had eluded them.

We borrow by choice not necessity and we pay income taxes as a result which are also unnecessary.  The sad thing is that we can stop both anytime we want but we don't.

Larry

Gigem77's picture
Gigem77
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Re: Money supply

Chris answers your question in depth in his crash course.   http://www.peakprosperity.com/crashcourse

DrKrbyLuv's picture
DrKrbyLuv
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Re: Money supply

Gigem77 wrote:

Chris answers your question in depth in his crash course.

Can you be more specific, or better yet, make a point?

Vivian Day's picture
Vivian Day
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Re: Money supply

Thank you for the tip. You are correct it is a good answer. Vivian

Tycer's picture
Tycer
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Re: Money supply

Hi Vivian,

The good doctor gave you an excellent answer. I believe he is correct that by simply ending the reign of the Federal Reserve, ceasing to issue bonds and printing sovereign dollars, our country can right itself.

If you are interested to learn in depth how we got to this point, watch Bill Still's The Money Masters 

If you would like to hear Chris Martenson speak on inflation vs. deflation, listen to Two Beers With Steve

Ellen Brown does an outstanding job explaining our financial state on her website and in her book Web Of Debt

goes211's picture
goes211
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Re: Money supply
Tycer wrote:

The good doctor gave you an excellent answer. I believe he is correct that by simply ending the reign of the Federal Reserve, ceasing to issue bonds and printing sovereign dollars, our country can right itself.

I know that printing sovereign dollars is the solution advocated by many on this site ( Larry / Thomas / ... ) and I admit that it would be an improvement to paying interest to a third party that is not actually adding any value, but do you really think we can get from where we are today to a properly functioning economy just by doing this?  To me that makes no sense.

I personally don't think there is any way that we can get from the current system of 10's of trillions of dollars of debt based money to a reasonable/sustainable system without going through some sort of revolution or massive reset.

Can you convince me why that is not the case?

Thomas Hedin's picture
Thomas Hedin
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Re: Money supply

but do you really think we can get from where we are today to a properly functioning economy just by doing this?

Goes211, even if the govnernment created soverign dollars (like they do now with the coinage) (and U.S. Notes, which haven't been placed in circulation for quite some time) it's the principles we have to focus on.  Just because they are soverign isn't the whole issue.  The issue is what principles the money functions under.  If the government only allows the people to have the money by going into debt nothing has changed.  That is exactly what we have today wih the U.S. Coins.  They are not a debt to the government but they are a debt (liability) to the people because the only way the people can get any coins is by first getting an interest bearing loan from the private banking system.

To really answer your question is that debt money ought to be outlawed as it is only a tool for theft by deception by whomever is allowed to use it, weather it be a private banking system or the government.

At this point in time most of the debt is going to have to be forgiven, coupled with an outlawing of interest and loaning of a promise to pay (credit), combined with vehicle to move brand new, debt free, wealth-money into circulation, or be faced with the fact that the debt is now becoming so large that it is becoming unmanageable and will eventually collapse underneath the weight of the interest.

 

I personally don't think there is any way that we can get from the current system of 10's of trillions of dollars of debt based money to a reasonable/sustainable system without going through some sort of revolution or massive reset.

You're probably correct, but what I usually ask the people is why have a revolution if we don't even know what we are fighting?  Plus the last two times we had a revolution we didn't fix the money problem and here we are again for round 3.  I guess I'm of the nature that because I've been to two wars, I personally don't feel like living through a third.  It seems much more logical to begin to really understand the effects of interest, monetary policy, and most importantly who benifits, then take the bad out of the system and replace it with a sustainable monetary policy of debt free, wealth based money.

 

If we just had a massive reset to zero we would never solve the problem and we would just be shifting it onto the next generation like the generations before us.  Do you really want your grandchildren to remain slaves to an ever growing debt burden owed to people who didn't have anything to begin with?

 

The sad thing is the American people have been so brainwashed into believing that interest is a good thing when interest is the single best tool that can be used to overturn the exsisting basis of a society and transfer all of the wealth of the nation into a very, very few hands.

I hope this helps but I know its only scratching the surface.

DrKrbyLuv's picture
DrKrbyLuv
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Re: Money supply

Hello goes,

I'll take a shot at responding to your concern.

goes211 wrote:

I know that printing sovereign dollars is the solution advocated by many on this site ( Larry / Thomas / ... ) and I admit that it would be an improvement to paying interest to a third party that is not actually adding any value, but do you really think we can get from where we are today to a properly functioning economy just by doing this?

Yes...the difference between [sovereign] credit and debt is that great.  Professor Henry C.K. Liu explained the difference:

"Credit drives the economy, not debt. Debt is the mirror reflection of credit. Even the most accurate mirror does violence to the symmetry of its reflection. Why does a mirror turn an image right to left and not upside down as the lens of a camera does? The scientific answer is that a mirror image transforms front to back rather than left to right as commonly assumed. Yet we often accept this aberrant mirror distortion as uncolored truth and we unthinkingly consider the distorted reflection in the mirror as a perfect representation.

In the language of finance economics, credit and debt are opposites but not identical. In fact, credit and debt operate in reverse relations. Credit requires a positive net worth and debt does not. One can have good credit and no debt. High debt lowers credit rating. When one understands credit, one understands the main force behind the modern finance economy, which is driven by credit and stalled by debt. Behaviorally, debt distorts marginal utility calculations and rearranges disposable income."  - Link

The Federal Reserve monopoly allows private banks to "monetize" debt; when supported by a promissory note and collateral pledged by the borrower.  Banks imply that they are lending their or their depositors money - they don't.  It is all created on the spot.

Every dollar (Federal Reserve Note) that they create for profit is another dollar of debt for individuals, businesses and government.  The alternative, sovereign credit, enables us to monetize collateral, just as the private banks do, but without any debt.  Money can be used to enslave or liberate mankind - debt slavery or credit freedom.

The government has the power to charge interest and/or issuance fees on every dollar put into circulation through private loans.  The new revenue stream would eliminate the need for income and employment taxes.

Larry

Tycer's picture
Tycer
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Joined: Apr 26 2009
Posts: 617
Re: Money supply

Fix what we have without severe pain? I don't think so.

Phoenix rising from the ashes? You betcha. And we don't have to wait for the collapse to start rebuilding.

 

Start on a state level and create State Banks

Replace congress and the IRS

Do banking on a national level with a Public Owned Bank

Tell the Fed, BIS and IMF to go screw.

 

 

 

tiasmith123's picture
tiasmith123
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Re: Money supply

You have really mentioned very good and useful things in your post and I am glad to be the part of it.

Tia Smith

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