Hopefully you realize that at this point, everyone else is bored with this, so I will respond once more merely to show the following:
1- All of your objections and questions are easily dealt with.
2- Its not worth dealing these questions further because most of your points don't deal with essentials and are based on misunderstanding my position, perhaps intentionally. Your needless sarcasm and butchery of the socratic method only force me to explain why trivial details are trivial details.
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Answer me this, what is the "credit" that governments are "fully authorized" to issue into the economy? China's economy is growing because it holds something like 1 trillion dollars of our debt. I would have to check the actual number if you want me to be accurate.
Part of the reason China is growing is because it holds our debt. This is not a relevant objection to anything I've said. China must be doing other things right, otherwise it would have never obtained so much of our debt to begin with. This is a trivial detail not a response to any essential point I've made. And no, I don't care if you want to re-check figures for such a trivial point.
As to your actual question, look at the Bank of North Dakota, it loans money to businesses and individuals and thus earns interest from the growth of the private sector. That is the crucial difference between what I favor and the current operation of our government, a point you repeatedly evade.
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Well it seems I have to use small words and generic ideas to many people on this forum. Should we move pass the crayon drawings section?
If you really have to bring crayons into the discussion it say more about you than me. If you're having trouble with that many people, the problem just might be on your end.
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The only time that the Fed would sell their bonds is if they wanted to soak up the monetary supply....which they really haven't done. I put the word "buy" in quotes because it is not the Federal Reserve that actually create the money. Physically they print it don't get me wrong but they get their que's from the US Treasury department. It is not as if the Fed chairman wakes up one morning and says "I want to create 300 billion dollars today!"
Yes, mostly true but again not a contradiction of what I've said, because it is more accurate to say the Fed loans the money to the federal government. My essential point is that the word "buy" is misleading either way.
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Really? And who are these private investors?
Any individual or financial institution that buys bonds is a private investor that is financing the government's debt. The federal government could become less reliant on this by using its own reserves to create credit and earn interest on it, just like any other financial institution.
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Again, the Fed only sells bonds when it is trying to soak up its monetary supply. Where do you see that happening?
Partly right, the Fed can sell bonds for other reasons. Here is a WSJ article from last week about the Fed selling bonds:
The Federal Reserve Says, 'Let's Do the Twist' - WSJ.com
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How does the government get money? (Beyond the Fed printing it) It taxes it. Treasury bonds are in effect taxpayer money that is due to the government at a specified time, and then the government gives the money to the bond holder.
Yes, so ultimately the taxpayer is paying the bondholder, so that the government can finance itself. The government is not earning interest on the bond, the bondholder is.
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So kind of like...government being a firm...and taxpayers owing money to it. So when I say:
"So the US government is in a sense a creditor in Treasury bonds which are based upon future holdings of taxpayers payments."
It's true! Hooray! Learning is fun!
Two can play the definitions game:
What Does Creditor Mean?
An entity (person or institution) that extends credit by giving another entity permission to borrow money if it is paid back at a later date. Creditors can be classified as either "personal" or "real". Those people who loan money to friends or family are personal creditors. Real creditors (i.e. a bank or finance company) have legal contracts with the borrower granting the lender the right to claim any of the debtor's real assets (e.g. real estate or car) if he or she fails to pay back the loan.
Read more: Creditor Definition
Even under your definition the government is not a creditor in regards to the bonds it issues. By your definition, I could easily say that I am a creditor because I have a job, and I am a "person to whom money is due" but that's a pretty meaningless use of the word creditor. It would be even less intelligent to say I am a creditor because the money I owe requires me to collect money from others.
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Where is Obama going to get 447 billion dollars to lend to these businesses? The debt is now at 14.7 trillion dollars, meaning that the United States government owes 14.7 trillion dollars. Ok get ready cause this is the crayon drawing section. The government revenue has only been 2 trillion this year soooo
14 Trillion....minus 2 Trillion....equals.....come on....12 trillion!
The deficit of the US is 1.3 trillion dollars. That means that this year we have already spent 1.3 trillion dollars more then we have taken in. So unless Obama has a magic wand up his ass, he is going to borrow/print that 447 billion dollars which will stack up the national debt. So more spending in a deficit economy...means more national debt.
Do you feel the slightest embarrassment when you have to be shown basic math?
I'm glad you know how to subtract, but it doesn't do much for your argument. Nice evasion perhaps though. Another piece of evidence of your basic dishonesty.
One possible solution to the actual question you pose (Where the money will come from) is that the government does have reserves it could lend against. I am not saying this is the best or only solution but, the government could set up its own bank and use the gold in its vaults as reserves through which it could create credit and loan into the economy. It would not have to loan the actual gold out, but could create credit using the gold as reserves. This would limit the amount of money it could create as credit, but it would still be earning interest and spurring the economy at the same time. This is so radically different from what Obama is doing that your continuing to bring it up, convinces me we can't really move forward. The government has a number of other holdings of precious metals that could be used the same way. Hell, we could even tap pension funds if we had the political will and use them to create credit. There are a number of options, so you're comments about math are a pretty transparent and pretentious attempt to impress yourself.
It was a nice try, but I actually run a math tutoring service and have been growing my business rapidly as schools cut back because local governments are all buried in debt. That means I not only have to know math inside out, but I have to be able to explain it to others in a way that gets immediate results. So, no, I'm not embarrassed by your sad failures of logic because your mighty subtraction skills don't relate to my argument. Did you really think that you were being impressive there?
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I keep using the Socratic method but honestly why do I? I just have to hold your hand through the forest anyways. I mean honestly, you don't even know what a deficit is so how can I treat you like an intelligent human being?
You're not quite clear on what the Socratic method is. The Socratic method depends on finding and responding to essential points, not trivial details. Socrates did not try to point out imagined contradictions before he understood the overall gist of other's arguments. He usually tried to state the other's argument in the clearest way possible and then looked to see if it stood up or not. It might be fun to fancy yourself a modern Socrates asking questions that no one will answer, but if people are repeatedly explaining to you why your questions don't relate to what they're saying, that's your first clue that your application of the method has gone awry.
Quite frankly I don't care how you treat me. It is clear you have all your basic intellectual faculties working, I have no need to randomly insult your vocabulary or basic capacities, but when I have to explain that Obama's borrowing and spending is different then loaning money, and your only response is to demand that I explain what bonds are, the best possible scenario I can imagine is that you are being evasive. To call your questions Socratic is laughable.
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With lending at .25 that would infer that banks are more likely to borrow money from the Federal Reserve therefore beefing up their currency reserves. With the current 3% inflation (which lets be honest is probably higher because they keep on changing what they input into it), what "bonds" are the banks buying up that is getting them this "guaranteed profit?"
Actually, I'll admit this is a good question and I should elaborate. Too bad you couldn't have started with questions like this. Banks can borrow at near 0% and buy up short term bonds yielding more than 0. They can immediately sell on secondary markets or slice and dice them up and package them in derivative contracts to lower the risk of said contracts. I said before that financial institutions can now use a number of tools to gain a greater return on their money than they can by lending to productive businesses and that is what I would claim is partly responsible for stalling our economy.
Here is another person explaining (I don't claim this proves I am right, it is just another articulation that may help you understand the essential point.):
Philip Greenspun's Weblog » How Wall Street is making its billions
Lastly, just in case you actually ever do want to understand and learn, the two articles below explain the difference between my position and the current system. Maybe next time we could have a more productive debate.
If government created money instead of debt: Thomas Edison - National Nonpartisan | Examiner.com
Debt-damned economics: learn monetary reform or kiss your assets goodbye. 1 of 2 - National Nonpartisan | Examiner.com
Ciao Amigo