Originally Posted by Olysseus
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.
You're original comment concerned spurring growth without causing debt. The Chinese government is able to build so many public works because of the surpluses that it has acquired. Where has it acquired them? From financing U.S. borrowing. That is why I commented that China's market is growing because it holds 1.1 trillion dollars in U.S. debt
Originally Posted by Olysseus
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.
The government doesn't "have" money to loan out. Not in the strict sense of the word. The only way government acquires money is through taxation. What it doesn't acquire through taxation, it borrows or prints (thus increasing the debt). You act as though governments have a nice portfolio of assets that help it to acquire an income.
Originally Posted by Olysseus
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.
Well I would think that if I didn't have to example basic governmental principles to you, like deficits and surpluses.
Originally Posted by Olysseus
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.
Loans it on the basis of the Treasury department que's. Something I previous said.
Originally Posted by Olysseus
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.
Bonds are sold by the government, not the Federal Reserve unless they are trying to soak up monetary excess which again have you seen them doing? So its not as if private investors are working THROUGH the Federal Reserve to finance the government.
Originally Posted by Olysseus
Those bonds are usually 30-90 day investments and again the article points out that they are utilizing that to buy long term bonds. So they aren't soaking up monetary excess.
Originally Posted by Olysseus
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.
Again, not true. The bondholder isn't necessarily a taxpayer. Remember that 1.1 trillion dollar trade imbalance with China...we don't owe they tea cups.
Originally Posted by Olysseus
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.
Really? We're going to do this? I just pointed out how the government is a creditor in the sense of bond issuing, and yes in a sense you are a creditor because you labor under the premise that you are going to get money. So in a way, your employee is the debtor because they owe you for services rendered. Will we have to talk about what a paycheck is next? Or how about what labor is? That is always fun.
Originally Posted by Olysseus
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.
When the US borrows money, it goes into debt unless it has a surplus but then again why would it borrow money when it has a surplus. Anyways when I say, Obama is allocating spending, based on credit, for his jobs plan, you say "oh no no no, It's not credit!" We have a deficit. 1.3 trillion. We have a debt of over 14 trillion. We already are on credit now...so acquiring more money...from borrrowing...is based on....credit....
Apparently this concept is so hard for you to imagine that you think I have somehow tricked you.
Originally Posted by Olysseus
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.
...What do you think the US dollar was before 1971? If the notes that the government is issuing as credit can't be redeemed in gold then what is stopping the government from inflating the monetary supply to the levels it is now? The primary reason for why we have such high inflation is because gold is no longer keeping the spending in check. Before if the government spent and incurred huge trade deficits then the gold would flood out of the country in foreign nations. Now it is illegal to redeem notes into gold or use gold as a monetary base. It makes you wonder why the U.S. doesn't return the gold in Fort Knox, yes return it because it is the product of the Gold Confiscation act of 1933. The government does not own that gold in Fort Knox. So you think you've invented an alternative but really you are only explaining what we have today.
Originally Posted by Olysseus
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?
See above comments
Originally Posted by Olysseus
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.
You not understanding deficits, trade imbalances, how bonds work seems an essential point. And who said I wanted to be a "modern Socrates?" Sir, you give me too much gusto.
Originally Posted by Olysseus
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.
Who asked you to explain bonds? I asked you which bonds these banks are buying up to get their "guaranteed profit." Obviously making such a statement would mean you know at least a little about it. Otherwise you would just be spitting out assertions which obviously you would never do...I mean come on. This is the internet right?
Originally Posted by Olysseus
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.
And how can you be so sure that banks are investing in things like derivatives and why would they so hurriedly invest in them in such a volatile market with such high inflation? And how can you say that they are actually making these exchanges when bank reserves in depository banks have been steadily increasing since Dec 10? And borrowing from the Federal Reserve has gone down since that very same time.
Federal Reserve Statistical Release H.3 - September 22, 2011
Originally Posted by Olysseus
Ah god, no wonder you're saying such inane things. You are one of those "Money=Debt" proponents. Ugh now we have to get into one of those long "money isn't debt just the Fed causes debt because it needs to print money" conversations and Xaqaria is going to cry.
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