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Mr. Johnson. That's my point: there is no such thing as the "National Debt." Clinton drained the economy of so much real money and borrowed so much from the wealthy that he pushed us into a depression. He also took welfare away from the poor and vastly swelled our prisons. To add a cherry on the frosting we must now pay taxes to the gov'…
Mr. Johnson. That's my point: there is no such thing as the "National Debt." Clinton drained the economy of so much real money and borrowed so much from the wealthy that he pushed us into a depression. He also took welfare away from the poor and vastly swelled our prisons. To add a cherry on the frosting we must now pay taxes to the gov't. so it can pay back the wealthy, with interest. Clinton was a Corporate-Loving Republican in Democrat's clothes. He repeated the performance of Grover Cleveland, who was unique until Clinton arrived on the scene. Now there have been at least two Republicans in Democrat's clothes.
First, and foremost, our economy has been undermined by our "allies." Not only a monetary problem, but also a national security emergency. We are at the mercy of price fixing and price gouging by OPEC/Saudi/Russia, and the Treasury could recoup trillions. Saudis own our largest domestic oil refineries, control domestic companies like Exxon.
Second, paying back the wealthy with interest. Treasury has the capacity to arbitrage, buying low interest debt in places like Japan, Switzerland and Sweden, to retire high interest debt.
Daniel, I'm reposting my reply to Mr Dobbertin, as you might miss it.. Discuss?
Mr Dobbertin. a good post almost but I must correct some misunderstandings. My source if Modern Money Mechanics, FRBNY, now out of print,was once free for the asking, but you can find it here: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf
The US Treasury does indeed print money, and the US Mint stamps out coinage, coinage is real money, printed money is sold to Federal Reserve for Cost of Printing, which then sells it to member banks, which then uses it to meet demand from small businesses and street vendors and vending machines demand for paper money. Most money is transmitted via twisted paris and wireless transactions in the form of 0's and 1's.
The US and the West are indeed on a debt money system, it is more accurate to call it a Debt money, not fantasy money, but it is officially the Federal Reserve system.
Member financial institutions, Banks, Credit Unions, Savings and Loans are required to hold reserves. most reserves are held by Fed Regional banks,. Reserves are govenment securities, corporate bonds, and time accounts (checking accounts)
The Fed sets the reserve base, it can be as little as 0.25 and high as the Federal Reserve Open Market committee sets it.
Money is created when anyone or any entity, including the government, borrows from a financial institution.
Let's say the reserve base is set at 10%, that means that the bank can lend out any amount, so long as they have 10% of the loan in reserve with the Regional Fed (there are 12 of them)
In visual form, using the Jimmy Stewart movie , It's a Wonderful Life. A person walks into the bank and wants to borrow $100. The banker looks in his drawer, to see if he has $100, he does, so he loans the customer, $100 and counts out bank notes (Notes printed by the bank) this is debt money,not fantasy money, fantasy money is found in monopoly games, but I understand people need a concept that isn't so difficult that they can't wrap their heads around it.
There is a fact about debt money, that is not easily understood. Any money created out of debt, is wiped off the books (goes out of existence) when debts are paid down and paid off.
In 2019, I paid off my mortgage,and in doing so the remainder of my debt disappeared,went off the books.
What doesn't disappear, and which is the primary driver of inflation, is the interest on the debt.
When I went in debt to pay my house, my cars, whatever, the bank did not have to pull all of the money for the mortgage or loan, out of it's vaults, only the fraction of the reserve set by the Fed. That is why it is called a Fractional Reserve System. The rest was a book keeping entry, as a credit to the bank. Your debts are a financial institutions assets and go in the Credit column of its books , it's customers savings accounts are considered liabilities, and that is why the Fed doesn't include them in its reserve calculations. Checking accounts are assets, savings accounts are liabilities.
Again, and I emphasize, the only currency the Federal Government creates is coinage, Paper and electronic money are created out of debt, by banks in a book keeping maneuver, as debt creates money so does paying off the debt extinguishes the money.
I acknowledge your education and experience in your fields, please acknowledge mine. This is a subject I researched for my MBA, majors in finance and accounting. I've researched and written a 156 page on International Financial Institutions, including the Bank for International Settlements, the Banking System of the USSR, and Bank of Israel. By the way the system I would opt for is Israels, circa 1984. I have no idea what it looks like today.
Here is a copy and paste: Many Israeli's are invested in Patam accounts(Local resident's foreign currency accounts). These accounts provide insurance and a hedge against devaluation(through inflation) of the Shekel. Wouldn't it be nice if American's could invest in SDR (IMF-Special DrawingRights) accounts as can certain multinational corporations and banks. In fact Patam accounts (dollars) have moved so fast that in Israel they act like money in the banking system (Economic Review, 53, May 82, Bank of Israel.
Our currency is Fractional Reserve (which I explained) a Debt Money System, not a Phantom money system, though it amounts to the same, only the Government isn't creating the money, financial instiutions via the Federal Reserve create the money, but not the money to pay the interest hence inflation. Raise the amount of interest due the Federal Reserve debt money system, and you raise the inflation floor.
Jerome Powell's interest rate increases will only increase and accelerate inflation in the future.(it takes time for the system to work it's way through the economy), time for the debts (public and private) to come due
Mr. Farrar, it is hard to believe that Biden was naive enough to keep Powell around. Is it not?
Mr. Farrar. I have copied the source for the Modern Money Mechanics, now out of print, which you printed. I intend to get it if I can and read it. Hope I can make sense of it. It was difficult for my old eyes to read as I copied it out of your comment.
It is on wikipedia commons and you can download it, free. It is one hell of a dry read, and you need some background in money and finance. One thing you won't see in it is, that money created out of debt, "vanishes" as the debt is paid down and paid off, however if one reads carefully, one realizes that.
The pamphlet was a required reading in my first finance course, when I mentioned that in class, an Army Captain also in the class, challenged me. I looked at the professor and he nodded and told the Captain I was correct.
Money created out of debts (public, corporate and private) go out of existence when debts are paid down and paid off, and also when one files bankruptcy .
Have you never asked why is it that financial institutions can buy and sell mortgages, car, airplane and boat loans?
The answer is simple, so long as they recover their original reserve (the 10% or so they have to have to loan money) and received interest payments, they have recovered their original investment plus interest, the rest is simply wiped off the books, double entry accounting.
The institution the buys the loan, soon recovers their original investment,plus interest, and the game goes on and on, they can buy and sell a loan or a mortgage over and over, and not lose a penny but make a profit, and if the borrower defaults, then they recover the property which was the basis of the loan, and make a huge profit selling it and starting all over.
Of course financial institutions need the law on their side, they have the sheriff who can seize property if the holder doesn't pay taxes, payments on the mortgage or loan,or obey the laws.
ICYMI, now comes my exposition. You and I don't actually own property, we simple hold title in Fee Simple.
Fee feudal) Simple is a device that originated with Edward I. his barons rose up against him, because the King (the sovereign) held allodial rights to all of England. Allodial rights are the right of conquest. And the barons were sore pissed because the King, being sovereign with allodial rights) all too frequently disposed his barons of their titles and fiefdoms, to bestow them on a court favorite.
The answer he came up with is to grant them title in Fee Simple, meaning the land and the feudal title, Duke and Baron) were his and his heirs in perpetuity, so long as he paid his taxes, provided for defense of the realm with weapons, armor and men at arms, pledged fealty (another word with a feudal stem) , and obeyed the law of the land, which was the King's law.
Failure to do so, resulted in eviction from he land and title.
And the word sheriff is a derivative of shire reeve (reave) or reave of the shire, whose job was to collect taxes, and evict those that didn't obey the King's laws.
And that is why it is the sheriff is used to foreclose and evict delinquents and law breakers.
Not all counties and states exercise this authority, but enough do, and that is where sheriff's obtain the authority to confiscate money and titled property, of people accused of breaking the law of the Sovereign,which apparently are the several states, as delegate to the counties the responsibility of enforcing the allodial law.
The Constitutional sheriffs and Peace Officers are a joke, they aren't empowered to enforce or abide by the Constitution.
The oath of office for sheriff's (shire reeve) varies state to state, county to county, but sometimes goes like this: "On my honor, I will never Betray my integrity, my character Or the public trust. I will always have the courage to hold myself and others accountable for our actions. I will always maintain the highest ethical standards and uphold the values of my community, and the agency I serve."
And like this: "“I, (employee name), do solemnly swear (or affirm) that I will support and defend the Constitution of the United States and the Constitution of the State of ... "
note the "and the Constitution. of the State of........" which means that the constitution of the state supersedes the Constitution of the United States.
FYI the Constitution ratified in 1790, as amended, actually acknowledges the sovereignty of the several states., that is why it takes a Constitutional amendment to grant rights to everyone.
Individual states can elect or not elect to pass laws, acknowledging rights, regulate industries, limit or regulate such things as guns, but if they go beyond the Constitution as defined by six radical theocratic fascists, the laws will be nullfiied.
The federal government was not able to outlaw automatic fire weapons, but found a work around by requiring a permit, an exhausive application process, and then paying a heavy tax, to purchase and own an automatic fire weapon.
They could do the same for semi automatic, rapid fire weapons and large magazines.
Self loading, semi automatics, like those used for hunting, and shotguns have or had, magazines with limited rounds, I had a 30.05 with a magazine of four rounds, most semi automatic shotguns also have a four or five round limit.
Mr. Farrar. I acknowledge your expertise. Is there any doubt? you clearly are well informed about banking and financial issues.
Mr. Solomon. I agree.
I am a Keynesian, haven't always been. 40 years ago I was a Friedmanite, a devotee of the Austrian School and Koch's Foundation for Economic Education (FEE)until I started working on my MBA and did extensive soure research, had a foot locker full of documents and reports from the Fed,BIS, many banks and books as well like . 0. Kuschpeta, The Banking and Credit System of the USSR, Tilburg Studies in Economics, 1978, MaRTINUS Nijhoff Social Sciences Div, Leidenl Boston, 284 pages
Anway Keynes properly said, that a sovereign nations debts are owed to itself, and the way to prosper is by spending money, even during a depression. FDR's success is proof, Japan survived a devastating depression by spending money it didn't have, and plowing most of it into education, which of course international financial institutions, absolutely fear, all they want is a positive return on investment, and have created domestic chaos in P.I.G. nations like Portugal and Greece by forcing them to cut domestic spending, especially social spending and divert the payments to them, the debt holders.
Being friends with my Econ 101 professor, a Friedmanite, I tried to educate him, his response was "I only know economics, not money", Imagine that.
I ask you not to befuddle minds with your misunderstanding of how national currency works (and it works the same for all members of the Bank for International Settlements (BIS), to wit:France, England, Germany, Netherlands, Belgium and so on.
The BIS was created in 1929, to handle and isburse German's reparation payments from WWI, it's first President was Paul Warburg, who was also the author of the Federal Reserve Act (Title 12 USC) and it's first president.. His brother Max was the genius who came up with the idea of secreting Lenin into Russia in a closed RR car
Representatives of member banks, report to the BIS first Monday of each month, to occupy identical offices laid out identically, to finish reports and receive instructions.
Including Jerome Powell or a designee.
The BIS is the boss of central banks or Central bank of central banks. As a grad student I was able to recieve copies of their gold covered, annual report for three years running, dry but eye opening, including the critique of the USSR which they declared a failed experiment in need of restructuring then who showed up but
Gorbachev (Reagan knew that Russia was in the infancy of dismantling)..
Gorbie was rewarded with a handsome retirement, a dacha on Lake Geneva, and his own NGO, the Green Cross.
Mr. farrar. Two things: it almost looks as though Greece has in effect given up its sovereignty when it agreed use the euro and get rid of its own currency. Does this sound right?
Can you recommend a good book to act as an introductory text for banking and finance?
Any entity that uses an international monetary unit has in effect give up it's own sovereignty, but they are forced to by the structure of international trade. An entity, be it an individual or a nation, can't engage in international commerce unless it has access and uses a monetary unit, that is accepted by the vendor. The Afghan Afghani (AFN) is of no value in international trade, what they import must be paid for in internationally recognized currency. And such currency has varying values, and values are always fluctuating.
In most nations, the national currency is used for internal purchases, but in some places they will accept Dollars, and EU's.I traveled the Pan American hiway from Juarez to Panama on a brief case of 300 $1.00 bills. Did not have to convert anything, but they were very glad to take the dollar, as I am sure that I overpaid
I can't point to one book or a series of books, my 40 year old monolith has 157 references, ranging from books, news papers and magazines.
Back in 1984, the Federal Reserve had a list of free publications, took up most of the space in my footlocker,but they soon realized that educating the public was a mistake, as I started posting excerpts like the Association of Primary Dealers in Government Securities (APDGS) on the nascent internet, including what I know about Modern Money Mechanics, and soon there was a proliferation of books and articles and they stopped making Modern Money Mechanics free for the asking. Mostly it was grad students in finance that asked for the publications.
Obama not passing Medicare for all when he had the chance, I consider him a GOP also. What would you do to raise the standard of living for the workers?
I will be kind, Obama was a novice, a fish out of water, when it comes to money, finance, economics he was a blank slate, that and thanks to the likes of Rahm Emanuel, now in Bidens cabinet and a real scum bag, along with Larry Summers,He was at the beck and call of AHIP, Association of Health Insurance Providers).
They had access to the White house during the construction of the ACA,but single payor advocates like Bernie were excluded.
The result if a 600 page bill, that doesn't solve the problem, has issues, but is beloved by AHIP because it enriches.
All congress had to do was change a few words in the Medicare enabling legislation from"eligibility starts at age 65" to eligibility starts at Birth, but that would have inflamed AHIP and they would declare war on the DNC.
And of course the corrupt Rahm Emanuel who slops at the trough of the elect (privatized education in Chicago, a major agenda item of Betsy DeVoss, would have no part of it, and called progressives "fucking retards" Fuck face Rahm is Biden's ambassador to Japan.
The enemies of democracy are even embedded into the Biden administration.
Thank Mr. Farrar, I have been wondering what happened to Rahm Emmanuel der Wunderkind. Bacteria on the bottom of shallow lakes eat away at the flesh of human corpses dropped there by criminals. This produces gas which bloats the corpse and eventually causes it to float to the surface. Expect Mr. Rahm Emanuel to float up again in the future.
Well Gerald, I'm waiting for a professor to answer. Either that or you don't know or you are a troll who uses artificial intelligence? This is a very important question and you seem to be very knowledgeable about economics.
Mr.. Johnson. I am sorry I do no understand what you are referring to. I do not know what you are asking. If I were to take a shot in the dark I would say that Obama-Care was a gift to the Insurance industry and a dishonest service to Americans. We need Single payer Gov't. medical coverage. This combined with Pro-labor-union legislation would be a start. There are too many areas to list here.
No, I am not a "troll who uses artificial intelligence." Although I have used computers in my work for over half a century. I began my work long before the advent of readily available electronic computers. I am a real, live, actual human being who is honestly and sincerely trying to understand the world we live in and to figure out my place in it. I take these discussions seriously. I admit that I get it wrong more often than I like. But I have spent my entire professional adult life working on this never-ending life project. What can you say about yourself?
It is a very simple question. How would you raise the standard of living for American workers? I don't need a lecture on how brilliant you are.