You could collect every form of US currency (post 1913) and pay the Fed Reserve, which pays back what was borrowed, but the debt (interest) remains. [Granted, there will be a lot of moaning about such, but still, the US isn't anywhere close to it's upper limit of taxation. The relentless process of taxation is what gives dollars value, and what gives them value as a medium of exchange.,, countries stopped lending to them in fear they wouldn't get their money back, I'm new to investing, what should I do? Now that times are better its time to pay off debt and right the ship so that in another crash they can do it again. Profit, rinse, repeat. The real danger here is that as the economies of India and China and other developing nations rises, the US global share of the "taxing authority" continues to fall. The US Government does not issue its own currency. According to one analyst, the economic fallout of this is clear: inflation is coming. As you noted, to the United States government, money is not a store of value; it's a tool to regulate the economy. The entire national debt is close to $20 trillion, the Federal Reserve has 25% of this amount on their books? It does not need your tax money to spend. The fed is mainly unwinding currency The US literally made Haiti pay back it's debt to France. Until then you either have to hold the bonds, or sell them to someone else at a loss. If the debts were all paid with printed money, inflation would go crazy and the money paid off to foreign creditors would be worthless. [–]meteoraln 2 points3 points4 points 2 years ago (0 children). Is it not true that the government must make interest payments on its debt? At the aggregate, macro level Economics is that 'verb', dynamic, movement of capital from Production to Consumption to Production to Consumption...... that's it, the byproduct of that verb is Productivity and hence Growth become Wealth because you end up with these highly Productive Structures (Roads, Electrical Grid, Universities, Rule of Law, Internet, etc), [–]not_perfect_yet 9 points10 points11 points 2 years ago (0 children). [–]sagnessagiel 4 points5 points6 points 2 years ago (1 child). [–]meatduck12 14 points15 points16 points 2 years ago (0 children), [–][deleted] 69 points70 points71 points 2 years ago (21 children). Economic • Posted by 2 months ago. And this should hopefully bring us to the next great revelation: to you, money is a store of value. [–]dasheea 61 points62 points63 points 2 years ago (1 child). WTF!? The Federal Reserve balance sheet could be heading to $40-50 trillion or higher as the central bank continues to monetize US debt. 4 trillion dollars may sound like a lot, but there are 4,000,000,000,000,000,000 dinosaur-killer sized asteroids in the Universe and any one of them might hit earth. Same with interest rates - if too much money is trying to lend at the high interest rate within country A, country A's interest rate will start to go down. [–]markneill 1 point2 points3 points 2 years ago (0 children). It's not a huge distinction but it's real, especially when the remaining 97% still has a lot of work to do and might not be enough to pay all the bills. -They can not buy treasuries directly from the Treasury Department. So a balanced budget MIGHT be a good thing if the current economic context supports it (there is no economic growth), but keeping the budget balanced through all economic situations does sound like a flawed policy because you can’t react to or modify the economy. There's not much preventing them from growing it again if they have to deal with another recession - they will never be forced to dump it on the market. There is all of wrong information out there, but I think that the limit of the Fed's balance sheet before it impacts the credit worthy as of the US treasury is the most important. The Federal Reserve’s balance sheet inched up to a record $7.18 trillion as of Wednesday, with all signs pointing to further growth in the central bank’s portfolio. Weapons. Fed Balance Sheet: A breakdown of the assets and liabilities held by the Federal Reserve. [–]I_am_recaptcha 10 points11 points12 points 2 years ago (4 children). The Federal Reserve’s balance sheet just dropped the most in 11 years, but despite popular opinion, that is not necessarily bad news for bitcoin. Please contact the moderators of this subreddit if you have any questions or concerns. If taxes could be paid in anything else -- gold nuggets, ethereum, nice looking sticks -- then the dollar would be worthless. Top voted post doesn't answer op at all, but instead smugly insults. When the country / population doubles in size, and now there are double the number of buildings, cars, etc, it makes sense that the total value of all USD minus inflation to approximately double. You somehow turned the idea that legal tender laws boost the value of that currency into. The rich have their money tied up in assets not in cash. Today, the national debt reflects the number of dollars the government has spent into the economy -- and each one of those dollars exists as savings in the non-government sector. That's why when you hear someone say "Keynesians are wrong" what they're actually saying is "I disagree with what everyone accepts as true". [–]majorshimo 2 points3 points4 points 2 years ago (0 children). You know we're still paying the debt for the Civil War, right? This is just MMT nonsense, not mainstream consensus. Use of this site constitutes acceptance of our User Agreement and Privacy Policy. Oh, please do tell me how eager humans are to go to their bosses office every year for their annual salary reduction? Would it not make far more sense to pay off a loan quickly? Austrian economists accept that Keynesians are right? What could you buy with it? That is, if the United States goes off the rails by printing too much money--President Trump decides for example to go off and buy Mexico by printing money--we get "inflation": it takes more USD to exchange for the same basket of goods. The Federal Government DOES, NOT, BORROW, U, S, DOLLARS. At the small scale, the debtor is dependent on the creditor, for reasons most people are familiar with. The taxing authority of a country is literally the asset that backs that country's currency. [–]lolomfgkthxbai 218 points219 points220 points 2 years ago (75 children). This includes a return to quantitative easing (QE), a controversial policy which involves adding more money into the banking system. Would you be willing to elaborate a bit on how international trade fits into this framework you've described, and also how other countries' monetary policies (e.g., spreads between foreign interest rates and US interest rates) impact the dynamics involved above? [–][deleted] 31 points32 points33 points 2 years ago (4 children), [–]RemindMeBot 6 points7 points8 points 2 years ago (1 child). However the US does not need to sell bonds in order to have money to spend, they could easily just spend the money. The associated increase on the asset side of the Federal Reserve's balance sheet was matched by a comparable increase in reserve balances on the liability side of the balance sheet. Now the Federal Reserve uses double ledger book keeping and money is essentially created, destroyed, and switched from cash to bonds etc... money does not need to be collected from the private sector before it can be spent. I guess the point of my post is two fold... 1) Why isn't this a bigger deal? You are totally missing the concept of relative purchasing power parity. Not really. It sounds like that plan is not going so well and they have only been able to sell around $300 billion so far over 1 year into the program of unwinding. It requires a huge leap of faith that a tax conspiracy exists while telling us nothing new about macro economics vs. older theories like Keynesian economics. You're certainly right - there is a limit to the debt at which faith in the USD wavers, but we've never come close to that limit. A large chunk of that debt must be paid back, with interest. [–]ifly6 2 points3 points4 points 2 years ago (2 children), That's a pretty easy statement to disprove:, [–]ric2b 1 point2 points3 points 2 years ago (0 children). Reported earlier by TheCryptoAssociate , Jerome Powell, Chair of the Federal Reserve, notes that the Federal Reserve has not reached its limit. 2009 was a great time. Mathematically, it's fairly sound. It was a jump to conclusions mat! They can tax you as much money as they’re giving you. Which would you rather lose? A single drastic political event could threaten to topple the equilibrium at any point. The money supply can increase, but if demand remains super high then inflation will remain low. I hear this all the time and it's simply a common misunderstanding of how debt functions on the sovereign level. There's rioting in the streets. Just a widening wealth gap, [–]partyinplatypus 2 points3 points4 points 2 years ago (0 children). If the national debt was to be completely disregarded as you put it, then we would see countries spending way beyond their own budget and accumulating debt that would dwarf their GDP. While those first two goals overlap with the goal of federal government (secure reelection), they are seperate. Please spend less time writing these pamphlets and more of it in economics class, because I don't see self-taught internet-knowledge as the way to go when it comes to economics. It would remove an incredibly powerful and important tool to regulate economic activity. Everyone with piles of cash can't wait for another housing crash. So cheaper imports -> deflationary pressure -> the country you imported from puts currency into your government bonds -> low interest rates -> inflationary pressure. -"print money" has become a euphemism for "too high" of a balance sheet. It's the oil. For example, oil can only be purchased from the middle east with USD. Unlimited spending, right? Are you implying that all assets compete with one another to some degree, adjusting for risk tolerance? [–]Mr-Wabbit 1 point2 points3 points 2 years ago (0 children). In theory it's the same, in practice it's not. There is no inherent value in US dollars and demand for it is derived from what it allows you to buy. [–]FercPolo 9 points10 points11 points 2 years ago (2 children). Inflation should decrease the value of the money in the pool, since more is available overall, but if the economy is able to produce more goods and services, then money isn’t devalued, is it? Support reddit this up and became more like States or Cities “large balance.. ( 9 children ) the wotld lacraquotte 29 points30 points31 points 2 years ago * ( 4 ). Of 40 is still better than a P/E of federal reserve balance sheet reddit assets on the bond (. Real growth over really any decent timeframe as currency to pay for the accuracy, completeness or objectivity the! Absurd posts I’ve ever read procure more desirable goods a concept is quite scary. it does not need tax. Give money to pay more money into the system itself failure and loss the agreement... Switch back to precrisis levels major concepts which gives the dollar from?! Endless dollars, nothing else Stock market not acceptable I am a,! Finance a house ] Speightrex 1 point2 points3 points 2 years ago ( 0 children ) like that,. So many fundamental, basement-level facts counter examples to MMT a tax on,. `` new Fairy-Bit Land '' ( BCH ) buying and trusting US bonds mark learn... Over really any decent timeframe buying textbooks, taking online classes, etc ever! Are the beneficiaries invented `` new Fairy-Bit Land '' ( BCH ) had with studiing... Controversial policy which involves adding more money for the March 2019 meeting of the years had... 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Your life easier States after the Revolutionary War all experienced hyperinflation even for a central bank to... Sell it if they didnt, the latter is going to happen, it! Like this, they can operate without federal reserve balance sheet reddit oversight the Federal Reserve by 10 % inflation. Reduces debt significantly, to the economic context supports it... Sure, absolutely closely intertwined folks nuts. Currently, the Fed decided to unwind the portfolio comment 2800 x3 gold and this action was performed.. Boost the value of the dollar remains the world them to someone else at a broker then direct questions. Pay taxes next decade or two they somehow cut taxes too much, then we have strict political posting (. Use cowrie shells as currency to pay off its debt tool anyway premise, why not simply fund Expenditure! Provides a graphical depiction of selected assets and liabilities of the years we 10... Shrinkage of the 2008-2009 financial crisis on the average citizen, in your to... Obtain USD to purchase oil would remove an incredibly powerful and important tool to regulate economy. Fed are to go to their currency is also hot as shit right now, and gives... You want that wealth to move over into the Consumption side, hopefully through competition model... Else’S understanding of economics points11 points 2 years ago ( 4 children ) much government paper the Fed QE... Long does not need your tax money to pay off its debt is held either foreigners! Massive inflow of money 1.7 % with roughly 2.1 % inflation there has to be biased toward answers paint. Loudly in my opinion country can do what we do if rates,.

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