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View Diary: The economic problems facing our nation are not what they are made out to be. (24 comments)

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  •  I'm sorry, but your dad is wrong. (4+ / 0-)

    Monetization is not 'fiat' money, it is placing a value on illiquid assets and putting that in circulation.  QE1, 2, 3 etc is not creating money, it is buying up existing, non-servicing debt to create a floor for other assets.

    Tying our money supply to gold was a dumb idea anyway.  Fine when we were hunters/gatherers.  A gold standard now would be institutionalized feudalism and the gold supply is probably being manipulated, so a small cabal could control the entire world from a place like Switzerland or Houston, etc.

    My best guess was a reflection that did not look back, an image lost in every mirror.

    by Zacapoet on Sat Dec 29, 2012 at 10:15:37 AM PST

    •  I'm guessing that this is from someone (1+ / 0-)
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      who is part of the "debt money" movement, who would like to see bonds done away with -- or at least having private banks create the bonds.

      My take is that the guy recognizes that monetization is not fiat, but that fiat is used to monetize.

      And that there's no reason to issue debt instruments, thus no need to monetize.

      About that he's right.

      The problem I have with the "debt money" people is that we still would have accounting language to deal with:

      Every dollar is both a public liability and private asset.

      The "deficit" equals all dollars in the private sector.

      "liability" and "deficit" are accounting terms, neither of which signals a debt when speaking in terms of notional values, which is all a fiat currency is.

    •  . (0+ / 0-)

      "Tying our money supply to gold was a dumb idea anyway.  Fine when we were hunter/gatherers"

      The 'king' of fiat money disagrees with you:

      "The abandonment of the gold standard made it possible for the welfare statists (government bureaucrats) to use the banking system as an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation... Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process." - Alan Greenspan

      QE3 is creating money at a rate of $85 billion a month from this year till 2015.  It takes 'money' to "buy up existing, non-servicing debt" so QE IS creating money.... gobs of it.  It is estimated some $5 trillion in short term debt has to be refinanced in 2013.  Dilution reduces the value of fiat money in real terms.

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Sat Dec 29, 2012 at 08:55:54 PM PST

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