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View Diary: Gold Standard, Fiat Currency, and Petrodollar Explained (Why we may never be a green nation) (29 comments)

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  •  Well as far as our government is concerned (0+ / 0-)

    the federal reserve is a private institution, and wishes to make a profit in "real" dollars.  Putting real dollars into circulation is far different than putting "government debt" into circulation.

    Think of it this way.  If the federal reserve were to "gift" the united states government one trillion dollars, then that would drive up inflation, as the level of circulation would increase.

    Instead the federal reserve "loans" money to the government, by holding private capital through the selling of bonds.  No new money is introduced into circulation, it is just shifted from private hands to public.  

    The "new money" that is put into circulation, is balanced based on population and need, and is done so in a way that results in a "healthy" 2.5-4% yearly inflation rate.

    As to your original question though, the US congress decides what denominations to issue, so in that aspect, there is nothing stopping the government from issuing new currency, but that is why we have checks and balances.

    95% of all life forms that once existed on earth are now extinct. It is only a matter of time until the Republicans follow suit.

    by PRRedlin on Fri Feb 01, 2013 at 10:12:04 AM PST

    [ Parent ]

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