Debt Question

Discussion in 'Economy' started by chockfullofthat, Feb 29, 2012.

  1. chockfullofthat
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    chockfullofthat Rookie

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    This is probably a pretty basic question here. If it is impossible to payoff the debt because of our fractional reserve system, what does the government want to do with the debt? Do they simply want to trim it down from it's current levels right now?
     
  2. Toro
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    Toro Diamond Member

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    Yes.
     
  3. chockfullofthat
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    chockfullofthat Rookie

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    Isn't that pretty much a short term fix then?
     
  4. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    how does fractional reserve system make it impossible to pay off debt?
     
  5. chockfullofthat
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    chockfullofthat Rookie

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    Payoff the debt completely*
     
  6. KissMy
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    KissMy Free Breast Exam

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    It will never get paid off in your lifetime. It may stop rising in about 20 years.
     
  7. DSGE
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    DSGE VIP Member

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    The fractional reserves system has nothing to do with paying down government debt. Why do you think it matters? :eusa_eh:
     
  8. ERGO
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    ERGO Bursting Bubbles

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    Our fractional-reserve, fiat financial system is built upon debt-based money. In this perverse arrangement, new dollars come into existence through the creation of government and private debt. Going the other way, if the private sector and the federal government ever began seriously paying down their debts, the supply of US dollars would shrink. Money is loaned into existence. Put simply, under a fractional reserve banking system all money is created out of debt.
     
  9. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    correct


    correct, although you have not established it is perverse.

    somewhat correct, but only in the absence of Fed action to prevent that shrinkage


    you're repeating yourself???

    and?????
     
    Last edited: Feb 29, 2012
  10. ERGO
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    ERGO Bursting Bubbles

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    I was responding to your question "how does fractional reserve system make it impossible to pay off debt?

    The fractional reserve system is responsible for creating debt, how do you pay off debt when the fractional reserve system creates it?

    "somewhat correct, but only in the absence of Fed action to prevent that shrinkage"
    The Federal Reserve would being creating more debt in order to prevent that shrinkage. The Federal Reserve creates money out of thin air and charges interest on it. When the FED creates money, IT'S MORE DEBT.
    The money is loaned into existence at interest!

    I don't think you know what you're talking about.
     
    Last edited: Feb 29, 2012

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