Krugman kicks von Mises acolyte while he's down

So if the mere issuance of debt creates value of government paper, why do people bother trading currencies?
 
Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat

Any entity that buys US Treasuries is lending the Treasury our own fiat.

I'd rethink that if I were you. You're wrong. Those Treasuries are being purchased with US dollars. Those dollars, sitting in the Bank of China's reserve account, were spent into existence at some point by the federal government.

Try again, Sparky
.

Those Treasuries are being purchased with US dollars.

Yes they were. US dollars given to the US Treasury, in exchange for a Treasury security, is how the US Treasury borrows our fiat currency, chief. I'm surprised as simple a subject as lending and borrowing confuses you so much.

I'm surprised you don't get it. Where did those dollars come from? They didn't magically appear out of the ether. The federal government spent them into existence at some point and China received them from exporting goods and services. They desire to save those dollars in government securities since they pay a higher rate of return than letting those dollars sit in reserve accounts over at the FED.

The federal government spent them existence at some point and China received them from exporting goods.

Yes, now they are owned by China. When China buys Treasuries, China is lending those fiat dollars to the US Treasury.

You really need to quit[e] while you're ahead.

I'd like to, but you keep posting silly errors.
 
They get dollars from net exports to the US. These end up at the Bank of China. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. There’s no net flow of dollars to the US Treasury.
Oh Jesus. FDR only created the SS Trust fund for political reasons. Why not just eliminate FICA and fund SS out of the general revenue?

Again, it's not these mystical and esoteric "unfunded liabilities" which are the problem. Like I said, the only problem would be the availability of real resources in the future, which will not be an issue as long as the economy grows along with the population, and we have an increase in productivity that will enable us to have fewer workers to supply increased numbers. This is basically what's happened historically, so the only problem I see is this illogical and almost religious devotion to austerity that wants to save future needs as opposed to investing. It's retarded and has zero basis in economics .

I agree, individuals should invest for their future need. They should start with the 12.4% of income currently spent on SS taxes.

Not everyone has the time or inclination to invest. We've already went over why privatization of SS is a horrible idea.

Here's the Kimura Grand Bargain for American Prosperity:

1. Suspend FICA
2. Fund SS out of the general revenue
3. Raise SS payments to to a minimum of $2,000 per month.

Problem solved, everyone can go have a beer.

You forgot one:

4. National bankruptcy.


This is the last time I'm going to say this: The US government, as the sovereign issuer of the dollar, cannot go bankrupt.

The Congress spends by basically telling the FED to credit a member bank account at the FED. This is entirely independent from tax revenues and/or borrowing.

What you pedantically and erroneously refer to as borrowing is simply shifting $$$$ from reserve accounts at the FED to securities accounts at the FED. When debt payments are made, in terms of operationally servicing said debt, $$$$ is shifted from securities accounts to reserve accounts over at the FED.

Oh yeah, and your tax payments are nothing more than unprinting $$$$ ( demand accounts are debited, the monetary circuit isn't a feedback loop with a fixed amount of $$$$ that is perpetually recycled).

I fuckin' don't how many ways I can spell this out for you. I can create a diagram in Photoshop or something.

You can't be serious. You're trying to tell us that when a U.S citizen or a foreign government exchanges their cash for a U.S. Treasury bond that the government hasn't borrowed money.

It takes a special kind of fool to fall for that abracadabra.

You're confused as usual. I worked for a primary dealer for five at the start of my career, so I understand the mechanics better than most.

When a foreign government or citizen exchanges $$$$ for a Treasury, $$$$ is simply debited from a reserve account and credited to a securities account (US Treasuries are nothing more than interest beating dollar deposits at the FED).

Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat, nor do they have a dollar factory in Hong Kong. They obtain US $$$$ from net exports to the US which end up at the Bank of China. They then convert their US $$$$ to US Treasuries which is nothing more than a balance sheet operation, consisting of a series of debits and credits, between the Bank of China's reserve account and securities accounts at the FED.

There's no abracadabra here. Uncle Sam can NEVER run of his supply of dollars as the sovereign issuer of the currency.

There’s no net flow of dollars to the US Treasury.
They get dollars from net exports to the US. These end up at the Bank of China. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. There’s no net flow of dollars to the US Treasury.
Oh Jesus. FDR only created the SS Trust fund for political reasons. Why not just eliminate FICA and fund SS out of the general revenue?

Again, it's not these mystical and esoteric "unfunded liabilities" which are the problem. Like I said, the only problem would be the availability of real resources in the future, which will not be an issue as long as the economy grows along with the population, and we have an increase in productivity that will enable us to have fewer workers to supply increased numbers. This is basically what's happened historically, so the only problem I see is this illogical and almost religious devotion to austerity that wants to save future needs as opposed to investing. It's retarded and has zero basis in economics .

I agree, individuals should invest for their future need. They should start with the 12.4% of income currently spent on SS taxes.

Not everyone has the time or inclination to invest. We've already went over why privatization of SS is a horrible idea.

Here's the Kimura Grand Bargain for American Prosperity:

1. Suspend FICA
2. Fund SS out of the general revenue
3. Raise SS payments to to a minimum of $2,000 per month.

Problem solved, everyone can go have a beer.

You forgot one:

4. National bankruptcy.


This is the last time I'm going to say this: The US government, as the sovereign issuer of the dollar, cannot go bankrupt.

The Congress spends by basically telling the FED to credit a member bank account at the FED. This is entirely independent from tax revenues and/or borrowing.

What you pedantically and erroneously refer to as borrowing is simply shifting $$$$ from reserve accounts at the FED to securities accounts at the FED. When debt payments are made, in terms of operationally servicing said debt, $$$$ is shifted from securities accounts to reserve accounts over at the FED.

Oh yeah, and your tax payments are nothing more than unprinting $$$$ ( demand accounts are debited, the monetary circuit isn't a feedback loop with a fixed amount of $$$$ that is perpetually recycled).

I fuckin' don't how many ways I can spell this out for you. I can create a diagram in Photoshop or something.

You can't be serious. You're trying to tell us that when a U.S citizen or a foreign government exchanges their cash for a U.S. Treasury bond that the government hasn't borrowed money.

It takes a special kind of fool to fall for that abracadabra.

You're confused as usual. I worked for a primary dealer for five at the start of my career, so I understand the mechanics better than most.

When a foreign government or citizen exchanges $$$$ for a Treasury, $$$$ is simply debited from a reserve account and credited to a securities account (US Treasuries are nothing more than interest beating dollar deposits at the FED).

Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat, nor do they have a dollar factory in Hong Kong. They obtain US $$$$ from net exports to the US which end up at the Bank of China. They then convert their US $$$$ to US Treasuries which is nothing more than a balance sheet operation, consisting of a series of debits and credits, between the Bank of China's reserve account and securities accounts at the FED.

There's no abracadabra here. Uncle Sam can NEVER run of his supply of dollars as the sovereign issuer of the currency.

There’s no net flow of dollars to the US Treasury.

Ummmm...when new US Treasuries are purchased, money flows to the US Treasury. That's why they sell Treasuries.

Your're still confused.

If you have written a bunch of IOUs to your neighbors that then come back to you (say, you owe them cups of sugar), would you count the "inflow" of your own IOUs to yourself as a net flow (of sugar or dollars) in your favor? No. You would shred them.

When the government receives its own currency back, it shreds it. (today it is all electronic, so they just debit their liabilities).
 
Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat

Any entity that buys US Treasuries is lending the Treasury our own fiat.

I'd rethink that if I were you. You're wrong. Those Treasuries are being purchased with US dollars. Those dollars, sitting in the Bank of China's reserve account, were spent into existence at some point by the federal government.

Try again, Sparky
.

Those Treasuries are being purchased with US dollars.

Yes they were. US dollars given to the US Treasury, in exchange for a Treasury security, is how the US Treasury borrows our fiat currency, chief. I'm surprised as simple a subject as lending and borrowing confuses you so much.

I'm surprised you don't get it. Where did those dollars come from? They didn't magically appear out of the ether. The federal government spent them into existence at some point and China received them from exporting goods and services. They desire to save those dollars in government securities since they pay a higher rate of return than letting those dollars sit in reserve accounts over at the FED.

The federal government spent them existence at some point and China received them from exporting goods.

Yes, now they are owned by China. When China buys Treasuries, China is lending those fiat dollars to the US Treasury.

You really need to quit[e] while you're ahead.

I'd like to, but you keep posting silly errors.


Oh Jesus. It doesn't matter if they're owned by Santa Claus. The point being that the federal government is the only source of dollars.
 
They get dollars from net exports to the US. These end up at the Bank of China. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. There’s no net flow of dollars to the US Treasury.
Oh Jesus. FDR only created the SS Trust fund for political reasons. Why not just eliminate FICA and fund SS out of the general revenue?

Again, it's not these mystical and esoteric "unfunded liabilities" which are the problem. Like I said, the only problem would be the availability of real resources in the future, which will not be an issue as long as the economy grows along with the population, and we have an increase in productivity that will enable us to have fewer workers to supply increased numbers. This is basically what's happened historically, so the only problem I see is this illogical and almost religious devotion to austerity that wants to save future needs as opposed to investing. It's retarded and has zero basis in economics .

I agree, individuals should invest for their future need. They should start with the 12.4% of income currently spent on SS taxes.

Not everyone has the time or inclination to invest. We've already went over why privatization of SS is a horrible idea.

Here's the Kimura Grand Bargain for American Prosperity:

1. Suspend FICA
2. Fund SS out of the general revenue
3. Raise SS payments to to a minimum of $2,000 per month.

Problem solved, everyone can go have a beer.

You forgot one:

4. National bankruptcy.


This is the last time I'm going to say this: The US government, as the sovereign issuer of the dollar, cannot go bankrupt.

The Congress spends by basically telling the FED to credit a member bank account at the FED. This is entirely independent from tax revenues and/or borrowing.

What you pedantically and erroneously refer to as borrowing is simply shifting $$$$ from reserve accounts at the FED to securities accounts at the FED. When debt payments are made, in terms of operationally servicing said debt, $$$$ is shifted from securities accounts to reserve accounts over at the FED.

Oh yeah, and your tax payments are nothing more than unprinting $$$$ ( demand accounts are debited, the monetary circuit isn't a feedback loop with a fixed amount of $$$$ that is perpetually recycled).

I fuckin' don't how many ways I can spell this out for you. I can create a diagram in Photoshop or something.

You can't be serious. You're trying to tell us that when a U.S citizen or a foreign government exchanges their cash for a U.S. Treasury bond that the government hasn't borrowed money.

It takes a special kind of fool to fall for that abracadabra.

You're confused as usual. I worked for a primary dealer for five at the start of my career, so I understand the mechanics better than most.

When a foreign government or citizen exchanges $$$$ for a Treasury, $$$$ is simply debited from a reserve account and credited to a securities account (US Treasuries are nothing more than interest beating dollar deposits at the FED).

Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat, nor do they have a dollar factory in Hong Kong. They obtain US $$$$ from net exports to the US which end up at the Bank of China. They then convert their US $$$$ to US Treasuries which is nothing more than a balance sheet operation, consisting of a series of debits and credits, between the Bank of China's reserve account and securities accounts at the FED.

There's no abracadabra here. Uncle Sam can NEVER run of his supply of dollars as the sovereign issuer of the currency.

There’s no net flow of dollars to the US Treasury.
They get dollars from net exports to the US. These end up at the Bank of China. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. There’s no net flow of dollars to the US Treasury.
Oh Jesus. FDR only created the SS Trust fund for political reasons. Why not just eliminate FICA and fund SS out of the general revenue?

Again, it's not these mystical and esoteric "unfunded liabilities" which are the problem. Like I said, the only problem would be the availability of real resources in the future, which will not be an issue as long as the economy grows along with the population, and we have an increase in productivity that will enable us to have fewer workers to supply increased numbers. This is basically what's happened historically, so the only problem I see is this illogical and almost religious devotion to austerity that wants to save future needs as opposed to investing. It's retarded and has zero basis in economics .

I agree, individuals should invest for their future need. They should start with the 12.4% of income currently spent on SS taxes.

Not everyone has the time or inclination to invest. We've already went over why privatization of SS is a horrible idea.

Here's the Kimura Grand Bargain for American Prosperity:

1. Suspend FICA
2. Fund SS out of the general revenue
3. Raise SS payments to to a minimum of $2,000 per month.

Problem solved, everyone can go have a beer.

You forgot one:

4. National bankruptcy.


This is the last time I'm going to say this: The US government, as the sovereign issuer of the dollar, cannot go bankrupt.

The Congress spends by basically telling the FED to credit a member bank account at the FED. This is entirely independent from tax revenues and/or borrowing.

What you pedantically and erroneously refer to as borrowing is simply shifting $$$$ from reserve accounts at the FED to securities accounts at the FED. When debt payments are made, in terms of operationally servicing said debt, $$$$ is shifted from securities accounts to reserve accounts over at the FED.

Oh yeah, and your tax payments are nothing more than unprinting $$$$ ( demand accounts are debited, the monetary circuit isn't a feedback loop with a fixed amount of $$$$ that is perpetually recycled).

I fuckin' don't how many ways I can spell this out for you. I can create a diagram in Photoshop or something.

You can't be serious. You're trying to tell us that when a U.S citizen or a foreign government exchanges their cash for a U.S. Treasury bond that the government hasn't borrowed money.

It takes a special kind of fool to fall for that abracadabra.

You're confused as usual. I worked for a primary dealer for five at the start of my career, so I understand the mechanics better than most.

When a foreign government or citizen exchanges $$$$ for a Treasury, $$$$ is simply debited from a reserve account and credited to a securities account (US Treasuries are nothing more than interest beating dollar deposits at the FED).

Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat, nor do they have a dollar factory in Hong Kong. They obtain US $$$$ from net exports to the US which end up at the Bank of China. They then convert their US $$$$ to US Treasuries which is nothing more than a balance sheet operation, consisting of a series of debits and credits, between the Bank of China's reserve account and securities accounts at the FED.

There's no abracadabra here. Uncle Sam can NEVER run of his supply of dollars as the sovereign issuer of the currency.

There’s no net flow of dollars to the US Treasury.

Ummmm...when new US Treasuries are purchased, money flows to the US Treasury. That's why they sell Treasuries.

Your're still confused.

If you have written a bunch of IOUs to your neighbors that then come back to you (say, you owe them cups of sugar), would you count the "inflow" of your own IOUs to yourself as a net flow (of sugar or dollars) in your favor? No. You would shred them.

When the government receives its own currency back, it shreds it. (today it is all electronic, so they just debit their liabilities).

The Treasury shreds the money they borrow from China? If you say so.
Doesn't change the fact that China lent the Treasury fiat dollars.
 
Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat

Any entity that buys US Treasuries is lending the Treasury our own fiat.

I'd rethink that if I were you. You're wrong. Those Treasuries are being purchased with US dollars. Those dollars, sitting in the Bank of China's reserve account, were spent into existence at some point by the federal government.

Try again, Sparky
.

Those Treasuries are being purchased with US dollars.

Yes they were. US dollars given to the US Treasury, in exchange for a Treasury security, is how the US Treasury borrows our fiat currency, chief. I'm surprised as simple a subject as lending and borrowing confuses you so much.

I'm surprised you don't get it. Where did those dollars come from? They didn't magically appear out of the ether. The federal government spent them into existence at some point and China received them from exporting goods and services. They desire to save those dollars in government securities since they pay a higher rate of return than letting those dollars sit in reserve accounts over at the FED.

The federal government spent them existence at some point and China received them from exporting goods.

Yes, now they are owned by China. When China buys Treasuries, China is lending those fiat dollars to the US Treasury.

You really need to quit[e] while you're ahead.

I'd like to, but you keep posting silly errors.


Oh Jesus. It doesn't matter if they're owned by Santa Claus. The point being that the federal government is the only source of dollars.

Yes, the only source of original issue dollars. And once they're out there, China lends some to the Treasury.
Despite your confusion.
 
They get dollars from net exports to the US. These end up at the Bank of China. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. There’s no net flow of dollars to the US Treasury.
Oh Jesus. FDR only created the SS Trust fund for political reasons. Why not just eliminate FICA and fund SS out of the general revenue?

Again, it's not these mystical and esoteric "unfunded liabilities" which are the problem. Like I said, the only problem would be the availability of real resources in the future, which will not be an issue as long as the economy grows along with the population, and we have an increase in productivity that will enable us to have fewer workers to supply increased numbers. This is basically what's happened historically, so the only problem I see is this illogical and almost religious devotion to austerity that wants to save future needs as opposed to investing. It's retarded and has zero basis in economics .

I agree, individuals should invest for their future need. They should start with the 12.4% of income currently spent on SS taxes.

Not everyone has the time or inclination to invest. We've already went over why privatization of SS is a horrible idea.

Here's the Kimura Grand Bargain for American Prosperity:

1. Suspend FICA
2. Fund SS out of the general revenue
3. Raise SS payments to to a minimum of $2,000 per month.

Problem solved, everyone can go have a beer.

You forgot one:

4. National bankruptcy.


This is the last time I'm going to say this: The US government, as the sovereign issuer of the dollar, cannot go bankrupt.

The Congress spends by basically telling the FED to credit a member bank account at the FED. This is entirely independent from tax revenues and/or borrowing.

What you pedantically and erroneously refer to as borrowing is simply shifting $$$$ from reserve accounts at the FED to securities accounts at the FED. When debt payments are made, in terms of operationally servicing said debt, $$$$ is shifted from securities accounts to reserve accounts over at the FED.

Oh yeah, and your tax payments are nothing more than unprinting $$$$ ( demand accounts are debited, the monetary circuit isn't a feedback loop with a fixed amount of $$$$ that is perpetually recycled).

I fuckin' don't how many ways I can spell this out for you. I can create a diagram in Photoshop or something.

You can't be serious. You're trying to tell us that when a U.S citizen or a foreign government exchanges their cash for a U.S. Treasury bond that the government hasn't borrowed money.

It takes a special kind of fool to fall for that abracadabra.

You're confused as usual. I worked for a primary dealer for five at the start of my career, so I understand the mechanics better than most.

When a foreign government or citizen exchanges $$$$ for a Treasury, $$$$ is simply debited from a reserve account and credited to a securities account (US Treasuries are nothing more than interest beating dollar deposits at the FED).

Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat, nor do they have a dollar factory in Hong Kong. They obtain US $$$$ from net exports to the US which end up at the Bank of China. They then convert their US $$$$ to US Treasuries which is nothing more than a balance sheet operation, consisting of a series of debits and credits, between the Bank of China's reserve account and securities accounts at the FED.

There's no abracadabra here. Uncle Sam can NEVER run of his supply of dollars as the sovereign issuer of the currency.

There’s no net flow of dollars to the US Treasury.
They get dollars from net exports to the US. These end up at the Bank of China. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. There’s no net flow of dollars to the US Treasury.
Oh Jesus. FDR only created the SS Trust fund for political reasons. Why not just eliminate FICA and fund SS out of the general revenue?

Again, it's not these mystical and esoteric "unfunded liabilities" which are the problem. Like I said, the only problem would be the availability of real resources in the future, which will not be an issue as long as the economy grows along with the population, and we have an increase in productivity that will enable us to have fewer workers to supply increased numbers. This is basically what's happened historically, so the only problem I see is this illogical and almost religious devotion to austerity that wants to save future needs as opposed to investing. It's retarded and has zero basis in economics .

I agree, individuals should invest for their future need. They should start with the 12.4% of income currently spent on SS taxes.

Not everyone has the time or inclination to invest. We've already went over why privatization of SS is a horrible idea.

Here's the Kimura Grand Bargain for American Prosperity:

1. Suspend FICA
2. Fund SS out of the general revenue
3. Raise SS payments to to a minimum of $2,000 per month.

Problem solved, everyone can go have a beer.

You forgot one:

4. National bankruptcy.


This is the last time I'm going to say this: The US government, as the sovereign issuer of the dollar, cannot go bankrupt.

The Congress spends by basically telling the FED to credit a member bank account at the FED. This is entirely independent from tax revenues and/or borrowing.

What you pedantically and erroneously refer to as borrowing is simply shifting $$$$ from reserve accounts at the FED to securities accounts at the FED. When debt payments are made, in terms of operationally servicing said debt, $$$$ is shifted from securities accounts to reserve accounts over at the FED.

Oh yeah, and your tax payments are nothing more than unprinting $$$$ ( demand accounts are debited, the monetary circuit isn't a feedback loop with a fixed amount of $$$$ that is perpetually recycled).

I fuckin' don't how many ways I can spell this out for you. I can create a diagram in Photoshop or something.

You can't be serious. You're trying to tell us that when a U.S citizen or a foreign government exchanges their cash for a U.S. Treasury bond that the government hasn't borrowed money.

It takes a special kind of fool to fall for that abracadabra.

You're confused as usual. I worked for a primary dealer for five at the start of my career, so I understand the mechanics better than most.

When a foreign government or citizen exchanges $$$$ for a Treasury, $$$$ is simply debited from a reserve account and credited to a securities account (US Treasuries are nothing more than interest beating dollar deposits at the FED).

Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat, nor do they have a dollar factory in Hong Kong. They obtain US $$$$ from net exports to the US which end up at the Bank of China. They then convert their US $$$$ to US Treasuries which is nothing more than a balance sheet operation, consisting of a series of debits and credits, between the Bank of China's reserve account and securities accounts at the FED.

There's no abracadabra here. Uncle Sam can NEVER run of his supply of dollars as the sovereign issuer of the currency.

There’s no net flow of dollars to the US Treasury.

Ummmm...when new US Treasuries are purchased, money flows to the US Treasury. That's why they sell Treasuries.

Your're still confused.

If you have written a bunch of IOUs to your neighbors that then come back to you (say, you owe them cups of sugar), would you count the "inflow" of your own IOUs to yourself as a net flow (of sugar or dollars) in your favor? No. You would shred them.

When the government receives its own currency back, it shreds it. (today it is all electronic, so they just debit their liabilities).

The Treasury shreds the money they borrow from China? If you say so.
Doesn't change the fact that China lent the Treasury fiat dollars.

I said there we're no net flows of dollars to the US Treasury. My example demonstrated why. When China purchases Treasuries, their reserve account at the FED is debited and their securities account at the FED is credited.

Thanks for playing, though.
 
Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat

Any entity that buys US Treasuries is lending the Treasury our own fiat.

I'd rethink that if I were you. You're wrong. Those Treasuries are being purchased with US dollars. Those dollars, sitting in the Bank of China's reserve account, were spent into existence at some point by the federal government.

Try again, Sparky
.

Those Treasuries are being purchased with US dollars.

Yes they were. US dollars given to the US Treasury, in exchange for a Treasury security, is how the US Treasury borrows our fiat currency, chief. I'm surprised as simple a subject as lending and borrowing confuses you so much.

I'm surprised you don't get it. Where did those dollars come from? They didn't magically appear out of the ether. The federal government spent them into existence at some point and China received them from exporting goods and services. They desire to save those dollars in government securities since they pay a higher rate of return than letting those dollars sit in reserve accounts over at the FED.

The federal government spent them existence at some point and China received them from exporting goods.

Yes, now they are owned by China. When China buys Treasuries, China is lending those fiat dollars to the US Treasury.

You really need to quit[e] while you're ahead.

I'd like to, but you keep posting silly errors.


Oh Jesus. It doesn't matter if they're owned by Santa Claus. The point being that the federal government is the only source of dollars.

Yes, the only source of original issue dollars. And once they're out there, China lends some to the Treasury.
Despite your confusion.

They're not lent, the Bank of China could keep their dollars in reserve accounts until the cows come home. They get a better rate of interest with US Treasuries. They desire to save in US Treasuries.
 
There’s no net flow of dollars to the US Treasury.

Ummmm...when new US Treasuries are purchased, money flows to the US Treasury. That's why they sell Treasuries.[/QUOTE]

Your're still confused.

If you have written a bunch of IOUs to your neighbors that then come back to you (say, you owe them cups of sugar), would you count the "inflow" of your own IOUs to yourself as a net flow (of sugar or dollars) in your favor? No. You would shred them.

When the government receives its own currency back, it shreds it. (today it is all electronic, so they just debit their liabilities).[/QUOTE]

The Treasury shreds the money they borrow from China? If you say so.
Doesn't change the fact that China lent the Treasury fiat dollars.[/QUOTE]

I said there we're no net flows of dollars to the US Treasury. My example demonstrated why. When China purchases Treasuries, their reserve account at the FED is debited and their securities account at the FED is credited.

Thanks for playing, though.[/QUOTE]

If you have written a bunch of IOUs to your neighbors that then come back to you

Another point you are confused on. If I buy something made in China, I'm not spending an IOU of the Treasury.
When the Treasury borrows these dollars from China, that borrowing does not erase a liability, it adds one.


When the government receives its own currency back, it shreds it.

If you change the word government to the word Fed while understanding that the Fed is not the Treasury, I would agree.

I said there we're no net flows of dollars to the US Treasury.

Yes, and you were wrong.
The Treasury borrows money. They don't have to, as you incessently point out, they could merely issue it.
But they don't. So when they issue a Treasury and China buys it, that is a net inflow of dollars to the Treasury.


Thanks for playing, though.

You're welcome, I enjoy pointing out your mistakes.
 
Let's use China, the right wing's favorite boogeyman to prey on the ignorance of the average person. All Chinese dollars come from the US. They don't lend us our own fiat

Any entity that buys US Treasuries is lending the Treasury our own fiat.

I'd rethink that if I were you. You're wrong. Those Treasuries are being purchased with US dollars. Those dollars, sitting in the Bank of China's reserve account, were spent into existence at some point by the federal government.

Try again, Sparky
.

Those Treasuries are being purchased with US dollars.

Yes they were. US dollars given to the US Treasury, in exchange for a Treasury security, is how the US Treasury borrows our fiat currency, chief. I'm surprised as simple a subject as lending and borrowing confuses you so much.

I'm surprised you don't get it. Where did those dollars come from? They didn't magically appear out of the ether. The federal government spent them into existence at some point and China received them from exporting goods and services. They desire to save those dollars in government securities since they pay a higher rate of return than letting those dollars sit in reserve accounts over at the FED.

The federal government spent them existence at some point and China received them from exporting goods.

Yes, now they are owned by China. When China buys Treasuries, China is lending those fiat dollars to the US Treasury.

You really need to quit[e] while you're ahead.

I'd like to, but you keep posting silly errors.


Oh Jesus. It doesn't matter if they're owned by Santa Claus. The point being that the federal government is the only source of dollars.

Yes, the only source of original issue dollars. And once they're out there, China lends some to the Treasury.
Despite your confusion.

They're not lent, the Bank of China could keep their dollars in reserve accounts until the cows come home. They get a better rate of interest with US Treasuries. They desire to save in US Treasuries.

They're not lent,

When I buy a bond from IBM, do you feel I am lending IBM money?

the Bank of China could keep their dollars in reserve accounts until the cows come home.

That's true. They can continue lending to the Fed.

They desire to save in US Treasuries

Which they do by lending to the Treasury.
 
When I buy a bond from IBM, do you feel I am lending IBM money?

It's a different ball game with a sovereign currency issuer. IBM and other firms are currency users, the federal government is a currency user. There is a huge distinction.

That's true. They can continue lending to the Fed.

You're still confused. The central bank creates the currency, it doesn't need to be lent the money it issues. IBM can't make their own currency and require that people pay taxes with said currency. Their supply of dollars will always be limited. The government's supply of money boils down to policy decisions.

Which they do by lending to the Treasury.

Those dollars already existed, they don't need to lent back to the government. If they stayed in reserve accounts, they'd just sit there in an idle fashion. Federal borrowing consists of crediting dollars from reserve accounts at the Fed and crediting securities accounts at the Fed.


Like I tried to explain to Britpat, our resident candidate for the Darwin Award, Congress spends by giving instructions to the FED to credit a member bank account at the FED. This is independent of taxation, revenues, or borrowing.
 
When I buy a bond from IBM, do you feel I am lending IBM money?

It's a different ball game with a sovereign currency issuer. IBM and other firms are currency users, the federal government is a currency user. There is a huge distinction.

That's true. They can continue lending to the Fed.

You're still confused. The central bank creates the currency, it doesn't need to be lent the money it issues. IBM can't make their own currency and require that people pay taxes with said currency. Their supply of dollars will always be limited. The government's supply of money boils down to policy decisions.

Which they do by lending to the Treasury.

Those dollars already existed, they don't need to lent back to the government. If they stayed in reserve accounts, they'd just sit there in an idle fashion. Federal borrowing consists of crediting dollars from reserve accounts at the Fed and crediting securities accounts at the Fed.


Like I tried to explain to Britpat, our resident candidate for the Darwin Award, Congress spends by giving instructions to the FED to credit a member bank account at the FED. This is independent of taxation, revenues, or borrowing.

IBM and other firms are currency users, the federal government is a currency user. There is a huge distinction.
And one big similarity. When they borrow money, they're both borrowing money.

The central bank creates the currency, it doesn't need to be lent the money it issues.

The Fed doesn't need to be lent, but is currently holding trillions in excess reserves that the banks are lending it. It's turning a nice profit on those loans.

Those dollars already existed

Yes they did.

they don't need to lent back to the government

Right, if the Treasury printed instead of borrowing, the Treasury would never need to borrow.
In our current reality that is not the case, so they borrow.


Like I tried to explain to Britpat, our resident candidate for the Darwin Award

Looking at all your errors here, you'll give him a run for the money.
 
When I buy a bond from IBM, do you feel I am lending IBM money?

It's a different ball game with a sovereign currency issuer. IBM and other firms are currency users, the federal government is a currency user. There is a huge distinction.

That's true. They can continue lending to the Fed.

You're still confused. The central bank creates the currency, it doesn't need to be lent the money it issues. IBM can't make their own currency and require that people pay taxes with said currency. Their supply of dollars will always be limited. The government's supply of money boils down to policy decisions.

Which they do by lending to the Treasury.

Those dollars already existed, they don't need to lent back to the government. If they stayed in reserve accounts, they'd just sit there in an idle fashion. Federal borrowing consists of crediting dollars from reserve accounts at the Fed and crediting securities accounts at the Fed.


Like I tried to explain to Britpat, our resident candidate for the Darwin Award, Congress spends by giving instructions to the FED to credit a member bank account at the FED. This is independent of taxation, revenues, or borrowing.

Edit to add: I meant the federal government is a currency issuer. Type-o central, my apologies. :)
 
And one big similarity. When they borrow money, they're both borrowing money.

It was a type-o, I mean the US government is a currency issuer. Huge difference. Night and day. It issues the currency, it doesn't borrow it as the monopoly issuer of said currency.

The Fed doesn't need to be lent, but is currently holding trillions in excess reserves that the banks are lending it. It's turning a nice profit on those loans.

Meh. Once a bank makes a loan, it borrows the exact amount of $$$$ in the interbank market at a slightly decreased rate. Banks will charge borrowers at a rate which are higher than what banks pay in order to borrow.

By the way, this is what I mean about the textbooks being out of date. People, even some of my colleagues, still parrot the model they learned from undergrad text books. Banks take deposits from customers and lend out said deposits as loans. In reality, and we both agree, banks fund loans by borrowing in the interbank market.

Right, if the Treasury printed instead of borrowing, the Treasury would never need to borrow.
In our current reality that is not the case, so they borrow.

You seem to the think the FED has some access to a source of funds the Treasury doesn't. All the FED does is provide the monetary basis for Treasury's fiscal policy.

Looking at all your errors here, you'll give him a run for the money.

I'm not the one throwing around absurd things like national bankruptcy, unfunded liabilities, and they we'll end up like Zimbabwe or Weimar. :lame2:
 
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And one big similarity. When they borrow money, they're both borrowing money.

It was a type-o, I mean the US government is a currency issuer. Huge difference. Night and day. It issues the currency, it doesn't borrow it as the monopoly issuer of said currency.

The Fed doesn't need to be lent, but is currently holding trillions in excess reserves that the banks are lending it. It's turning a nice profit on those loans.

Meh. Once a bank makes a loan, it borrows the exact amount of $$$$ in the interbank market at a slightly decreased rate. Banks will charge borrowers at a rate which are higher than what banks pay in order to borrow.

By the way, this is what I mean about the textbooks being out of date. People, even some of my colleagues, still parrot the model they learned from undergrad text books. Banks take deposits from customers and lend out said deposits as loans. In reality, and we both agree, banks fund loans by borrowing in the interbank market.

Right, if the Treasury printed instead of borrowing, the Treasury would never need to borrow.
In our current reality that is not the case, so they borrow.

You seem to the think the FED has some access to a source of funds the Treasury doesn't. All the FED does is provide the monetary basis for Treasury's fiscal policy.

Looking at all your errors here, you'll give him a run for the money.

I'm not the one throwing around absurd things like national bankruptcy, unfunded liabilities, and they we'll end up like Zimbabwe or Weimar. :lame2:

It issues the currency, it doesn't borrow it as the monopoly issuer of said currency.

I love your constant claim that the Treasury doesn't borrow money.
I'm wondering if they have a pill that can help your issue.

Once a bank makes a loan, it borrows the exact amount of $$$$ in the interbank market at a slightly decreased rate.

Why would a bank need to borrow today? They have trillions in excess reserves at the Fed.

Banks take deposits from customers and lend out said deposits as loans. In reality, and we both agree, banks fund loans by borrowing in the interbank market.

Your claim is silly. Banks loan excess reserves, either to borrowers, other banks or, currently, to the Fed.
A bank would be stupid to borrow excess reserves elsewhere when they have their own.


You seem to the think the FED has some access to a source of funds the Treasury doesn't.

That's only because the FED does have access to a source of funds the Treasury doesn't.

I'm not the one throwing around absurd things like national bankruptcy, unfunded liabilities, and they we'll end up like Zimbabwe or Weimar

I agree, the absurd things you're throwing around are different than those 3 examples.
 
I love your constant claim that the Treasury doesn't borrow money.
I'm wondering if they have a pill that can help your issue.

Again, from whom does the Treasury borrow $$$$? Under a fiat system and non-convertible currency, spending by sovereign governments is independent of taxing and borrowing. Get over it.

Why would a bank need to borrow today? They have trillions in excess reserves at the Fed.

Your claim is silly. Banks loan excess reserves, either to borrowers, other banks or, currently, to the Fed.
A bank would be stupid to borrow excess reserves elsewhere when they have their own.

You need to understand banks create loans through an accounting entry on their books. This is the power granted to you by the state once you receive a bank charter. Loans are created out thin air so to speak. Banks aren't RESERVE constrained, they're CAPITAL constrained. No reserves in this equation, not at this point.

My point being that if a bank requires nothing more than capital and book keeping to facilitate loans, why in god's name would they lend out reserves? This would fall under the category of retarded business decision. Reserves also earn interest for banks, so even if rates are low, the interest adds up in the aggregate, which add to the bottom line. It's also a zero risk form of income for a sector that is loaded with heavy risk (the banking sector).

We had this discussion multiple times. Why would a bank lend out its reserves and throw about that risk free income when it's not even needed? A loan is nothing more than an entry on the bank's balance sheet. They do this any time they desire and let reserves site idle and earn income.

By the way, I'm not even sure if a bank can legally make loans with reserves. I'm pretty confident reserves can only be invested in certain assets granted by regulatory authorities and I'm pretty sure it's government securities.



That's only because the FED does have access to a source of funds the Treasury doesn't.

Do I have to draw you a picture? I'm being serious.
 

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