US debt ?

sam111

Member
Jan 26, 2012
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I know the US treasure is responsible in printing US money.

And we say that we are in debt and the debt ceiling is still going up here and their.

But what is stopping the treasure just from printing more money...
I mean now that money is not based on resources like gold what is stopping them from make us all rich in theory?

Is this just a law or do they just regulate the US amount of money to keep everybody at a certain level.... and in line sort of.
Obvious if we made everybody reach it would then be meaningless and cause catastrophic stuff... because most people cann't live with in a means that everybody could live together at.... (some like me have no problem with it)

Very interested in how they come up with how much money we have or when we should print more... obviously this most be based on population , resources , energy ,...social factors ,..etc something to keep people working and at a common goal sort of.
But is their an equation that the US abides to or do couple people en-power just make an educated guess on what it should be.
If I would have to guess it is probably an economic math equation the works or is working currently .... when it fails we must mathematically model another equation for the population and living quality...
 
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First off, the treasury isn't responsible for controlling the amount of money; the Federal Reserve is. The treasury issues debt, called treasury bonds, when the government wants to borrow money to finance some spending.

So what happens if we printed more money? Would it make people richer?

The first thing to recognise is that we don't care about "nominal" values; we care about "real" values. If I walk into the shops with $100, I don't really care that the number "100" is on the note. What I care about is how many things I can buy with that $100. If bread costs $50 per loaf, I don't care that I've bought $100 worth of bread; I care that I've bought two loaves of bread. When people focus on the number on the money rather than the amount of real things it can buy, that's called "money illusion".

Take for example the Japanese yen. One US dollar is worth about 100 Japanese yen. So if a can of coke in the US costs $1, does that mean I can go to Japan and buy 100 cans of coke with that dollar? Obviously not. The price of coke in japan isn't going to be 1 yen, it's going to be around 100 yen. So in both the US and Japan you'll only be able to buy the same amount of coke, despite the fact that the number on the money in Japan is 100 times bigger.

So what happens if we print a bunch of money and introduce it into the economy? One way to imagine it is if we magically added an extra couple of zeros to the notes overnight. When you wake up in the morning, your $1 note now says $100. Does that mean I can now buy 100 cokes today when I could only buy 1 yesterday? No. Because people selling cokes will raise their prices. They'll add an extra two zeroes to the price of coke. So you'll go down to the shop to get some coke with your $100 bill only to find that the price of coke is now $100. You could only buy 1 coke yesterday, and prices have changed to make it so that you can only buy 1 coke today.

When the general level of prices rise, that is called "inflation". Increasing the amount of money being spent in the economy doesn't mean we can all buy more things now, it means that we'll get inflation.

We care about real goods, and real goods are scarce (they aren't unlimited). Say, for simplicity, there's only enough Kola nuts in the world to make 10 cans of coke. Printing money and giving it to people to buy coke doesn't mean everybody can buy more coke, because the amount of coke is constrained by how many Kola nuts there are. The only way I can make more coke for people to drink is by improvements happening to the production of coke. Maybe we find some new Kola nuts? Maybe we come up with new technology to produce more coke using fewer nuts? If we just throw more printed money at it though, all that's going to happen is that the price of coke will rise until the real buying power of the money is restored.

In the short run, prices take time to adjust and increasing the amount of money can temporarily increase the amount of output (I won't go into it; monetary economics is an entire field that's extremely interesting but very in depth). But in the long run it just turns into inflation. A tiny bit of inflation isn't so bad and can actually help an economy run smoothly (for reasons I won't explain). But lots of inflation is a very bad thing. First, if people are on fixed incomes or hold their wealth in currency, then inflation lowers the buying power of those people (because prices are rising but their incomes are not). It begins seriously damaging economic activity at high rates because real resources and work get diverted from producing productive things that people like to trying to deal with an unpredictable price level. At extremely high rates, called "hyperinflation", it completely ruins the ability of money to act as a medium of exchange and has disastrous effects on the economy. There's the classic story of a man in Weimar Germany who withdrew his pay packet from the bank and had to take all the notes home in a wheelbarrow. He got robbed along the way but the money would quickly become so worthless that they left it and took his wheelbarrow.

So how do we decide how much money to print? Well the Federal Reserve has an inflation target of 2% (general level of prices rise by about 2% per year on average over the medium term). If inflation is less than 2%, they increase the rate at which they print money; if it's more than 2%, they slow the rate at which they print money.

Hope that helps.
 
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First off, the treasury isn't responsible for controlling the amount of money; the Federal Reserve is. The treasury issues debt...
Authority and responsibility for money and debt is with congress ( from The United States Constitution - The U.S. Constitution Online - USConstitution.net )--
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts...

To borrow money on the credit of the United States...

To coin Money, regulate the Value thereof...
--and according to The United States Constitution - The U.S. Constitution Online - USConstitution.net the President with his cabinet (including the Treasury) are responsible for carrying out the will of Congress. What happened is that (from FRB: What is the difference between monetary policy and fiscal policy, and how are they related? )--

Congress established maximum employment and price stability as the macroeconomic objectives for the Federal Reserve; they are sometimes referred to as the Federal Reserve's dual mandate. Apart from these overarching objectives, the Congress determined that operational conduct of monetary policy should be free from political influence. As a result, the Federal Reserve is an independent agency of the federal government. Fiscal policy is a broad term used to refer to the tax and spending policies of the federal government. Fiscal policy decisions are determined by the Congress and the Administration; the Federal Reserve plays no role in determining fiscal policy.
 
Money is not wealth.

It is an agreed upon marker with which we keep track of wealth.
 
First off, the treasury isn't responsible for controlling the amount of money; the Federal Reserve is. The treasury issues debt...
Authority and responsibility for money and debt is with congress ( from The United States Constitution - The U.S. Constitution Online - USConstitution.net )--
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts...

To borrow money on the credit of the United States...

To coin Money, regulate the Value thereof...
--and according to The United States Constitution - The U.S. Constitution Online - USConstitution.net the President with his cabinet (including the Treasury) are responsible for carrying out the will of Congress. What happened is that (from FRB: What is the difference between monetary policy and fiscal policy, and how are they related? )--

Congress established maximum employment and price stability as the macroeconomic objectives for the Federal Reserve; they are sometimes referred to as the Federal Reserve's dual mandate. Apart from these overarching objectives, the Congress determined that operational conduct of monetary policy should be free from political influence. As a result, the Federal Reserve is an independent agency of the federal government. Fiscal policy is a broad term used to refer to the tax and spending policies of the federal government. Fiscal policy decisions are determined by the Congress and the Administration; the Federal Reserve plays no role in determining fiscal policy.

Yes. The power to issue money is given to congress who have delegated that responsibility to the Federal Reserve.
Rolleyes.gif
 
...now that money is not based on resources like gold what is stopping them from make us all rich in theory?..
Actually, money is still based on valuable resources just like it's always been. All that's changed is that instead of making the dollar buy a fixed amount of say, gold or silver, they peg it to a fixed amount of stuff we actually need: food, shelter, and clothing.
 
...now that money is not based on resources like gold what is stopping them from make us all rich in theory?..
Actually, money is still based on valuable resources just like it's always been. All that's changed is that instead of making the dollar buy a fixed amount of say, gold or silver, they peg it to a fixed amount of stuff we actually need: food, shelter, and clothing.

They don't peg it to anything. They keep average PCE inflation at around 2% over the medium term.
 
...The power to issue money is given to congress who have delegated that responsibility to the Federal Reserve.
You're right, and the point that I'm pushing is that while anyone can delegate power, nobody can delegate responsibility. Usually this doesn't matter but with Ron Paul types they seem to be trying to make the Fed look like the bad guy and it's a lie. The fed is just doing what Ron and his gang are telling it to do.
 
...They don't peg it to anything. They keep average PCE inflation at around 2% over the medium term.
That's what 'pegging' is. The Fed varies the value of the dollar so that at any given time it buys a fixed amount of (instead of gold or silver like before) that basket of items that makes up Personal Consumption Expenditures.
 
...The power to issue money is given to congress who have delegated that responsibility to the Federal Reserve.
You're right, and the point that I'm pushing is that while anyone can delegate power, nobody can delegate responsibility. Usually this doesn't matter but with Ron Paul types they seem to be trying to make the Fed look like the bad guy and it's a lie. The fed is just doing what Ron and his gang are telling it to do.

Semantics. No thanks.
 
...They don't peg it to anything. They keep average PCE inflation at around 2% over the medium term.
That's what 'pegging' is. The Fed varies the value of the dollar so that at any given time it buys a fixed amount of (instead of gold or silver like before) that basket of items that makes up Personal Consumption Expenditures.

Except no pegging is taking place. This is what it looks like when they peg something, here it's the price of gold:

Gold_1833_1999.gif


Notice the periods where the price of gold remains constant.

Now here's PCE:

fredgraph.png
 
...while anyone can delegate power, nobody can delegate responsibility...
Semantics...
No, it's words, and words have to mean things. Clinton lied when he tried to say Waco was Reno's fault, or that Whitewatergate was Ken Starr's fault, and Obama can't blame 'Fast & Furious' on anyone but himself. Fault and responsibility can't be delegated.
 
...while anyone can delegate power, nobody can delegate responsibility...
Semantics...
No, it's words, and words have to mean things. Clinton lied when he tried to say Waco was Reno's fault, or that Whitewatergate was Ken Starr's fault, and Obama can't blame 'Fast & Furious' on anyone but himself. Fault and responsibility can't be delegated.

And I'm sure you can acknowledge that words have multiple meanings. Such as for "responsible": Responsible - Definition and More from the Free Merriam-Webster Dictionary

To me it seemed obvious from context that meaning 1b was being invoked here. The Federal Reserve is the agent whose job is to administer the money supply. If you think a different meaning is being invoked then good for you. I'm not especially interested in arguing with you over semantics. If you care enough, ask the OP. Since it's a trivial point anyway, why don't we just leave it at "congress delegated administration of the money supply to the Fed"?
 
....This is what it looks like when they peg something...
LOL!! No, that's what it looks like when the scale is adjusted to make the plot appear flat.

In real life before gold certs were recalled in '33 the dollar was officially set at a twentieth or a 32nd of an oz of gold depending on the calendar, but government prices controls look great on paper while in real life we get shortages and surpluses. Outside the US the amount of gold that dollars could buy varied a lot. The PCE Index is based on a list of goods and services common to past consumption expenditures. In the '40's and later in the '70's we had price controls on that too and those also came with flat graphs plus more shortages and surpluses.
 
....This is what it looks like when they peg something...
LOL!! No, that's what it looks like when the scale is adjusted to make the plot appear flat.

It's a linear scale. :cuckoo:

In real life before gold certs were recalled in '33 the dollar was officially set at a twentieth or a 32nd of an oz of gold depending on the calendar, but government prices controls look great on paper while in real life we get shortages and surpluses. Outside the US the amount of gold that dollars could buy varied a lot. The PCE Index is based on a list of goods and services common to past consumption expenditures. In the '40's and later in the '70's we had price controls on that too and those also came with flat graphs plus more shortages and surpluses.

What on earth are you talking about?

Look, maybe it'll be more helpful if you tell us what price you think the Fed has pegged PCE to?
 
...you can acknowledge that words have multiple meanings...
Absolutely and your point is well taken that there are always many ways to say the same thing. My point has fallen on bad times lately as the president's followers are constantly attempting to blame policy mistakes on others. Willingness to accept responsibility is a trait that's become far less common than it should be.
 
expat_panama said:
...the scale is adjusted to make the plot appear flat.
It's a linear scale. :cuckoo:...
Huh, you actually don't know.

OK, here're your same numbers plotted again but this time with your linear scales adjusted to make the US gold prices appear more volatile...
goldpeg.png

pcepeg.png

It's the numbers that matter, not how they're made to look on a graph. Bottom line here is that before '33 the dollars/gold price was more stable with consumption expenditures volatile, and for the past few decades it's been the other way around.
 
Ok, I see and I agree.
Weather you create money or not.... fundamentally it is the quantity ,values, and resources that you have that we base are money on (that people need or want).

But making or not making money will ultimately effect the way people perceive resources and how much it is worth sort of terms.

So they must have figured that 2% is a good number for inflation.

At its most basic level we are no better then the barter system.... so in theory we could throw out all this money , accounting ,....etc stuff and just look at improving things.
People complain about taxes put in theory the government is using it to improve are states and towns....(so even if you don't agree with what they are using some for in general it is done for the greater good of the country and in that thought I have no-problem in why we have taxes)

What I hate is CEO and companies they feel like they can do anything to their workers or have some sort of power over them (I agree some order but when it comes to personal stuff FU CEO... )
And some of the smartest people in the world are the least paid.... so who should get the highest paying jobs....
My opinion either the smartest people or the hardest workers not by political affiliation and such.
And most CEO are not that smart by my standards.

Anyway getting a little off track.

Thanks
I for-see us going back to a form of barter system some day since money usually isn't even seen in the public eye any more it is essentially just debit /credit cards and numbers on a statement ,...etc
So some day people may wake up and say what the hell does this paper even mean.

The essential problem with resources is number of people and as we over populate we either better find away to make the same product with less resources , or have less people in the world.

Also I think surveys are a great way to judge / analysis the culturals social behaviors, needs/wants , and global objectives at large. ( rough estimate at best but can be useful to Gage what Americans think is important.)
 
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But what is stopping the treasure just from printing more money...
I mean now that money is not based on resources like gold what is stopping them from make us all rich in theory?

.

5 year old: why don't they print enough money to make us all rich

Father: but why do you want to be rich

5 year old: so I don't have to work, work is hard and so I can buy lots of toys.

Father: if you didn't have to work neither would the toy maker or bread maker , there would nothing for you to buy, and soon enough you'd die.
 
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I agree with your statements.
However, in some cases medical / personal issues prevent people from functioning at a workable level. So your statement is true provided that you have no problems preventing you and no things from stopping you.

Essentially people should work or do what makes them happy and if you can't find happiness this is a problem and must be taken care of first... as well as affects your ability to work.

Another point is medical conditions... some people have to live with conditions that prevent them from doing the very simple things should they be denied away to live with out work?
Should companies get to look into you with probing background checks?
Should workers be biased and fired based on personality differences ?
the list goes on.

The point is their is exceptions to all rules in certain cases.
 

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