Kimura
VIP Member
So it issues the dollar based on what? It's own demand for fiat dollars, or against the productivity in the market to incur revenues from the issuance it creates? I'd call that printing money. What then exactly, is the public and government debt? Who is responsible for servicing that debt? Why are we paying interest on servicing said debt?
Under a fiat system, the dollar – or national unit of account – obtains demand trough legislative fiat. The government tells us that this is the currency and legislates it so. The dollar has no intrinsic value, but we have to use it since all tax obligations are denominated in dollars. If you live in the US, you must pay taxes in dollars. Demand for dollars, otherwise worthless pieces papers, stems from the fact that we pay all tax obligations in dollars. This helps to ensure that all prices, debts, and assets are denominated in dollars. One you let this sink in, you’ll realize that the US government is the monopoly issuer of dollars. It doesn’t need us or China to lend it the currency it issues.
US government debt represents the total savings of the US economy – or the propensity of the private sector to save. Ultimately, US public debt is private wealth and the interest payments should be viewed private income. In point of fact, it should be viewed as national savings or equity, not debt in the traditional sense.
Operationally, we no longer NEED to issue Treasuries, but the whole thing has been hijacked by politicians. This is a leftover from the gold standard. Here’s what we could do: the Federal Reserve could pay out on its target cash rate on all bank reserves. This would effectively guarantee the short-term rate target was met without the need to issue “US public debt”. It would then serve as the same function Treasuries – a savings vehicle for the private sector which is the same as short-term US bonds.
After it was issued, yes. Are treasury issuance the result
of monetizing debt?
Again, this is gold standard terminology. We no longer monetize debt under a fiat system.
The government issues dollars by having the FED credit commercial bank acccouts.Off from what wealth does the government issue dollars?
Borrowing precedes borrowing, ok. Deficits are credits, loans aren't loans when the federal reserve makes them, or bank reserves are actually reserves in the sense of acquired wealth. It's all very clever and yet requires a masters in sophistry to "understand".
Yes, you shouldn’t distinguish between the FED and Treasury, since they should be viewed as part of the consolidated government sector. One doesn’t have access to a pool of funds the other does. Zero sophistry, all basic monetary operations.
And since loans aren't borrowing, this is the fourth way in which government can acquire revenue
From whom does the US borrow its own fiat? I’ve tried to explain this to you on multiple occasions.
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