FA_Q2
Gold Member
Hence the complete and utter failure of any system that works that way. Simply put, 100% employment is only preferable if 100% of those employees are actually producing. Almost all government jobs do not produce and there is zero incentive to produce if the government guarantees your job regardless of performance. Unfortunately, that is exactly what the government does. Government jobs do not require any real performance and usually rely on a couple of base metrics that have nothing to do with your job in the first place.A better question, if the government hired all unemployed, would our economic situation be better?
Yes. If the government hired everyone who was willing and able to work, the economic situation would be better.
Fact is, you are incorrect in thinking that government providing universal employment would improve our economy, or at least the people’s situations within it.
I noticed that you also failed to address or even quote my actual point with that question. The very least you should do is quote the point that the question was highlighting.
No, no,no. That is how the system USED to work when cash was actually represented and backed by gold. You could turn in a dollar and get one dollar back in gold. Today, you can’t turn in a dollar at all. You have no right or means to and you would get nothing in return. Money is not debt though it is sometimes introduced into the system in that manner instead of printing it out. Anyway, all this is rather scholastic as it has no bearing on the subject other than the next point which can be addressed separately.Wow, utterly false. Our money is not backed by debt but rather by the government.
Money is backed by debt.
You can see the balance sheet for the Federal Reserve here.
The first set of tables are the Fed's assets. The Fed has 1.6 trillion in US Treasury securities, and another 900 billion in mortgage-backed securities. (The mortgages are new; before the most recent crisis the Fed bought government debt exclusively.) The Fed has a handful of other assets, but those two categories are the lion's share.
The second set of tables are the Fed's liabilities. The Fed has issued about $1 trillion in currency ("Federal Reserve Notes"), and has another 1.6 trillion which are reserve deposits. Again, it has some other miscellaneous liabilities, but those two are the lion's share.
Liabilities are what the Fed owes to others. Assets are what others owe to the Fed. As with any bank, assets must equal liabilities (+capital). If a bank has more liabilities than assets, it's insolvent.
US currency is a liability of the Fed because it is an IOU. (The "Note" in "Federal Reserve Note" is for "promissory note," which is a kind of IOU.)
When the Fed writes promissory notes, it creates a liability on itself. It must, therefore, create an asset of at least equal value in order to stay solvent. The asset the Fed buys when it issues money is debt. Traditionally government debt, but recently mortgage debt as well.
The asset that backs the Fed's liabilities, therefore, is debt.
Commercial banks operate the same way, except that they're required to keep a certain amount of Fed liabilities as reserves. That's why it's called the Federal Reserve System.
Anyway, the point is that just as commercial banks' liabilities (also known as customer deposits) are backed by loans they make to the public, the Fed's liabilities (currency and Federal Reserve accounts) are backed by the loans it makes to the US.
Money is, therefore, not just backed by debt, it is debt itself. It is bank debt - it is the money the banks owe to us. And it's backed by the money we owe to them.
No. If the debt was 100% paid off there would still be cash in the system. Where do you think all existing cash would go? What debt is created when cash is printed?It's paying off the debt that would cause the problem, not balancing the budget.If the US had a completely balanced budget we would still have money and it would still have value.
But I do need to retract something I said before. While the Fed has traditionally relied on US government securities, recently (since the financial crisis) it's bought mortgages as well. Treasury debt may be preferable, but it's not required. So paying off the debt would not necessarily put the Fed out of business.
Actually, it is the value of a dollar that has been in flux. The value of gold is rather stable. There are times like this when market forces become volatile and gold’s value becomes over inflated but it will become stable as it did before. Gold will ALWAYS have value. The dollar on the other hand will always shrink in value.Between about 1973 or so and 1980 gold went from $60 - $850. Over the next ten years it fell to about $400, and then fell another $100+ in the ten years after that. Since then, as I'm sure you know, it's skyrocketed. Gold's record is not one of price stability.You can get dollars with gold and will always be able to do so as long as the dollar has value. Even further than that, you will easily be able to pay for things with gold long after the dollar ceases to exist. Even MORE importantly, an ounce of gold will get you roughly the same amount of food today as it will in ten years.
The dollar has value for the same reason anything has value. Because people think it does. It has no inherent value.Gold has value for the same reason anything has value. Because people think it does. It has no inherent value.
Sorry but gold has an inherent value in the rarity and stable supply. That creates that inherent value. If anyone could ‘print’ out gold at any time like you can do with dollars then it would lose that inherent value but until then, gold has something the dollar does not: it is rare and cannot be created.
So, you did not state:No. I'm not supposing a dollar must be spent in America. I'm supposing that America is the only place where a dollar must be accepted.
That is not the only use of dollars. Here, you were stating that a dollar is an IOU of sorts, which it is not. It is a medium of exchange, as all currencies are.Ultimately the only use for dollars is to buy stuff from us.