Do loans and credit create new money?

[Stormy Daniels]

Liberals often talk about wealth disparity and wages as something akin to a zero sum game. CEOs make too much money, not leaving enough for others, that kind of stuff. Conservatives usually say that wealth has no limits and can be created if people just find a way. Credit is supposed to be one of the ways wealth is created, and government influence over credit allegedly affects creation of new wealth. When the fed cuts interests rates low, or even down to zero, it's allegedly no different than printing money out of thin air. But is it?

Does credit equate to creating new money? Why? How?

 

[Bootney Lee Farnsworth]

interest on money printed means there will always be debt. Forever.

If our federal government really had our interest at heart, they would spend money into circulation and we would not be taxed a goddamn thing.

The biggest lie ever told is that we must be taxed. Especially when there is nothing but fiat currency.

Also, repeal the federal reserve act.

 

[Stormy Daniels]

interest on money printed means

This doesn't make sense and sounds medieval.

 

[Ralph Norton]

Liberals often talk about wealth disparity and wages as something akin to a zero sum game. CEOs make too much money, not leaving enough for others, that kind of stuff. Conservatives usually say that wealth has no limits and can be created if people just find a way. Credit is supposed to be one of the ways wealth is created, and government influence over credit allegedly affects creation of new wealth. When the fed cuts interests rates low, or even down to zero, it's allegedly no different than printing money out of thin air. But is it?

Does credit equate to creating new money? Why? How?

No:
- you buy something
- the credit card company pays the seller
- you pay the credit card company back.
How is that "new money"?

 

[DudleySmith]

Of course it does. Why do you even have to ask that? Consumer debt creates inflation, so does corporate debts, Federal and state debts, $20 trillion dollar bank bailouts, etc. It all creates money that has to be paid back with money that hasn't been made yet on production that hasn't been produced yet. And, it gets treated as real assets. and is used in turn to leverage even more debt, and inflates asset values to imaginary levels. It's artificially created demand, which pumps up prices.

If people were to buy only what they can actually afford, price would adapt to the real market; there would be no such thing as ridiculous 7 year car loans or 30 year mortgages. My grandparents were extremely nervous about taking out a 3 year mortgage on their house when they needed to add on to it because of having kids. They ended up having 6.

 

[Stormy Daniels]

The biggest lie ever told is that we must be taxed. Especially when there is nothing but fiat currency.

Are you suggesting that instead of levying taxes to pay for public spending the government should simply print cash to pay for it?

 

[Bootney Lee Farnsworth]

This doesn't make sense and sounds medieval.

Let me paint the picture for you.:

The federal reserve prints one dollar. The federal reserve then loans that dollar to your bank. The federal reserve charges interest on that one dollar to your bank. Your bank loans that dollar to you with more interest.

How do you pay back the interest on the one dollar?

 

[Bootney Lee Farnsworth]

Are you suggesting that instead of levying taxes to pay for public spending the government should simply print cash to pay for it?

If it's going to be fiat currency, yes why not. It's magic money anyway.

 

[Stormy Daniels]

Let me paint the picture for you.:

The federal reserve prints one dollar. The federal reserve then loans that dollar to your bank. The federal reserve charges interest on that one dollar to your bank. Your bank loans that dollar to you with more interest.

How do you pay back the interest on the one dollar?

That's not quite how it works. But I understand your position, now.

 

[Bootney Lee Farnsworth]

That's not quite how it works. But I understand your position, now.

Tell me then, how does it work?

I always get that comment but never an explanation.

Usually I get some bullshit about how we're not smart enough to understand how it works.

Then we never get an explanation.

I am left to conclude that it's all fucking bullshit and I'm right.

 

[Mikeoxenormous]

Liberals often talk about wealth disparity and wages as something akin to a zero sum game. CEOs make too much money, not leaving enough for others, that kind of stuff. Conservatives usually say that wealth has no limits and can be created if people just find a way. Credit is supposed to be one of the ways wealth is created, and government influence over credit allegedly affects creation of new wealth. When the fed cuts interests rates low, or even down to zero, it's allegedly no different than printing money out of thin air. But is it?

Does credit equate to creating new money? Why? How?

At one time, no the dollar was bound by the amount of gold in the reserve so the FED couldnt print any money other than with backing. It is the progressives who took the US off the gold standard allowing the debt and printing of oodles of money by the FED. Quantitative Easing, first by the brown turd Obammy was supposed to bring the US out of Progressive Andrew Cuomo's housing debacle, but all it did was delay the recovery while people like Steve Jobs , Elon Musk and Warren Buffet all took out loans at almost zero percent interest while investing in their company making 3 to 5 percent income per year. Now with the threat of higher interest rates, those debts are soon going to be higher than the income thus there will be a mad selloff of stock to cover, bringing a depression on the US. Who is the president again?

 

[postman]

interest on money printed means there will always be debt. Forever.

If our federal government really had our interest at heart, they would spend money into circulation and we would not be taxed a goddamn thing.

The biggest lie ever told is that we must be taxed. Especially when there is nothing but fiat currency.

Also, repeal the federal reserve act.

Idiot !!!

You'll have to buy a car with chickens.

 

[Bootney Lee Farnsworth]

Idiot !!!

Exhibit A. I rest my case.

 

[postman]

If it's going to be fiat currency, yes why not. It's magic money anyway.

If you don't like it, Then don't use it

 

[Stormy Daniels]

Tell me then, how does it work?

For now I'll just say that it's more complex and nuanced then the picture you suggest, which I think is leading you to incorrect attributions. But given the way you describe it, I see the logic in your perspective.

At the moment I'm mostly interested in listening and hearing out others. There are a few people around here who are much better educated than the average bear who might chime in, who would probably be better at explaining things than I could anyway.

 

[postman]

Tell me then, how does it work?

I always get that comment but never an explanation.

Usually I get some bullshit about how we're not smart enough to understand how it works.

Then we never get an explanation.

The federal reserve brokers money.
They loan it out at one rate,
And they sell T-bills at a slightly higher rate, to get the money back.
Wash - rinse - repeat

 

[22lcidw]

Liberals often talk about wealth disparity and wages as something akin to a zero sum game. CEOs make too much money, not leaving enough for others, that kind of stuff. Conservatives usually say that wealth has no limits and can be created if people just find a way. Credit is supposed to be one of the ways wealth is created, and government influence over credit allegedly affects creation of new wealth. When the fed cuts interests rates low, or even down to zero, it's allegedly no different than printing money out of thin air. But is it?

Does credit equate to creating new money? Why? How?

When a loan is made the Federal reserve prints it up or uses money already printed to loan out again. It is allowed to be laned out I believe 9 times each time worth 10% less from the previous loan. The fiat currency relies on constant credit expansion as it will implode with out it. However, in recent years it seems more likely and there can be just printing up money 24 hours a day to keep the system from collapsing from all the debt and promised payouts.

 

[Stormy Daniels]

At one time, no the dollar was bound by the amount of gold in the reserve so the FED couldnt print any money other than with backing. It is the progressives who took the US off the gold standard allowing the debt and printing of oodles of money by the FED. Quantitative Easing, first by the brown turd Obammy was supposed to bring the US out of Progressive Andrew Cuomo's housing debacle, but all it did was delay the recovery while people like Steve Jobs , Elon Musk and Warren Buffet all took out loans at almost zero percent interest while investing in their company making 3 to 5 percent income per year. Now with the threat of higher interest rates, those debts are soon going to be higher than the income thus there will be a mad selloff of stock to cover, bringing a depression on the US. Who is the president again?

I'm curious. Back in the days of the gold standard, was new money not ever created? If it was, how was it created? Was there no inflation? If there was, what caused it?

 

[Natural Citizen]

If it's going to be fiat currency, yes why not. It's magic money anyway.

Most people don't know what money actually is, Bootney.

All of the currency that is piling up is nothing more than a receipt for a claim check on an IOU bond.

Actual 'money' has to be a store of value and maintain its purchasing power over long periods of time, have a well defined unit of account to serve as a standard of value, and a medium of exchange.

Challenge any single one of our resident so-called 'experts' in the field to define the unit of account for one Federal Reserve Note and see what they tell you. Ask them to define their yardstick for measuring economic value. Heh heh. That'll be a hoot. They'll either look like a deer in headlights or pawn of some sensless troll remark or try to flip the script with some stupid, irrelevant counter-question to weasel away from it and re-steer the discussion. History is rife with example.

As you know, creating currency and credit out of thin air devalues the currency and inevitably leads to inflation.

 

[Natural Citizen]

Anyway. I see the dollar is losing shares.

Imagine that. Whoda thunkit.