Author Topic: Help me out here....  (Read 1923 times)

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Offline ACBass

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Help me out here....
« on: August 14, 2012, 08:32:56 PM »
Hey guys.  Need some opinions.  Got a debate going on a social page and I want to know where he is coming from.   its a debate that he thinks the country is not going broke becuasause we control our own currency.  Heres the statement. 



Be my guest, educate me. I'd rather you listen while I explain it to you, though. Yes indeed the government is not dependent on taxes for revenue. If you were to pay your taxes in cash, it would simply be shredded. The fed simply credits ac
counts at the fed. Where does the treasury get it? They print it, or more specifically they credit bank accounts. Don't call me naive if you aren't smart enough to get it. I never said you didn't earn your pay... I'm saying originally that money entered circulation through either bank loans or gov. spending. The US cannot go broke in a currency it controls. Money is simply a stake on the economy. As long as the economy can still produce, it can't be in jeopardy



Is this mofo right??



Online Pandora

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Re: Help me out here....
« Reply #1 on: August 14, 2012, 09:14:02 PM »
NO.  The government's printing paper.  What backs it up?  Full faith and credit, right?  Well, the more they print, the less your paper dollar is worth without something of real value as a backer.
"Under certain circumstances, profanity provides a relief denied even to prayer." - Mark Twain

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Offline Glock32

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Re: Help me out here....
« Reply #2 on: August 14, 2012, 09:18:44 PM »
This is a variation of the "national debt isn't a problem because we just owe the money to ourselves" argument. It is generational theft. Successive generations give up more and more of their earnings to service debt incurred before they were born, debt that was used to bribe voters with gimmes and benefits that the later generation will never see for itself.

The idea that government expenditure drives an economy makes about as much sense as plugging a power strip into itself and demanding your lamp turn on.
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Offline Libertas

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Re: Help me out here....
« Reply #3 on: August 15, 2012, 07:10:11 AM »
"Control", yeah, but the Neo-Keynesian approach of easy money, debasement and being in cahoots with crony money center banks looking to get their share of the fleecing is unsustainable and the more debt progressives heap upon the rotting corpse will only ensure maggots will be the last to die.  So called "control" will spin off wildly into the unknown once the first major filement snaps.  Tell your friend to examine the recent history of Zimbabwe for the hyperinflation route, we need only to look at Europe to see the spending/debt model being played out and as far as the Euro is concerned we are seeing the beginnings of Gresham's Law being played out.  So far the US is winning the currency war, somewhat (Canada, Australia & New Zealand are actually faring better) by default because other currencies are much worse off.  Once enough currencies have failed...you see it is just a matter of fiat currency musical chairs...being the last one seated does not mean you win in this scenario...all are losers!
We are now where The Founders were when they faced despotism.

Offline Weisshaupt

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Re: Help me out here....
« Reply #4 on: August 15, 2012, 08:55:21 AM »
This is a variation of the "national debt isn't a problem because we just owe the money to ourselves" argument. It is generational theft. Successive generations give up more and more of their earnings to service debt incurred before they were born, debt that was used to bribe voters with gimmes and benefits that the later generation will never see for itself.

The idea that government expenditure drives an economy makes about as much sense as plugging a power strip into itself and demanding your lamp turn on.

And that is how you respond- "We owe ourselves, eh?  So its okay if we don't get paid right?  So if Social Security isn't paid, that is alight, because its money we owe ourselves?  Oh, but we can always  borrow more,  which increases the money supply and therefore, after a lag, results in  inflation, and while you get paid your full SS check, it will actually buy less. He is right that the dollar is just a stake or a share in the economy- but printing and loaning more dollars  is share dilution. The overall effect of these new shares is to REDUCE the growth rate of the economy (http://politicalcalculations.blogspot.com/2012/05/economic-growth-and-chains-of-debt.html) - so not only is your stake smaller, but the company that produces them is making less "profit"

But  there are other shareholders in the American economy - that is why its called the World reserve currency - other people use and hold dollars.  We don't just "owe ourselves" - we owe China, Japan and many other countries who bought treasuries ( which is how the National debt is financed) as well as all of the people just using paper cash worldwide - and the longer and more we borrow, and the less our tax revenue is able to service that debt, and the less interested the countries are in buying more of our debt or keeping what they have. The less interested individuals are in keeping their savings in dollars.  (Were China to try and sell its treasuries, it would crash the US Dollar overnight.. a point I am sure is not lost on them in negotiations with the US.)  What would happen if the people holding these assets suddenly traded them in for real products ( houses, gold, oil, beans, guns)?  

In Greece, where they can't print their own currency,  Govt bond yields have risen to deal with the risk that Greece won't pay - and they would be rising in the US as well, except the Fed, because it has a printing press, is buying over 60% of each debt issue - and artificially keeping bond rates low. As we borrow more and more ( over 1 Trillion a year now thanks to Dems and Obama) - other countries have responded by buying less of our debt and even beginning to sell it.

 Raising taxes on the "wealthy" will NOT balance the budget. You can confiscate 100% of every dollar made over $100K and you still don't have enough to balance even the yearly budget.  And if we did tax 100% of every dollar over $100K how many people do you know will bother to work and earn that dollar? The current level of Government spending is unsustainable given the size of the economy.  We have run out of other people's money, the Nations of the World are looking for alternative currencies to trade in, and the reserve status of the dollar  is in jeopardy. A currency is a product. Just because Apple "Controls" the smart phone market, doesn't mean they will "control it" forever, because their "control" is based on individual consumer decisions.   Likewise, the dollar is only as valuable as its customer perceive it to be, and it becomes less valuable for every additional dollar we print into existence, and even less valuable when you realize the debt that allowed its printing cannot be repaid. Greece is our future - be it hyperinflation, stagflation, or outright default on our obligations. That which cannot continue, won't.

Of course, maybe we shouldn't educate your friend. Its ignorant people like him that are keeping the system afloat by not being smart enough to get out.  As a result we get a long slow decline instead of a sudden collapse as a dollar panic spreads ( which is essentially what happened in 2008 when someone or some group   started to withdraw huge sums from money markets) 
 

« Last Edit: August 15, 2012, 09:09:35 AM by Weisshaupt »

Offline Libertas

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Re: Help me out here....
« Reply #5 on: August 15, 2012, 11:34:57 AM »
Someone...

Soros.

I'd like to meet that pos on a sunny day at high noon someday...

 ::praying::
We are now where The Founders were when they faced despotism.

Offline AlanS

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Re: Help me out here....
« Reply #6 on: August 15, 2012, 05:17:57 PM »
Welcome, AC! Glad to see you show up over here. ::whoohoo:: You sure know where to find wisdom when you seek it.
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Offline John Florida

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Re: Help me out here....
« Reply #7 on: August 15, 2012, 06:11:05 PM »
  Get yourself out of that swamp!!Monetizing the debt is the end of the road for that currency. The more you print the less it's worth. Welcome.
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Offline BigAlSouth

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Re: Help me out here....
« Reply #8 on: August 19, 2012, 06:03:33 AM »
Tell yo dumbass friend that the U.S. is in danger of having the dollar dropped as the currency of international trade. China and Russia don't appreciate this position and want to trade using their own currency. This will make the dollar less valuable and their currency more valuable.

Quote
The dollar has this status because it is currently the currency of international trade.

For example, when Malaysia and Germany exchange goods, the transaction is often denominated in dollars.  In particular, oil -- something that all modern economies need -- is denominated in U.S. dollars, so the currency is almost as indispensable as oil itself.   

The dollar reserve currency status allows the U.S. to run up high deficits and have its debt be denominated in the U.S. dollar, which in turn enables it to print unlimited dollars and inflate its way out of debt. America, understandably, wants to protect

http://www.ibtimes.com/articles/85424/20101124/china-russia-drop-dollar.htm

If or when the world drops the Dollar as the international unit, we are screwed because the status of having the dollar used this way MAKES THE DOLLAR MORE VALUABLE THAN IT WOULD BE OTHERWISE.
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Offline John Florida

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Re: Help me out here....
« Reply #9 on: August 19, 2012, 04:10:15 PM »
  One and gone.
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Offline Libertas

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Re: Help me out here....
« Reply #10 on: August 19, 2012, 06:40:01 PM »
Right now it is winning by default, the countries that could most hurt the dollar as reserve currency are the currencies that are performing better - Canada, Australia, New Zealand.  China trying to get the Renmimbi established or some composite within the BRICS will be a harder sell until their economies improve and their currencies strengthen and the economies of many of the BRICS has a way to go before that can happen.  China has real problems and their military buildup isn't going to improve things with their massive population demanding a better standard of living.  It is why a military confrontation might be viewed as the best way to uncouple the dollar, and unwinding all the international supports everyone is tied into.
We are now where The Founders were when they faced despotism.

charlesoakwood

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Re: Help me out here....
« Reply #11 on: August 19, 2012, 09:10:26 PM »

 

China historically prefer proxies this time, as in the
South China Sea they are going it alone.  It will be
interesting if they proxy up or choose to go head
up with Romney.  Romney is talking tough on national
defense.

Offline John Florida

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Re: Help me out here....
« Reply #12 on: August 19, 2012, 09:23:21 PM »

 

China historically prefer proxies this time, as in the
South China Sea they are going it alone.  It will be
interesting if they proxy up or choose to go head
up with Romney.  Romney is talking tough on national
defense.



  They better get their licks in now because come January things are gonna change with the two new sheriffs on the job.
All men are created equal"
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Offline Libertas

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Re: Help me out here....
« Reply #13 on: August 20, 2012, 06:57:36 AM »
I'd love to see full-time basing rights in Taiwan for air, sea and land forces.  We can pull out of Japan (they need to start standing up for themselves, modify their constitution if need be with our approval).  That'd be a real stick in the Chi-Com eye.

Doubt any of that will happen though.

Way to scary and confrontational, can't have that!
We are now where The Founders were when they faced despotism.