How old were you when you realized our money is backed solely by debt...

>Ok, so I'm going to show up at the federal reserve with $1,000. How much debt will they give me?
bloomberg.com/markets/rates-bonds/government-bonds/us

I don't care about that.

1) Suppose we had no debt. Would (fiat) money have any value? Yes. So obviously money is backed by something other that just debt. In this case, it's backed because the US government requires people to use it for certain transaction (e.g. paying taxes).

2) The federal reserve loans money to banks. I don't think it has ever given anyone already-created debt.

>Would (fiat) money have any value? Yes.
duncan, the only times 'fiat' had value was when backed by commodity metal.
theres never been a "non-redeemable / pure fiat" money thats lasted outside a few years.
Our debt-backed model has been the longest.

That was my point.

Right now, at least, they are still making payments.

You might be thinking of the Treasury. The Federal reserve doesn't sell treasuries (except for the open-market committee, which doesn't count for our purposes).

>federal reserve loans money to banks. I don't think it has ever given anyone already-created debt.
the local bank only request the loan because it is in turn loaning it to consumer based on their signature...its loans all the way down.
The FR note you hold in your product came into creation from someone elses debt.

>Right now, at least, they are still making payments.
Sure but nobody thinks the debt is ever going to be paid off. It’ll just keep getting rolled over in perpetuity until the US is destroyed by WW3 or a new color of plague or whatever else. Nobody cares because their bonds have a fixed term and so long as the US still exists when their particular bond comes due they’ll get their fiat back

>theres never been a "non-redeemable / pure fiat" money thats lasted outside a few years.
The US has had fiat money on-and-off for almost 300 years. Google "scrip".

>en.wikipedia.org/wiki/Early_American_currency#Colonial_currency
>Pennsylvania, however, was responsible in not issuing too much currency and it remains a prime example in history as a successful government-managed monetary system. Pennsylvania's paper currency, secured by land, was said to have generally maintained its value against gold from 1723 until the Revolution broke out in 1775.

>The FR note you hold in your product came into creation from someone elses debt.
Only in the technical sense that it was originally loaned to somebody.

We're talking about whether money is "backed" by "debt". It obviously isn't. Money used to be "backed" by gold - you could go exchange the money for gold. You cannot exchange your US dollars for debt. (I mean, you can buy debt, but only in the same sense you can currently buy gold - you can buy it at freely fluctuating prices).

I mean, the US paid it's debt off once (1936), and it's paid off a large portion of the debt several times. See image.

But you certainly could be right. Obviously in many crisis scenarios, the US won't be able to repay it's obligations, and there is a pretty good chance that the US will carry a lot of debt, until it hits one of those crisis scenarios.

Attached: Total-US-Debt-As-A-Percentage-Of-GDP-2151794155.jpg (575x348, 71K)

>the US paid it's debt off once (1936)
Really? That’s news to me. According to that chart the debt never even goes below 100% of GDP though..?

*1836

The US paid off it's debt in 1836, not 1936. I hit the wrong key.

Absolutely not true. What you are talking about is a micro transaction on a tiny scale.

Think about that money's course of travel further on down the line. Eventually, that money ends up paying off the governments debt to the federal reserve, using taxes to turn your very real and tangible labor into something that can just be printed indefinitely. This is the only thing that gives it any perceived value.

It even says ON the fucking bills - legal tender for all debts. Nothing more, nothing less. The bill is a pure representation of how much debt you are able to repay on behalf of the US gov.

Sorry, I hit the wrong key. Andrew Jackson paid off the entire national debt in 1836, and then an economic crisis forced him to borrow again.

He was our only solvent president.

npr.org/sections/money/2011/04/15/135423586/when-the-u-s-paid-off-the-entire-national-debt-and-why-it-didnt-last

Oh. That’s long ago though, in this day and age there’s no need or even any apparent benefit for a sovereign nation to pay off its debt. What would it accomplish?

You can't exchange your money for debt, because money is the "absence" of debt. Being in debt is your default state, from the moment you are born.

That’s only true if you think that you’re somehow personally legally liable for your government’s debt.

I mean, if you don't have to make debt payments, you have more economic independence from other countries. There are all sorts of political and economic dimensions to debt. You might find the following links interesting.

en.wikipedia.org/wiki/Net_international_investment_position

en.wikipedia.org/wiki/List_of_countries_by_external_debt

Well I’m not going to go full MMTard on you, but it’s hard to see how it’s a disadvantage to trade promises to pay imaginary dollarydoos later in exchange for actual stuff today. I’m looking at it more from a political perspective than an economic one though

>because money is the "absence" of debt
Ummm. No. Money is money.

If money were the absence of debt, it would be impossible to have both money and debt. It would also be impossible to have neither money or debt. And obviously, both are possible.

>Being in debt is your default state, from the moment you are born.
1) I didn't have any legal debts when I was born.

2) I did, however, have tax liability on my (possible) future earnings, which isn't a debt per se, but is a potential liability. That tax liability will be used to repay the US government debts.

3) Obviously, if I never earned any money, I would incur no tax liability. So no, I had no debts when I was born.

It's been a while now.

Attached: P2170393.jpg (3648x2736, 2.23M)

Yeah, you're definitely missing the economic dimension.

>pay imaginary dollarydoos later in exchange for actual stuff today
Ok, buddy. I'll give you some actual stuff. In exchange, you promise to give me all your pointless, future dollarydoos.

>imaginary dollarydoos
The problem is, you can't pull MMT (or similar stuff), without scaring the bond markets. If China and Japan smell that MMT is likely going to dictate federal reserve policy, they will be afraid of losing money, and they'll dump our Treasuries. And once they start that, the US government won't be able to continue borrowing money, which will force them to slash the budget - probably mostly from social security and medicare. Which will cause all sorts of political and economic turmoil.

I think James Carville (Clinton's advisor) once said that he wanted to die, and come back as the bond market. He said that it was the most powerful thing in Washington, but that he didn't realize it until after the election.

I might as well just give the quote.

>At the beginning of the Clinton administration in the early 1990s, adviser James Carville was stunned at the power the bond market had over the government. If he came back, Carville said: I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.
>Wall Street Journal (February 25, 1993, p. A1)

>en.wikiquote.org/wiki/James_Carville

>I'll give you some actual stuff. In exchange, you promise to give me all your pointless, future dollarydoos.
Bad analogy. Will you accept some anonbucks I issued on Ethereum instead?
>you can't pull MMT (or similar stuff), without scaring the bond markets
Insane spiraling deficits that nobody in either party even bothers to clutch pearls about anymore, proven record of unlimited QE on tap whenever we need it, and interest rates remain so low people call it “financial repression”
>insert makes me think face here

this is why i'm all in UND. the new United Nations Dollar. free the shackles. stop. think. act.

18 when I watched the Money Masters

>Bad analogy. Will you accept some anonbucks I issued on Ethereum instead?
No, that's the bad analogy. You're free to make as many new types of anonbucks as you want. However, the US government only has limited ability to print new money, without scaring the hell out of everybody, and causing a global run on the dollar (and dollar-denominated assets, like Treasuries).

>Insane spiraling deficits that nobody in either party even bothers to clutch pearls about anymore
I mean, I'm as fiscally conservative as can be, and if I were in control, I'd basically dissolve the federal government, but it's not really an insane spiraling deficit.

The economy grows at about 2%-3% per year. Inflation is about 2%-3% per year. That means that to keep the same debt-to-gdp ratio, we need a federal deficit of about 4%-6% per year. Last year, I think we had a federal 5% deficit.

The only real problem, is that we're in good economic times. In bad economic times, tax revenue goes down, and so the (federal) deficit gets larger. So we're probably on a long-term unsustainable track, but only very, very slowly.

See the (federal-only) chart I've attached. You'll notice that the debt-to-gdp ratio leveled off in the later-Obama/Trump years, and actually went down in the later-Clinton years.

(Of course, if we include state and local debt, things are getting worse. But local government have gone bankrupt before, and will probably go bankrupt in the future. It's not immediately THAT concerning).

>proven record of unlimited QE on tap whenever we need it, and interest rates remain so low people call it “financial repression”
This stuff is definitely historically abnormal. But, I mean, it probably has more to do with the fact that everybody is buying our bonds (China, Japan, et cetera), and investing here. If everybody wants to loan us money, we get a pretty good interest rate.

But, what do I know? I'm suspect most economists don't actually understand how this stuff works.

Attached: saupload_4df1376bd5e6260db1e7719ee20f431e.png (910x661, 61K)

The real question is - what are you going to do about it?

>>theres never been a "non-redeemable / pure fiat" money thats lasted outside a few years.
>The US has had fiat money on-and-off for almost 300 years. Google "scrip".
links me to a fagapedia article that says "it lasted a few years".

>whether money is "backed" by "debt". It obviously isn't. Money used to be "backed" by gold - you could go exchange the money for gold.
You are confusing the terms "redeemable" and "backed" there is a difference.
The "backing" (ie. basis) of fiat today is debt. That is its the mechanism behind the issuance.

However, fiat is non-redeemable....though technically thats not precisely true....in legal theory $1 FRN it is "supposed" to be redeemable for $1 USD.....after all the clue is in the name a "Federal Reserve Note" is a debt note which is supposed to be backed with some dollar somewhere..however they never give you the USD they will only keep giving you FRNs

I literally gave you a link, and quoted about Pennsylvania scrip, which lasted over 52 years.

I suppose it depends on what "a few" means.

>You are confusing the terms "redeemable" and "backed" there is a difference.
They literally mean the same thing.

>The "backing" (ie. basis) of fiat today is debt. That is its the mechanism behind the issuance.
So, if the Federal Reserve only issued the money to people who gay homeless men, would you say that the money is "backed" by gay homeless men?

>the clue is in the name a "Federal Reserve Note" is a debt note which is supposed to be backed with some dollar somewhere
So what is the Sacagawea dollar?

en.wikipedia.org/wiki/Dollar_coin_(United_States)
en.wikipedia.org/wiki/File:Sacagawea_dollar_obverse.png
en.wikipedia.org/wiki/File:2019_Native_American_Dollar_Reverse.jpg

I notice a distinct lack of "federal reserve note", on the coin. I see a $1 marking. Is it not a federal reserve note? I suspect so, because it's obviously a coin, and thus presumably not a note.

Did they forget to put it on? Or is the Sacagawea the only actual dollar around?

Attached: US_one_dollar_bill,_obverse,_series_2009.jpg (1216x528, 339K)

I'm going to fix that second sentence.

>So, if the Federal Reserve only issued the money to people who are gay homeless men, would you say that the money is "backed" by gay homeless men?

>having debt
never gonna make it

Attached: 1558286861664.jpg (640x627, 82K)

>So, if the Federal Reserve only issued the money to people who gay homeless men, would you say that the money is "backed" by gay homeless men?
No.
But you deliberately keep ignoring the fact that dollars are only issued via debt (a) either directly between US Treasury and FR, (b) or via FR and Member bank (and/or) via Consumer and Member bank.

This is why they are so paranoid against "paying down the debt" as it would literally create a deflation cycle. Paying debt destroys money in circulation.

>So what is the Sacagawea dollar?

You are correct. Coins are minted by Mint / Treasury therefore are technically dollars.
But there is that pesky part of the constitution that states. "no other thing but gold and silver" - so they are in violation.

It should be noted that they do have a legal argument to stand on...as the mint DOES mint silver / gold coins...these are denominated with USD on them....

They could technically make the argument that FRN's are redeemable for USD....but they are not 1:1 redeemable...and the market rate is $18:1 for silver USD and $1400:1 for gold USD.

>Paying debt destroys money in circulation.
No it doesn't. If I pay $1 of mortgage debt to a bank, they receive $1 of cash, and lose a $1 asset. They can then loan that $1 back out to someone. Paying debt would only destroy money, if the bank cannot find a new person to loan the money to.

(Also, people often declare bankruptcy, which "permanently" creates unattached money, which is never ultimately owed to the federal reserve.)

>But there is that pesky part of the constitution that states. "no other thing but gold and silver" - so they are in violation.
Try re-reading that section of the US constitution. I'll wait.

Are you done? It says nothing about the federal government. Only states.