| richardhutnik said: The problem is that this system increases the money supply, not based on actual goods and services available in the economy, but on other factors. And when you have things like they are now, where assets were overvalued, and paid for with debt, you can't service the debt. Critics of monetary systems based around fractional reserve banking point this out: http://en.wikipedia.org/wiki/Criticism_of_fractional-reserve_banking The short here is that there isn't enough money in existence to service the current debt. You see this now, because how is Europe considering addressing its debt crisis? It is looking to issue Euro bonds. As far as "the government buying debt from itself", this is false, because the Federal Reserve is not part of the government. There is government oversight but it is a private bank. If they government did buy debt from itself, why would it charge itself interest? The end result here, on how the system is set up, right down to the issuing of currency, is that any disruption and slowdown in growth causes it to collapse. It is not sustainable, and that isn't a win-lose. It ends up being a win-lose-lose-lose-lose. As far as the world not functioning a 0% interest based economy, if you didn't have one that was based on debt, it could. But, so long as you keep operating a system around the need for more money in the future, particularly in how currency is produced, it eventually does collapse. A debt based system will always produce a certain percentages of insolvency, no matter what people try to do, and if they did everything right. Only sustainable system is one pegged to the current amount of goods and services in the economy. But the current system has money supply not pegged to goods and services, but to projections of possible goods and services, all linked to interest that requires even more economic growth to sustain itself. The one question that would remain here is: How the heck do you finance any projects getting done, if it isn't debt based? How about using one based on future returns on assets? You know, like they have with stock markets? |
Actually europe ISN'T looking into Euro bonds.
Everyone else wants them too, and Europes response has more or less been "Hell no."
Your arguement seems pretty scatteershot but...
Let's start with the "Federal Reserve isn't a government orgnization myth."
We can move on to the rest of the argument after this.
Well, lets start with what the Fed has to say on the matter themselves.
http://www.federalreserve.gov/faqs/about_14986.htm
1) Why would the government charge itself interest?
Ask the Social Security Surplus Trust Fund. It buys "speical" treasuries directly from the government with any surplus it has. Charging the government interest when those speical treasuries come through.
Or like, a dozen other federal funds that do so.
2) Why is the Federal Reserve board of govoners... the people who make ALL of the decisions apointed by the President and approved by Congress?
3) Why does the Federal Reserve give it's spare money to the government if it isn't a government agency?
Last year the Fed had a net income of 80.9 billion. 78.4 billion of that money was sent to the US Treasury. Considering the fact that US Treasuries holdings made up less then 78.4% of the feds profit... that means it bought and paid down some US debt, no? Since the treasury either never had to pay that money, or did pay it then got it back. In otherwords, not only is the federal reserve a part of the government. It's one of the few areas of the government that's profitable and subsdizes other agencies.
To quote...
"Under the Board's policy, the residual earnings of each Federal Reserve Bank, after providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in, are distributed to the U.S. Treasury."
http://www.federalreserve.gov/newsevents/press/other/20110110a.htm
That would be like say... Microsoft saying "We're going to pay our people, then our dividends, and then once we have enough money to make sure we can do what we want, the rest is going straight to the government!"
Versus say... investments, like a private company would do?
