US Government and trust

[patches70]

You are all looking at it wrong. Forget taxes, balancing budgets, it can't happen. To do so is to destroy the currency.

It was in 1971 when we embarked on this new system of a pure fiat money system. Before that the amount of currency flowing was restricted by the amount of gold held. Nixon put an end to that and famously uttered the words-
"Well, we're all Keynesians now" and all this is a consequence.

The reason why Reagan did so well is because deficits stopped mattering. This is quite easily done with a fiat currency, to a point. We are now reaching that point where it can no longer support itself since everything must continue to grow. There is always a point where you cannot grow any more. At that point it all implodes.

Balancing the budget won't work, just as "paying off the debt" is impossible. Not just because it's an insurmountable sum ($16.3+ trillion), it's because the currency created must be paid back but the interest itself is never created.
If I print up a $100 and it's the very first $100 of my currency that everyone, by law, must use, with the stipulation that the $100 must be paid back to me with 6% interest, tell me, where does that extra $6 come from that you must pay back as interest? It doesn't exist.
To pay me that interest, you must borrow from me again, maybe another $100 and then you'll have the $6 interest to pay me back. Of course, you'll owe me that second $100 plus another $6 of interest and you'll now be $12 short. You start to see how this system works?

It's a scam. The interest keeps growing and growing until it finally reaches the point where the interest itself is too great a burden. To actually pay back the debt is to turn in every single dollar in circulation that exists in the entire world, and the interest would still be due.

The only time our nation was ever debt free was back in Jackson's time. When we had a debt free currency. That is, the money that was used didn't have to be paid back to anyone just because it was created in the first place.

The purpose of money is to facilitate trade and services so that people may lead productive and virtuous lives. That's the original purpose. But when you have a single private entity, partnered with government force, money turns into another form of control. The exact opposite of what money's original purpose was for. The dollar is debt. That's not money you are carrying around in your wallet, it's debt.

This is the true underlying problem and it can be solved with the stroke of a legislative pen. But there would be consequences to such legislation. Consequences TPTB are not willing to face (and collectivists as well). Those consequences are the reason we went to this current system back in 1971. It works well in the short run, but long term it's always a loser. Always has been, always will be. Fiat currencies only average a lifetime of around 37 years. Our current system has been in existence for 43 years or so. It's on it's last legs, an old timer as far as fiat currencies go.

The sooner we all understand this the better off we'll be. Because when this current incarnation finally expires, if we don't understand what we had, we'll just be saddled with yet another scam of a monetary system.

[_sabotage_]

+ 1 for patches

[jay_a2j]

You are all looking at it wrong. Forget taxes, balancing budgets, it can't happen. To do so is to destroy the currency.

It was in 1971 when we embarked on this new system of a pure fiat money system. Before that the amount of currency flowing was restricted by the amount of gold held. Nixon put an end to that and famously uttered the words-
"Well, we're all Keynesians now" and all this is a consequence.

The reason why Reagan did so well is because deficits stopped mattering. This is quite easily done with a fiat currency, to a point. We are now reaching that point where it can no longer support itself since everything must continue to grow. There is always a point where you cannot grow any more. At that point it all implodes.

Balancing the budget won't work, just as "paying off the debt" is impossible. Not just because it's an insurmountable sum ($16.3+ trillion), it's because the currency created must be paid back but the interest itself is never created.
If I print up a $100 and it's the very first $100 of my currency that everyone, by law, must use, with the stipulation that the $100 must be paid back to me with 6% interest, tell me, where does that extra $6 come from that you must pay back as interest? It doesn't exist.
To pay me that interest, you must borrow from me again, maybe another $100 and then you'll have the $6 interest to pay me back. Of course, you'll owe me that second $100 plus another $6 of interest and you'll now be $12 short. You start to see how this system works?

It's a scam. The interest keeps growing and growing until it finally reaches the point where the interest itself is too great a burden. To actually pay back the debt is to turn in every single dollar in circulation that exists in the entire world, and the interest would still be due.

The only time our nation was ever debt free was back in Jackson's time. When we had a debt free currency. That is, the money that was used didn't have to be paid back to anyone just because it was created in the first place.

The purpose of money is to facilitate trade and services so that people may lead productive and virtuous lives. That's the original purpose. But when you have a single private entity, partnered with government force, money turns into another form of control. The exact opposite of what money's original purpose was for. The dollar is debt. That's not money you are carrying around in your wallet, it's debt.

This is the true underlying problem and it can be solved with the stroke of a legislative pen. But there would be consequences to such legislation. Consequences TPTB are not willing to face (and collectivists as well). Those consequences are the reason we went to this current system back in 1971. It works well in the short run, but long term it's always a loser. Always has been, always will be. Fiat currencies only average a lifetime of around 37 years. Our current system has been in existence for 43 years or so. It's on it's last legs, an old timer as far as fiat currencies go.

The sooner we all understand this the better off we'll be. Because when this current incarnation finally expires, if we don't understand what we had, we'll just be saddled with yet another scam of a monetary system.

Wow! Makes sense. So, the financial system was doomed to fail from the beginning! At least once we did away with the gold standard.

[_sabotage_]

Nothing to do with the gold standard.

Money is a concept. The concept is that this, whatever "this" is (tally sticks were used as the British currency for 720 years and as such the longest standing currency in history) is worth something. If all people agree and place their trust in a form of currency, then it does have worth.

At the moment, the dollar does not have gold backing, that is simply because we trust in it's use. If I give a stripper a $100 bill, then she will give me a lap dance (and if she doesn't give me a good one, I will pimp slap her). Nothing to do with gold. In fact, involving gold into the equation just confuses the matter.

The issue is quite simple, at the moment we allow a private organization to print and distribute our money. This has two major impacts which we could eliminate by printing our own money:

1.Interest,
2 Money supply.

The Fed is a private corporation that receives US bonds for the money they print into circulation. That is where the 6 comes from in Patches analysis, the 6% is interest on the bond, a debt we incur in order to receive money. The Fed can then sell this debt to whoever it chooses and or keep them all. So basically, we lose 6% as soon as our money is printed.

The supply of money; according to Milton Friedman, when the Fed chooses to contract the money supply, it causes recessions or depressions. This is proved by every money contraction in our history. A money contraction happens when the Fed starts talking money out of circulation. They did this just prior to the Great Depression. When there is less money available, people have a smaller piece of the pie to chase and some get nothing at all. In such a time, having money is a great advantage. So if I were one of the private directors on the board of the Fed and decided to start contracting the money supply, then I would get my money out first, so when the Fed does contract the supply, I have a lot during a low supply. As can be seen just prior to the Great Depression, all of the major bankers did get their money out and when the supply was contracted, they could buy up vast assets cheaply.

Fractional reserve banking exasperates this problem. If the Fed "buys" $1 of bonds, it can create $10 of cash to lend out. The banks that borrow this money can then create $100 from the $10 and so forth and thereby for the value of .03, the cost of creating and sending a dollar to the government, the banks can lend out a $100.

Money is built on trust. The trust is quite simple, that the value will remain. In order to maintain the value of money, the supply must be rooted to the population. If there are 100,000,000 people and each requires cash of $1,000 to go about their daily business, then this ratio should be kept as the population grows/shrinks. Then, we wouldn't experience the sudden shock of a contracted supply or the sudden overconfidence of an increased supply.

Conclusion:

The government creates money by paying 6% for the privilege. The supply is unstable and this can only help a certain few wealthy bankers. They can use our money to create more money, and can use the shifts in the amounts of money made available for personal gain.

Solution:

We print our own money, end fractional lending and maintain a fixed ratio of money to the populace.

[BigBallinStalin]

The thing with fiat currencies is that the government requires US citizens (and non-citizens operating a business in the US) to accept US paper money; otherwise, they will face consequences. Consequently, people cannot choose to use more useful or safer means of currency. Since we are locked into the US (or [name your favorite government's]) fiat currency, they can depreciate its value in order to create new money to pay for government goodies and/or borrow more money.

If no such law existed, people would be using other forms of currency or different paper monies--which would actually be backed by real assets (e.g. gold).

[Metsfanmax]

I trust career politicians to keep our government running a lot more than I trust the average voter.

[_sabotage_]

Colonial script was a fiat system that worked rather well according to Ben Franklin.

[_sabotage_]

I trust career politicians to keep our government running a lot more than I trust the average voter.

Fascist much?

[AAFitz]

I'll tell you what I think. (popular or not it seems the only logical explanation)
The US government is purposely destroying the US economy. Other than those getting "free stuff" from Obama, not a single person in this country should support this man. He took the fiscal cliff and got an INCREASE in spending and a tax increase on 77% of Americans (is that about equal to ALL working people?) Then he has said he will not budge on the debt ceiling. Dude, it doesn't take a rocket scientist to see into the future with policies like this! No one is this stupid. There is no way our leaders can honestly believe that bailouts, TRILLIONS $ added to debt each year, increasing the amount we can borrow (debt ceiling), increased spending is in any way going to BALANCE a 16.3 TRILLION DOLLAR DEFICIT!!!!!!!!

Don't you think you may be oversimplifying a little?

Did you just seriously ask someone who believes that the earth was clicked into existence in 1 day, 6000 years ago, if he was oversimplifying a little?

[Metsfanmax]

I trust career politicians to keep our government running a lot more than I trust the average voter.

Fascist much?

I wouldn't say it that way. I just think that the complexities of a government for 300 million people are too much for the typical citizen to process.

[Phatscotty]

I trust career politicians to keep our government running a lot more than I trust the average voter.

Fascist much?

I wouldn't say it that way. I just think that the complexities of a government for 300 million people are too much for the typical citizen to process.

[Funkyterrance]

I trust career politicians to keep our government running a lot more than I trust the average voter.

Fascist much?

I wouldn't say it that way. I just think that the complexities of a government for 300 million people are too much for the typical citizen to process.

I found the fascist comment to be a bit exaggerated as well.

[notyou2]

In Canada, we extended the whole thing by having a 15% tax on all goods and services. It basically gave the Canadian government an instant 15% on the entire Canadian economy. That's a lot of instant income, and debt.

[_sabotage_]

I ask because one of our most successful political families since WWII, the Bush dynasty, was, among other things, linked to an attempted fascist overthrow in the 30s in the US while financing Hitler's rise to power in Germany, apart from the what your statement directly implies. The very reason they wanted to pursue this policy, is that they felt they could lead the country better than the elected government. It would seem that most administrations have the same concept and stray far from their constitutional rights in such a pursuit. The US is getting ever more fascist and that was why I started this thread.

[patches70]

Colonial script was a fiat system that worked rather well according to Ben Franklin.

It did work rather well, and was a debt free currency. It's also the reason why the British had to put down the colonies. However, if you look at the history of the Colonial script, it eventually went the way all fiat currencies eventually go.

Washington famously said, about the colonial script-
"A wagon full of money can scarcely buy a wagon full of supplies."

Wow! Makes sense. So, the financial system was doomed to fail from the beginning! At least once we did away with the gold standard.

You really have no concept of what I'm talking about, do you?

The fiat currency, debt based as we have today, benefits only one party. The one who issues the currency at interest. This is not the intent or purpose of money at all.

Would you agree that a currency is an important (if not the most important) aspect of having a successful State?

If such a thing is so important, then why would the control over such power be given to a private entity who has sole authority to manipulate the value of said currency for their own benefit at the detriment of the people of the State?


If you look at life in these United States before Nixon slammed the gold window, you'd see that a typical family could get by with only one parent having to work. That one parent could afford a roof, food, clothes, entertainment and even put a little bit of money away.
This also has the additional safety net that if the primary provider got incapacitated for some reason and was unable to work, the other parent could enter the workforce instead to make ends meet.

Today, the same family has both parents working to get the exact same things the family got pre gold window. Except they are barely getting by and aren't saving a damn thing. If one gets hurt and is unable to work the family faces severe economic hardship.
And I'm not even looking at the social impacts of such a loss of value of our time, the disintegrating family structure, moral and ethical destruction, crime and all those other goodies.

This is the cost of our "safety nets". To have all of our programs, and at the same time fund our industrial military complex, we have had to trade the value of our time. Our time is worth less and we get nothing more than we did before.

This is directly attributed to the falling value of the currency itself, not a thing to do with the actual prices of things. If we look at the prices of things in other mediums beside fiat currency, everything is much, much cheaper than ever before. What is worth less if the currency we are using and all this is a predictable consequence.

Forget not the famous quote from Maynard Keynes. When questioned about the long term viability of his theories he shrugged off the long term consequences and said-
"In the long run we are all dead anyway".

And this is true! Except after the one generation passes, it falls upon the next to pay the previous debts. I believe Keynes himself would be horrified at how his theories have been abused, IMO.

Anyway, when we keep printing money like idiots it only encourages malinvestment, over consumption and waste. Three very important things to remember considering the market collapse back in the long ago time of 2008.
If you are concerned about Global warming and environmental impacts, then you should also pay close attention to the issue of debt based currency as it leads to over consumption, which of course causes environment impacts that are less than ideal.
Waste is a serious issue as well, and considering that government must take part of your time, the one thing you have that is absolutely non renewable, you see how much time of yours is wasted. You're only alive but so long, why would you allow your time to be wasted? Money is a form of representation of your time. It's bad enough to waste money, resources, but wasting your time is a cardinal sin. You'll understand that better when you are on your death bed wishing for just a little more time.....

[_sabotage_]

Colonial script is subject to it's supply and demand, just as gold is. The colonial script failed as it was attacked by the bankers and the revolution created an excessive need for currency, just as gold from the vaults would be depleted in a similar situation. The difference between gold and the colonial script, is that we could keep on printing it and keep fighting, but if our gold ran out and we had no fiat currency, we would be holding our shafts.

It is impossible for the US to return to a gold standard since we have no gold. We could use silver, but the basic concept is still the same: we can put value on anything we choose, whether it be gold, paper, sticks, shells or stones. The insistence to return to a gold standard would just be putting ourselves back at the mercy of bankers who emptied Fort Knox long ago and sent it to Europe.

[BigBallinStalin]

I trust career politicians to keep our government running a lot more than I trust the average voter.

So, you're in favor of an aristocracy or some kind of landed gentry arrangement? e.g. early US?

Or how about a monarchy? I hear that Saudi Arabia is a very law-abiding place.

[patches70]

Colonial script is subject to it's supply and demand, just as gold is. The colonial script failed as it was attacked by the bankers and the revolution created an excessive need for currency, just as gold from the vaults would be depleted in a similar situation. The difference between gold and the colonial script, is that we could keep on printing it and keep fighting, but if our gold ran out and we had no fiat currency, we would be holding our shafts.

It is impossible for the US to return to a gold standard since we have no gold. We could use silver, but the basic concept is still the same: we can put value on anything we choose, whether it be gold, paper, sticks, shells or stones. The insistence to return to a gold standard would just be putting ourselves back at the mercy of bankers who emptied Fort Knox long ago and sent it to Europe.

Oh, I'm against a Gold Standard as well. The Central banks own all of it. We must not forget the Golden Rule- "He who owns the Gold makes the Rules".
It's funny, the Bernanke told Congress that Gold is not money, but every Central bank in the world (including The Fed) are more than willing to trade pieces of paper for Gold. Go figure....

As to the colonial script, too many were printed. The British counterfeited it as well, which caused a lot of problems, obviously. The biggest problem was Congress was printing the script and that the States themselves were issuing their own bills of credit. The individual States doing what they did was the reason Article I, section 10, clause 1 was put into the Constitution.

The last debt free fiat currency we had in the United States was the Greenback. They were in circulation all the way up until the early 1990's. They were Treasury Notes and began with Lincoln. I've not only seen a Greenback before, but I've actually spent a few of them quite a long time ago. They were rare back then and are now completely gone, but if you had one, you could spend it just like a Federal Reserve Note.

The Gold in Fort Knox, now I'm not one to say one way or another if there is any located there, most of our Gold is held at
33 Liberty Street
New York, NY 10045
but it was Reagan who commissioned the Gold Report and what was reported was that all the Gold was owned by The Fed as collateral on the money it prints.
Since no real accounting by a third party has been done of the gold held at Fort Knox (or at Liberty Street for that matter) has been done in decades, it's hard to say with any certainty one way or another of what is actually there.
There is a lot of speculation, but only one thing is really certain, the majority of gold is owned by the Central Banks.
Going to the Gold Standard is just another way for us to stay under the thumb of the private bankers.

But there are alternatives. The problem is that The Federal Reserve Note has been around for so long that it's the only thing we know. "We" as in the average citizen. We don't remember and are not taught of all the other forms of monetary systems that have been. Some work, some don't. But each and every system has pros and cons.

The biggest "con" to a sound money is that there isn't enough money to fund everything under the sun. That is, if we wanted to have government take care of everything, then government would have to confiscate far too much of our money (through taxes) and it would piss people off. Politicians wouldn't be able to spend, spend spend and in effect pay for votes. We'd have to be very careful on what we choose to spend on. With the fiat currency we can just keep borrowing and borrowing and the issuers of the currency don't even care if we pay it back, only that we make the interest payments.

At a point even that becomes too burdensome. The only reason we can keep on at the moment like we have been is because interest rates are the lowest they have ever been. There will come a day when the Central Bank will be forced to exit from it's current course and raise those rates, at which time the gig is up, we won't be able to afford the interest payments. Right now The Fed is pumping $85 billion a month just into the markets to keep them propped up. When they stop that's it, game over. The Bernanke is in a bad spot, it's all extend and pretend now. They'll do that for as long as they can because they really don't have any other choice in the matter. Trying to extend the life of our current system, that's all that's happening now.