Alternative minimum tax

[Iriemon]

All loans should be repaid in the exact dollar amount of previously existing,true asset that was handed over by the lender. All interest should be calculated accordingly.

That is part of what interest is for. It is reimbursement for expected devaluation of the asset loaned, as well as payment for the time value of money.

If there is a perception that the US dollar will devalue, lenders will demand higher interest rates.

 

[taxedout]

As I already said, if you don't want to call me a libertarian, then don't. Why are some of you guys so obsessed with labels? Why not just address the issue?

I don't want to call you a libertarian, or a constitutionalist for that matter. You call you a libertarian and constitutionalist.
see your own words here.

Your "tax the rich" statement displays loud and clear your confiscatory views on private property. Your defense of usury tax and fractional reserve banking likewise reveal you collectivist underpinnings.

 

[ARealConservative]

How so? You said we'd exchange it 100 for 1. Why should it matter which currency they get paid in, assuming that monetary policies are the same for both? What would make this new currency inherently inferior to the dollar?

Why would monetary policy be the same?

In 1968 a dollar had an exchange rate equal to 1/35th an ounce of gold. In 1973, no such exchange rate existed.

I guess under some idiotic statist apologist system, exchange rates have nothing to do with monetary policy.

 

[Kandahar]

I don't want to call you a libertarian, or a constitutionalist for that matter. You call you a libertarian and constitutionalist.
see your own words here.

Of the labels listed, those are the ones I felt most closely described me. If you disagree, don't use them when describing me. It's really that simple.

Your "tax the rich" statement displays loud and clear your confiscatory views on private property. Your defense of usury tax and fractional reserve banking likewise reveal you collectivist underpinnings.

It has nothing to do with wanting to confiscate property from the rich, it has to do with the fact that, as things stand now, SOMEONE has to pay for our spending so it might as well be the people who can afford to do so.

Unlike you, I don't have an obsession with branding anyone who disagrees with total laissez-faire orthodoxy as a tax-the-rich socialist. I'm not an ideologue. A functioning economy is worth a lot more to me than some utopian theory on paper.

 

[Kandahar]

Why would monetary policy be the same?

In 1968 a dollar had an exchange rate equal to 1/35th an ounce of gold. In 1973, no such exchange rate existed.

I guess under some idiotic statist apologist system, exchange rates have nothing to do with monetary policy.

All you said was that our government would offer to exchange $100 for one unit of the new currency. You didn't say anything about monetary policies being different for the two currencies. That isn't reneging on a promise any more than developing a new $20 bill would be.

 

[taxedout]

That is part of what interest is for. It is reimbursement for expected devaluation of the asset loaned, as well as payment for the time value of money.

If there is a perception that the US dollar will devalue, lenders will demand higher interest rates.

Perhaps you are under the impression that existing assets are being loaned ?

 

[taxedout]

Of the labels listed, those are the ones I felt most closely described me. If you disagree, don't use them when describing me. It's really that simple.



It has nothing to do with wanting to confiscate property from the rich, it has to do with the fact that, as things stand now, SOMEONE has to pay for our spending so it might as well be the people who can afford to do so.

Unlike you, I don't have an obsession with branding anyone who disagrees with total laissez-faire orthodoxy as a tax-the-rich socialist. I'm not an ideologue. A functioning economy is worth a lot more to me than some utopian theory on paper.

1) I haven't used them to describe you. I guess one is free to affix any label to themselves, whether it is accurate or not.

2) you branded yourself as a tax the rich socialist. I didn't have to say a word.

3) Why don't you apply your efforts to fixing what has caused the dysfunction.

 

[Kandahar]

Why don't you apply your efforts to fixing what has caused the dysfunction.

I am. That is, runaway deficit spending. You fix the problem by paying off the debt, not by defaulting on it. Duh.

 

[taxedout]

I am. That is, runaway deficit spending. You fix the problem by paying off the debt, not by defaulting on it. Duh.

Paying it off by raising taxes on "the rich" fixes the debt causing mechanisms how ?

Also I have not said Default.
All principle and the interest on principle that was based on real asset lending should be repaid.

 

[Kandahar]

Paying it off by raising taxes on "the rich" fixes the debt causing mechanisms how ?

You have to raise revenue to pay off debt. After we eliminate the deficit we need a balanced budget amendment.

Also I have not said Default.
All principle and the interest on principle that was based on real asset lending should be repaid.

Define "real asset lending" and what qualifies and what does not, please. And if our government made irresponsible promises, how exactly is that the fault of our creditors?

 

[taxedout]

Define "real asset lending" and what qualifies and what does not, please. And if our government made irresponsible promises, how exactly is that the fault of our creditors?

For one, government IOUs are not real assets in anybody's minds but the bankers' and government's.
The assets should exist prior to the lending of the money.
In our current system the money(asset) is simply created at the time of lending. There is no previously existing asset.

The government did not make irresponsible promises to creditors, it made irresponsible deals with creditors, to the benefit of both the the banks and the government, and to the detriment of the citizens. The banks lose nothing because they have not placed any pre existing assets at risk.
The government IOU on previously non-existing money then becomes an "asset" on the books of the bank, for further lending.
The only thing the banks loses if the loan defaults is the "asset", generated from nothing, and the interest on money which they never actually lent.
I believe this is called usury tax, forced on us by the government and the banking community. Couple this with the inflation caused by this scam, and we get screwed double. Now you want a triple screwing of new taxation ?
Bravo !!!

Now then, tell me again what is actually owed ?
Replace our monetary system with real precious metal backed currency and pay the banks back in their own fiat money. Of course, I await one thousand and one pragmatic reasons why we should continue with the present theft.

 

[ARealConservative]

All you said was that our government would offer to exchange $100 for one unit of the new currency. You didn't say anything about monetary policies being different for the two currencies. That isn't reneging on a promise any more than developing a new $20 bill would be.

I assumed that even a moderately intelligent person would understand that the dickedya had a completely different monetary policy - one that favored us.

 

[Iriemon]

Perhaps you are under the impression that existing assets are being loaned ?

Loaned to the Govt, yes, except what is loaned from the Fed.

 

[Iriemon]

For one, government IOUs are not real assets in anybody's minds but the bankers' and government's.
The assets should exist prior to the lending of the money.
In our current system the money(asset) is simply created at the time of lending. There is no previously existing asset.

It is the Govt borrowing money. And they probably wouldn't take your '99 Camry in lieu of dollars.

The government did not make irresponsible promises to creditors, it made irresponsible deals with creditors, to the benefit of both the the banks and the government, and to the detriment of the citizens.

The banks lose nothing because they have not placed any pre existing assets at risk. The government IOU on previously non-existing money then becomes an "asset" on the books of the bank, for further lending.

The Govt IOU is a debt owed for a loan from someone to the Govt. How is that "previously non-existing money"?

If a bank lends money to the Govt, receives a bond, T-Bill, which is an asset, but it has lost cash in the exchange. It is a wash. What is available for furhter lending?

I think you are getting confused between debt of the US Govt, and loans by the Federal Reserve System (the Fed) to banks which is a way of expanding the money supply because of fractional banking.

But the latter is completely different than the US Govt borrowing money to feed its debt addiction.

The only thing the banks loses if the loan defaults is the "asset", generated from nothing, and the interest on money which they never actually lent. I believe this is called usury tax, forced on us by the government and the banking community. Couple this with the inflation caused by this scam, and we get screwed double. Now you want a triple screwing of new taxation ? Bravo !!!

You have totally lost me. You are claiming there is a "usury tax" based on loan default by money lent to the Govt????

Now then, tell me again what is actually owed ?
Replace our monetary system with real precious metal backed currency and pay the banks back in their own fiat money. Of course, I await one thousand and one pragmatic reasons why we should continue with the present theft.

Owed by whom?

A commodity based system is a loser. It was used before and abandoned. It was a contributor of business cycles and a limitation on capital for investment trade and expansion. An expanding economy needs an expanding money supply to keep capital available, that a commodity cannot provide.

Still don't understand the theft, except that you have completely confused the Fed with the Govt and loans, taxes, debt and the money supply.

 

[taxedout]

The Govt IOU is a debt owed for a loan from someone to the Govt. How is that "previously non-existing money"?.

The money doesn't exist. It is created at the exact instant the loan is made.
The bank is not lending its money. In fact it is not "lending" anything.
It is created at the time of the loan.

If a bank lends money to the Govt, receives a bond, T-Bill, which is an asset, but it has lost cash in the exchange. It is a wash. What is available for furhter lending?.

The bank lends nothing. It has been granted the power to create the money at the instant the loan is made. For instance, if the bank has $100 in assets and loans the gov $50, it is not left with only $50. It is left with the original $100 and now has a $50 government guaranteed IOU. Since it is taxpayer guaranteed, the bank is now free to claim this $50 as a new "asset" for further lending. It now has $150 in assets and risked nothing.
If the loan defaults, the bank does not lose its $50. It simply loses any further interest payments, and can no longer claim the additional $50 as an asset for further lending. The original $100 is intact.

I think you are getting confused between debt of the US Govt, and loans by the Federal Reserve System (the Fed) to banks which is a way of expanding the money supply because of fractional banking..

I think not.

You have totally lost me. You are claiming there is a "usury tax" based on loan default by money lent to the Govt????.

When did I say that ?
There is a ususry tax on all citizens who are forced to pay interest on loans from central banks. The loans are created from nothing by the fractional reserve banking system, as I described above. Therefore all interest is usury.
If no assets are given, no interest is due.

Owed by whom?

Are you for real ?

A commodity based system is a loser. It was used before and abandoned. It was a contributor of business cycles and a limitation on capital for investment trade and expansion. An expanding economy needs an expanding money supply to keep capital available, that a commodity cannot provide.

Expanding money supply ?
Hmmm ? Print ten more dollar bills and we have ten more dollars in capital available ? You have swallowed the biggest hook in histroy.

Still don't understand the theft, except that you have completely confused the Fed with the Govt and loans, taxes, debt and the money supply.

Explain it to me.

 

[Iriemon]

The money doesn't exist. It is created at the exact instant the loan is made.
The bank is not lending its money. In fact it is not "lending" anything.
It is created at the time of the loan.

Huh? The Govt needs money. It borrows by issuing notes and bonds. I buy a T-bill. I write the Govt a check for $10,000 in exchange for the note.

How is that $10,000 being created by me giving it from my checking account to the Govt in exchange for a note?

No money is created.

The bank lends nothing. It has been granted the power to create the money at the instant the loan is made. For instance, if the bank has $100 in assets and loans the gov $50, it is not left with only $50. It is left with the original $100 and now has a $50 government guaranteed IOU.

If a bank lends nothing, where does the Govt get the money it needs?

You are again, confusing the Federal Reserve System with a bank. The Fed can create money. Banks cannot.

When the Fed (not banks) lend the Govt money, it can do it by creating money and thereby expaning the money supply, and it is one of the mechanisms the Fed can use to do it. The loan is still a debt obligation of the US Govt.

Since it is taxpayer guaranteed, the bank is now free to claim this $50 as a new "asset" for further lending. It now has $150 in assets and risked nothing. If the loan defaults, the bank does not lose its $50. It simply loses any further interest payments, and can no longer claim the additional $50 as an asset for further lending. The original $100 is intact.

Banks cannot create assets like this.

I think not.

What is the source of your claim that banks can supposedly lend the Govt money without actually lending them anything and get a Govt loan payable for free? Hell, banks would never fail if they could do that! There'd be hyper inflation. Why don't they all do it?

When did I say that ?
There is a ususry tax on all citizens who are forced to pay interest on loans from central banks. The loans are created from nothing by the fractional reserve banking system, as I described above. Therefore all interest is usury.
If no assets are given, no interest is due.

What is the interest paid by the Fed last year? How are citizens forced to pay it?

You are totally confusing loans to the Govt with Fed loans to the Fed banking system.

A Fed member bank can borrow from the Fed (not the Govt) at a fed funds rate. The bank has a loan payable to the Fed in exchange for cash. It is not the bank getting money for free, it has to pay the Fed back. The bank then lends out its newly acquired cash less the required reserve, this effect multiples as the money is deposited and redeposited in other banks. That is how the money supply is expanded.

When the Fed (not the Govt) wants to contract the money supply, one of the things it does is make the fed funds rate more expensive (higher interest). This will induce member banks to pay back some of what they borrowed, reversing the effect. The Fed can also call its loans to the Govt (not banks), and the effect of the Govt paying off its loans reduces the money supply as well.

Are you for real ?

Yes I am. You said: "Now then, tell me again what is actually owed?"

I have no idea what you were talking about, which is why I thought you might be able to explain it rather than giving a snotty comment.

Expanding money supply ?
Hmmm ? Print ten more dollar bills and we have ten more dollars in capital available ? You have swallowed the biggest hook in histroy.

I used the term capital loosely in the sense of maintaining money purchasing parity with population and production, not specifically investment money.

If you have 10 people and 10 widgets and ten dollars, each widget is worth a dollar. If the population and production grows, you have 11 people and 11 widgets. If there is only 10 dollars, then each widget is 91 cents. A growing population and economy will create deflationary pressures on a fixed money supply. And with growing population and economy, there will be a growing demand for the limited supply of money.

If as the population expands to 11 and the production expands to 11, if the money supply is also expanded to 11, you have parity and the purchasing power of the money stays constant, and is not inflationary in the sense of price inflation.

Explain it to me.

See above.

 

[taxedout]

Huh? The Govt needs money. It borrows by issuing notes and bonds. I buy a T-bill. I write the Govt a check for $10,000 in exchange for the note.

How is that $10,000 being created by me giving it from my checking account to the Govt in exchange for a note?

No money is created.

that's nice, since mostly foreign central bank fiat money is buying the bonds, and not you.
Also what does The Federal Open Market Committee of the FED do.
It buys BONDS. What does it buy them with ? NOTHING, 100% fiat money.

If a bank lends nothing, where does the Govt get the money it needs?

When the FED lends money to the Gov, where do you think the money comes from ? Is is sitting in a vault waiting to be lent ? Is it taken out of the hands of the FED, where it can no longer be used, and given to the government ? NOT!!

You are again, confusing the Federal Reserve System with a bank. The Fed can create money. Banks cannot.

The FED is a private bank.
What does the FED use as its base to expand the money?
It uses IOU's from the governmnet for bonds that were purchased with "created" money, and calls them assets. It uses these as "assets", to lend.The FED then lends to the banks through the discount window. The banking system multiplies the money through fractional reserve banking system. The banking system makes billions in interest for money created from nothing. We pay the usury and the inflation.

When the Fed (not banks) lend the Govt money, it can do it by creating money and thereby expaning the money supply, and it is one of the mechanisms the Fed can use to do it. The loan is still a debt obligation of the US Govt.

So a private bank, the FED can buy US Bonds for nothing, simply by expanding the money supply(translation: creating money from nothing), and is owed money plus interest in return ? How do you or I get that job ?
Secondly, why does the governmnent not expand the money supply itself ?
Why is a private bank allowed to do so?
Hint: it's all in the interest.

What is the source of your claim that banks can supposedly lend the Govt money without actually lending them anything and get a Govt loan payable for free? Hell, banks would never fail if they could do that! There'd be hyper inflation. Why don't they all do it?

That's what the FED does. The central bank, The lender of last resort,
You know, the FED, a private bank. (BTW:try to find a list of the stockholders....good luck)

A Fed member bank can borrow from the Fed (not the Govt) at a fed funds rate. The bank has a loan payable to the Fed in exchange for cash. It is not the bank getting money for free, it has to pay the Fed back. The bank then lends out its newly acquired cash less the required reserve, this effect multiples as the money is deposited and redeposited in other banks. That is how the money supply is expanded.

And there is the trick again. It loans out multiples of it's assets, so in effect it loans out nothing, at a much higer rate than it borrows, it and at a much highr rate than it will pay to hold your savings. The money is created fresh with each loan. You and I pay usury because the bank lent money it did not have.
And so the interest is returned to the FED from the citizens through the banks. It has enriched itself by lending nothing.

It also contributes fiat money to the IMF/World Bank, as well as foreign governments who rarely pay, but refinance again and again, generating huge ammounts of interest and of course inflation as the money is diluted.
It also lends fiat money to businesses participating in foreign government contracts, government guaranteed of course.

I used the term capital loosely in the sense of maintaining money purchasing parity with population and production, not specifically investment money.

If you have 10 people and 10 widgets and ten dollars, each widget is worth a dollar. If the population and production grows, you have 11 people and 11 widgets. If there is only 10 dollars, then each widget is 91 cents. A growing population and economy will create deflationary pressures on a fixed money supply. And with growing population and economy, there will be a growing demand for the limited supply of money.

If as the population expands to 11 and the production expands to 11, if the money supply is also expanded to 11, you have parity and the purchasing power of the money stays constant, and is not inflationary in the sense of price inflation.

And that is why we have legal tender laws, because the people are just dying to get their hands on this high valued currency. They don't need to be forced I suppose.

 

[Kandahar]

For one, government IOUs are not real assets in anybody's minds but the bankers' and government's.
The assets should exist prior to the lending of the money.
In our current system the money(asset) is simply created at the time of lending. There is no previously existing asset.

So by the same logic, should people simply stop paying their unsecured credit card debt? It's just an IOU with no previously existing asset. That means it doesn't count, right?

The government did not make irresponsible promises to creditors, it made irresponsible deals with creditors, to the benefit of both the the banks and the government, and to the detriment of the citizens.

Well, that's the fault of the citizens who elected the government. Not saying that it's right, but it isn't the fault of the creditors.

The banks lose nothing because they have not placed any pre existing assets at risk.
The government IOU on previously non-existing money then becomes an "asset" on the books of the bank, for further lending.
The only thing the banks loses if the loan defaults is the "asset", generated from nothing, and the interest on money which they never actually lent.
I believe this is called usury tax, forced on us by the government and the banking community. Couple this with the inflation caused by this scam, and we get screwed double. Now you want a triple screwing of new taxation ?
Bravo !!!

You have a remarkably poor understanding of how banks actually work.

Now then, tell me again what is actually owed ?

$8.5 trillion

Replace our monetary system with real precious metal backed currency and pay the banks back in their own fiat money.

This doesn't make any sense. The bank (or individuals) put up real money when they bought bonds from our government. And yes, it is an asset...If I have $10,000, I can either buy a government bond or a car.

Of course, I await one thousand and one pragmatic reasons why we should continue with the present theft.

Which theft would that be? Paying back the money our government has already borrowed? :roll:

 

[Kandahar]

I assumed that even a moderately intelligent person would understand that the dickedya had a completely different monetary policy - one that favored us.

Well you didn't say or imply that, so I don't see how any moderate intelligent person would be expected to know that.

If the monetary policy is different, how would that be any different than just keeping the same currency and changing the monetary policy? That's a risk people take when they invest in dollars, and it's already been factored in to the value of bonds.

 

[taxedout]

So by the same logic, should people simply stop paying their unsecured credit card debt? It's just an IOU with no previously existing asset. That means it doesn't count, right?

Certainly they should only owe interest on any loan portion that was backed by real asset. According to reserve rate, set by the FED, which can be as low as a few percent, very little was actually put a risk when your loan was made.
The money was multiplied as Iriemon likes to say.

Well, that's the fault of the citizens who elected the government. Not saying that it's right, but it isn't the fault of the creditors.

Fault of the citizens. You make me laugh.
That is why fraud is illegal. It is the victims fault.

You have a remarkably poor understanding of how banks actually work.

Maybe you can explain to me how your bank had 100% of the mortgage money they lent to you, and all of their other debtors, just sitting in a vault, waiting to be lent. Also tell me how they have your savings sitting in a vault waiting for you to come by and take it back. Oh that's right, they don't.

The bank (or individuals) put up real money when they bought bonds from our government.

That is how The Federal Open Market Committee does it ?
That is how the japanese , chinese and european central banks do it ?
NOT !!

Which theft would that be? Paying back the money our government has already borrowed? :roll:

Actually the government could expand the money supply itself, including its own supply, without charging interest. As Iriemon described, money in exchange for new labor, and widgets or just simply WEALTH. The money need not be borrowed form institutions that are simply creating it. The government could create it and we would all pay evenly through inflation, without interest.Instead, it has unconstitutionally allowed the PRIVATE central banks to create it, then lend "created" money and collect usury. How nice.

A century of this has gotten us where we are today.
But don't worry, tax the rich and it'll all get better.

 

[Kandahar]

Certainly they should only owe interest on any loan portion that was backed by real asset. According to reserve rate, set by the FED, which can be as low as a few percent, very little was actually put a risk when your loan was made.
The money was multiplied as Iriemon likes to say.

So in other words, your answer is no, people shouldn't pay off their unsecured credit card debt. It doesn't count unless it's backed by a real asset.

You should get a job as a financial adviser. :lol:

Fault of the citizens. You make me laugh.
That is why fraud is illegal. It is the victims fault.

How is it our creditor's fault if the government made promises that you don't approve of? If you don't like it, vote the government out of office rather than attacking people who invested in our country.

Maybe you can explain to me how your bank had 100% of the mortgage money they lent to you, and all of their other debtors, just sitting in a vault, waiting to be lent. Also tell me how they have your savings sitting in a vault waiting for you to come by and take it back. Oh that's right, they don't.

Oh Jesus...
Are you saying that that is how banks SHOULD operate in your utopia? How would they make money? What possible reason would banks even have for existing if they operated like that?

That is how The Federal Open Market Committee does it ?
That is how the japanese , chinese and european central banks do it ?
NOT !!

It's a real asset as I already explained. I have $10,000. I can either buy a government bond or I can buy a car. If I buy the bond, then I've given up the car.

Actually the government could expand the money supply itself, including its own supply, without charging interest. As Iriemon described, money in exchange for new labor, and widgets or just simply WEALTH. The money need not be borrowed form institutions that are simply creating it. The government could create it and we would all pay evenly through inflation, without interest.Instead, it has unconstitutionally allowed the PRIVATE central banks to create it, then lend "created" money and collect usury. How nice.

The government still controls the amount of money that can be created, by imposing a reserve requirement on banks.

A century of this has gotten us where we are today.

I'd say that most Americans are doing pretty well compared to a century ago. Do you disagree?

 

[Iriemon]

that's nice, since mostly foreign central bank fiat money is buying the bonds, and not you.

I don't know about other foreign banks. But if you are contending that the most of the money owed by the US Govt is owed to the Fed, you are wrong.

Of the approximately $8.7 trillion owed to the US Govt, a little less than 1 trillion is owed to the Fed, last time I checked. About $3 trillion is owed to retirment/pension funds the Govt has "stolen" from (the biggeest being the SS trust), and about $5 billion is owed to the public, folks like you and me, and other entities, the largest being our good friend China.

Also what does The Federal Open Market Committee of the FED do.
It buys BONDS. What does it buy them with ? NOTHING, 100% fiat money.

This is true. This is one method by which the money supply is expanded, by the Fed (not banks). So what?

When the FED lends money to the Gov, where do you think the money comes from ? Is is sitting in a vault waiting to be lent ? Is it taken out of the hands of the FED, where it can no longer be used, and given to the government ? NOT!!

I not in an earlier post that the Fed (not banks) can create money in this way. It can restrict the money supply by calling the loans.

The FED is a private bank.

Are you trying to argue the Fed is just like any other private bank?

What does the FED use as its base to expand the money?
It uses IOU's from the governmnet for bonds that were purchased with "created" money, and calls them assets. It uses these as "assets", to lend.The FED then lends to the banks through the discount window. The banking system multiplies the money through fractional reserve banking system.

Those are two different methods. It doesn't lend IOUs from the Govt to member banks, each system expands the money supply because it is creating money on deposit via loans from the Fed.

The banking system makes billions in interest for money created from nothing. We pay the usury and the inflation.

Banks make money charging interest, this is true, that is their business. Member banks make money on the interest spread from money they borrow from the Fed at the discount rate versus what they earn lending it out. True.

So a private bank, the FED can buy US Bonds for nothing, simply by expanding the money supply(translation: creating money from nothing), and is owed money plus interest in return ? How do you or I get that job ?

You have to be appointed by the president. Unfortunately, all you get paid is a salary.

Secondly, why does the governmnent not expand the money supply itself ? Why is a private bank allowed to do so?
Hint: it's all in the interest.

Because when the central bank system was set up to control the money supply, it was thought that it would not be smart to give the same folks who control Govt spending the ability to create money.

A very very wise decision, IMO You can really screw up the economy by screwing with the money supply. It would be a disaster if Congress could both print and spend money.

That's what the FED does. The central bank, The lender of last resort, You know, the FED, a private bank. (BTW:try to find a list of the stockholders....good luck)

The Fed is made up of reserve banks that are semi-private bank, but I disagree with your implication that it like other private banks. The Fed's board is selected by the President, not elected by shareholders. Shareholders in Federal Reserve Banks do not receive direct financial benefits from membership like other shareholders of private banks. It is more like a non-profit organization.

And there is the trick again. It loans out multiples of it's assets, so in effect it loans out nothing, at a much higer rate than it borrows, it and at a much highr rate than it will pay to hold your savings. The money is created fresh with each loan. You and I pay usury because the bank lent money it did not have. And so the interest is returned to the FED from the citizens through the banks. It has enriched itself by lending nothing.

I don't believe the Fed is a major borrower. That is not necessary since it can create its only money. It does charge interest, which it uses to pay expenses, and remits the balance to the US Treasury.

It also contributes fiat money to the IMF/World Bank, as well as foreign governments who rarely pay, but refinance again and again, generating huge ammounts of interest and of course inflation as the money is diluted. It also lends fiat money to businesses participating in foreign government contracts, government guaranteed of course.

Do you have a source for this?

Inflation is only generated when the money supply exceeds the growth of what is produced and consumed in the economy.

And that is why we have legal tender laws, because the people are just dying to get their hands on this high valued currency. They don't need to be forced I suppose.

Don't understand your point.

 

[Iriemon]

Certainly they should only owe interest on any loan portion that was backed by real asset. According to reserve rate, set by the FED, which can be as low as a few percent, very little was actually put a risk when your loan was made.
The money was multiplied as Iriemon likes to say.

No part of a credit card loan is back by an asset. It is a line of credit banks give you based on your demostrated ability to be financially responsible.

Maybe you can explain to me how your bank had 100% of the mortgage money they lent to you, and all of their other debtors, just sitting in a vault, waiting to be lent. Also tell me how they have your savings sitting in a vault waiting for you to come by and take it back. Oh that's right, they don't.

Why would the bank have any of the mortgage money they lent to you? That is loan receiveable from the bank, the bank that lent you the money doesn't have the money.

Banks have money because of deposits, not because of loans. And no, they don't keep money received as deposits. They lend it out, subject to a legally mandated reserve (By setting the reserve requirement is another way the Fed can control the money supply, though it seldom uses this method).

That is how The Federal Open Market Committee does it ?
That is how the japanese , chinese and european central banks do it ?
NOT !!

He's talking about a bank. A bank does not have a Federal Open Market Committee. You are confusing private banks with the Federal reserve system again.

Actually the government could expand the money supply itself, including its own supply, without charging interest. As Iriemon described, money in exchange for new labor, and widgets or just simply WEALTH. The money need not be borrowed form institutions that are simply creating it. The government could create it and we would all pay evenly through inflation, without interest.Instead, it has unconstitutionally allowed the PRIVATE central banks to create it, then lend "created" money and collect usury. How nice.

You really think it would be wise to allow Congress to just create money to pay for its expenditures?

A century of this has gotten us where we are today.
But don't worry, tax the rich and it'll all get better.

Yes. We have seen stable financial growth over the past 25 years with this system. Since the Fed changed policy and started focusing on inflation as opposed to employment in 1979, inflation has been under control, usually a couple points a year. We have so far managed to avoide the huge cycles of boom and depression that were far more prevalent, culminating in the Great Depression.

The system is working pretty well, I'd say.

 

[taxedout]

No part of a credit card loan is back by an asset. It is a line of credit banks give you based on your demostrated ability to be financially responsible.

Interest on loan of non-asset is called usury. Formerly illegal.

Why would the bank have any of the mortgage money they lent to you? That is loan receiveable from the bank, the bank that lent you the money doesn't have the money.

I'm talking about prior to the issuing of the loan. The bank does not have the asset to loan, because it doesn't exist yet.

Banks have money because of deposits, not because of loans.

Did I say that ?

And no, they don't keep money received as deposits. They lend it out, subject to a legally mandated reserve (By setting the reserve requirement is another way the Fed can control the money supply, though it seldom uses this method).

Seldom uses it? So the reserve rate is usually around 100% you say?

He's talking about a bank. A bank does not have a Federal Open Market Committee. You are confusing private banks with the Federal reserve system again.

The FED is a private bank. It has share holders, though good luck figuring out who they are. The federal reserve system is a deceiving misnomer.

You really think it would be wise to allow Congress to just create money to pay for its expenditures?

Having a private bank create it,and collect interest makes much more sense.

Yes. We have seen stable financial growth over the past 25 years with this system. Since the Fed changed policy and started focusing on inflation as opposed to employment in 1979, inflation has been under control, usually a couple points a year. We have so far managed to avoide the huge cycles of boom and depression that were far more prevalent, culminating in the Great Depression.

The system is working pretty well, I'd say.

And that is precisely why the FED has stoppped publishing the M3 data.

 

[Iriemon]

Interest on loan of non-asset is called usury. Formerly illegal.

Last I checked, my CC company charging me interest was perfectly legal.

You have your definition of "usury" wrong. Usury is not interest on a non-asset (whatever that means) but an interest rate charged above a limit set by law.

I'm talking about prior to the issuing of the loan. The bank does not have the asset to loan, because it doesn't exist yet.

What? How can a bank loan me money if it doesn't have the money?

Did I say that ?

I thought you were talking about whether a bank that lends out money has the money in its vault.

Seldom uses it? So the reserve rate is usually around 100% you say?

If you mean the reserve requirement, I think it is 10%.

The FED is a private bank. It has share holders, though good luck figuring out who they are. The federal reserve system is a deceiving misnomer.

I asked you this before, so I can understand what you are trying to assert here.

Are you trying to say there is no difference from the Fed and any other private bank? Or do you agree that whether or not you want to call it a private bank, it is in fact a completely different thing than a private bank.

Having a private bank create it, and collect interest makes much more sense.

Under the right setup, of course.

And that is precisely why the FED has stoppped publishing the M3 data.

Not sure your point here. Are you disagreeing with why I said?