I know they sit on a balance sheet! That's my point, they don't exist! This is how the US can mitigate inflation. They buy oil shares with money they doesn't exist! They when the oil shares are sold for profit, money comes into the US economy they never existed before. What this does is allows the US to increase its economic activity without having to print money for banks to lend to citizens (QE = this option equates to inflation).
That is the problem: Banks do not need reserves to lend! Debt is only an asset to the dispensers of that debt. Banks that originally started in the US never had their own money, they were public businesses that lent money loaned to them from the Fed to the citizens of the US.
I understand how important this. It's one of the single largest reasons that US capitalism is killing itself. When citizens/businesses/institutions fail to pay back their debts to banks, few if any banks truly go under. What happens is they bundle all that debt, refinance the it, sell it parted out to other banks and lenders, and file some nice documents to get the Fed to stimulate the economy again with newly printed dollars they can lend.
All money in the US economy since its 'humble' beginnings in 1776 are debt. Money cannot be created out of nothing.
1- Don't hand wave by saying "no professional investor." That's a cheesy line and dates your age at about 21. China doesn't want reserve status. Why would they? It would mean losing out on collection of all the debts they have from the US and other countries. If you put yourself in the shoes of Chinese economic power, think about it? The US is the example of what happens if you take on reserve status. Why the hell would they want to wreck their economy? What they would do is given a world currency, China would back it's use for foreign economic affairs provided when they exchange all their debts both held/personal would be given an exchange rate equal to the country the currency was held in.
2- Not to sound condescending, but Europe is a conglomerate of countries, not one economic house. You talk as if all Europe functions as one. Greece was bailed out not to long ago. The Germans (one of the economic powerhouse manufacturers of Europe) want Greece to remain out of austerity. The point of the Euro was to unit Europe after the war. There are too many competing currencies and countries in the area, so the idea was to unite making trade, travel and access to Europe easier for all Europeans. In a sense bolster the economy after being crushed from the war. Of course the Germans are pissed - do you realize what happen to them after the fall of the Berlin Wall? - Try supporting an entire new eastern half of your country that was decimated by the Russians with massive influx of poor eastern Germans.
3- The devaluing is not good. Everything in the world economy is tied to the reserve currency. When you are selling products from your country at a lower value, you may sell more, but you still make less on the economic scale. How do you think GB borrows their capital? and from who? Credit lines to GB come from the US (mostly). GB may have a booming economy from sale of its goods, but when it has to borrow 2:1 to finance the increased production of those goods, it's a net loss for GB.
4- China banned Bitcoins because it meant Chinese dollars were leaving the Chinese economy. China has a heavy tradition of gambling and superstition. For instance, similar to the US, Chinese elevators don't contain the number of certain floors. Certain numbers in Chinese signify death or life and people live by it. It's may sound like a farce, but it is heavily steeped into Chinese culture and business practice. Much of Chinese is rural and poor. Bitcoin was seen as a chance to make a lot of money quickly. The government locked it down because of that.
5- I never said any of this. What I said was that every year there are taxes taken from the citizens of the US. As the debt level rises, the Fed can either adjust the interest rates/the government can increase taxes or a combination of both. For the next decades to come, the US economy is shooting out of control. There are not enough US citizens to tax (at whatever future rate needed) to make the debt payments in the future. Tax rates are based on economic status which is ultimately determined by debt ratios.
6- I quote things because that is how I root my arguments. When you want to make a statement regarding something, one must references his facts. For instance:
"Every economist every Wall Street analyst 99% of the time predicts things to get better and follow a trend." - said by you
This has nothing to do with anything. 99% of all Wall Street analysts don't agree with 1% of Wall Street analysts. This is all that you are telling me. I don't want to harp on you, but in all your responses to me, you have not stated one clear fact at all nor backed up anything besides saying "I'm in finance." I don't care if you're in Sewage sales. Everyone is entitled to their opinion, but clowning around on an internet forum where many young up and comers stop to get a perspective on Bitcoin and finance get ruined by your unsubstantiated statements.
I don't think you are understanding this whole reserve thing. If you are saying they don't exist, how can they buy oil with them. The point about QE that you make, about how money isn't real and how it is buying oil I just don't understand it. Loans are created when banks lend, that is new money. Going out and buying oil has nothing to do with QE or reserves.. the banks, if they buy oil, could have sold their US Treasurys and bought oil with that, so the fact that QE happened has nothing to do with it. If you read my posts which explain that QE was an asset swap of one type of money for another, there is no change that happened. Look, if you are talking about how the USD is not going to be reserve status anymore we are missing one major step - them losing that status. You have to convince central banks around the world to dump their dollars when the USD has been very strong and stable. And I have argued over and over that it is stable and will likely continue to be stable. Talking about losing status, or how inflation is coming is too far ahead. There is no inflation right now, that is the problem. QE did not create it. The Fed can't create it. So let's move past this point you are trying to make which is that somehow inflation is being created because that's not how it works.
Banks do lose money when people default on debt.. they lose all the money they gave to the person. And banks do fail, thousands of times. Getting things moving again with government intervention is the only way to prevent a depression. You say that all the money created since 1776 has been debt but that is not true and I'm saying it again you are not understanding or reading what I am writing - money is only CREATED or truly put into circulation by the US TREASURY they are the only ones who can create physical money. But that is not the only thing that money is. Money is also money in checking accounts and savings accounts, which is created by other borrowing and lending and so on. The important thing is that there IS a ton of money out that that is BEYOND the debt. Household assets in the US are about $80 TRILLION with liabilities of like $12 trillion, so there is WEALTH there. Tons of it. Not just that came out of debt. What I think you are getting at is that all wealth is backed by the full faith and power of the US Government, which is true - the cash and wealth is not backed by anything like gold. But look at what happened to stock markets and economic activity after we left the gold standard - it took off like a rocket. That system is antiquated. And if you are saying that that guarantee is worth nothing, I think you are wrong and I have talked about the things that protect the value of the dollar ad naseum in here.
1 - Dude the US did not get it's economy wrecked by having reserve status, that is nonsense and contradicts the other comments you made about how somehow they can buy things with money that doesn't exist it is false.
2 - The Eurozone has problems that cannot be fixed unless there is a union which the Germans oppose - that is a problem. Greece was bailed out and they like 3 times and they need to be bailed out again. The euro was created to facilitate trade, not to unite Europe in some political way. I don't really know what you are arguing I said that Europe has a lot of problems and they clearly do, just look at their currency strength or lack thereof.
3 - Devaluing IS good. What does it mean when you say you sell more but you make less on an economic scale? That is not a real thing. I don't care about GB I'm talking about the US which does NOT borrow in other currencies, because you were saying that somehow devaluation of the dollar would be disasterous.
4 - I hear that, but again that was entirely my point and I am not sure why we are arguing.
5 - This is wrong on so many levels. Yo usay that it is shooting out of control but corporate profits are at all time highs. Nothing of what you said is actually happening. Can't make debt payments - are you serious? They ARE doing so comfortably. If this was true our interest rates would be 50%! They are like 3% - this is simply false and misleading at best. Economic status has nothing to do with debt ratios.. tax rates are based on how much money you make and that has nothing to do with what you said in the rest of your paragraph.
I can't tell if you really believe that all the stuff you are saying is true or not. But let me assume that you do believe it. You are talking about things like economic scale which is not a thing, you are saying that somehow banks are buying oil without real money, that China would happily accept BTC but then that they don't want to take BTC because well it means $ leaving their economy, and that is just to pick on a couple points. Most of what I have said is based on facts, and the fact that you think I have not substantiated anything with facts speaks to how unhinged from reality you are.
No disrespect but it doesn't sound like you are reading my posts or if you do read them you then just quickly move onto the next manic point you may have and ignore the facts about how banks, the economy and real world work so that you can fit everything into your picture of the world. This is not good for you.