Post
Topic
Board Economics
Re: A Resource Based Economy
by
jtimon
on 29/06/2011, 10:51:38 UTC
HI Lightrider, why don't you elaborate a post that would put some light on the mechanics of the current monetary system ?

Because he believes that dollars are debt.

Dollars are debt. The creation of dollars starts with loan origination. All dollars are brought into existence through loans. All dollars represent debts.


Not always. The fed issues dollars simply by buying things. If what they buy is, for example, US bonds or a debt (at interest) from a bank, then you're reasoning can be applied. But they can buy stocks, ETFs, gold, bitcoins or just tons of shit if they want.
Not that I like the Fed, but that's how it works.


Yes they can only after the dollars have been created by buying bonds and using them as the basis for new loans and money creation.

They don't just print dollars and buy whatever. Read modern money mechanics.

Yes all federal dollars are debt.


I can't find a paper from the fed where they say literally that they issue dollars simply by buying things.
But I found this:

http://www.frbsf.org/education/activities/drecon/2002/0209.html
http://en.wikipedia.org/wiki/Securities

It seems like you were right when you said they can't buy whatever they want, but they definitely can buy things different from US bonds.
Gold certificates or SDRs, for example, don't sound much like debt.