This One Thing Shows How Deeply Washington Is Broken

You're stuck in the past.


Inflation is inching closer toward the Fed’s 2% target
https://www.cnn.com/2024/07/26/economy/us-pce-inflation-consumer-spending-june/index.html

 

Money is a medium of exchange. It isn't debt. It is whatever people use to exchange value. In the U.S. the currency we use as money is created by government and has value only because people believe in the government. U.S. currency has no intrinsic value as you noted above. It is a convenience for buying and selling created and managed by the government.

Since we use fiat currency, the government does not earn money and then spend some or all of what it earned like you and I do. It takes money that others have earned and spends that. The problem is that it spends much more than that. Since enough money to pay for what it spends is not available, it borrows like you and I might do but it also creates more money. These days it creates trillions of dollars every so often since it doesn't have the funds to pay down the debt or even pay the interest on the debt. Think of it as something akin to a person who has acquired so much credit card debt that it can no longer make the minimum payments. You and I could go bankrupt doing that. Government just creates the missing money.

We know from economics that greater supply reduces the value of whatever is supplied. That is why over production causes prices to decline and scarcity causes them to rise. As the government increases the supply of money, the value of the money is diluted and loses value. During my lifetime, the dollar has lost more than 95% of its value. All of that is caused by how government manages the money supply.

Since the debt is now unmanageable, we are actually heading our government toward bankruptcy. For a government we call it default on the debt. It isn't a guess. It is basic economics. So far government has gotten away with chipping away at the value of the dollar but the debt and spending has become so great that now it requires more than just chipping. Government debt is now greater than our GNP. That means that we no longer produce enough in our economy in a year to pay off the debt with all of it.

Default on the debt is inevitable unless we stop borrowing more than we can afford and stop expanding the money supply. Government has to go on a serious financial diet. The alternative is default on the debt and it wouldn't make for a pretty economy. The question is how quickly we want to get to that point. Is it too late to prevent that future default? No but government will have to change to fix it. We are simply making default arrive sooner by continuing down the current path.

I agree with you that we are in better shape than most other countries. It is because our economy is so much larger but that won't last forever if we don't change our ways. That is the point. Your hatred of Trump has nothing to do with that. Government overspent during his term just like it has since under every president since Calvin Coolidge. Politics won't help. Only government financial discipline will resolve the problem. I hope this helps you understand things better.

 

And it essentially guarantees that you will eventually have inflation.

 

Ask your self why that is?And then figure out what the number would be if we still figured inflation the way we did in 1990

 

Think about that target for a minute. Why does government want 2% annual inflation? Quite simply because it allows it to make debt and interest payments with cheaper dollars. It is a debtor with a very powerful tool by being able to create money out of thin air. Government is afraid of deflation because it would cause them to have to repay debt and interest with dollars that are more valuable than the ones they borrowed. 2% is 20% every decade. That helps put things into perspective. The purpose of the inflation target is be sure that there is no deflation. The target is in the interest of government. It is definitely not in your best interest and mine.

 

Ouch.

Stopping the borrowing and money supply expansion would be a good start.

The FED is a central bank. It's job is to loan money to the private banks. It is the money wholesaler. Inflation is caused when government spends money it doesn't have and the FED creates money to cover the deficit. The FED is actually the engine of inflation. When the dollar declines in value from creating the money, the FED then punishes the private sector by raising interest rates thereby hurting the economy. It was they that made the inflation happen for government spenders in the first place. It is a strange state of affairs.

More accurately the economy is slowing because of the actions of the FED. True inflation (inflation of the money supply) is basically permanent. It hasn't "mended" since the Coolidge administration.

 

True but they had control over mask and vaccine mandates and school closings.

 

U.S was built by immigrants. We are fed by immigrants. Immigrants clean up after us.

We agree that's a function of the FED. When was the last time anyone told the FED what to do?

What was that? "THE FED CREATES MONEY"?

So! Inflation really wasn't President Biden's fault?

I thought it was the FED's job to maintain a stable economy so that everyone's finances remain stable and no one is "punished". They don't?

"They" who?

It certainly is, I would go so far as to say corrupt.

Since the creation of the FED, would be more accurate.

 

Last time there was a board meeting

This is an epiphany? Where do you think dollars come from?

He signed the spending bills.

They don't because government spends money it doesn't have. If government didn't do that they wouldn't have to create dollars. Otherwise the federal government would default.

The FED

I agree. Government overspending is not only corrupt but incompetent as well.

So you don't want the U.S. to have a central bank. Federal government has caused inflation by overspending and causing the FED to expand the money supply. The government spenders are the bad guys, not the central bankers. I said since the Coolidge administration because the Coolidge administration was the last one not to overspend. In fact, the Coolidge Administration reduced the national debt.

 

1990?
I see, you are stuck in the past.

 

Of course. Inflation is the hidden tax.
But it is also much much much better than deflation. Which will wreak total havoc on an economy.

 

Only in certain areas.
And certainly not outside their State and not outside the country where the rest of the world was also controlling those things.

 

How would it wreak havoc on the economy? The only result would be that the dollar would become more valuable. It would require government to pay its debts with dollars that are more valuable than the ones they borrowed. It is government that should fear deflation. You should encourage it.

 

I cannot fathom how anyone fails to understand how critical security of our borders is.
Sure, brandon has his open borders policy and liberals naturally will try to sell whatever his program is.

But border security is ever so much more important than any administration or political party.

If we don't have secure borders we don't have a country.
If we don't have secure borders we don't have a safe country.
If we don't have secure borders we don't have a society.

 

So! The FED tells itself what to do. Duh!

No it's not an "epiphany", IF the FED creates money how does it do that?

Passed by a bipartisan Congress.

And yet, IF the FED creates money wouldn't the economy stagnate without new debt?

You said

I replied

And you reply: "The FED"
I agree.

That's not what I meant. It's the FED and the Federal Reserve System that is corrupt and incompetent. The "CREATE" money from nothing as "DEBT" to be paid by the American tax payers. And the economy has never been stable for any length of time since the FED was created.

I think the world wide Central Banking system is a corrupt fraud on all the peoples of the world.

 

All evidence to the contrary, immigrants have ALWAYS been a valuable resource of America.
We've never had a "secure" Southern Boarder, but since 1783 we've ALWAYS had a country.
Immigrants commit far fewer crimes, by percentage, than American citizens.
We have a society, it is broken right now, but it's divisiveness of the right that has broken it; not immigrants.

 

It must be the liberal mindset. Either because they don't want to try and understand the difference between LEGAL and ILLEGAL migration. Or because they think we're to stupid to understand the difference.

LEGAL migration is what helped build this country. The mix of cultures, language, food, art and experience is why America is so unique and strong. We need LEGAL migration and we need LEGAL foreign labor.

ILLEGAL migration sucks up resources and wastes effort better spent on Americans. It denegrates our national pride and endangers us without any return benefit. ILLEGAL migrants have no loyalty and no reason to respect our laws.
Terrorists are ILLEGAL migrants.
The bill for Brandon's open border policy will be coming due soon.
I expect it will be more than we want to pay.

 

Never even crossed my mind.

When my grandfather came to the U.S. he was penniless and had no documentation. In those days the U.S. had invested in the means to process and assimilate immigrants. To day we treat them as refuse and have no plan what to do with them, thanks in part to tRaitor tRump nixing the bipartisan immigration bill.

The number of unauthorized immigrants has grown during the Biden administration but not nearly as drastically as publicized when compared to our recent past. And tRaitor tRump really didn't affect immigration much at all.


Economic benefits of illegal immigration outweigh the costs, Baker Institute study shows
HOUSTON – (May 18, 2020) – The economic benefits of illegal immigration are greater than the costs of the public services utilized, according to an expert at Rice University’s Baker Institute for Public Policy.

Indeed, for every dollar the Texas state government spends on public services for undocumented immigrants, new research indicates, the state collects $1.21 in revenue.
https://news.rice.edu/news/2020/eco...on-outweigh-costs-baker-institute-study-shows

You're being lied to about the real impact of undocumented immigrants.

 

The board is made up of outsiders, including some of the FED's customer like any public company.

By covering checks written by the administration that are not currenty available.

In my view "passed by Congress" is a negative thing. Every president has the power of veto.

No.

We came together on something at least.

We agree again. But I consider all of federal government to be corrupt, not just the FED.

 

50+ standing ovations for a war criminal is another indicator how deeply broken the Congress is. The House passing legislation clearly in violation of the First Amendment is another such sign, and that's been going on for 20+ years.

 

It looks like you need Clinton senior back.

 

So, you agree that the FED is controlled by insiders and is as “Federal” as Federal Express.

You’re spinning and doing backflips to keep from admitting that the FED, a private enterprise, CREATES money out of thin air and charges U.S. interest on it.

I believe, like all christian nationalists, you “view” our Constitution as a “negative thing”.

The economy would “stagnate if the FED stopped creating money (as debt) because growth would be hamstrung.

Only because you changed your tune.

Just like a good little christian nationalist “you” believe that our government BY the PEOPLE that built the greatest nation on earth is “corrupt”. -sad

 

Well that would be Newt. With out whom we would likely be closer to 40 trillion than thirty.

 

No idea what you're talking about. Did you read my post? I was talking about Clinton senior. 90s.

 

Periods of deflation most commonly occur after long periods of artificial monetary expansion. The early 1930s was the last time significant deflation was experienced in the United States. The major contributor to this deflationary period was the fall in the money supply following catastrophic bank failures.12 Other nations, such as Japan in the 1990s, experienced deflation in modern times.3
https://www.investopedia.com/terms/d/deflation.asp