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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MSI who wrote (7765)	1/3/2003 3:06:58 AM
From: JF Quinnelly	Read Replies (1) \| Respond to of 306849

1). Why create more expense for US taxpayers by issuing trillions in bonds... The debt already exists, we aren't issuing anything new as long as the budget is in balance. It's the sum of past loans to the government, nothing new. Alexander Hamilton's program of a Funded Public Debt turned the crushing debts and bankrupt finances of the Continental Congress into an asset for the United States. It still works this way. We have tried the opposite: Jefferson set up a Sinking Fund to pay off the debt, which happened under Jackson, and that event was accompanied by recession. While this is counter-intuitive, it was the result of paying off the debt. A properly funded public debt acts as a capital asset, and actually increases the money available to the national economy. 2)the gov't debt burden is a proxy for excessive spending, but what I'm exploring are questions why there isn't simply the substitution of gov't issuance of payment for gov't purposes, without consequent issuance of bonds. The debt is simply past spending, not necessarily excessive spending. A capital asset like a dam, a bridge, or a battleship will logically be paid for over time, not all at once. The same as a business would do. Again, government debt can be as much an asset to the economy as burden, as Hamilton knew. Direct issuance of government payment has been done many times throughout history, always ending in disaster. John Law. The Continental Dollar. German marks of the '20s. It's pure inflation, hyperinflation. 3)the banks need a regulatory system, but the gov't is the responsible party to excesses and deceptive accounting, and using the Fed exclusively allows a too-easy conduit for creating such debt The national debt existed for over a hundred years before there was a Fed. The Fed cannot increase the debt by even one penny. Congress votes on the debt. Openly. They discuss it every time they pass a budget, and every time the Treasury warns them that they will exceed the debt limit if they don't reduce spending. They invariably vote to increase the debt, and they do this quite openly. 4)as far as profits to the banks, the question there is whether this system defined as exclusively regulatory is in fact a source of significant profit to the member banks. If so, it's not likely to be an easy number to determine, for obvious reasons of self-interest, but for the same reasons should be reexamined, especially after 90 years. It's a little hard for me to make out what you are saying here, and I think it may be because you have some erroneous ideas of the nature of the Fed. The Fed has nothing to do with the profits banks earn. They have to do that themselves with their own private loans. The Fed pays them nothing. The money they must deposit with the Fed as reserve requirements earns them nothing. Many non-member banks tried to stay non-members, so that they wouldn't have their money tied up. The purpose of the Fed isn't to enrich banks, it's to try to keep the banking system stable and free from periodic collapse. 5)These days we should have a web page in realtime showing the expenditures of every public dollar and program, with debt and inflation calculations of current and proposed actions, and impact on every citizen in the country, posted daily. This would have no relation to the Fed, which doesn't spend public money. You've described something that might be applicable to Congress and the GAO.