You Pay whatever your Taxes are Regardless of how much the Government Spends

Although I disagree with Iriemon on some things, he never makes claims without backing them up with empirical data. You're just making stuff up to try to smear him.

 

The debt decreases when tax receipts exceed outlays for the day. It decreases over a year's time (as it did in 2000) when the tax receipts exceed outlays for the year.

The record of monthly tax receipts and outlays are maintained by the Treasury Department and can be accessed here:

http://www.fms.treas.gov/mts/mts.pdf

As opposed to what the Treasury Department shows, what do you contend was used to create the surpluses which paid down the debt in 2000 if not tax revenues?

 

Intragovernmental debt.

 

But the total public debt decreased in 2000, including intragovernmental debt. Meaning whatever the Govt borrowed from intragovernment accounts (lie the SS trsut fund) was less than the surplus it had from other sources funds.

Intragovernmental debt means debt the US Govt owes to another Govt or quasi-Govt fund, most notably the SS and other government pension trust funds.
This intragovernmental debt is created when surplus pension (ie SS) tax receipts are generated, as they were for most of the last three decades. Rather than investing those surplus tax receipts, or even putting them in a bank, the Govt takes them, applies them to the general fund, and replaces the money with an "IOU". That IOU is intragovernmental debt.

You can see the history of SS tax surpluses and deficits in the CBO's historic budget data, here:

http://cbo.gov/ftpdocs/120xx/doc12039/HistoricalTables[1].pdf Table 1.

The "on-budget" figures show the US Govt surplus/deficit excluding surplus SS funds (which is technically not "on-budget" though they are "unified" for operations purposes).

For example, in 2008, the Govt had total revenues of $2,524.0 billion and total outlays of $2,982.5 billion, resulting in an total deficit of $641.8 billion. The SS program, however, generated a surplus (SS tax receipts exceeded SS outlays) of $185.7 billion. When that figure is added in, you get an "on-budget" deficit of $458.7 billion, which is the deficit you would have if SS expenditures and receipts were taken out of the calculations.

In this situation, even though you have a SS surplus, you have a total deficit and the total debt will likely increase.

In 2000, however, the situation was different. As you can see on the table, there was not only a SS surplus and a total surplus, but also an "on-budget" (excluding SS) surplus. That meant that for 2000, the government ran a surplus even without applying SS funds.

And in that (calendar) year, we also saw the total public debt decrease as well.

So what you say about intragovernmental debt, or more accurately, SS surplus receipts, being the reason why there was a "total" surplus in 2001 of $128.2 billion is accurate. The only reason there was a "total surplus that year is because of surplus SS tax receipts of $163.0 billion. And mostly likely the total (public) debt will increase as well.

But that was not the case in 2000. The Govt ran a true, on-budget, surplus, excluding SS.

So we are back to the begining. The funds for the "on-budget" surplus in 2000 did not come from SS receipts and money borrowed from the SS trust fund.

And so again we have the open question: What do you contend was used to create the surpluses which paid down the debt in 2000?

 

Iriemon,

You are still picking two random dates with a discrepancy and using that to make your point.

The truth is the annual consolidated calculation for gross national debt increased every year Clinton was President. There was no "total" decrease in the national debt whatsoever.



Those are the actual fiscal debt calculations for the Clinton surplus years. And I've shown you directly from the Treasury's site why they say the national debt sometimes decreases. Why do you think they would have that as one of their FAQ's? They specifically tell you why there is sometimes a decrease in the national debt.

I was wrong about saying that accounting wise taxes can not be used to pay down the national debt... and I showed accounting-wise how that is possible in one of my threads.

 

Delusional, isn't it?! I'm in the construction industry, and turn raw materials into something far more valuable than the sum of their parts every day.

 

Your graph is the wrong one. It includes debt from other governments, not just the federal debt.

While the total debt did increase for the year ending 9/30/2000 (by about $17 billion), in the year 2000 the total debt decreased $114 billion, per the Treasury Department.

Total Public Debt Outstanding:
12/31/1999 $5,776,091
12/29/2000 $5,662,216

ftp://ftp.publicdebt.treas.gov/opd/opds122000.pdf

Treasury Department explains:

Why does the debt sometimes decrease?

The Public Debt Outstanding decreases when there are more redemptions of Treasury securities than there are issues.

http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm

That explains technically when the debt decreases. But begs the same question I asked:

What do you contend was used to create the surpluses which funded the redemptions of that decreased the debt in 2000? What was the source of funds to enabled the redemptions of $114 billion in 2000?

 

Just because our economy is more technology advanced does not change the fundamental properties of the free market. Trying to control the fundamental aspects of the free market is not realistic, and the current state of our economy is proof.

Look at the price of food, energy, and gold. I'm not talking about real prices, I'm talking about prices in terms of Federal Reserve Notes. They're all going up and there is no end in sight. And try 40 years, since we moved to a totally fiat currency. They all suffer the same fate, and you're wrong: it ALWAYS happens. Fiat currencies are always eventually reduced to their real value of zero. The British pound is the oldest fiat currency in existence, and it has lost 99.5% of its value. It won't be long before that number bumps up 0.5%. And besides, just because the Austrians have been saying it for a long time doesn't somehow negate the fact that it's going to happen. There is not a single shred of historical evidence that suggests fiat currencies retain their value.

Fact: Artificially low interest rates, set by the Fed, which caused inflation of the money supply, caused the recession.
Fact: Inflation of the money supply at a rate faster than the rate of growth of GDP causes price inflation.
Fact: Despite all the trillions of dollars in stimuli, which came from inflation and debt, there is not a single shred of evidence that the private jobs sector has improved as a result.
Fact: U-3 unemployment is not an accurate indicator of employment because it excludes unemployed people who gave up looking for a job. U-5 is the real unemployment rate, which was reported at 10.6% in August.
Fact: The nominal prices of food and energy are soaring (when expressed in terms of Federal Reserve Notes). When expressed in terms of gold, their prices have moved downwards. This is due to inflation of the money supply at a faster rate than GDP was growing.

The only indicator that the economy is improving is the fact that the GDP is not negative. But even "real" GDP is misleading because it is based on the faulty CPI, which neglects food and energy prices. There is no evidence that the stimulus helped jumpstart the GDP. Every other economic indicator shows that the government and central bank have failed in their efforts to stabilize the economy.

So you think concentrating such an enormous amount of power in the hands of a few small elite is a good idea? You think the people are too dumb and stupid to know what's good for them? Maybe we should go back to Mideval times where we had a divinely appointed all-powerful and wise king to make all of our decisions for us, not just the value of our money.

This statement makes no sense. The value of gold is equivalent to the labor it takes to mine and refine it relative to the labor required to create other goods and services in the economy What don't you understand about that?

See, this is why you're hopelessly confused. You don't understand the fact that it's NOT a plan! We are not talking about central economic planning! Trading in gold and silver is NATURALLY what would happen. People WILL trade in gold and silver in the absence of legal tender laws. Regardless of your emotional OPINION on using metals as money.

Nobody in the civilized world does it because that is the definition of fiat currency. It only has value because the governments declare it to, not because the free markets declare it to. They are enforced through legal tender laws. Take away the government force and you'll see people trading in gold and silver in no time. History has proven this countless times.

I certainly do believe in math and logic, I'm an electrical engineer. I understand math and logic better than you ever will.

The creators of the Fed KNEW it was impossible for the money supply to be effectively managed, no matter what sort of mathematical skills the Board members have. The Fed was never intended to effectively control the money supply. It was intended to serve the interests of its member banks. It's a CARTEL, McFly. Hello, anybody home?

You have given no proof to your claims. Your opinions have no factual backing to them, they are simply emotionally based. It is impossible to argue with you because what I'm saying is either way over your head or you simply disregard what I say instead of responding to it effectively.

You're dodging the question. I never said that the Fed purchased govt debt directly from the Fed...those are your words, not mine. Please don't put them in my mouth. I said it purchases the bonds on the open market. So I'll ask you again, where does the Fed get the money to purchase those bonds?

This is just completely wrong. GDP is a measure of the economic output of goods and services available.

http://en.wikipedia.org/wiki/Gross_domestic_product
Gross domestic product (GDP) refers to the market value of all final goods and services produced in a country in a given period.

http://oxforddictionaries.com/definition/recession

Recession: a period of temporary economic decline during which trade and industrial activity are reduced , generally identified by a fall in GDP in two successive quarters

Saving money does not cause a recession. Saving money and deflation is a symptom of a recession, but that is only true in a Keynesian business cycle recession. Under a gold standard free market system, minor/negligible deflation and saving would naturally occur during times of economic expansion.

Already debunked. Saving money only halts economic expansion under Keynesian economic systems. Under a gold standard, this would not be the case.

 

Once again, you're showing that you don't understand anything outside of your Keynesian world view. Deflationary spirals ONLY occur in a KEYNESIAN business cycle when the bubble bursts. They DO NOT happen under a gold standard. The Keyensian system is not a free market, so you're speaking of an oxymoron.

That's exactly my point. Why do you think that a few guys sitting in a room can mathematically predict something that is impossible to predict without being God? And if they're doing it so well, and have had 100 years at the Fed to perfect their methods, then why is the economy so crappy right now?

What would you like for me to "Mathematically explain"? You've already proven that you have no idea what the Austrian Theory is all about. Everything you know about it is a total misconception, all the way down to your basic understanding of the theory of money. Once you understand how money functions outside of a Keynesian perspective, then you can begin to understand Austrian theory.

Past couple "centuries"? Making stuff up again, I see?

Austrians are not pseudo-economists. They have accurately predicted everything that has happened. Why did the Keynesians fail to predict and stop the current recession? Deflation is the market's way of correcting itself from the abuses the central bank and government put it through. Why do you think inflation and debt are good? Look at the problems both are causing us right now. You need to re-examine your values.

The Keynesian business cycle gives wide swings of inflation and deflation. Inflation and deflation under a gold standard would be virtually non-existent because the money would provide for a stable pricing structure, as I've already proven to you.

Can you explain why FA Hayek's Nobel Prize winning explanation of this phenomena is incorrect?

No, that's not what I'm saying at all. You only think that's what I'm saying because you don't understand Austrian Theory at its most fundamental level. When the Fed depresses interest rates like that, it sends false signals to banks and borrowers. The banks, in their own rational self interest of making profit, are able to create more money out of thin air to make loans they wouldn't have normally made if interest rates were higher. But they hardly care because the FDIC will bail them out (at least the ones deemed too big to fail). Borrowers don't get off as easy. They too made decisions that they wouldn't have normally made had interest rates been higher. The borrowers were doing what was best for themselves in their own rational self-interest. They wouldn't have done it had they known what kind of trouble they were going to get themselves into. These situations woudln't have occured if it weren't for the Fed lowering interest rates. Taxpayers suffer becuase of it.

If you read Hayek's work, then you obviously didn't comprehend any of it. Either that or you're just lying and haven't read any of it.

Agreed.

This is where you lost me. We can create this medium of exchange. In a fiat system, the money can be created out of thin air. In a gold standard system, we can mine gold, which requires labor, so a) the amount of money in circulation is finite, not able to be created into existence simply by pressing some buttons, b) requires labor to come into existence, so it will be traded for goods and services of a price that was roughly equivalent to the cost of mining/refining that gold. The gold will always represent the labor that it cost to mine/refine it. That's how it becomes a medium of exchange, because it is a tangible item that represents labor.

Tell that to the citizens of 600+ civilizations who have lived through destruction of fiat currencies and began trading in gold again. Gold has never failed as a currency. There is nothing which has better properties to be used as a medium of exchange.

 

That is not a "fact" at all. The collapse of the housing market caused the recession, and the housing price bubble far exceed any relationship to Fed interest rates.

Which money supply?

5 million private sectors jobs added since Jan 2010 says otherwise, so do these independent sources:

CBO estimates that ARRA’s policies had the following effects in the fourth quarter of calendar year
2010:

o Increased the number of people employed by between 1.3 million and 3.5 million, and

o Increased the number of full-time-equivalent jobs by 1.8 million to 5.0 million compared with what would have occurred otherwise, as shown in Table 1. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.

http://www.cbo.gov/ftpdocs/120xx/doc12074/02-23-ARRA.pdf

Non-partisan analysis by IHS, Macroeconomic advisers, and Moody's also show job creations by the stimulus in the 2.1-2.5 million range.

http://www.whitehouse.gov/sites/default/files/cea_5th_arra_report.pdf page 16.

*CBO: Between 1.3 million and 3.6 million jobs saved or created.
*IHS/Global Insight: 2.45 million jobs saved or created.
*Macroeconomic Advisers: 2.3 million jobs saved or created.
*Moody’s Economy.com: 2.5 million jobs saved or created.

http://www.politifact.com/virginia/...or-says-stimulus-failed-get-people-back-work/

U-3 is perfectly legitimate to compare over periods of time, as it measures the same thing in 2011 and 2000.

Gas prices have decreased from their highs. Food and energy have increased more quickly recently, many other prices have not.

Do you have a source for your contention that the GDP price deflator does not include food and energy prices? I've never heard that.

The Fed has direct control over the base money supply. The Fed is not a cartel. That is internet myth.

Why wouldn't not a large increase in saving with a corresponding decrease in consumption cause a negative effect on GDP?

 

The surplus social security receipts that created the intragovernmental debt. I will be honest I can't tell you if the surplus from income taxes was rolled over in to the next year for spending purposes or was used to pay off maturing Govt debt. The thing we have to realize is this are just year end consolidated numbers.

The economy doesn't just do things once a year, it is an every day process of incoming/outgoing money.

So I will be honest and say I have no found what they did with the surplus from non-SS taxes, but I can also say with a guarantee that you have yet to prove to me either what they did with it.

I'm under the impression that Clinton used excess SS tax receipts in order to pay off maturing debt.

 

The point is not so much whether or not there was a surplus in 2000 or when the debt decreased.

The key point is that the debt in fact decreased, as we both now agree on.

And what makes the debt decrease? Well, technically, debt is redeemed or paid off. Btu what enables the government to redeem debt?

You have mentioned on source of tax funds, social security tax receipts. What is it about SS tax receipts in your view that enables the Govt to redeem debt over a year?

We have SS tax receipts now, for example, more than we had in 2000. But no one is redeeming debt at this time.

What's the difference?

 

It has always been about us being more advanced and more productive. Gold didn't make us who we are today, either does fiat. It is simply the medium of exchange and I don't get how you do not understand this. You can give tons of gold to Nigeria, but it won't make them any more intelligent or productive.

You confuse currency with society. All societies have eventually failed for plenty of different reasons. Just because you have gold leftover after your society fails does not mean gold "retains" it's value. There is nothing in gold that makes a society not fail over fiat.

Iriemon already did me a favor and schooled you on all these lies

Govt spending is apart of GDP, so there is plenty of evidence that stimulus "jumpstarted" the GDP.

You think giving the power to 310 million individuals who have absolutely zero clue how the monetary system works is a good idea?

False, digging the stupid metal out of the ground has no correlation to it's value as a currency. That is absurd.

It's not "naturally" what would happen. It was only natural because they were uncivilized and didn't have computers or any other legitimate means of record keeping. I'm sorry but it's time to grow up out of the simplistic times of the 18th century.

If fiat currency is so inferior to gold and silver based currency systems, then wouldn't you think the largest economies out there would use gold and silver? It seems to me the largest economies and the most robust economies in the world are migrating towards are very same system. Maybe, we know something a little bit more than you.

It shows, lol

False, your irrational fear of the Fed plays no role in this argument. Take your conspiracy theories to your other crazy Ron Paul friends

All my claims are based on what America actually does. You are the one advocating something that doesn't exist with no factual backing to why it would make us better off.

They create it out of thin air. But the question is who cares? They provide an infrastructure for the banking system. That money they create does not see the light of day in the real economy.

You said you are an engineer and understand math. Now try to figure out why saving more money than before lowers GDP. It shouldn't be that difficult for a genius like you.

False, there is nothing different about saving money under a gold standard than saving money in a fiat standard. You just simply do not understand basic math.

 

Alright, let's first come to an agreement that surplus SS tax receipts are basically just added on to the rest of the Govt receipts... but it just carries a piece of paper with it (intragovernmental debt) to basically give the Govt an allowance on future SS spending? Do you agree?

So essentially surplus SS receipts just get lumped in with all other Govt receipts in to the Treasury's account in the form of TT&L accounts. Now, I can definitely see how this lump of money can be used to pay off maturing national debt. So I will concede that point to you. Since either the money is there or they have to get it from the banking system.

My question comes from the accounting angle. At the end of the year when they consolidate the fiscal balances, where do they apply the surplus money to? Do they in fact use income tax payments to reduce Govt debt or is it rolled over for the next year to use for Govt spending? I haven't been able to find anywhere that the tax payments were actually used to pay off maturing national debt... other than with the SS tax receipts which basically just swapped public debt with intragovernmental debt?

 

OK, there are other tax receipts as well.

I agree that the Govt takes the money and issues intragovt debt for it. I'm not sure what you mean with the rest of the sentence.

But we have the same lump of money now, more so than in 2000. Why aren't we redeeming debt now like we were in 2000?

If there is an "on-budget" surplus, and the Govt does not project it will need the funds for other things (ie loans or funding future expenditures), then the surplus tax receipts are applied to redeem the "debt held by the public" (debt owed to non-intragovt debt holders).

You can see that in the CBO historical table I cited. Starting in 1997, the debt held by the public decreased from $3.7 trillion to 3.3 trillion in 2001, before it started increasing again.

Now the total public debt did not decrease in any of those fiscal years, because the Govt continued taking the money out of the SS trust, and basically used to to pay down the "debt held by the public." But throught 2000, total tax receipts exceed total outlays, and the total public debt decreased as well (meaning the amount of the "debt held by the public" redeemed was greater than the increase in the intragovt debt).

It's too bad they couldn't come up with less confusing terminology.

 

Why did the housing market collapse? How did the housing bubble "far exceed any relationship" to Fed interest rates?

I was talking about the effective money supply in circulation, not total money supply.

None of these sources indicate that those jobs created were private sector jobs.

U-3 excludes people who are unemployed. It's not an honest method of declaring the real unemployment rate. U-5 is far more accurate because it includes those who are unemployed that gave up seeking a job because they couldn't find one.

In terms of Federal Reserve Notes, not real prices.

http://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_index

"The less volatile measure of the PCE price index is the core PCE price index which excludes the more volatile and seasonal food and energy prices."

"In its "Monetary Policy Report to the Congress" ("Humphrey-Hawkins Report") from February 17, 2000 the FOMC said it was changing its primary measure of inflation from the consumer price index to the "chain-type price index for personal consumption expenditures".[2]"

Correct.

Incorrect.

The Fed was created by seven men who, at the time, represented about 1/4 of the world's entire wealth. Those seven men were Benjamin Strong, Frank Vanderlip (Rockefeller's National City / Kuhn, Loeb & Co.), Paul Warburg (Kuhn, Loeb & Co., Rothschild), Nelson Aldrich, A. Piatt Andrew, Henry Davison (J.P. Morgan), and Charles Norton. These financial powers were all competitors, it's obvious that they were meeting to form a banking cartel agreement and pass into law, which is exactly what the Federal Reserve System is. They wanted to limit their competition between each other. But it's not only a cartel between its member banks, but the Federal Reserve Act is a cartel agreement between the Federal Reserve System and the government, because the Federal Reserve can purchase any amount of treasury bonds on the open market that the federal government needs it to. That way, Congress doesn't have to go through the humiliation of raising taxes to finance the expansion of government. This is factual, not an "internet myth".

Only under a Keyensian system would this be true, because an increase in savings coupled with a decrease in consumption is usually associated with a long deflationary contraction period. Under a gold standard/free market, deflationary periods aren't indicative of economic contraction and would occur during times of economic expansion.

 

Lol!! Get out of here. Some of the worst deflationary spirals have ever happened under the gold standard. Deflationary depressions was one of the very reasons why Keynesian's came about. They tried to figure out how to get out of that rut. Your infatuation with gold is scary, it doesn't provide any inherent worth to a country's productive capacity.

You are making the economy out to be much worse than it really is. We had $15 trillion in economic output last year... that is a quarter of the world's total economic output. We are just spoiled because of our amazing fiat system.

Austrian's have not been correct about everything. In fact they have been crying about hyperinflation for the past 20 years and we've seen none of it. They have been crying about Govt debt bubbles, etc. They simply are the doom and gloomers and whenever their is doom and gloom they are "correct", whenever there is a massive boom they are just talking about the next bubble bursting.

You are just making stuff up, you have not proven anything. If sound money was all that was needed for a country to reach our economic greatness, then every country in the world would use "sound money". Your problem is you are fighting against the biggest and most robust economy in the history of mankind. It isn't like we are some scrub that doesn't know what it's doing. And you think for some reason that we don't know what we are doing.

He actually shared the Nobel Prize with another economists that was literally on the completely opposite side of his spectrum. Many economists have come out and said Hayek provides a great based for the philosophical thinking of an economy, but otherwise he is nothing more than an ideologue.

Fiat money is finite also. We know exactly how much money is out there. And no the gold does not represent the labor to mine it. That is silly talk.

It's great to see all those thriving gold standard economies out there!! Maybe we should dumb ourselves down and stop being the world hegemon and follow in their footsteps? I can't wait for massive depression!!!

 

Mathematically this is incorrect. If the total public debt had a larger decrease than the increase in intragovernmental debt, than we would have a decrease in the gross national debt. We did not have a decrease in the gross national debt which is why I am having a hard time believing that a single one of our tax dollars went to paying off the public portion of the national debt. As I showed above, the gross national debt has never decreased in a fiscal year consolidated view.

 

Speculative bubbles result in prices that far exceed economic justification always eventually collapse.

Interest rates do affect housing prices. With a lower mortgage rate, your monthly cost is lowered, and you can afford a more expensive house. The greater demand increases prices.

Lower rates in the early 2000s did make purchasing a house more affordable.

But starting in mid-2004, the Fed raised its rates every quarter.

http://www.moneycafe.com/library/fedfundsrate.htm

That should have put downward pressure on house prices. Yet they continued to soar thru 2006. why?

Because shoddy lending practices including little or no income verification, coupled with "teaser" rates and ARMs, masked the true monthly costs of the higher interest rates by providing artificially lower rates up front. This allowed people to continue buying more expensive housing even while the rates went up over 4 percentage points.

That, coupled with the irrational belief that always accompanies bubbles that prices would continue to increase, or at least not significantly increased, fueled price growth in the bubble far beyond that which was rational given the Fed's interest rate policies. Fed policies on interest rates only have a relative effect on long term rates in any event, since Fed rates are short term.

I'm not sure what you mean with these terms, but if you mean broad money supply measures, I'd generally agree. An increase in the base money supply does not necessarily affect inflation if banks are not multiplying the money with lending. The economy also has an effect.

This one does: http://www.bls.gov/webapps/legacy/cesbtab1.htm

U-3 definitely includes people who are unemployed. It excludes people who are not looking for a job, either because they are not interested or discouraged.

What are "real prices"?

I understand that the "core" inflation rates ecluded food and energy.

But that source does not say the BEA uses the core rate to calculate real GDP figures.

This article discussed the GDP deflator.

http://en.wikipedia.org/wiki/GDP_deflator

Contradicting your position, it specifically reference how the cost of a food item effects it.

Source?

How did those 7 men pass the Fed into law?

How would that still not have a negative effect on GDP? When there is less demand for products, business will try to lower prices to a degree, but then they start producing less and letting people off.

 

Re-read my post, because you misunderstood it as evidenced in your response. The "debt held by the public" is not the same as the total public debt. The "total public debt" is the gross national debt. If you don't see it let me know and I'll try to explain.

 

Whatever, I meant the total public portion of the debt. Reread my post with the correct usage of the public portion of the debt and then reply, because math is not in your favor.

 

I am not denying that. Once again you're putting words in my mouth. I'm saying that having a stable medium of exchange provides for a more efficient economic system than an unstable medium of exchange. We've gotten where we are today becuase of our productivity, but we'd be much further along than we are now had we not abandoned sound money.

Not true. They could buy all the productivity and intelligence that they could ever possibly want from the rest of the civilized world.

Also not true. Throughout history, at least 155 civilizations have hyperinflated their fiat currency. There is not a single example of a fiat currency which has retained its value. You cannot give me one example.

You're simultaneously making a logical fallacy while putting words in my mouth. First of all, just because I said "If A then B" does not mean that I said "if C then not B". I said hyperinflation destroys societies - I never said that having a gold standard prevents the destruction of societies, though it does decrease the chances.

Please see post #66. That discussion isn't over between me and him, but I'll take the fact that you declined to respond to the points yourself as a concession to my points.

Government spending is not a part of GDP. GDP is a measure of goods and services available in the economy, not a measure of government spending.

The monetary system works based off the actions of those 310 million individuals, regardless of whether or not a handful of people are artificially controlling the money supply and interest rates. They are always going to be motivated by rational self-interest, regardless of the quality of their money. They don't need to "know" how the monetary system works, all they need to know is that their money is worth exactly how much it says it is.

Again, your emotional opinion doesn't change the facts. Why don't you tell the guys who mine gold for a living that their labor is worthless? They'll laugh at you all the way to the bank after they exchange their ounces of gold for thousands of dollars worth of Federal Reserve Notes.

So tell me, why is gold worth almost $2000 an ounce right now if it's just a "stupid worthless metal"?

Then why do people still trade in gold and silver today? The dollar was redeemable in silver up until 1971. We were hardly uncivilized and we certainly had legitimate methods of record keeping.

No, they are incapable of it because of legal tender laws. We've already gone over this. And why is it that governments, bankers and the Fed are buying large quantities gold? It's just a "stupid worthless metal" afterall. Maybe we know something a little bit more than you.

See post #66 again. It's not a "conspiracy theory", it's historical fact. Please learn the difference, not everyone who disagrees with your limited Keynesian worldview is a nutty conspiracy theorist.

This is false, where do you get these crazy ideas? The Fed's money supply acts as a base for the banking system to create even more money (up to 10x the amount). That money certainly sees the light of day in the real economy, once that money is loaned out. Which it gets loaned out much more than it normally would have in the free market because interest rates are artificially depressed by the Fed. This is what led to the recession. Not only that, but the federal government now has money it did not have before, which it very much spends into the economy. All of these factors contribute to debt price inflation, because the rate at which money is created always excedes the rate at which GDP is growing.

So you think there's nothing wrong with debt or price inflation? You think we don't have a debt crisis? You think this recession is a good thing? You find nothing wrong with the Fed's ability to create money out of thin air and control interest rates?

See post #66.

Meaningless slander.

 

But the more it spends the more your currency is devalued.

 

Really, you have proof of this?

Then once they gave the rest of the world their gold, then what would they do?

Fiat currency isn't supposed to "retain" it's value. Gold doesn't "retain" it's value either.

Does it really? Because that magical commodity makes people smarter and more productive?

This shows the level of education you have on this subject. Govt spending is most definitely included in GDP calculations.

What is the exact value money is supposed to be worth?

I never said it was worthless, I simply said it has nothing to do with the value of gold.

Because inflation mixed with investors looking to park their money during a recession, and global demand.

When it comes to intrinsic value as a currency it is a stupid worthless metal

Lol, I bet you have a large collection of tin foil

Banks do not lend reserves. They simply create loans. Our system is much too complicated for you to understand until we get some basics down, like how gold doesn't make a country more educated or more productive.

Based on what I make right now, I would be making $4 million a year in 1913. It's all relative. You just don't understand how inflation and economic growth works.

You are fighting an uphill battle. We know what America is like and has become based of factual data. We know how we are the wealthiest and most productive nation in the history of mankind, we know we have the largest military, best higher education, smartest in financial services, most technologically advanced, most innovative, etc.

Your argument is based off a make believe world that we would be better off right now based on your "sound money" policies. Yet you can not represent why mathematical or you can not even disprove the basic ideologies that have brought us to this point economically. You are just talking out your butt.

 

Or, the more money you can make... ever think of that. Only people who can't increase their wealth suffer from inflation.