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Thread: The Fed Does Not Monetize the Debt!

  1. Default The Fed Does Not Monetize the Debt!

    Here is an awesome article touching on multiple points that really change how one thinks about the monetary system.

    #1) The Fed does not Monetize the debt
    #2) Monetization happens by act of Congress
    #3) The bond market does not fund Govt spending
    #4) The Govt can never run out money and does not rely on the Fed

    If you can read this article with out an agenda in mind and just try to conceptualize what it means, it starts to make sense. If you hate the Govt and the Fed and refuse to even budge from that ideology than you will probably not understand anything it is saying.

    Here is a great quote...

    The issuance of bonds continues to this day due to Congressional mandate. In reality, our bond market funds nothing and serves only as a reserve drain which helps the Fed maintain its overnight target interest rate. It has nothing to do with funding the government. When the US government wants to spend money they do not call China and ask for a line of credit. They do not count tax receipts. And they most certainly do not call the Fed to ensure that we have any money left. No, the truth is that the USA never really has nor doesn’t have any money. So the entire implication that the Fed is helping to fund US government expenditures is entirely inaccurate and anyone who implies as much is still working under the now defunct gold standard model and clearly doesn’t understand the workings of the modern monetary system.
    Last edited by akphidelt2007; Mar 25 2012 at 10:37 AM.

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