How exactly did we get to be trillions of dollars in debt if......

DennisTate · Aug 2, 2016

The Federal Reserve actually pays back most of the interest payments
that is generated by the loans that it makes to government??????

http://www.politicalforum.com/showthread.php?t=211515&page=2&p=1064784748#post1064784748
Who Actually Owns the Fed and Why That Must End

dad2three said: ↑

Anyone understand how markets were manipulated pre federal resserve and the US had a 2008 crisis less than every 5 years on average PRE federal reserve???

Facts: Yes, the Federal Reserve banks are privately owned, but they are controlled by the publically-appointed Board of Governors. The Federal Reserve banks merely execute the monetary policy choices made by the Board. In addition, nearly all the interest the Federal Reserve collects on government bonds is rebated to the Treasury each year, so the government does not pay any net interest to the Fed.

....Moreover, monetary policy is controlled by the publically-appointed Board of Governors, not by the Federal Reserve banks.

Fact: Independent accounting firms conduct full financial audits of the Federal Reserve banks and the Board of Governors every year. The Fed is also subject to certain types of audits from the Government Accounting Office.

Facts: The Federal Reserve rebates its net earnings to the Treasury every year. Consequently, the interest the Treasury pays to the Fed is returned, so the money borrowed from the Fed has no net interest obligation for the Treasury. The government could print its own currency independent of the Fed, but there would be no effective safeguards against abuse of this power for political gain.

MORE HERE

http://www.publiceye.org/conspire/flaherty/Federal_Reserve.html
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So if the above statement is accurate......
how did America get to be eighteen trillion dollars in debt??????

In my opinion..... I do hope that this other article is accurate because something seems to be wrong here.

http://www.infowars.com/trump-calls-for-auditing-the-fed/
Trump Calls For Auditing the Fed

GOP frontrunner makes good on promise to call for audit of Fed

It is so important to audit the Federal Reserve, and yet Ted Cruz missed the vote on the bill that would allow this to be done, Trump tweeted out.

During Fridays appearance on the Alex Jones Show, Trump insider Roger Stone was asked if Trump would call for an audit, and Stone said that he thought so but would pass the message along to the Trump campaign.

Hes not a big fan of the Fed, Stone pointed out. He is scaring the central bankers; he is scaring the Washington/Wall Street/D.C. consultant/lobbyist class.

Hes deeply suspicious of the Fed and I think he is open-minded about the Fed Id suspect youd get an audit of the Fed [with Trump].
Click to expand...

ImNotOliver · Aug 2, 2016

DennisTate said: ↑

The Federal Reserve actually pays back most of the interest payments
that is generated by the loans that it makes to government??????

http://www.politicalforum.com/showthread.php?t=211515&page=2&p=1064784748#post1064784748
Who Actually Owns the Fed and Why That Must End

So if the above statement is accurate......
how did America get to be eighteen trillion dollars in debt??????

In my opinion..... I do hope that this other article is accurate because something seems to be wrong here.

http://www.infowars.com/trump-calls-for-auditing-the-fed/
Trump Calls For Auditing the Fed

GOP frontrunner makes good on promise to call for audit of Fed
Click to expand...

You misunderstand the role of the Federal Reserve in the Federal debt. You see giving out loans, or not, is how the Federal Reserve controls the money supply. The government, federal, state, and local, doesn't get loans through the Federal Reserve. The loans come about in the form of bonds which are issued by the issuing agency (the treasury in the case of the federal government) and bought by investors.

DennisTate · Aug 3, 2016

ImNotOliver said: ↑

You misunderstand the role of the Federal Reserve in the Federal debt. You see giving out loans, or not, is how the Federal Reserve controls the money supply. The government, federal, state, and local, doesn't get loans through the Federal Reserve. The loans come about in the form of bonds which are issued by the issuing agency (the treasury in the case of the federal government) and bought by investors.
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Thank you for this clarification.

You are correct.... this subject is confusing to me. I am actually Canadian but in my 2004 campaign for the office of Municipal Councillor in my area I
wrote more about USA history than our Canadian history, because it seemed to me that perhaps aspects of the British North America Act that formed
Canada into an independent nation seemed to borrow from, and be based partly on the brilliant Greenback Monetary Experiment initiated by
President Lincoln.

Here is a link to my 2006 and 2004 primary campaign writings.
www.BankingSystemFlaws.blogspot.ca/

Here is another topic that I began that deals with this.

http://www.politicalforum.com/econo...our-billion-dollars-how-can-we-do-2013-a.html
President Lincoln saved taxpayers four billion dollars...how can we do this in 2013?

I was given a copy of this article in 1994.

After reading this article those lectures from Economics 101, 212 and Economic History sure took on a whole new level of importance.

http://www.michaeljournal.org/lincolnkennedy.htm
Melvin Sickler:

In 1972, the United States Treasury Department was asked to compute the amount of interest that would have been paid if that 400 million dollars would have been borrowed at interest instead of being issued by Abraham Lincoln. They did some computations, and a few weeks later, the United States Treasury Department said the United States Government saved 4 billion dollars in interest because Lincoln had created his own money. So you can about imagine how much the Government has paid and how much we owe solely on the basis of interest.
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OK, so how do we apply this information in 2013 without scaring the guys on Wallstreet, who have a tendency to go out on their balconies and jump, if investors get scared....which actually could happen even if government did something intelligent!!!!!???????

Stevew · Aug 3, 2016

ImNotOliver said: ↑

You misunderstand the role of the Federal Reserve in the Federal debt. You see giving out loans, or not, is how the Federal Reserve controls the money supply. The government, federal, state, and local, doesn't get loans through the Federal Reserve. The loans come about in the form of bonds which are issued by the issuing agency (the treasury in the case of the federal government) and bought by investors.
Click to expand...

That's true. A lot of knowledgeable people like to call that "printing money" in a sarcastic manner, and in a way it is, because dollars are in the form of digital information on computers, not cash.

And this leads to the next useless statement of auditing the Fed. That is the same as auditing an auditor. The fed is intended to be an independent private organization. When politicians start threatening the Fed with an audit suggesting they are not independent, then it is basically the same as influencing the Fed to make decisions based on what politicians want them to do. That has been their argument against Cruz and others.

However, I agree that the Fed has been making some stupid decisions in recent years, but I think it has to do with their stupidity, not politics. The last thing we want is to force the Fed under the wings of politicians.

Steve

Ronstar · Aug 3, 2016

we sell more Treasuries than we pay back

Stevew · Aug 3, 2016

Ronstar said: ↑

we sell more Treasuries than we pay back
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Where do you get that info? That is contrary to what has been ocurring or claimed to occur. That is money supply reduction potentially causing the economy to slow down. Obama and the Fed have wanted to expand the money supply, or buy back treasuries putting cash in the economy. (sarcasm)

Steve

DennisTate · Aug 3, 2016

Stevew said: ↑

That's true. A lot of knowledgeable people like to call that "printing money" in a sarcastic manner, and in a way it is, because dollars are in the form of digital information on computers, not cash.

And this leads to the next useless statement of auditing the Fed. That is the same as auditing an auditor. The fed is intended to be an independent private organization. When politicians start threatening the Fed with an audit suggesting they are not independent, then it is basically the same as influencing the Fed to make decisions based on what politicians want them to do. That has been their argument against Cruz and others.

However, I agree that the Fed has been making some stupid decisions in recent years, but I think it has to do with their stupidity, not politics. The last thing we want is to force the Fed under the wings of politicians.

Steve
Click to expand...

Or.... a politician could be attempting to do their duty to tweak
Federal Reserve Policy if it is significantly flawed.

I would like to explain what I meant by the following statement:

http://www.politicalforum.com/polit...ence-federal-reserve-doing-excellent-job.html
I just read powerful evidence that the Federal Reserve is doing an excellent job.

If this statement is correct...… that the bulk of the interest generated by the loans issued by the Fed..... go back into the budget of the USA...… then........ I no longer have any serious issues with the American Federal Reserve System!

This is news to me...… although it looks like this has been going on for a long time.

.....(then I quote much of the OP)....

..........

In the year 1940.... faced with the issue of financing Canada's participation in WWII,
Prime Minister Mackenzie King began an exceptionally wise central banking policy that
continued until 1974.

Basically...... .fifty percent of the total money supply in the Canadian economy was put into
existence through loans....... (from the Bank of Canada that is theoretically..... .owned by all
Canadians)........ for infrastructure projects that benefited all Canadians. Those loans were at
zero or at most one percent interest.

In 1974, Prime Minister Pierre Elliott Trudeau altered this policy for some good reasons.... and for
some bad reasons...... and since that time the national debt of Canada has spiralled out of control.

From 1974 to 1995, the Bank of Canada was used....... to create merely TWO PERCENT of the
total money supply... .and about 98% of the money supply was created through loans, by private banks,
even to the various levels of Canadian government..... even for infrastructure projects.... at quite high
rates of interest.

It was estimated that in the one year of 1995, that roughly SIXTY BILLION DOLLARS IN INTEREST PAYMENTS....
could have been saved... .if we had gone back to P. M. Mackenzie King's monetary policy formula...... and applied it
to pay off the national debt.

Since 1974.... in many given years, the Bank of Canada has often created TEN TIMES AS MUCH DEBT.... as money put into circulation.....
whereas during that same time period.... the USA Federal Reserve ..... created only about 3.5 times as much debt as
money......... which gives the Fed a three hundred percent or so............. margin of basic superiority over their
counterpart here in Canada.

There is an exceptional quotation on this in my 2008 campaign writing from three Canadian economists, John Hotson, Harold Chorney and Mario
Seccareccia.

www.BankingSystemsFlaws.blogspot.ca/

DennisTate · Aug 3, 2016

Ronstar said: ↑

we sell more Treasuries than we pay back
Click to expand...

What do you think of my theory.....
that we do this deliberately..... so that we can make our economic situation look.....
worse than it really is.... .so that we can put pressure on unions to accept somewhat
lower wages..........

and so that citizens....place a lower value on their land..... time... and other resources?

I could be wrong... but I am of the opinion that we Canadians ALREADY learned a lot from
the Greenback Central Banking Policy of President Lincoln.... but American economists might just be able
to learn something from the Canadian central banking policy initiated by P. M. Mackenzie King..........

NDP leader Jack Layton did a great job of summarizing the whole subject in one sentence.

"We never should have privatized our debt and turned it over to the
private banks, we should have kept it in the hands of the Bank of Canada,
at least a major part of it, because then we would have been paying
interest back to ourselves." (NDP Leader Jack Layton)
Oh Canada Movie 6 - Banking - 5
https://www.youtube.com/watch?v=i1HfKIvmZGU

DennisTate · Aug 7, 2016

Ronstar said: ↑

we sell more Treasuries than we pay back
Click to expand...

On a scale of one to ten.....
one being strongly disagree and ten being strongly agree.....

what do you personally think of my explanation for why this is happening up here in Canada.....
(which is surely at least to some degree similar the USA system)....

http://bankingsystemflaws.blogspot.ca
My name is Dennis Tate. I lived most of my forty seven years in West Lochiel Lake, Guysborough County. I am running for MLA as an independent in the area of Pictou Centre so that I can help as many people as possible become more aware of what I am sure is the real reason why our roads are in disrepair, why hospital beds are unused, why so many of the rural schools have been shut down, why our soldiers in Afghanistan are poorly equipped and why many if not most of our young people may have to leave Nova Scotia to find jobs.

When well trained workers have high quality technology to work with then the total of all wages and benefits paid out to employees is only a fraction of the retail value of the products they produce. As a result of this fact the only way to move products out of warehouses is to extend higher and higher levels of credit. One problem with an abundance of red ink is that compound interest on all this government, business and personal debt over a period of decades will grow to astronomical levels. At this time there is approximately TEN TIMES as much debt in Canada as there is money. A simple explanation for how this happened can be seen here:
http://www.michaeljournal.org/plenty34.htm

Chapter 34 — The Public-Debt Problem
français

(An article of Alain Pilote, first published in the July-August, 1986 issue of the Michael Journal.)
All the countries in the world are presently struggling with a debt problem. Third-World countries’ debt is over $1,300 billion (in 1986), and most of these Third-World countries are not even capable to meet the interest payments on their foreign debts.

More developed countries, like Canada and the United States, do not escape this crisis: Canada's federal debt – $224 billion in 1986, is over $500 billion in 2004. And the richest country in the world, the one with the largest production — the United States — is also the most indebted country, with a debt of over $2,073 billion in 1986 (over $7,000 billion in 2004). Is there not a contradiction here? How can a country be rich and debt-ridden at the same time? Is the whole world on the brink of becoming completely bankrupt?

A debt-money system
Why are all the countries in debt? It is quite simple: in the present system, all money is created, comes into being, as a debt.

To understand this, let us divide the economic system into two parts: the producing system and the financial system. The example is taken from Louis Even's parable, The Money Myth Exploded: On the one side, there are five shipwrecked people on an island, who produce all the necessities of life, and on the other side, a banker, who lends them money. To simplify this example, let us say there is only one borrower on behalf of the community; we'll call him Paul.

Paul decides, on behalf of the community, to borrow a certain amount of money from the banker, an amount sufficient for business in the little community, say $100, at 6% interest. At the end of the year, Paul must pay the bank an interest of 6%, that is to say, $6. 100 minus 6 = 94, so there is $94 left in circulation on the island. But the $100-debt remains. The $100-loan is therefore renewed for another year, and another $6 of interest is due at the end of the second year. 94 minus 6, leaves $88 in circulation. If Paul continues to pay $6 in interest each year, by the seventeenth year there will be no more money left in circulation on the island. But the debt will still be $100, and the banker will be authorized to seize all the properties of the island's inhabitants.

Production has increased on the island, but not the money supply. It is not products that the banker wants, but money. The island's inhabitants were making products, but not money. Only the banker has the right to create money. So, it seems that Paul wasn't wise to pay the interest yearly.

Let us go back to the beginning of our example. At the end of the first year, Paul chooses not to pay the interest, but to borrow it from the banker, thereby increasing the loan principal to $106. “No problem,” says the banker, “the interest on the additional $6 is only 36 cents; it is peanuts in comparison with the $106 loan!” So the debt at the end of the second year is: $106 plus the interest at 6% of $106, $6.36, for a total debt of $112.36 after two years. At the end of the fifth year, the debt is $133.82 and the interest is $7.57. “It is not so bad,” thinks Paul, “the interest has only increased by $1.57 in five years. We can handle that.” But what will the situation be like after 50 years?
Click to expand...

In my opinion this rather simple mathematical problem is perhaps the number one cause of inflation in the Canadian economy over the past three decades. This is also perhaps the number one reason why our costs of production are so high and Canadian products cannot compete on the world markets as well as they could under better conditions.

From 1940 to 1970 the Government of Canada put roughly half of the total money supply into the economy through loans issued through the federally owned Bank of Canada. Provincial and municipal governments could borrow the money to build roads, schools, hospitals and sewage treatment facilities at zero or one percent interest. In 1970 we changed our system and since that time a higher and higher percentage of all government debt is financed through loans issued through privately owned banks. At this time it is ninety eight percent. This policy may be great for our banking sector but it was estimated that in the one year of 1995 alone our federal government could have saved roughly SIXTY FIVE BILLION DOLLARS in interest payments if we had gone back to creating half the total money supply through these low interest rate loans issued through the bank that is OWNED BY ALL CANADIANS.

Considering that our deficit was approximately thirty billion dollars for that year, simply by changing back to an already proven monetary and banking system, we could theoretically have had a FEDERAL BUDGET SURPLUS OF THIRTY FIVE BILLION DOLLARS in 1995.

The massive cutbacks in the Canadian military, in health care, highway construction, social programs and education were profoundly affected by these accounting practices?

logical1 · Aug 9, 2016

Its just part of Obama's hokus pokus great economy that has put us an additional 10 trillion dollars in the dumper.

DennisTate · Aug 9, 2016

logical1 said: ↑

Its just part of Obama's hokus pokus great economy that has put us an additional 10 trillion dollars in the dumper.
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Here is a link to the USA national debt on this day back in 2008

http://www.usdebtclock.org/2008.html

Here is a link to the USA national debt today I think..... .....
you are right.... it is up by over nine trillion dollars......

http://www.usdebtclock.org

jdog · Aug 9, 2016

DennisTate said: ↑

The Federal Reserve actually pays back most of the interest payments
that is generated by the loans that it makes to government??????

http://www.politicalforum.com/showthread.php?t=211515&page=2&p=1064784748#post1064784748
Who Actually Owns the Fed and Why That Must End

So if the above statement is accurate......
how did America get to be eighteen trillion dollars in debt??????

In my opinion..... I do hope that this other article is accurate because something seems to be wrong here.

http://www.infowars.com/trump-calls-for-auditing-the-fed/
Trump Calls For Auditing the Fed

GOP frontrunner makes good on promise to call for audit of Fed
Click to expand...

If more people were smart enough to ask this question, we would not be on the road to tyranny and declining wealth........

- - - Updated - - -

The real question is why the United States has a private corporation printing its money, and loaning it to the government at interest.....
Who thinks that is a good idea?

DennisTate · Aug 21, 2016

jdog said: ↑

If more people were smart enough to ask this question, we would not be on the road to tyranny and declining wealth........

- - - Updated - - -

The real question is why the United States has a private corporation printing its money, and loaning it to the government at interest.....
Who thinks that is a good idea?
Click to expand...

True.... and I know that this may sound strange but sometimes......
one of the best ways to get an idea across to 300 million people......

may be to promote it to 35 million neighbours of theirs?!?!

http://www.politicalforum.com/canad...tional-leader-canadas-conservative-party.html

DennisTate · Jan 10, 2017

We have a winner......
in another one of the forums here......
I began a discussion that has led to somebody answering this question
quite brilliantly.........(I think)?!

http://www.politicalforum.com/showthread.php?t=387345&page=4&p=1066985634#post1066985634

Do you think that the Worgl, Austria experiment can be applied in America again?

Econ4Every1 said: ↑

Yes, I told you I was going to challenge your thinking

Let's have a little fun with this....

Yes, and it's amazing how many people don't understand the debt when it comes to accounting.

This is where we have some fun.

Who actually holds the public debt?

Roughly 1/3 of it is held by people in the private sector. At the macro level if the government taxed the $6 trillion out of us private sector to repay the debt, it would pay it right back to people in the private sector who hold that debt (bondholders), so on a micro level, some people would have less and other would have more once the debt is repaid, but overall it's a wash. Another 1/3 of that debt is held by the government. Government debt or intragovernmental debt, is the equivalent of reaching into your right pocket, taking out a dollar and putting an IOU in its place and then sticking the dollar in your left pocket and saying that you now have a dollar because you just borrowed $1. It's insane that people don't understand the semantics that go on when discussing the public debt.

Ok, a little disclaimer, if you click on the link you'll see that the private sector only holds about 15% of the debt and the government holds closer to 1/2. This is really misleading because of the Fed's QE program. The Fed created money out of thin air and it bought assets from the private sector (it was a simple swap, cash to private sector banks and assets to the Fed). On paper, this increased the amount held by government and decreased the amount held by the public. Since that graph, the Fed has sild close to $1 trillion dollars in assets back to the US public banking system and has decreased it's overall debt position, but that's a topic for another time. Point is, the Fed is holding a lot of assets that belong to the private banking sector and they will spend the next 3-5 years selling it all back.

The last approx 1/3 of the debt is held by the foreign sector, and while it's true they are owed roughly $6 trillion dollars, what can they do with it? That is, they are holding US dollars, dollars that can't be spent by the people in the economies that hold them. If you are a Chinese business man if you sell your $1 million bonds for $1 million US dollars, what can he do with it? He can't pay taxes in China with it, you can't buy groceries or pay your mortgage. For that $1 million dollars to have value it has to purchase something denominated in dollars. Nothing changes if you exchange it for native dollars. Whoever it's traded to will only find real value in the dollars once they are spent purchasing goods denominated in US dollars. Eventually that dollar will have to find it's way back here (or one of the 12 economies outside the US that use US dollars, economies that all together have a GDP of about $250 billion) where it can be spent, otherwise, it really is just a worthless piece of paper (or electronic credit).

Said another way, imagine you created IOU's and traded those IOU's for things of real value. If people wanted to trade them back to you, it would put you to work. If the foreign sector decided to spend it's money here, it would create millions of jobs!

The point is, the private sector benefits from the debt it holds because it's also the payee. The private sector benefits indirectly from debt held by foreigners as to have value they have to be spent here (less the other nations I listed), and the last 1/3 of the debt cancels itself out as the government takes money from the left pocket and puts it back into the right and tears up the IOU's..

Interestingly, after all of that.....In the video, DT subtracts the $20 trillion dollars in US government debt. He subtracted the wrong debt. The true debt of the people in the US is private debt, not government debt. Private debt in the US is ~25 trillion!

"If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy." - Lord Keynes
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That's awesome.
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Wow!

I believe that you just answered a question that I posted here to the forum several months ago.

DennisTate · Mar 9, 2017

I just found a great article that sure helps to answer the question in the opening post.....

http://www.newswithviews.com/Coffman/mike118.htm

GEORGE SOROS AND HIS PROGRESSIVE WAR ON AMERICA

By Dr. Michael S. Coffman Ph. D.
February 15, 2011

If the world no longer used the dollar as the world reserve currency, the demand for dollars would evaporate and there would be a glut of dollars in the world. The value of the dollar would drop to near zero and hyperinflation could set in. The resulting depression would make the Great Depression look like a cake-walk.
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