The Financial System and Money Supply
in Banking, Insurance & Loans ·
Maria Thomas48 said:It’s just basic logic, really. On a global scale, Earth has to produce new money somehow. And we can pretty much rule out gold deposits as a viable source.
Which means, if printing happens somewhere, it could just as easily happen in America. The mathematical Jednadzba tells us exactly how much. Are there any other economic equations out there that specify the exact amount of money that can be printed to cover a budget deficit without triggering hyperinflation?
If those formulas exist, why isn't anyone in this conversation willing to present them?
How is it okay to issue new money abroad? If you look at reality, the way the USA owes money to the Federal Reserve looks exactly like primary issuance—except for the part where the debt to the Federal Reserve still accrues interest on value that doesn't actually exist. I mean, how can a bank grant a massive credit line without devaluing the currency, simply because they haven't actually earned that money? The USA's debt grows exponentially every year, which just confirms my point: you shouldn't finance a budget deficit through credit. Especially when that credit is just newly printed money.
When I first started this topic about the financial system and the source of money, I had no clue that thinking about how new money enters the system would lead directly to connections between a community's profit and its budget deficit.
Some economists still can't wrap their heads around the fact that these two things are directly linked.
Even a few months ago, I was thinking that America should probably have a balanced budget, or maybe even a surplus. It always seemed strange to predict a deficit. It looked like a deliberate rush toward debt. But it turns out that making a deficit makes sense; it's actually a good thing. The only problem is doing it by taking on more credit.
The discussion drifted into budget planning, but it was inevitable to build a mathematical model that includes the state budget and integrates its deficit into the whole picture. It all ties back to the community's financial system.
And my message is simple: I am just asking someone to prove me wrong.
So far, every attempt to debunk this using examples or other equations has fallen flat.
It would be great if I were wrong, but so many current events seem to align perfectly with these claims.
I even read dirkati Krueger " Makorekonomik", and while it doesn't say much concrete about primary issuance, it does talk extensively about the growth of the USA budget deficit.
So, how can a person not connect the dots and realize you can't pay back a loan (plus interest) unless you pull those massive dollars back in? To do that, a budget needs a surplus. My formulas show that a surplus is the only way to make this work. But a surplus is an impossible mission. In plain English, you either sink assets into debt, kill off entrepreneurs with taxes, or you have to take as much as the debt amounts from others (by maintaining a huge export surplus). Basically, it ends up being pure enrichment for creditors. You let people create things and earn money, then you demand all that money (plus interest) back. You see immediately that it’s a net loss in terms of interest. In the end, you have new goods, but the system has even less money in circulation because it was spent on interest. Using an export surplus would just shift the problem to other countries, causing a crisis there, leaving you with nowhere left to profit.
Sure, it’s all gotten complicated, but from my perspective, I’ve had a total epiphany regarding the flow and balance of money in the financial system. It's a depressing realization, and it might drive me into a depression if I didn't believe that talking about it might actually give us a chance at a Happy End.
Look, being wrong isn't necessarily a bad thing. 😁
You did pick up on a few things quite accurately, though. :klap: