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This is an inevitable consequence of basing the money supply on debt. The Federal Reserve banks are responsible for making money and loaning it out into circula

This is an inevitable consequence of basing the money supply on debt. The Federal Reserve banks are responsible for making money and loaning it out into circulation. There is never enough money to pay back the interest on the loans, so the federal reserve loans out a little bit more every year. A solution to this quandary was figured out in 2011. Due to a quirk in the laws, the US Government has the ability to issue platinum coins of any value. These 'coins' never have to be paid back. The U.S.'s national debt could be retired by minting a couple "trillion dollar coins": https://en.wikipedia.org/wiki/Trillion_dollar_coin https://en.wikipedia.org/wiki/Trillion_dollar_coin The Federal Reserve does a decent job at keeping the money supply growing at less than a hyper-inflationary rate, but the value of our money has collapsed since I was a kid, since we all were kids...

JumpCrisscross 8y ago
> This is an inevitable consequence of basing the money supply on debt Not really. The U.S. government ran surpluses in the nineties. This led to hand-wringing as banks imagined a world without Treasuries, which would make collateralisation quite complicated. (We had the same "not enough safe assets" conversation after the financial crisis.) The U.S. government could wipe out its debt. The Federal Reserve couldn't, as every dollar bill is technically a Federal Reserve note, but that's a different beast.
- teslabox 8y ago
  I'm saying that under the Federal Reserve system, the total indebtedness of the U.S. economy must always increase. If the government starts to pay off its debt, the private sector must increase its debt levels. If the economy doesn't keep borrowing money, the money supply would rapidly collapse, leading to a deflationary spiral. The only money that never has to be paid back are coins. Do you have an alternate understanding of our monetary system?

JumpCrisscross 8y ago

> This is an inevitable consequence of basing the money supply on debt Not really. The U.S. government ran surpluses in the nineties. This led to hand-wringing as banks imagined a world without Treasuries, which would make collateralisation quite complicated. (We had the same "not enough safe assets" conversation after the financial crisis.) The U.S. government could wipe out its debt. The Federal Reserve couldn't, as every dollar bill is technically a Federal Reserve note, but that's a different beast.

teslabox 8y ago
I'm saying that under the Federal Reserve system, the total indebtedness of the U.S. economy must always increase. If the government starts to pay off its debt, the private sector must increase its debt levels. If the economy doesn't keep borrowing money, the money supply would rapidly collapse, leading to a deflationary spiral. The only money that never has to be paid back are coins. Do you have an alternate understanding of our monetary system?