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People think government works like a household budget - it doesn't. Think about it - who controls how much money is the economy? Does someone measure 'okay the
by ClumsyPilot 4y ago
People think government works like a household budget - it doesn't. Think about it - who controls how much money is the economy?
Does someone measure 'okay the economy has grown 5%, it needs 5% more money to be printed?" No, nobody does that.
If the government prints zero money, the money supply can still quadruple, because banks create money out of thin air.
Which is exactly what they did prior to 2008. The reason government had to 'print' miney in 2008 is that they were replacing all the 'unsupported' money that was creates by banks, and then suddenly imploded.
As soon as you suggest government should print money everyone starts screaming inflation, but when private banks do it, noone blinks an eye.
The rules that allow banks to create money have changed dramatically over the past 20 years, and nobody is even discussing it.
- SoftTalker 4y agoThe money that banks create by fractional reserve lending is (at least somewhat) backed by real assets. The money that governemnt 'prints' is backed by nothing.
- neilwilson 4y agoThe money government prints is backed by the best asset of them all - the power to recover it as taxation. Paying the tax to the tax collector is far cheaper than the alternative amount you end up paying to the bailiff when they confiscate all your assets. Taxation is, ultimately, the only 'reserve' asset there is. And as you can see it is very definitely backed by real assets. All your real assets.
- ClumsyPilot 4y agoWe have not operated fractional reserve banking for generations. A bank today can give out loans and mortgages without any assets. https://positivemoney.org/2011/04/monetary-reform-myths-1-10/ https://positivemoney.org/2011/04/monetary-reform-myths-1-10...