4 ms·

> Then you solve it by printing more money. the money isn't printed. It's debt, which is different. The debt is expected to be repaid, with interest. If you

by chii 3y ago

> Then you solve it by printing more money. the money isn't printed. It's debt, which is different. The debt is expected to be repaid, with interest. If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. By borrowing instead of printing, you don't have this permanent increase in money supply. Of course, there are other ways to increase the money supply, which is to control how much debt actually makes it into the system - but this can be regulated as required by the economy. > Other countries don't have a reserve currency like the dollar. the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve. They do it because other parties trust it. They could use the japanese Yen, or even the chinese yuan. And yet, majority of entities choose to use the USD. They do it because it's a relatively stable currency. They do it because other people accept it, and they do it because there's some trust that the US won't print money like Venezuela or Zimbabwe.

georgeplusplus 3y ago
>>>If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. When banks make a loan they are literally creating new money into existence. Perhaps you meant Bank Reserves which is the underlying system banks and the fed use and the dollars which is bank customers like you and me use.
- notahacker 3y ago
  Nothing you've said disagrees with the OP. The new "money" is literally credit, which literally is someone else's debt obligation which disappears when repaid.
  - epups 3y ago
    I think it does, actually. Every time I see a comment about "money printing", it makes me think of the author holding the opinion that the government literally created money, as in wealth, out of thin air.
    - PeterStuer 3y ago
      No, that privilege is reserved for the private banks. In the US the cunningly named FED. Presidents that actually tried changing that ended up killed.
- RandomLensman 3y ago
  Yes, but then the banks need to borrow that money as soon as it moves off the balance sheet.
- chii 3y ago
  > they are literally creating new money into existence. Debt is new money, but this new money is _different_ from printed money. It's because the debt has to be repaid, which implies you have to have the ability to repay (otherwise who would do the lending?). Therefore, this implies that production increases at a rate that is at least the same as, if not higher, than interest rate charged.
  - neilwilson 3y ago
    It’s no different from money. It just has a longer duration. Overnight money is repaid every day and replaced with a new loan for the following day. That also happens with so called “debt”. Money and debt are fundamentally the same thing. They are issued by the same entity which has the same lifespan. Necessarily the debt can never be “paid off”. All that happens is the assets are swapped around. Lending happens automatically as a function of accounting for a payment journal. The only people who get excited about it are those who are hard of accounting. Money is debt. Time to accept that.
    - chii 3y ago
      Never denied that money and debt are the same. I am denying that printed money is the same as debt money.
      - kelipso 3y ago
        You are talking about printed money as in real world coins and paper/cloth cash? That's just not relevant at all in this age.
        chii 3y ago
        no, i'm not talking about physically printed money. I'm talking about generating money not via debt, but via "wishing" it into existance. Banks generate money via debt. This is OK. If the treasury starts printing money - like what Zimbabwe or Venezuela did (or the Weimar Republic[1] pre-WW2) - then you will get rampant inflation. [1] https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic#Hyperinflation https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
Ylpertnodi 3y ago
>the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve. The several countries that tried not to use the usd kinda got penalised, though.
- bobthepanda 3y ago
  It also doesn’t help that most of the other candidates are more heavily controlled (CNY), actively do not want to be reserve currencies (JPY, CHF, CNY), or are worse managed (EUR)
- belltaco 3y ago
  > The several countries that tried not to use the usd kinda got penalised, though. That theory, even though it's floated a lot and is assumed true by otherwise smart people, never made too much sense to me because of the simple fact that a country that's already in the very bad books with the US would be the one that tries to switch to a different currency. For example Iraq and Libya were already on the list of the countries that the US would take military action against, for several strong reasons nothing to do with currencies, before they floated the idea of switching to a different reserve currency. So it's correlation rather than causation.
laboratorymice 3y ago
> If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. You have to get your head around the fact that this is an open-ended system, the music never has to stop so long as the sun rises and we stay on this monetary system. The same way people still get "wealthier" from stock market appreciation, even though there is a buyer for each seller, so too does more debt indeed mean a permanent increase in money supply[1]. [1] https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S
PeterStuer 3y ago
"the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve" Try selling your oil in anything but usd and see what happens. It's not a choice if the consequences of making the 'wrong' choice is being invaded, bombed into the stone age and have your country pillaged and its assets handed off to reserve currency alligned corporations.
- plonk 3y ago
  > It's not a choice if the consequences of making the 'wrong' choice is being invaded, bombed into the stone age and have your country pillaged and its assets handed off to reserve currency alligned corporations. Is there a reason everybody here seems to believe in that threat? I don't think the US is keen to repeat the 200X invasions. Plus Saudi Arabia, a US ally is threatening to switch to China's currency despite that?
  - blkhawk 3y ago
    So your argument is that it doesn't happen all that often? Also you have to remember that war isn't the only option the US has pulled. I mean the general low cost solution was just paying some terrorists to boot out the government to install a friendly Dictator. This fucking happened several times and it ruined whole regions and the aftereffects killed hundreds of thousands and affected millions. Do the planners not know this will happen? Probably. They might have predicted those outcomes as worst case scenarios. History seems to point to it being the usual outcome. Bias I guess. For them this is a trolley problem on one set of tracks is economic harm to the US and on the other as an indirect effect 500k deaths of people not anywhere near the US. Heck if they don't pull the lever somebody else will. Anyway the practice of the US to externalize their inflation will cause extreme instability in the US if it can't wean itself off it.
    - plonk 3y ago
      I'm looking for actual evidence or reasoning. Of course I have nothing against the US government strong-arming others into using the dollar, but I don't think you have a lot supporting that hypothesis either. The dollar's preeminence could just as well be explained by the fact that the whole world already accepts it, and it's mostly free of exchange controls contrary to e.g. China's currency. And yeah, the US is known to be a fan of regime change, but again, what indicates that this was done to support the dollar as reserve currency specifically?
mejutoco 3y ago
> If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. I understand this logic, and I am trying to square it with the following: When there is instability investors flee to the dollar (like during covid), and the demand for it increases (dollar goes up), also from other countries increasing reserves. So If when the dollar goes up the US prints more dollars, are they really getting into debt? It seems like a different case form other countries.
- RandomLensman 3y ago
  Dollar going up isn't the same as more dollars being created, it is the same dollars being worth more.
  - mejutoco 3y ago
    Uhm... I know? OP said printing dollars makes the dollar worth less > expectation is that each printed dollar is worth less And I said in times of instability the demand for dollars increases (dollar goes up). What I am saying is the "every dollar is worth less" of printing dollars might be offset by the higher demand of dollars in times of crisis.
    - RandomLensman 3y ago
      There isn't necessary printing of dollars in a crisis - that is my point.
      - mejutoco 3y ago
        I was originally addressing this comment form OP. Below for your convenience. > > If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. So I really do not understand the relevance of what you are saying. It seems disconnected from the actual comments I made. I did not mention "necessary". I think you might be responding to the wrong thread,
Sharlin 3y ago
Government debt is, in general, not expected to be repaid. Ever. Only the interest, and often not even that.
roenxi 3y ago
> The debt is expected to be repaid, with interest. And yet, realistically, the US is almost at the end of a trajectory where they keep borrowing until they can't repay even the interest then default. What scenarios are there now where it makes sense to even try drawing down the principle? The only question is who is eating the real losses. The ambiguity of that is half the spectacle. Ironically, US taxpayers are in it with the best chance of avoiding that particular burden. > They do it because other parties trust it. Speaking of, the Chinese seem to be losing confidence in the dollar, their treasury securities holdings are going down [0] remarkably quickly. They're at around 60% of peak and dropping. Amazingly, the US is still seeing foreign holdings of treasuries going up! [0] https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...
- xyzzy123 3y ago
  The interest is also USD denominated, so the only way the US government can default is by choice.
- chii 3y ago
  > The only question is who is eating the real losses. nobody has to lose. A buyer of a treasury is receiving interest payments, and will receive the entire principle on maturity. At the time of buying, the buyer must have judged that the value is worth buying. In the future, if the value drops, then that's loss, but it's not unexpected. Just like if the value grow. Debt is something that is used to produce _more_. Now, if the debt was not used properly and with care then, that's a different story...
ThinkBeat 3y ago
The money is not printed but that is a technicality. The money is invented out of thin air as needed and spent. (In a rapid succession. ) (QE) For a lot of it: No loans have been made, no obligations sold, No foreign or domestic entity has handed over "real money" No interest rate has been set. For other parts the US government has bought its own obligations. And then there are parts that are actually loans from other entities. If they wanted, they could mint a few $1 trillion USD coins and whoosh the money exists. The US is able to do this due to the special status of the USD as a reserve currency and general trust. Venezuela is not able to do this because they lack the might and power od USD. Nor would Norway. Under Covid Norway spent "real money" from their piggy bank. The US spent a lot of invented money. (But also, other categories) https://www.investopedia.com/terms/t/trillion-dollar-coin.asp https://www.investopedia.com/terms/t/trillion-dollar-coin.as... https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723 https://www.investopedia.com/government-stimulus-efforts-to-...
- chii 3y ago
  > If they wanted, they could mint a few $1 trillion USD coins and whoosh the money exists. of course this is true - that's what sovereign power means. And yet, other entities have trust that the US gov't doesn't just do it. Thus, the 'general trust' as you said. And this special status as being a reserve is mainly due to this trust - no amount of coersion is going to make an untrustworthy currency a reserve.
  - flagrant_taco 3y ago
    Is it any different in your opinion when $1T is created and deposited into bank accounts rather than minted and released as coins?
    - chii 3y ago
      It depends on the mechanism of said creation. If it is created as debt, then there's a due date for which it is repaid, with interest. In which case, it works out OK, if the interest is lower than actual economic growth.
flagrant_taco 3y ago
> the money isn't printed. It's debt, which is different. The debt is expected to be repaid, with interest One person's debt is another person's money. Our economic system is built on an expectation of contistent growth, deflation is not an option and those in charge will do everything they can to avoid it. When the government creates new money it's technically debt, but debt they will never get back and clear off the books. Doing so would reduce the money supply and either cause deflation or reduce GDP, neither are acceptable for the system. They tried quantitative tightening policies to remove some of the debt/money created after the housing crisis, even a small amount of QT hit hard and they very quickly abandoned the idea of allowing those debts to be paid back (or ought back and removed).

by chii 3y ago

georgeplusplus 3y ago

>>>If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. When banks make a loan they are literally creating new money into existence. Perhaps you meant Bank Reserves which is the underlying system banks and the fed use and the dollars which is bank customers like you and me use.

notahacker 3y ago
Nothing you've said disagrees with the OP. The new "money" is literally credit, which literally is someone else's debt obligation which disappears when repaid.
- epups 3y ago
  I think it does, actually. Every time I see a comment about "money printing", it makes me think of the author holding the opinion that the government literally created money, as in wealth, out of thin air.
  - PeterStuer 3y ago
    No, that privilege is reserved for the private banks. In the US the cunningly named FED. Presidents that actually tried changing that ended up killed.
RandomLensman 3y ago
Yes, but then the banks need to borrow that money as soon as it moves off the balance sheet.
chii 3y ago
> they are literally creating new money into existence. Debt is new money, but this new money is _different_ from printed money. It's because the debt has to be repaid, which implies you have to have the ability to repay (otherwise who would do the lending?). Therefore, this implies that production increases at a rate that is at least the same as, if not higher, than interest rate charged.
- neilwilson 3y ago
  It’s no different from money. It just has a longer duration. Overnight money is repaid every day and replaced with a new loan for the following day. That also happens with so called “debt”. Money and debt are fundamentally the same thing. They are issued by the same entity which has the same lifespan. Necessarily the debt can never be “paid off”. All that happens is the assets are swapped around. Lending happens automatically as a function of accounting for a payment journal. The only people who get excited about it are those who are hard of accounting. Money is debt. Time to accept that.
  - chii 3y ago
    Never denied that money and debt are the same. I am denying that printed money is the same as debt money.
    - kelipso 3y ago
      You are talking about printed money as in real world coins and paper/cloth cash? That's just not relevant at all in this age.
      - chii 3y ago
        no, i'm not talking about physically printed money. I'm talking about generating money not via debt, but via "wishing" it into existance. Banks generate money via debt. This is OK. If the treasury starts printing money - like what Zimbabwe or Venezuela did (or the Weimar Republic[1] pre-WW2) - then you will get rampant inflation. [1] https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic#Hyperinflation https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...

Ylpertnodi 3y ago

>the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve. The several countries that tried not to use the usd kinda got penalised, though.

bobthepanda 3y ago
It also doesn’t help that most of the other candidates are more heavily controlled (CNY), actively do not want to be reserve currencies (JPY, CHF, CNY), or are worse managed (EUR)
belltaco 3y ago
> The several countries that tried not to use the usd kinda got penalised, though. That theory, even though it's floated a lot and is assumed true by otherwise smart people, never made too much sense to me because of the simple fact that a country that's already in the very bad books with the US would be the one that tries to switch to a different currency. For example Iraq and Libya were already on the list of the countries that the US would take military action against, for several strong reasons nothing to do with currencies, before they floated the idea of switching to a different reserve currency. So it's correlation rather than causation.

laboratorymice 3y ago

> If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. You have to get your head around the fact that this is an open-ended system, the music never has to stop so long as the sun rises and we stay on this monetary system. The same way people still get "wealthier" from stock market appreciation, even though there is a buyer for each seller, so too does more debt indeed mean a permanent increase in money supply[1]. [1] https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S

PeterStuer 3y ago

"the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve" Try selling your oil in anything but usd and see what happens. It's not a choice if the consequences of making the 'wrong' choice is being invaded, bombed into the stone age and have your country pillaged and its assets handed off to reserve currency alligned corporations.

plonk 3y ago
> It's not a choice if the consequences of making the 'wrong' choice is being invaded, bombed into the stone age and have your country pillaged and its assets handed off to reserve currency alligned corporations. Is there a reason everybody here seems to believe in that threat? I don't think the US is keen to repeat the 200X invasions. Plus Saudi Arabia, a US ally is threatening to switch to China's currency despite that?
- blkhawk 3y ago
  So your argument is that it doesn't happen all that often? Also you have to remember that war isn't the only option the US has pulled. I mean the general low cost solution was just paying some terrorists to boot out the government to install a friendly Dictator. This fucking happened several times and it ruined whole regions and the aftereffects killed hundreds of thousands and affected millions. Do the planners not know this will happen? Probably. They might have predicted those outcomes as worst case scenarios. History seems to point to it being the usual outcome. Bias I guess. For them this is a trolley problem on one set of tracks is economic harm to the US and on the other as an indirect effect 500k deaths of people not anywhere near the US. Heck if they don't pull the lever somebody else will. Anyway the practice of the US to externalize their inflation will cause extreme instability in the US if it can't wean itself off it.
  - plonk 3y ago
    I'm looking for actual evidence or reasoning. Of course I have nothing against the US government strong-arming others into using the dollar, but I don't think you have a lot supporting that hypothesis either. The dollar's preeminence could just as well be explained by the fact that the whole world already accepts it, and it's mostly free of exchange controls contrary to e.g. China's currency. And yeah, the US is known to be a fan of regime change, but again, what indicates that this was done to support the dollar as reserve currency specifically?

mejutoco 3y ago

> If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. I understand this logic, and I am trying to square it with the following: When there is instability investors flee to the dollar (like during covid), and the demand for it increases (dollar goes up), also from other countries increasing reserves. So If when the dollar goes up the US prints more dollars, are they really getting into debt? It seems like a different case form other countries.

RandomLensman 3y ago
Dollar going up isn't the same as more dollars being created, it is the same dollars being worth more.
- mejutoco 3y ago
  Uhm... I know? OP said printing dollars makes the dollar worth less > expectation is that each printed dollar is worth less And I said in times of instability the demand for dollars increases (dollar goes up). What I am saying is the "every dollar is worth less" of printing dollars might be offset by the higher demand of dollars in times of crisis.
  - RandomLensman 3y ago
    There isn't necessary printing of dollars in a crisis - that is my point.
    - mejutoco 3y ago
      I was originally addressing this comment form OP. Below for your convenience. > > If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. So I really do not understand the relevance of what you are saying. It seems disconnected from the actual comments I made. I did not mention "necessary". I think you might be responding to the wrong thread,

Sharlin 3y ago

Government debt is, in general, not expected to be repaid. Ever. Only the interest, and often not even that.

roenxi 3y ago

> The debt is expected to be repaid, with interest. And yet, realistically, the US is almost at the end of a trajectory where they keep borrowing until they can't repay even the interest then default. What scenarios are there now where it makes sense to even try drawing down the principle? The only question is who is eating the real losses. The ambiguity of that is half the spectacle. Ironically, US taxpayers are in it with the best chance of avoiding that particular burden. > They do it because other parties trust it. Speaking of, the Chinese seem to be losing confidence in the dollar, their treasury securities holdings are going down [0] remarkably quickly. They're at around 60% of peak and dropping. Amazingly, the US is still seeing foreign holdings of treasuries going up! [0] https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...

xyzzy123 3y ago
The interest is also USD denominated, so the only way the US government can default is by choice.
chii 3y ago
> The only question is who is eating the real losses. nobody has to lose. A buyer of a treasury is receiving interest payments, and will receive the entire principle on maturity. At the time of buying, the buyer must have judged that the value is worth buying. In the future, if the value drops, then that's loss, but it's not unexpected. Just like if the value grow. Debt is something that is used to produce _more_. Now, if the debt was not used properly and with care then, that's a different story...

ThinkBeat 3y ago

The money is not printed but that is a technicality. The money is invented out of thin air as needed and spent. (In a rapid succession. ) (QE) For a lot of it: No loans have been made, no obligations sold, No foreign or domestic entity has handed over "real money" No interest rate has been set. For other parts the US government has bought its own obligations. And then there are parts that are actually loans from other entities. If they wanted, they could mint a few $1 trillion USD coins and whoosh the money exists. The US is able to do this due to the special status of the USD as a reserve currency and general trust. Venezuela is not able to do this because they lack the might and power od USD. Nor would Norway. Under Covid Norway spent "real money" from their piggy bank. The US spent a lot of invented money. (But also, other categories) https://www.investopedia.com/terms/t/trillion-dollar-coin.asp https://www.investopedia.com/terms/t/trillion-dollar-coin.as... https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723 https://www.investopedia.com/government-stimulus-efforts-to-...

chii 3y ago
> If they wanted, they could mint a few $1 trillion USD coins and whoosh the money exists. of course this is true - that's what sovereign power means. And yet, other entities have trust that the US gov't doesn't just do it. Thus, the 'general trust' as you said. And this special status as being a reserve is mainly due to this trust - no amount of coersion is going to make an untrustworthy currency a reserve.
- flagrant_taco 3y ago
  Is it any different in your opinion when $1T is created and deposited into bank accounts rather than minted and released as coins?
  - chii 3y ago
    It depends on the mechanism of said creation. If it is created as debt, then there's a due date for which it is repaid, with interest. In which case, it works out OK, if the interest is lower than actual economic growth.

flagrant_taco 3y ago

> the money isn't printed. It's debt, which is different. The debt is expected to be repaid, with interest One person's debt is another person's money. Our economic system is built on an expectation of contistent growth, deflation is not an option and those in charge will do everything they can to avoid it. When the government creates new money it's technically debt, but debt they will never get back and clear off the books. Doing so would reduce the money supply and either cause deflation or reduce GDP, neither are acceptable for the system. They tried quantitative tightening policies to remove some of the debt/money created after the housing crisis, even a small amount of QT hit hard and they very quickly abandoned the idea of allowing those debts to be paid back (or ought back and removed).