[–]yodelocity 4 points5 points6 points 2 years ago (2 children). Investors pull money from the US economy (stocks and bonds) and invest it in US-government issues! 3. The USD (or any currency) is backed by all the goods that can potentially be purchased using USD. Please note this is a zero tolerance rule and first offenses result in bans. [–]jwright665 3 points4 points5 points 2 years ago (0 children), [–]MansourMan 16 points17 points18 points 2 years ago (0 children). Printing money to get more foreign currency is hard. This is a hold over from when governments had gold as a backing to their currency and needed to raise funds before they could spend money. Changing values of currencies simply changes what we write on the bucket the water is in. Money is an abstract claim to a portion of the economy. Hmmmm, I think that the government could print unlimited money if it collected unlimited taxes, right? At the most abstract: Production = Consumption & hence Consumption = Production. 2) Important: We have strict political posting guidelines (described here and here). In real terms it is of course limited. Use the search function or check out. If the US were to reduce it's debt it would be more likely to default on it's debt than use a scheme with the Federal Reserve to "print money"because they would position to issue new debt after the hair cuts are given. Everyone's savings are now worthless. Just after WWII our debt was 108% of GDP and steadily fell to close to 50% over the next decade or two. If that were to happen then we would have inflation like never seen before due to current debasement. To put matters into perspective, the Federal Reserve’s total liabilities have more than quadrupled since the onset of the financial crisis, amounting to about $4.1 trillion in the fourth quarter of 2018. Also, inflation has always been a much more terrifying proposition for the rich than for regular people. You have to look at debt as a percentage of earning power as well as assets. Anything remotely critical of the fed or QE or even slightly bearish gets ridiculed. And it helps provide topics I can search for more in depth reading on. [–]vep 58 points59 points60 points 2 years ago (6 children), you are a saint to respond so sincerely here. [–]Crentski 5 points6 points7 points 2 years ago (0 children). Summary U.S. Federal Reserve balance sheet surges past $6.9 trillion. If taxes could be paid in anything else -- gold nuggets, ethereum, nice looking sticks -- then the dollar would be worthless. Do not post your app, tool, blog, referral code, event, etc. 20% and those of the Federal Reserve by 10%. If it loses value US companies and consumers will have to pay more dollars for the same products from abroad. The national debt is the tax payer tab that can only go as high as people are willing to lend it. That's all well and good when interest rates are at historical lows and the economy is (at least on paper) humming along, but things don't look so great if you consider that rates have been ticking up. You could collect every form of US currency (post 1913) and pay the Fed Reserve, which pays back what was borrowed, but the debt (interest) remains. Defaulting would have sparked a financial crisis on the bond holders (other EU countries) cascading additional liquidity issues. Tag: Federal Reserve balance sheet THE ONLY THING SYSTEMATIC IS THE DESTRUCTION OF AMERICA – PART 2. By contrast, the Bank of Japan’s balance sheet was relatively large Ironic, since they're the ones who were complaining about the short road to hyperinflation for the last decade while inflation languished around 1%, and the economy suffered from high unemployment, because none of those stupid fuckers could wrap their heads around the fact that government finances are not analogous to household finances, and that they should allowed the government to step in and bridge the gap between idle labor and idle resources. No, it wouldn't. This means the real cost to service our debt was -0.39%. This slows down trade as people may hang on to their currency, expecting it to be more valuable later. At present they are targeting a 2% inflation rate as the core inflation rate, using data gathered by the Bureau of Economic Analysis. Mathematically, it's fairly sound. Government can will dollars into creation, and then use it to buy things from people and businesses that are otherwise experiencing no demand in a down economy. I like you worry that the next resession will significantly expand our national debt and the feds liabilities on their balance sheet. That's why when you hear someone say "Keynesians are wrong" what they're actually saying is "I disagree with what everyone accepts as true". Because people don't anticipate 1 shell to be worth 2 or 3 coconuts in the future with mild inflation, they won't hang onto shells, so you avoid deflation. There's rioting in the streets. The global economy would crash and we’d start begging to return to the relative prosperity of the Great Depression. They didn’t understand that the value of the “Zimbabwean currency” pie was already falling and instead of propping up demand they pushed the other direction and dumped a shitload of additional supply, thus turning an inflation problem into something much worse. which is nuts (and it's so transparently nuts that it makes all economists look like fools to the moderately knowledgeable layman). As the Federal Reserve balance sheet continues to rise, many are taking a closer look at the Federal Reserve’s next steps. Jesus this post is bad. OP, you're getting trashed in the comments because you have a fundamental misunderstanding of economics. 3when do you see the bubble popping for this era? This inevitability, this unavoidable constant is also partially what gives the dollar stability and gravitas -- people are content to save it, and people are content to use it as a medium of exchange, because it has the ability to pay a debt that no other substance on earth can. The fact that an arm of the government issues the currency its debt will be settled in, does not negate the fact that the debt will have to be paid and that taxes are necessary to fund government without nation-wrecking inflation. Thank you for the informative and articulate post. Most people (and certainly most people on Reddit in general) really can't even conceive just how much of our country is owned by so very few people, of just how much money these people have. The income dried up, the debt got too big, countries stopped lending to them in fear they wouldn't get their money back. [–]ancap17 3 points4 points5 points 2 years ago (0 children), [–]Dhosti 7 points8 points9 points 2 years ago (1 child). [–][deleted] 31 points32 points33 points 2 years ago (4 children), [–]RemindMeBot 6 points7 points8 points 2 years ago (1 child). That is just part of the business cycle and liquidity will dry up the next recession. It can't without destroying the dollar, which it has been doing since the inception of the federal reserve. The Federal Reserve’s balance sheet topped $5 trillion for the first time amid the U.S. central bank’s aggressive efforts to cushion debt markets against … [–]w3woody 12 points13 points14 points 2 years ago (3 children), (Which is what happens when you have too many dollars: you need more dollars to buy stuff, because the supply of stuff doesn't inherently grow at the same rate. [–]Federer2020hype 484 points485 points486 points 2 years ago (161 children). You would have to convince the entire economic forum of the world. Both constraints (print too much money, you get hyperinflation; print too little money, you get deflation which as we saw in the 1930's can lead to a Depression) limit what the U.S. government can do when printing money. The tipping point may not be anytime soon. uhhhhhh what? No, the key indicator to watch is the Personal Consumption Expenditure price index. And no, creating money out of thin air is not an economically feasible concept. In 2017 our cost to service the debt was roughly 1.7% with roughly 2.1% inflation. [–]ifly6 2 points3 points4 points 2 years ago (2 children), That's a pretty easy statement to disprove: https://fred.stlouisfed.org/series/FYFSD, [–]ric2b 1 point2 points3 points 2 years ago (0 children). A large chunk of that debt must be paid back, with interest. [–]personnedepene 5 points6 points7 points 2 years ago (0 children), [–]magnus91 5 points6 points7 points 2 years ago (0 children). It sounds like that plan is not going so well and they have only been able to sell around $300 billion so far over 1 year into the program of unwinding. [–]Idontstandout 1 point2 points3 points 2 years ago (0 children). Now it's almost $60,000. It also spends solely in that currency. 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