Just_me_Mike
Well-Known Member
Some consider the US dollar not backed by gold anymore, but by China
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New dollars are issued when the Federal Reserve elects to fund the purchase of debt, primarily U.S. Treasury Bonds, by creating new reserves rather than financing the purchase with existing reserves. When the bond issuer spends the money, new dollars enter circulation.[citation needed]
In theory, Federal Reserve Notes are like checks: liabilities drawn on the Federal Reserve Bank. The Fed offsets these liabilities by holding U.S. Treasury Bonds as assets, which are backed by the U.S. Government's ability to levy taxes and repay.[citation needed]
When compared to hard money backed by gold or silver, this debt-based approach has the advantage of making the currency elastic, giving the government a means of expanding or contracting the money supply in response to changing economic conditions. The disadvantage of this approach is inflation. The money supply must be continually expanded in order to finance interest payments on the debt by which it is issued. This devalues the currency, causing inflation
Some consider the US dollar not backed by gold anymore, but by China
The money supply must be continually expanded in order to finance interest payments on the debt by which it is issued. This devalues the currency, causing inflation
Wait, so..... we gotta (as in our Governments) have to buy more money to pay for the interest that is set by obtaining the money?!
If that's the case, then it is impossible for our Governments to clear the debt from the interest of buying the money: because everytime a Government buys the money (to help pay off the interest and debt) they therefore create new debt because of the new interest from the new money!?
That makes absolutely no sense what-so-ever! Have I misunderstood, or is this correct!?
Do you know there are also small amounts of some sort of magnetic metal is dollar bills? If you take a powerful enough magnet, such as that from a computer hard drive, it will actually pull the bill towards it. Not a very big effect, but it is definitely noticeable.I carry around worthless paper in my pocket.
Do you know there are also small amounts of some sort of magnetic metal is dollar bills? If you take a powerful enough magnet, such as that from a computer hard drive, it will actually pull the bill towards it. Not a very big effect, but it is definitely noticeable.