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Geruda's picture

The solution is simple.  The Fed holds lots of T-bills in exchange for printing money for the gov't.   Our gov't should be printing the money itself to eliminate the middle man.   All the interest we pay on the IOU's the Fed holds essentially funnels into the hands of 9 families.   Advise the those greedy fuckers that the party is over and we reneg on paying off the Fed for their IOU's.   That clears up the debt problem and those nine families will just have to live on the treasure they already hold.  


Is there a flaw in this plan I'm not seeing?

striped-pad's picture

A slightly round-about way to answer your question, but I hope it makes it clearer.

There are two kinds of fiat money. One is really a form of official recognition of promises made to repay. The other is where the government simply says "this is your money - you *will* use it to pay for goods and services".

When someone borrows from the bank, the money is created at the same time as the debt to the bank. The borrower can spend that money, and the money is valuable because the borrower must sell something of equal value back into the economy to obtain the money to clear their debt. If they default, the bank must write off the loan, reducing its owners claim to goods and services in the economy by the same amount as the borrower spent.

With the current system, the situation is similar for the government, except that instead of producing and selling something to repay the loan, it taxes the people, so they end up selling more goods and services into the economy than they buy. This difference is the value of the FRNs.

If the government simply printed and spent money, without promising to remove the same amount in future, each time it did so it would dilute the value of existing money because no more goods and services would be produced. It would be very similar to the QE world. But rather than formalising the abomination of having the Fed creating money to allow the government to deficit spend at will, I say it would be better to go back to the system in which Treasuries were bought in a free market by anyone who desires to lend to the government, and with the interest rate being set by the market. This would provide a greater resistance to the ability of the government to deficit spend.

Another thing: if the government just reneges on the debt, the Fed takes a massive loss, which of course is transferred to the Treasury, just as profits (after dividends) are. This means that the government has to raise taxes to repair its balance sheet. It's not much different from raising taxes to repay the debt.

Geruda's picture

Sounds like your entire speech is based on an ambiguous premise at best.

You begin with the assumption that deficit spending is a bad thing.   

Almost no one goes through life without deficit spending.

* * * 

If everybody decides to stop pretending money has value, the entire world plunges into chaos.  The chaos when looked at from a long range perspective might appear to have been a good thing.   But perhaps not if it could have been compared to OTHER possibilities that could have occurred instead.  One thing highly likely on the other side of the abyss that that chaos opened up will be a drastically reduced world population, and a quality of life for survivors proportionately more unpleasant in relation to how good it was on the other side.   Assuming someone reading this is one who makes it through, they will likely less able to find joy in living than those who are already conditioned to third world existence, or even close to home, to ferrel folks you see standing on street corners playing the numbers game with their wily patience, accumlating what they need to survive for another day in quarter and dimes.   

* * * 


You can dress it up all you want and paint lipstick on it, lay all the blame on Obama if it makes you feel like your vision for how to escape your fears is in that direction but the real issue is that increasingly more wealth has been concentrated in the hands of too few and they now use that control it gives them ruthlessly to take even more.   

Meanwhile there is a herd of stooges out there including most people here apparently, that chase around pointing fingers at the puppets who have no way of controlling the ones with all the wealth thus power.

All Obama wanted was a way to fix an awful problem in our society.   Making it so you don't die on the street if you need medical help.   The exploitation of that impulse by every money making entity that smelled a way to enrich themselves from the attempt at solution, aided and abetted by obstinate, stupid, corrupt, and mostly republican legistlators yielded up an abortion of a result in comparison to what it should be.   








zebrasquid's picture

The interest paid by USTreasury to the Fed is reportedly returned to the Treasury.

Geruda's picture

"Although the Federal Reserve Bank claims not to be private as their website claims, they clearly operate under terms that no other "government institution" operates by. For example, they are not required to submit financial information and are not subject to IRS audits, nor do they even publish the amount of money they print to the American public. So given these terms it's hard to believe the Federal Reserve's claims that they are a government institution providing a genuine service to the American people. A commonly held position not mentioned on their website is that The FED is a privately owned central bank. Central banks are supposed to implement a country's fiscal policies. They monitor commercial banks to ensure that they maintain sufficient assets, like cash, so as to remain solvent and stable. Central banks also do business, such as currency exchanges and gold transactions, with other central banks. In theory, a central bank should be good for a country, and they might be if it wasn't for the fact that they are not owned or controlled by the government of the country they are serving. Private central banks, including the United States FED, operate not in the interest of the public good but for profit. There have been three central banks in the nation's history. The first two, while deceptive and fraudulent, pale in comparison to the scope and size of the fraud being perpetrated by the current FED. What they all have in common is an insidious practice known as "fractional banking." Who really owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York. The FED is the only for-profit corporation in America that is exempt from both federal and state taxes? The FED takes in about one trillion dollars per year tax free! The banking families listed above get all that money. Forty cents in every dollar of US taxes."

the grateful unemployed's picture

the fed is the USTs off balance sheet depository for bad assets, sterilzation, and their money laundering division. when a politician says pie in the sky, the fed says how much? its the same game they played with GSEs, insisting all along they did not have the guarantee of the USG. i expect them to break the fed the same way, but that's only when they get up the hubris to run off balance sheet budgets, such as Bush did during Iraq. (Obama has ten times more hubris than Bush).

akak's picture

I am wanting to be asking the Geruda who is one of the very sillies who is doing the playing of the 'red team/blue team' game for the mental childs why he is not making the doing of the sucking of the cock of the president who is named Obama as he was always having the doing of the making in his many previous posts which were all the lying and the stupids?

Geruda's picture

akak, the imitations we are having from you are being much piss poor.  I am having many laughings when I am knowing what the name you are having is being when it is read backwards.  At first I was having the thinking it was what the wife you are having was saying when she was looking at the insides of the underware you are wearing but now I am thinking it is what she was speaking after seeing much of what it is being when it is spelled backwards and is in the undershorts you are wearing.    

akak's picture

It is being with the many sorries that I am having for making the forcing of the Geruda to be doing the removing from his mouth of the cock of the president who is Obama in the ordering to be making the doing of the responding to my questioning of his former lyings and sillymakings and veiled angries against the peoples who are only wanting to be left alones from the governments and enjoying the remaining traces of the liberties.

the grateful unemployed's picture

the stock market is like the young man in a story about spiritual hubris. his guru tells him, god is everything. the young man takes it to heart.

he is walking down the road, watching things in a new way, it is all god. then an elephant and its driver come right at him, the driver yells, the young man thinks, ah this is god too, coming at me. at the last minute the elephant pushes the man aside, tosses him in the ditch. the man returns bruised and dispirited to his guru. 

he explains what happens, i saw god was everything. the guru asked "if you saw god coming, why didn't you get out of the way.." the stock market hears god in the Fed, but if the government can't INCREASE their debt (not merely pay it off) then somebody is going to get run over because the stock market requires lots of new money to keep leviatating at 15% a year.

Alexandre Stavisky's picture

Small showers last long, but sudden storms are short;

He tires betimes that spurs too fast betimes;

With eager feeding food doth choke the feeder:

Hard vanity, insatiate throat-bound cormorant,

Consuming means, soon preys upon itself.

This imperial arena of knaves, this tempestuous wilderness,

This earth of such promise, this seat of Mars,

This once other Eden, demi-paradise—newly demi-hades,

This oceaned fortress built by Nature for herself

Against infection and the hand of outside war,

This heedless mixed breed of mild men, this little world,

This semi-precious stone set in the several sea,

Which serves it in the office of a shield,

Or as a moat defensive to a divided house,

Against the envy of better ordered lands,

This blighted plot, this earth, this realm, this Columbian,

This nursemaid, this teeming womb of purchasable men,

Fear'd for their intrigue and famous for their filching,

Infamous for their deeds as far from home,

For idolatry’s service and mocked chivalry,

Blind to the sepulchre in redemptive Jewry,

Of the world's ransom, blessed Mary's Son,

This land of such despairing souls, this once dear land,

Dear once for her reputation through the world,

Is now leased out, I die pronouncing it,

Like to a tenement or foyer given over to swineherd:

Amerigoround, bound in with the ambivalent sea

Whose rocky shore beats back wounded claimants’ siege

Of watered down promise, these now bound in with shame,

With inky blots and rotten parchment bonds:

Which New World, that was wont to conquer others,

Hath made a contemptible conquest of itself.

Ah, would the scandal vanish with its integrity,

How happy then were all ensuing default!

Geruda's picture

That's a pretty fucking tortuous metaphor to follow.  


akak's picture

Not nearly as tortuous as all of your many previous faux-Indian Obama-cock-sucking posts.

deerhunter's picture

Money from nothing.  Just read the excerpt from Creature from Jekyll Island.  I am not a finance guy or banker type.  I often wondered when going through the proctology exam that is securing a mortgage when in straigh commission sales where that actual 200K came from when the bank "loaned me" the money.  It has been smoke and mirrors all along.  If just ten percent of us were to withdraw all our cash from any banking institution their game would be over.  Wouldn't it be that simple?  A true bank run.  We have been lied to our entire lives.  I think the EBT debacle was a dry run.  I had my grankids here over the weekend.  I envy them. They live in a one traffic light town.  No locked doors.   One gas station/convenience/grocery store.  Middle of corn country and an hour or more from any city bigger than 10k people.  I might move there tomorrrow if I could make a living there.  See, that is the thing isn't it?  Where you can make a living you have a lot of people.  Where you have a lot of people you can have a lot of crime. Imagine every sixth person you see not knowing where their next meal comes from.  I must be off to make a living,  good day all.

striped-pad's picture

A few more comments on that excerpt:

As GEG says, money and debt are created at the same time. Modern money records who has provided goods and services without receiving any in return yet, and debt records who has received goods and services without providing any in return yet. This is why money and debt as bookkeeping entries is actually a reasonable system. (Don't get me wrong - it took me a while to get to the point where I understood that the monetary system isn't fundamentally flawed, so take some time to think about it, and just as you shouldn't accept the Fed's, Gov's and MSM's reassurances, you should also not take GEG (or me) at face value).

Money is not just declared to be valuable by governments - it becomes valuable because those who borrowed it into existence (so they can buy something) must sell something of equal value in order to repay it. The quantity of money increases and so does the quantity of goods and services available in the economy.

GEG is correct to say that if all debts were repaid, there would be no money in existence. But that wouldn't matter because if someone then wanted to receive goods and services before providing some, they could just borrow some more money into existence, and later repay the debt by selling something to whoever currently has the money.

Robert Hemphill's comment in Irving Fisher's (IMHO) foolish book is deeply flawed. The idea that people are prosperous when there is more money about, and that they starve when there is less money, is absurd. Money and debt merely represent the difference between what people have provided and received. If people keep this difference low (by selling shortly after buying), there will be very little money about, but there can still be large quantities of goods and services being traded.

Just because money is created as an accounting entry, it is not costless to the bank. The bank's owners originally invested money in the business. They placed some of their claims on other people's goods and services in the business. If the bank lends to a borrower, and the borrower fails to repay, the bank's owners lose that amount of money i.e. that amount of claim on other people's goods and services. It was effectively transferred to the borrower who got to receive without providing. A bank deposit is a *liability* of the bank - it is a promise to provide central bank money to the depositor on demand. The bank cannot create central bank money, any more than you or I can.

The fact that banks can lend more than their deposits, and collect interest on all those loans, is reasonably lucrative to a well-run bank that lends sensibly. But it is not a panacea. If it lends 10 times its capital, and just 10% of loans are not repaid, the owners lose their entire investment in the business. Banks have the privilege of creating their own leverage, but not of running off money which they can then spend on consumption.

I was pleased to see that GEG doesn't fall into the same trap that "Money as Debt" falls into of assuming that the system requires an infinite exponential expansion of money due to the interest payments. GEG is absolutely correct - the interest is not extinguished: it pays for the bank's running costs, covers losses from defaults on loans, and provides profit to the owners. Personally, I don't see a problem with this. A well-run shop selling sandwiches may spend some of its profits on having the shop's floors waxed, but I wouldn't say that this is a form of modern serfdom to sandwich shop owners.

Maybe I'll comment on the second half a bit later.

For now, I'll just close by saying that we need to be careful to think for ourselves, and not just accept that anyone criticising the current unsustainable and IMO outrageous situation must be correct themselves. There is much to criticise of what is happening at the moment, but my concern is that focusing on the system rather than on the decisions taken by those in power may lead us to thinking that the solution is simply to change the system rather than to hold accountable those in power who have worked against our interests.

striped-pad's picture

I learned a lot from G Edward Griffin, but he incorrectly conflates liquidity and solvency. If there is a run on a solvent bank, it can sell assets or use them as collateral when borrowing money to repay its depositors. If it can't borrow from another bank or the open market, it can always go to the central bank and borrow from there - that's the way it's supposed to work anyway. (As lender of last resort, the central bank isn't supposed to lend at low rates against bad collateral - it's supposed to lend at punitive rates against good collateral so it doesn't expose itself to credit risk).

Having said that, I'm not alone in believing that many banks are actually insolvent and a run on them would expose their insolvency as they found that nobody believed that their "assets" were worth what they claimed and so would not lend the amount they were claimed to be worth. The right thing to do then is what should have been done in 2008 - let them fail, pay the depositors first with the proceeds of selling the assets; if there is any left, repay senior bondholders; if there is still some left, repay the subordinated bondholders (and other creditors I think); and if the banks were actually solvent the shareholders get the remnant. While those banks are being liquidated, new or solvent competitor banks will take their place.

shovelhead's picture

I got your grandkids beat.

We don't even have a traffic light. City council voted that we like the 4 way stop sign just fine because its been working for about a 100 years and it don't need batteries.

Country folks are polite because everyone knows who you are and they'll tell your mama if you act up.

Ain't gonna be no EBT zombies here because we'll take care of those that need and the rest can go hang.

WTFUD's picture

Here we go again when all else fails roll out the biggest thieving cunt of them all, yes, Everyone's, Uncle Warren.

WTFUD's picture

Ass.Press Flash
. . " it's futile to fight the matrix. . .mainstream's where it's at "

We have it on good authority that his first public appearance will be an after dinner speaking engagement alongside former british PM Tony Blair at the JPM AGM.


Bro of the Sorrowful Figure's picture

reminds me of my last hopium trip. at least i don't have to see hillary naked this time.

Bro of the Sorrowful Figure's picture

reminds me of my last hopium trip. at least i don't have to see hillary naked this time.

Bro of the Sorrowful Figure's picture

reminds me of my last hopium trip. at least i don't have to see hillary naked this time.

Bro of the Sorrowful Figure's picture

reminds me of my last hopium trip. at least i don't have to see hillary naked this time.

JamesBond's picture

Progressives are merely tenderizing you for the grill. Foder, as it were, in the argument for a new constitution because, "Our form of government just isn't working any longer."  Of course, few in Washington DC are arguing that our constitution is just fine and it's the politicians who are the problem...



hangemhigh77's picture

Bingo, maybe if they adhered to the principles of the Constitution and the Bill of Rights it would actually WORK!!  It's like trying to vacuum your pool with a lawnmower, it just doesn't work. but it works great on your lawn. Imagine that. Get new operators that aren't insane, that would be a good start.

WTFUD's picture

@ hangemhigh77
i remember the good ol' days when Hangin' was your preferred method of summary execution.
what happened to all that hate bruv?
you've gone all soppy and intellectual on us!
hope you haven't found that ol' time religion.

hangemhigh77's picture

Sorry, HANG THOSE FUCKERS!!!!!!!!!!!!!!!!

hangemhigh77's picture

What is it with Fed ChairSatans?  Do you HAVE to look like some toasted fruitcake psychopath to get that job?  Is Yellen, Napalotano, and Reno the same person?  All of them should be kicked out of the gene pool.At some point you must wonder who or WHAT is rubbing their genetalia.  They probably fly a lot for the TSA sex they get pre-flight. TSA workers say Yellen likes it from the back.

JamesBond's picture

Biden is calling, should I place him on hold?




dontgoforit's picture

These are folks who lost their gig on SNL.

doMiKY's picture

Weeks from now, we will learn what has been attached to the legislation that saves us from the debt ceiling apocalypse.  We will not like it.

The U.S. default is not financial - It is governmental - 

personally, would not be using the U.S. dollar as a reserve currency - 




WTFUD's picture

The more i learn the less i understand!

williambanzai7's picture

Which is the genius of their scam. 

But if you read the Creature From Jekyll Island, excert in the link,  you will feel less confused:

The book:

I can't think of a better time to read it.

marathonman's picture

Money As Debt 2 Promises Unleashed on is also very good.

GetZeeGold's picture



The more i learn the less i understand!


After years of learning - when you realize everything is jackass stupid....basically you're done.

dontgoforit's picture

Over-stimulation.  Monetarily and mentally.  I'm with you.

the grateful unemployed's picture

someone said since the (retail) business of the TBTF banks is only about  20% of what they do, the collapse of the banking system means almost nothing to the average citizen. (banking services are done everywhere, including grocery stores) from 2008 on we propped up a system which was nonintegral to the economy. at the expense of taxpayers. okay i'm just repeating the obvious. now the other shoe will drop, and to quote hendricks If Six Was a Nine, "fall mountain, just don't fall on me.."

Spumoni's picture

WB, you are fucking brilliant. I hope you show at MOMA someday soon!

williambanzai7's picture

Unfortunately, many of the wives of the scumbags depicted in my works areon the board of MOMA.

Nevertheless, MOMA is held in a dear place in my heart since my Moma (pun) took me there first when I was a kid.

q99x2's picture


Washington D.C. is having a party.

robnume's picture

Now The Street will be gellin' with Yellin! OMG! Abolish the Fed!

WTFUD's picture

With all this shit going on are the fed still entitled to print $85 large per month? And if so why so?
You decide!

the grateful unemployed's picture

actually there is no reason for them to do it, since the government is not spending as much money as it was. should they continue they would need to figure out some way to get that money directly to the banks without monetizing through the treasury.

dontgoforit's picture

Think this isn't monetized?  Guess again.  Don't believe the blow-hard bastards telling us this.  It just isn't so.  This is going right on your W-2, so to speak.

blindman's picture


Kryten451's picture

Howard Zinn, an American treasure, is sorely missed.