Fakeconomics . . . .

[Austrian Economics]

I like to think of the capital as a chicken. The yield on capital is the egg. Before you can consume an egg, you have to produce a chicken. Right now, we are consuming eggs at a much faster rate than we are producing chickens.

[TOM4CWB]

I like to think of the capital as a chicken. The yield on capital is the egg. Before you can consume an egg, you have to produce a chicken. Right now, we are consuming eggs at a much faster rate than we are producing chickens.

Too big to FAIL... This is totally political... who decides now?

No Rational historical reference...

Like everyone playing a big card or Monopoly game... with rules changing hourly... and certain players having a veto...

As long as folks keep playing in this big game... it will continue!!!

Cheers!

[furrowtickler]

I have to emphasize that central banks don't print money into existence, they borrow it into existence. What we call money originates as a bond. Every bond carries an interest charge. What we typically call cash, i.e. bills, are merely pieces of the bond. But with fiat, there's no way that you can redeem a bond for final payment, i.e. redemption for a commodity such as gold, which would extinguish the debt.

Without redemption for a commodity, debt grows exponentially as interest compounds. Even at the absurdly low rates we now see, the compounding is still unstoppable.

It's bad enough that debt must grow exponentially in a fiat system, but as a result of this covid crisis we now have governments of every stripe borrowing exponentially more than was imaginable even five years ago.

I just saw a TV interview with the mayor of Mississauga cheering on the Ontario government's recent success in lobbying the federal government for billions in aid to municipalities to fill the holes in their budgets. This is, however, not found money. It's simply being added onto Ottawa's already huge debt burden.

Liberal way of thinking
No idea on wealth creation, just play with Monopoly money

[biglentil]

I have to emphasize that central banks don't print money into existence, they borrow it into existence. What we call money originates as a bond. Every bond carries an interest charge. What we typically call cash, i.e. bills, are merely pieces of the bond. But with fiat, there's no way that you can redeem a bond for final payment, i.e. redemption for a commodity such as gold, which would extinguish the debt.

Without redemption for a commodity, debt grows exponentially as interest compounds. Even at the absurdly low rates we now see, the compounding is still unstoppable.

It's bad enough that debt must grow exponentially in a fiat system, but as a result of this covid crisis we now have governments of every stripe borrowing exponentially more than was imaginable even five years ago.

I just saw a TV interview with the mayor of Mississauga cheering on the Ontario government's recent success in lobbying the federal government for billions in aid to municipalities to fill the holes in their budgets. This is, however, not found money. It's simply being added onto Ottawa's already huge debt burden.

Don't quite follow. Central banks like the fed print treasuries. They sell the treasuries into the market and offer a nominal interest rate on said treasuries. However the market for treasuries has dried up so the fed buys the treasuries back from the secondary market for a premium in cash. Its a roundabout way of monetizing debt as it is technically illegal to do so directly. That is why central banks balance sheets are growing and they count what was once their liability as their asset. Central banks expanding their balance sheets = central banks monetizing the debt. Also don't confuse central banks as being a government entity they are not.

[macdon02]

https://www.pscp.tv/w/1ynJOqPBaeXKR?s=09

The timing on this is impeccable, regarding gold and dollar

[Austrian Economics]

Don't quite follow. Central banks like the fed print treasuries. They sell the treasuries into the market and offer a nominal interest rate on said treasuries. However the market for treasuries has dried up so the fed buys the treasuries back from the secondary market for a premium in cash. Its a roundabout way of monetizing debt as it is technically illegal to do so directly. That is why central banks balance sheets are growing and they count what was once their liability as their asset. Central banks expanding their balance sheets = central banks monetizing the debt. Also don't confuse central banks as being a government entity they are not.

I think it's more accurate to say that anyone wishing to acquire capital on the capital markets issues a bond and then offers it up to potential investors. The investor who buys the bond does so in order to earn a yield over the term of the bond. The issuer of a bond could be a private entity or a government. The buyer, these days, is often the central bank which intervenes in the capital markets to try to force interest rates down. Absent their intervention, interest rates would skyrocket given governments' appetite for capital which they consume in ever greater amounts.

Once it gets to the point where debt service becomes a problem is when the system really begins to collapse. This can happen for governments but a seismic event could find a trigger in the heavily indebted private sector too. I don't think this is too far away.

To call this printing doesn't describe the process accurately. The printing concept glosses over the problem with exponential debt growth due to the inability of fiat currency to ever be redeemed.

[farming101]

Treasuries are issued by the government's Treasury Department

https://www.thebalance.com/what-are-treasury-bills-notes-and-bonds-3305609 https://www.thebalance.com/what-are-treasury-bills-notes-and-bonds-3305609

[ajl]

We are #1! We are #1! ....

Your chart explains how canuckistan, a place with no real economy has a first world lifestyle. We were the best at print and inflate for decades. What is currently produced here that is of use? If only a tax audit was useful.

[macdon02]

Gold off $40 from tonight's high. Look out below if 1926 doesn't hold.

[errolanderson]

Governments that print money to pay off debt create economic ruin. Fed desperation is now the last gas attempt to protect Wall Street, that is now showing major cracks . . . .

And it has sparked civil unrest across many U.S. cities. Income disparity continues to widen thanks to Fed policy. The USD is now under heavy pressure and for good reason. The dollar is now at-risk of losing its global reserve status.

This deck-of-cards has already fallen over (IMO).