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DeficitHawk says

Once it is established that USA wont pay the debt back, no one would buy more bonds.

I don't think so, because the Fed is very different from other borrowers.

But even so, the government should always fund operations out of current revenue. Borrowing to pay expenses is always a bad idea.

DeficitHawk says

Once it is established that USA wont pay the debt back, no one would buy more bonds

You say that like it's a bad thing.

Patrick says

We could eliminate 15% of the US national debt right there.

Why would we shoot ourselves in the foot like that?

US should create its own official stablecoin. 90% backed by USTs. With a two year or so redemption period of when the stablecoin holder can remit for its USD cash.

Like the federal reserve, it remits the yield from those USTs to the government or maybe to a providence fund to all US citizens.

Only this stablecoin would be legal tender in the US for debts & taxes like regular money and certain things like imports to the US will have to be paid by them. They also could be restricted so non-exported US assets can't be purchased by them, like R/E and most financial instruments. So nations exporting to us will be forced to finance US debt at their expense for two years OR buy US trade goods and services with them in return.

We can start out by issuing enough to cover financing all imports plus ~ $200 billion more.

Then after that level, new coins can be issued as the markets want.

The ExIm Bank can be abolished or reorged to be a retail issuer of this Stablecoin.

We can even call it the TradeCoin.

This will also fuck with the eurodollar markets eventually, as these TradeCoins will eventually supersede dollars in those holdings.

A bankruptcy would unravel Babylonian debt that is legitimate vs. illegitimate. That's why bankruptcies establish preferred creditors.

The 'Fed' and Vatican have been taking our tax money, skimming it, and returning it back to us through the IMF as interest bearing bonds. That history of illegal robbery could all by itself release a lot of Babylonian debt.

Patrick says

But even so, the government should always fund operations out of current revenue. Borrowing to pay expenses is always a bad idea.

I agree... but we are huge outliers in todays political world. There are no politicians who agree who can get elected. Balancing the budget is the third rail.

WE are running a >6% of GDP budget deficit today, and no political party in power wants to change that. The deficit has to be funded by either borrowing or by printing.

If you say "hey FED, please buy the bonds, and then we wont pay those bonds back so you can just print more to make up the shortfall"... that's the same as printing. Its not really changing anything.

Patrick says

I don't think so, because the Fed is very different from other borrowers.

I thought he was referring to all the debt, not just FED debt in his comment. Maybe I was mistaken.

Just the Fed. Fuck them, cartel of private bankers with a monopoly on issuing currency. Ugh.

I am of the opinion that the only sustainable way to manage the debt is through fiscal discipline. Expenditures = Taxes.

Stable-coin schemes and pushing bad debt to the fed to print out of existence... these are all schemes that wont solve the problems which are caused by the underlying lack of fiscal restraint.

Without fiscal restraint, we are all just moving deck chairs on the titantic. eventually people will stop buying the debt and if we try to use the fed as a buyer of last resort when no one else will buy, then we'll wind up with zimbabwe-bucks.

Deficits and Fed printing are OK for temporary lows in the business cycle... when we are in recession and unemployment are high. But we have been printing and deficit spending continuously through the last 10 years long super-expansion business cycle. It will end badly. I dont know when though. Yams, ammo, blah blah blah

Patrick says

Just the Fed. Fuck them, cartel of private bankers with a monopoly on issuing currency. Ugh.

So, who do you want to have authority print the money? Treasury?
Or you want the money supply fixed so we can trigger the crisis now?

DeficitHawk says

Without fiscal restraint, we are all just moving deck chairs on the titantic. eventually people will stop buying the debt and if we try to use the fed as a buyer of last resort when no one else will buy, then we'll wind up with zimbabwe-bucks.

Yep, but the spendthrifts are just worried about the next election, and believe the will be long gone when TSHTF. Harry Reid's favorite phrase when anyonee asked him about the long-term damage from a short-term solution (such as a rule change) was "I'll be gone by then."

DeficitHawk says

So, who do you want to have authority print the money? Treasury?
Or you want the money supply fixed so we can trigger the crisis now?

No entity should ever, under any circumstances, have the authority to print money. There is no one and no organization on earth which can be trusted with essentially infinite power.

Money should be defined to be weights of 0.9999 pure silver, not dollars or any other terms. Let's call the unit the "pound", which would literally be a pound of pure silver, as it used to be in England.

This leaves open the use of debt to facilitate commerce. That is, people and organizations can essentially write checks to each other for amounts of silver. Banks can validate that the check-writer actually has that amount of silver on hand and is not double-spending it. Banks can transfer the ownership of the silver metal from one depositor to another. This would make the weak point trust in the banks, but the Amsterdam Wisselbank ran such a system for centuries and Dutch commerce flourished under it.

Eric Holder says

Patrick says

We could eliminate 15% of the US national debt right there.

Why would we shoot ourselves in the foot like that?

Define "we".

From the point of view of the Fed, big banks, and the State Department, getting the rest of the world to accept the paper that the Fed prints is an enormous win.

But from the point of view of the ordinary citizen, Fed printing is a terrible loss because:

- It causes inflation, which steals from those without the means to own inflation-protected assets.
- It exports US jobs, because foreign goods become artificially cheap.
- It creates the ridiculously huge liability of the national debt which will have to be paid on the backs of US workers.

Patrick says

Money should be defined to be weights of 0.9999 pure silver, not dollars or any other terms. Let's call the unit the "pound", which would literally be a pound of pure silver, as it used to be in England.

OK, so you want to go to silver standard.

But if we have silver standard, we'd definitely need to balance the budget because no one is going to loan money to a government that wont be able to pay it back... and if the government wont balance its budget and cant print money, it cant pay it back.

I think silver standard or gold standard are pretty inefficient as monetary systems because they cant modulate money supply to match economic need.... but they ARE stable against out-of-control printing... so when the fiat systems inevitably collapse zimbabwe style there is always good old silver and gold to fall back on until the next fiat catches on.

IF the government holds the silver and circulates notes, would you trust it? or would you want the metal in coinage in your pocket like pre-1965 junk silver coins?

DeficitHawk says

I think silver standard or gold standard are pretty inefficient as monetary systems because they cant modulate money supply to match economic need...

They worked just fine.

Silver a bit better than gold as far as monetary liquidity went. That was the whole reason for the debate of 'free silver' vs gold in the late 1800s. Frank Baum wrote the Wizard of Oz as an allegory about that. (In the book, Dorothy's magic slippers were silver, not ruby).

Silver also has some built-in inflation as more is discovered, maybe 1% per year, but that's OK.DeficitHawk says

IF the government holds the silver and circulates notes, would you trust it? or would you want the metal in coinage in your pocket like pre-1965 junk silver coins?

In pocket for sure. The whole point is that you cannot trust the government.

DeficitHawk says

no one is going to loan money to a government that wont be able to pay it back... and if the government wont balance its budget and cant print money, it cant pay it back

So the government will finally balance the fecking budget.

There are two basic problems with a metal backed currency system.

The first is interest. Go ahead compound what you end up with for even a single gold coin over say a couple thousand years at even a modest interest rate. Yep. you end up with more gold than the mass of planet Earth. This forces the majority of people into becoming debt slaves. This problem was well known to the ancients, and why the Catholic Church killed in very painful ways anyone charging even a pittance of interest. With a fiat system more money can be added as needed avoiding this physical limitation.

The second problem with a metal based system is that some people try to save money. Even at a modest savings rate the overall money supply simply disappears from circulation. This causes the value of gold/silver to go up versus the goods/services produced in the economy. This leads to even more savings. Now in the markets in Tehran they have a simple method to stop people from saving too much. They simply kill the "Hoarder" and distribute the loot. By you saving there is just that much less for the rest of us. This makes saving for retirement simply impossible.

Gimme fiat any day,

Patrick says

So the government will finally balance the fecking budget.

Its good to have dreams...

Patrick says

In pocket for sure. The whole point is that you cannot trust the government.

At that point, its just barter then. Might as well trade in barley or whatever. Trading silver by weight, there would be no seniorage, and no way for the government to produce it since it couldnt afford to buy the silver. Even pre-65 junk silver was fiat.. when minted, it had fiat value much higher than the metal content... though the metal content provided a floor, and everyone yanked them out of circulation when the metal value exceeded the fiat value.

Misc says

Gimme fiat any day,

Yeah, I think I agree. Metals based is too limiting for supply. Fiat devalues of course. But you dont have to use fiat as your store of wealth. You can buy assets for that, and just trade in the fiat as needed while it slowly decays in value. You can hoard silver bars if you want to for wealth preservation. But its not a good system for monetary exchange.

Maybe the pre-65 coinage is a good compromise though... its fiat, and the government can produce it and get seniorage.. but it also has a commodity content so it prevents runaway inflation... the money gets pulled out of circulation by hoarders eventually.

Government can then produce a new fiat denomination with less commodity content, rinse soak and repeat. Old coinage that got pulled from circulation becomes a store of wealth at commodity content value.

So like if they release a new 100 dollar silver coin that is the size and silver content of an old silver dollar. 10 dollar coin the size of a dime. etc... Its fiat for now, but eventually becomes store of wealth and removed from circulation when they release a 1000 dollar coin of the same size...

Misc says

Go ahead compound what you end up with for even a single gold coin over say a couple thousand years at even a modest interest rate. Yep. you end up with more gold than the mass of planet Earth. This forces the majority of people into becoming debt slaves.

True, gold and silver do not compound themselves (except for mining) but interest is really paid with labor, the labor it takes to earn the metal.

I'd bet that a higher percentage of people are debt slaves under fiat currency than there were under real money.

Misc says

The second problem with a metal based system is that some people try to save money. Even at a modest savings rate the overall money supply simply disappears from circulation.

People trying to save real money is a good thing, not a bad one. They are protecting themselves from criminal organizations like the Fed.

But as long as interest rates are high enough, that money will be in circulation, simply because people like to earn money on their money.

DeficitHawk says

Metals based is too limiting for supply.

The entire point of gold and silver is to limit the supply of money so that it retains value and cannot be continuously stolen by a cabal of bankers.

DeficitHawk says

Even pre-65 junk silver was fiat.. when minted, it had fiat value much higher than the metal content...

Right, which is another argument for defining money to be silver by weight and not by "dollars" or other units easily used to scam the public out of their labor.

DeficitHawk says

You can hoard silver bars if you want to for wealth preservation.

But not for growth.

If you want growth, you'll have to either lend the money out or buy productive assets like stocks.

Patrick says

Right, which is another argument for defining money to be silver by weight and not by "dollars" or other units easily used to scam the public out of their labor.

I dont see why the government would have any incentive to mint it if there is no seniorage. How would they buy the silver? Would they just demand everyone pay their income taxes next year in silver bars at some defined silver-to-dollar conversion rate?

I dont see how this works. I understand silver backed money as a concept. I dont see how you get there from here without using fiat/seniorage. And I dont see why we would be better off if we did it.

Minting coins is not terribly expensive and should simply be one responsibility of government:

No state shall coin money, emit bills of credit, or make any thing but gold and silver coin a tender in payment of debts. ~ Art. I, sec. 10, cl. 1.

So no, the government would not profit from minting coins, nor should it. It's a public service to mint coins and the public can afford to pay taxes to have it done.

I'd also like a unique serial number on each coin so that ownership of specific coins can easily be transferred electronically.

Taxes could be paid by transferring ownership of some amount of silver to the government.

Patrick says

Minting coins is not terribly expensive and should simply be one responsibility of government:

I dont mean the cost to run the stamping machine. I mean the cost of the metal. How would they procure the silver? I dont understand how you'd get started. You'd either have to confiscate all the silver so people couldnt own it privately, or you'd have to say that the people who own silver or silver mines today are now hereby declared to have all the money and control the supply of money, and everyone else can become slaves to them..

IF you ask everyone to pay taxes in silver... how do people get the silver in the first place if they dont already own it, since fiat wont be accepted in exchange?

I think there is a way to transition from fiat to silver-backed, but you'd have to ease into it with a scheme like I suggested above, and coinage with nominal value greater than the silver value.

There's no need or right to confiscate anything.

Just declare that silver by weight must be accepted as payment in the US. Let the exchange rate float.

Good money will chase out the bad.

Patrick says

There's no need or right to confiscate anything.

Just declare that silver by weight must be accepted as payment in the US. Let the exchange rate float.

Good money will chase out the bad.

You mean keep paper fiat too, and people can choose whether to pay for stuff in paper or silver, at a floating 'spot price' exchange rate? No fixed exchange rate? (or maybe the vendor decides their own exchange rate on a case-by-case?)

Either way, why would people have a preference to pay by silver in that case instead of paper?

Stores and customers could agree to do that today if they both want to, but most don't. Why would mandating acceptance by stores cause shoppers to want to pay by silver instead of paper? I assume customers would rather pay in paper.

The saying is usually "Bad money chases out good" and applies in situations where commodity-backed money and fjat money are mandated to be exchanged at a fixed rate.... people prefer to hoard the commodity-backed money and spend the fiat. at some point, someone has to be forced to accept paper in exchange for silver.

Yes, let people still use the dollar, but stop printing them and stop issuing dollar-denominated debt. Eventually they will all be worthless.

No fixed exchange rate. That's just more opportunity for government fuckery.

Smart businesses would have a preference for inflation-protected silver instead of continuously depreciating Fed Fun Tokens. So maybe they'd give a discount for real money.

Note that you could still pay with "paper", meaning a legally enforceable promise to pay silver metal within a certain time period, whether by check or credit card.

DeficitHawk says

The saying is usually "Bad money chases out good" and applies in situations where commodity-backed money and fjat money are mandated to be exchanged at a fixed rate

Right, let's not do that. Then the good money will chase out the bad. The mandate will be that physical silver by weight must be accepted.

Patrick says

Yes, let people still use the dollar, but stop printing them and stop issuing dollar-denominated debt. Eventually they will all be worthless.

No fixed exchange rate.

I dont really see an advantage to doing this.

I think devaluation of our currency through inflation is the lesser evil vs. the inability to modulate the money supply to meet economic needs. I especially dont want to grant private silver mine owners anywhere in the world the right to create money at their profit instead of our government. As long as the currency depreciation is predictable and slow enough that you can spend, loan, or invest it before it devalues, I don't see a problem with it. Controlled devaluation is a feature, not a bug. Just don't store cash money long term.

I guess I'm just a fan of fiat. Commodities are something to stack or speculate in if you want to... not a medium of exchange. Embrace currency devaluation and get on with life.

Like i said above though, I'd be ok with fiat currency that contains a commodity content that makes a 'floor' value like junk silver used to be.. that will help ensure controlled inflation rates, by driving currency from circulation if inflation goes too fast.

Patrick says

Misc says

The second problem with a metal based system is that some people try to save money. Even at a modest savings rate the overall money supply simply disappears from circulation.

People trying to save real money is a good thing, not a bad one. They are protecting themselves from criminal organizations like the Fed.

But as long as interest rates are high enough, that money will be in circulation, simply because people like to earn money on their money.

Here lemme give you an example. Let's say there is 1 million silver ounces in the economy. Then stupid people "save" 10% of it. Now there is only 900000 ounces in the economy. Either the economy contracts or prices decline. Either way there is just an even greater justification to save even more. So, the economy goes to zero as everybody "saves" money. Until there is such a point as that those who don't have any money decide those that are "hoarding" money are simply "keeping the poor down". Then the poor kill the hoarders and distribute the gold/silver. - This happens frequently throughout history.

With fiat the monetary base can be increased at zero cost.

DeficitHawk says

Metals based is too limiting for supply.

Nonsense.

Prices adjust.

Misc says

Until there is such a point as that those who don't have any money decide those that are "hoarding" money are simply "keeping the poor down". Then the poor kill the hoarders and distribute the gold/silver. - This happens frequently throughout history.

With fiat the monetary base can be increased at zero cost.

In the past, the rich gave money to the churches who were the providers to the poor. So it's possible to have a social welfare net without fiat currency.

I just want Trump to bring more integrity, transparency and efficiency, like with arresting a Haines City police captain for VA disability fraud.

And holding hundreds of millions of dollars from Columbia University.

Eventually these victories will matter toward the end of Fiscal Year 2025 as far as demonstrating that Trump was able to manage to keep the deficit below the previous fiscal year's deficit, which would be the first time since 2001 that this occurred.

,

Misc says

Here lemme give you an example. Let's say there is 1 million silver ounces in the economy. Then stupid people "save" 10% of it. Now there is only 900000 ounces in the economy. Either the economy contracts or prices decline. Either way there is just an even greater justification to save even more.

People would still have to use that silver to buy or rent a home, food, cars, etc. If there was a hoarding problem, just replace the income tax with a tax on stored silver.

DeficitHawk says

I think devaluation of our currency through inflation is the lesser evil vs. the inability to modulate the money supply to meet economic needs.

There is a 3rd issue as well: Whether we can trust anyone with the power to create money out of thin air.

DeficitHawk says

I especially dont want to grant private silver mine owners anywhere in the world the right to create money at their profit instead of our government.

They're doing work and should get paid for it.

DeficitHawk says

As long as the currency depreciation is predictable and slow enough that you can spend, loan, or invest it before it devalues, I don't see a problem with it.

Then you should like silver, which depreciates very slowly as new silver is found. Also consider the ongoing demographic collapse, which reduces the need for new money.

Misc says

So, the economy goes to zero as everybody "saves" money.

Not going to zero because people need to spend money to live. There is a question of how to get people who have silver to lend and invest. The answer is high enough interest rates.

Misc says

Then stupid people "save" 10% of it. Now there is only 900000 ounces in the economy

What? They hoard it in money bins like Scrooge McDuck?

That's the only way 'savings' are 'removed' from the economy.

Most people will deposit their savings in the bank or invest in stocks. Deposits are loaned out.

@MolotovCocktail

Please careful how you use quotes. I never said "Then stupid people "save" 10% of it. Now there is only 900000 ounces in the economy." Misc said that, I was replying to it.

HeadSet says

MolotovCocktail

Please careful how you use quotes. I never said "Then stupid people "save" 10% of it. Now there is only 900000 ounces in the economy." Misc said that, I was replying to it.

That's a known bug in the PatNet quoting system, I am afraid. I changed it manually just now.