Topic: How long do you think we have? - page 3. (Read 4428 times)

Central bank is always net plus since they create money and lend those money out (the ownership of those money belongs to FED directly after being created)

If the central bank is really controlled by the government, like some people believe, then they have no problem to destroy the bond they purchased from government, means that they just freely give those printed money to government without asking anything for return

Currently FED are buying 40 billion dollar worth of bonds from government each month(with newly created money). If they just destroy those bonds, then government will get 40 billion dollar free money to spend each month. I don't see any problem with this. Of course there will be a loss from central bank's balance sheet (now they have liabilities without corresponding asset), but since they are the money creator, they don't lose anything

On the other hand, if government get free money to spend, they will spend a lot and create lots of jobs

Actually this practice was done 300 years ago by John Law. He first printed out lots of fiat money and use those money to raise the stock price of mississipi company, and then used those stocks to buy back lots of government bonds and then destroied those bonds, thus helped the government to eliminate the national debt

His faliure is caused by the fact that he printed too much money to raise the stock price of mississipi company, and he could not provide enough gold backing those fiat, thus resulted in a bankrun. But today, FED don't need gold to back the fiat

It's because we have a persistent civilization. Persistent idiocracy would be more accurate.

But all the people who must use the currency by law will suffer the consequences.

Anyway, most of this regime's debt is held by private institution or individuals as they are issuing small bonds for people last couple years. I even heard some bonds (not neccessarily those for the individuals) have due date of 105 years. Now who is THAT stupid to believe this regime will be anywhere arround in 100 years? That makes me laugh so hard

It'd have similar effects to a default. Central banks must remain solvent, so tons of money must be printed in order to forgive the debt. This would eliminate all confidence in the currency and government. The foreign debt wouldn't be written off in such a case, but eroded in value to the point where it may's well have been.

What is the consequence of central banks writing off the government debt (debt forgiven)?

You can't write off the debt that is hold by foreign investors, but you can write off the debt that is hold by central banks, but will that action hurt anyone?

This is non-government activity, based on regular national bank updates every 3 months. Even if they stopped releasing the news, we know how much they borrow each year, we +- know the interests so it can go on, even though probably not as accurately.

They'll hit some limit then just stop updating.

That's what the U.S. Treasury has done.  The national debt has been stuck at its $16.7T limit since the end of May.  Everyone knows the debt has been growing since, they just have taken "extraordinary" measures:
 - http://www.cnsnews.com/news/article/100-days-treasury-has-kept-debt-frozen-16699396000000

I've just accidentally run into the counter again at http://www.verejnydluh.cz/. Our current debt is ~1,84 trilion CZK (over 90 bilion USD). Budget for this year was 1,18 trilion. That means, probably next year the debt will rise to 2-year budget.

Of course, everything is fine here, nobody worries. I give it decade max, whaddaya think?