Topic: Real money vs debt, and the value of bitcoin. (Mitchell-Innes credit theory) - page 2. (Read 7058 times)

You forgot to mention the government must repay that dollar bill (to a bond holder) with interest, so the future "tax income stream" must exceed the original dollar bill.

Additionally, the FED does not monetize the government's (already monetary) tax income stream: the FED monetizes the government's debt. Before the FED, although the government could sell bonds in the market and create money, money creation could not be a loan to the government, which hence could not monetize its own debt. As thus, debt monetization (in its public form) was not "subcontracted" to, but rather made possible by, the FED.

Each time the Fed prints a dollar it is producing a paper claim on a dollar worth of future taxes to be paid to the US Treasury by the US taxpayers. The Treasury has sub-contracted the monetizing of its tax income stream to the Fed. The "loaning" in this situation arises because the tax income does not yet exist, so is a Treasury debt to the dollar holder (since 1971 repayable only in printed dollars  )

The FED's money does not exist before buying those bonds: the acts of loaning and creating this money are one and the same, which is why the resulting monetary value is nothing other than that loan itself.

(You keep treating the FED's money as if it were just money while it is rather money mistaken by debt.)

Exactly, if the money printed by FED does not have a value before FED buy anything with it, they could not get its value from their exchanging some government bond for it

Money that originates from a loan is worth the corresponding debt, regardless of what we then sell for it or buy with it. Money does not get its value just from our exchanging something for it, but rather must be valuable before we can buy anything with it or sell anything for it (otherwise nobody would want it in exchange for something valuable to begin with). The value of most money we use today comes from an either public or private liability.


Instead of not having any monetary value, the FED's money should not add any such value to the economy because it does not represent additional value in wealth - not because it has not been exchanged for something valuable (as I just told you, money does not get its value just from our exchanging it). Unfortunately, the FED's money does add exchange value to the economy: this exchange value comes from the same act that created its monetary representation - a loan.

It does not matter what that money originally come from, be it a loan, or robbed from the banks, or lost by someone, or counterfeited, etc... The only important is how did you acquire that money: As long as you get it through work or trading, then from your point of view, it has value, since you paid valuable things in exchange for it. But from central bank's point of view, those money should have no value since they paid nothing valuable in exchange for it, they just declare the ownership of those printed money and start to loan them out to government. This was not the case under a gold standard, where they also have to work/operate business to exchange gold as reserve, then print money based on that reserve

What I am saying from the beginning (unlike you above, on the Central Bank of China) is that no central bank could belong to the same government to which it loans money. Additionally, as I also said, the FED and the US Government have a partnership, which would likewise not be possible if either owned the other.


Government bonds represent a debt the government has with the bond holder: we cannot forget about that without forgetting about the bond itself (nobody buys a bond for its aesthetic beauty, but rather because it entitles its holder to become a government creditor, then to earn interest on government debt).


Most money people use to buy bonds is already a loan from the central bank to the government. This is precisely because the FED did not have that money before loaning it to the USA, so any additional monetary value resulting from its creation can only originate from that loan itself.

Good, so you agree that government and FED have totally different ownership


I recommend you forget about the word "loan" for a while, because it will make easy things complicated. The government bonds are like any other product, they can be sold to any entities: Japanese/Chinese government combined together owns more US government bonds than FED. However, any of the other person buy bonds using hard-earned cash while FED buy bonds using printed money, there is no loan process involved at all

Or, if you really like to use the word "loan" to complex the matter, then it will be like this: The average people loan money to US government in exchange for their bonds. But still, they must first work to earn those money and then loan them to US government, while FED do not need to work to earn those money, they just create them out of nothing

As I told you before: if an institution owns another institution, then the latter cannot loan money to the former. The Chinese central bank is a cartel - just like the FED - owned by the members of that cartel (in the case of the FED, banks control its shares, despite not being able to sell them in the market - which is a mechanism to enforce the cartel).


They are not just "printing" (digital) money: they are loaning it (to the government) into existence: the government bonds given in exchange for that money represent this debt.

I can give you a hint: In china, the government (to be more specifically, the communist party) OWNS the central bank, so most of the large building in china are government buildings, like congressional house, government office building, high speed train station etc... while in western most of the large buildings are banks' office


If this definition is coming from the FED, then it is no use, since fool would be telling you the truth if they are printing money for themselves

That debt is money, so more debt means less valuable money. The government benefits because it spends the money before it can affect the social perception of the resulting, expanded money supply. This is how inflation transfers monetary value from the already existing money to the newly created one, hence from you to the FED-government partnership.


Suppose the airway companies form a cartel, which the government enforce by law. Then, who owns that cartel?


The FED creates money by loaning it to the government. A citizen of the USA holding that money then holds a debt that citizen's government has with the FED, hence partially a debt that same citizen has with the FED (at the same time, the expansion of such a debt makes money less and less valuable, so citizens are less and less able to pay their growing debt with the FED).

The government do not benefit since it just accumulated larger and larger debt, owed to the central bank. Back to the simple question: Who owns the FED? Who get the ownership of newly created money? (If the government own the FED, they won't have that debt. If FED do not have the ownership of the money, they can't use it to purchase anything)

People always scared about hyperinflation (which causes 10% loss of their work), but they don't care that someone taking the ownership of all the money(which means they lose 100% of their work), this is the most absurd thing I can think of

Money requires trust, not conversely. While exchange cannot evolve without money.

You made no single mention to money (I guess this is not your subject after all).

Sorry, but in exactly which way the social division of labor and its corresponding notion of private property would depend on the state?

In a stateless community, you won't find 3 different owners of commodities.

As soon as some people started to enslave animals and to treat them as a property, they startet to enslave humans and treat them as a property as well. It is the same, and therefore the same problem: Submissive, violent and slavish moral. As long as a majority of the citizens and consumers accept this kind of 'human' being, as long they will have organised violence against themselves and against others.

The thing with an debt based currency is you always loose, when people eventually get tired of loosing.....

There is a modern currency with real value, it's called "CrowdFunding" one can start her/his company and give supporters
premium products @ no extra cost. Crowdfunding is valuable because you create communities/companies/commodities
"Triple C, for the Rick Ross readers among us" anywho. This even goes beyond the borders of trust, because there is
LOVE, Love in the community (people can relate to eachother), Love in/for the company (because their customers/company
is there everything), Love for the commodity (If you create an extremely durable product (good example Dyson) even if it
eventually breaksdown, they will buy a new one of the exact same brand, because the product was so good.
Planned obsolescence is only an invitation to NEVER use your product again. In the past the use to make products that
could last FOREVER and now those products are returning.

For me personally Bitcoin is valuable because:
- Unlimited amounts of national/international transfers @ a low costs
- Inflation proof
- Solid crypto
- Decentralized/ on my computer/ I can back it up
(or trust in the ability to sell bitcoin at a certain price) Bitcoins can function without fiat currency, like community currencies
did for centuries, it's only when you pay tax that they play a role if a community choose to.
- YOU CAN BUY DRUGS WITHIT AND NOT GIVE A FUCK ABOUT THE GOVERNMENT BS ABOUT FIGHTING A DRUGWAR.

Some people jerk off to this everyday "Let 1 Bitcoins be worth 1 million dollar", I don't really care what the fiat price is, as
long as I can transfer it from A to B, without any BS I'm ok with it. Infact what would ABSOLUTELY make it more valuable
is if it is less volatile. Less volatility makes it like fiat currencies, which ordinary people and companies trust.

How would you make that exchange possible?
[/quote]

It isn't possible once a community grows parts a size where a social network of trust no longer functions.

This idea doesn't conflict with the regression theory of money, it just adds some specialized anthropological insight into when and how it started.

There was a paper also written by someone at the world bank (or the FED) who defined the need for money purely as a trust phenomenon, helped me understand the claim money doesn't evolve from barter. 

To this point Adam Smith illustrates how wheat  corn is invested in labour to mine metals, over time the least corrosive being most valuable. This value then reflects stored labour and provides utility that increases productivity. These metals leverage ones ability to be both more productive and destructive. Plunder and stealing then create a chain reaction for a Mafia state to protect plunder and grow,  

While mirelo insight has been thorough and concise there is anthropological evidence to suggest that money doesn't logically evolve from barter. I think it may be a little premature to rule out that money is a meme that evolved as trust broke down and as Mafia state developed.

The one thing Bitcoin does is it removes the fiscal ability to steel it through violent force and having lots of it doesn't allow you to forge weapons, you need to engage in cooperative and mutually beneficial interaction to leverage the benefits. Not to mention participation is voluntary.

It is the first step in curing our collective insanity.