The point is that the bourgeoisie is pretty much everyone, since pretty much everyone has a 401k or IRA.
Ok you're not a serious contender here. You're forfeiting any claim of being rational and honest in this. Goodbye.
I'm being perfectly rational and honest. The bourgeoisie are those who own the means of production. Pretty much everyone owns some shares of stock, so pretty much everyone owns the means of production.
Well ok, you admit you're being rational and honest. So note that you pretended to be so very sure Marx's value theory of labor was completely wrong, yet now you admit to being serious in characterizing Marxian theory (or is it your own?) as reasonably meaning "ownership of the means of production" as you suggest. You see control and decision-making privileges as less than decisive?
I don't understand your question. Could you please rephrase it somehow to make it clear what you're asking me?
Ruml is wrong. Income tax revenue is the only collateral the U.S. government has to borrow on. Without income taxes the government would have no clear means of paying it's debts. Taxation is extortion and should be illegal. Instead of taxes, the government should fund itself by monetizing it's greatest asset- land. Public housing, for example, is usually viewed as a financial liability but, if private companies can make a profit renting apartments so can the government. They can also make money from transportation services, like PRT, distribution services, like the mail, utilities, telecommunications services, and the production of natural resources.
It's had a debt almost every year since it's inception, what is it about the government having a debt that's so bad? It's funny when people say debt is bad, but ask them what the right amount of debt is, they can never answer, they just know what we have today is too much. So what is the right amount of debt?
Because there's nothing good about it. 1. Debt is the greatest source of unnecessary risk. 2. Credit causes inflation which devalues everybody's money making it difficult for the poor to get what they need. 3. It's fundamentally unfair for anyone to receive money before they've earned it or to receive goods or services before they've fully paid for it. Zero! The only right amount of debt is zero. Monetary gifts and charitable donations are fine but lending money should be illegal.
If you believe there is a risk, I can only assume that you believe there is that there can exist a condition in which the government would be unable to repay. If you believe this, with respect, you don't understand how the government acquires dollars. Inflation is caused when demand for goods and services exceeds the supply of them. The creation of money can cause this to happen, but not as a rule. It depends on the economies ability to meet higher levels of demand. Are we talking about the government here? If the government carried no debt, there wouldn't be any US dollars in circulation.
To understand why this is true, you need to understand where banks get the money they lend to customers. Do you know??
Yes, but it's not all government debt. For instance the fed purchased tons of bad cdo debt from the banks. Also the FED was originally capitalized by the member banks. The large wall st banks purchase government debt from other wall st banks acting as primary dealers. The Fed then removes the bonds from the banks and replaces them with digits on the banks' ledgers. The treasury has cash, the fed owns the bonds, the primary dealers get a tidy commission for the sale.
Agreed. The Fed purchased securities that were, for lack of a better term "negative assets", in at they were created as assets but we're no longer worth their face value in the current market. Purchasing these assets at face value allowed banks to remain capitalized and maintain solvency. Basically, the Fed traded assets for cash reserves. Reserves cannot be lent, loaned or paid to anyone outside the federal reserve system, but they are assets were recorded as such on banks balance sheets. The Fed has held the assets purchased and has slowly begun trading them back for the cash used to purchases them now that the assets are worth at least their face value. I read through the Federal Reserve Act that lays out bank capitalization. It's like 897 pages. I'm not entirely sure what the bank's portion of the Feds capitalization was. I'm thinking about $1 billion, but I admit I can't be sure I'm reading the statement correctly. Having said that, I suspect that initial capitalization was raised through the sale of bonds or perhaps "stock". If you have the facts on the bank initial capitalization of the Fed, I would be interested in learning more. Having said that, whatever the level of capitalization, be it $1 billion or $300 billion, that pales in comparison to the number of dollars circulating today. If I concede you are correct, that not all currency would vanish Initial capitalization and a few billion in coins (as coins are not created as debt) would still remain in circulation, but that would be a minute fraction of the money needed to operate today's economy. The economic system would fall apart long before the economy shrunk to that level. So for all intents and purposes, I stick by my claim. It is the government creation of money and simultaneous creation of debt that accounts for the overwhelming majority of currency in circulation. I don't take issue wth any of that and that does not undermine my claim. My point is, at some point, the government issued its first dollar that was not represented by a promise for anything other than dollars in return. That probably took place in 1935 after the gold standard was abolished. However, the number of dollars circulating was still constrained by gold. In 1974 dollars we no longer constrained by gold, but rather an inflation which was (for the first time) not relative to the number of dollars created, rather by the economies capacity to put those dollars to use without running short of labor or raw materials. Most people don't understand the consequences of the changes that took place in 1974 and still treat dollars as if they are constrained by gold, which of course they are not. Virtually all the money in circulation was created as a debt, public or private. Repayment of that debt will cause money to cese to exist. The explanation looks like this: Whether the government or a (Fed member) bank. They both create money from nothing. When they create that dollar from nothing, they must record that creation as a liability. Now you were correct when you described the interplay between the Fed, The Treasury and Primary Dealers, however, there good justifications for operating the system this way. In the End, dollars created by the Fed are Liabilities, not assets. Government debt=private sector net financial assets. Bank credit isn't a net asset to the private sector as it's offset by a liability of an equal amount, both of which exist in the private sector. Government debt is carried outside the private sector, thus government spending adds net financial assets to the private sector.
You don't need to understand how the government acquires dollars in order to understand that lending in general is the greatest source of risk in the economy. All forms of credit eventually cause inflation, some sooner than later. But, at the same time, this economy is captive, not free. It's dominated by manufacturing and publishing monopolies that don't compete directly and are therefore quick to raise prices and slow to increase supply. I'm talking about everyone- individuals, corporations, and governments. We would have commodity-backed treasury notes instead of debt-backed fed notes.
