Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The dollar has been used as the global reserve currency since the end of WW2.
That increases the value of the dollar, which makes whatever the U.S. wants to sell to the rest of the world expensive but what latter can sell very cheap.
With that, trade deficits take place (which started in the mid '70s), and to be able to spend more, the U.S. has to take on more debt.
That started with voodoo economics from the early 1980s onward:
Also, it's not just government but total debt, including that owed by the commercial sector. In addition, the largest creator of credit isn't the government or the Fed (which isn't so much a central bank as a private consortium of Wall Street banks) but commercial banks and private financial corporations in general. The largest component of credit created consists of unregulated derivatives, or financial side bets.
More countries slowly move away from the dollar. At some point, that borrowing and spending binge ends.
It seems looking at that chart since 1978 going way up is trade debt not the 33 trillion dollar US debt.
Shows some high level breakdown on who holds the US debt.
And I'd say that the gold-standard-cynics are not exactly wrong. It all runs on faith and it has for a long time. I'm not convinced that this is truly a bad thing...better to say, so long as everybody is willing to have a certain level of faith, or in some ways has no choice but to operate as though they did...the "on faith" system can continue to work.
As I think you may be starting to be aware, because you are here trying to get your head around the whole concept, the national debt is not like an individual having a credit card necessarily. This whole, "our grandkids will be saddled with this problem"...as though they are gonna one day get a bill in the mail or whatever... Ehm, kinda but not really, and certainly not like that. Sure, it's expected that the US will continue to have a lot of resources that include all of its people doing economic activities and being generally productive. But did we expect that our grandkids would be able to just sit on their butts, or that one day nobody will have to pay taxes, or what? It's not that one day the bill will come due, it's more like generations of Americans have been "paying it" (sort of) all along. But still, my life ain't bad. I can't complain. Works well enough for me.
Put it this way... Debt is an investment to the entity holding it. If I have a loan or card or whatever, so long as it's never a risk of default and I am consistently able to pay what is due on it, the company holding it has no reason to want me to pay it off early because they get more interest from me, if I don't. In fact what they really want, is for me to keep paying but please borrow more. No sooner do I pay off a loan, then the lender is like, "wouldn't you like another?" Because they know I have a good score and steady income and it isn't very likely that I will default. I am a good risk, likely to be profitable to them. The only way in which holders of the US National debt start to get twitchy about the bill getting paid, is if the faith in the US gov's ability to pay gets shaky. A default would be disastrous...but the only reason it would happen is if Congresscritters get up to political games. Fortunately we've had enough serious ones there to just barely mitigate the shenanigans.
My credit is good enough to take unsecured loans...not backed by their ability to take away a house or a car to make themselves whole if I fail to pay, but only to wreck my reputation (credit score) if I burn them.
Likewise, so long as the faith in the US government is good enough, our "credit" is good enough, that it doesn't matter if we have the assets on hand to just pay off the debt, we can borrow on faith in our future income (economic activity.) And the holders of the debt are perfectly happy if we're just paying interest, after all...that's what they are in it for, income. So long as they aren't worried that the US will stop paying that interest, we're all good. So reducing the national debt becomes then, somewhat more like a big company buying back stock. Stock, as maybe you already know, is also a form of debt, but it's backed by a stake in a company.
This is even before getting all into the nature of currency...I mean, if we're pondering that... I suspect that now that so much of our commerce is done digitally, there likely isn't enough physical cash currency out there to cover all of the entirely digital balances that exist. So we got rid of the gold standard, we could move towards getting away from even the physical standard. Does that mean that the dollar becomes a form of cryptocurrency in a sense? A digital asset? I don't interact much with the funds in my bank and investment accounts, I can just log in and look at the numbers...pay with plastic, order stuff online, etc. Millions of dollars have "moved through my hands" over the years without me ever laying eyes on cash or coin. Quite a leap of faith there, too, since modern commerce relies on the internet and the electrical grid!
Is operating on faith a bad thing? Not at the moment...
You can read the Federal Reserve info on the subject at https://www.federalreserve.gov/faqs/money_15197.htm Note that the Federal Reserve Act does not define lawful money. Also note that there are numerous court cases on the subject as identified in the FR site.
Fed Res NOTES are debt, not money.
Did anyone repeal the USCON?
Art 1, Sec 8, and Sec 10 spell it out.
What the bankrupt government has done under "emergency rules" is not "constitutional."
Do not believe me - ask a sitting judge to rule that a "dollar bill" is a dollar.
I did, and he demurred.
There have been no dollars in circulation since 1933.
. . . .
Article 1, Section 8. U.S. Constitution.
The Congress shall have Power
...To borrow Money on the credit of the United States;
...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
Article 1, Section 10. U.S. Constitution
No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any ... Law impairing the Obligation of Contracts, ...
REAL MONEY - Money which has real metallic, intrinsic value as distinguished from paper currency, checks and drafts.
- - - Black's Law Dictionary, Sixth Ed. p. 1264
Note: only gold and silver coin PAY DEBT. And if Congress had the power to create money, it wouldn't need the power to borrow it. Congress can only coin money (stamp bullion). It cannot create bullion.
MONEY - In usual and ordinary acceptation it means coins and paper currency used as a circulating medium of exchange, and does not embrace notes, bonds, evidences of debt, or other personal or real estate. Lane v. Railey, 280 Ky. 319, 133 S.W. 2d 74, 79, 81.
- - - Black's Law Dictionary, Sixth Ed. p. 1005
Federal Reserve NOTES, being debt, are not money. Which is why we have to pay excise taxes on transactions using worthless notes, instead of lawful money.
". . .Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy."
In plain inglitch, CONgress is in violation of Title 12 USC Sec 411, is bankrupt, and dollar bills are worthless IOUs.
Now, you'll have to ask CONgress how they got to use all our labor and property to "back" their kited checks. 'Cause they cannot take PRIVATE PROPERTY for public use without paying JUST COMPENSATION (LAWFUL MONEY). Did "someone" abolish private property?
War and Emergency Powers Acts
United States, Senate Report 93-549 states: "That since March 09, 1933 the United States has been in a state of declared national emergency." Proclamation No. 2039 declared by President Franklin D. Roosevelt on March 9, 1933. This declared national emergency has never been revoked and has been codified into the US Code (Title 12 U.S.C. sec. 95a and b).
"A majority of the people of the United States have lived all of their lives under emergency rule. For 40 years (as of the report 1933-1973), freedoms and governmental procedures guaranteed by the Constitution have, in varying degrees, been abridged by laws brought into force by states of national emergency."
FREEDOMS ... GUARANTEED BY THE CONSTITUTION ... HAVE BEEN ABRIDGED BY LAWS ... UNDER EMERGENCY RULE ...
:-:-:-:
Some folks have noticed that there are several claims that the emergency was ended in 1976, and Title 12 USC Sec 95a, b was revoked. Odd, they didn't change the law in my copy of the 1992 US Code. Curious, isn't it.
Section 2. The revocation, in whole or in part, of such prior Executive orders relating to regulation on the acquisition of, holding of, or other transactions in gold shall not affect any act completed, or any right accruing or accrued, or any suit or proceeding finished or started in any civil or criminal cause prior to the revocation, but all such liabilities, penalties, and forfeitures under the Executive orders shall continue and may be enforced in the same manner AS IF THE REVOCATION HAD NOT BEEN MADE.
WHOOPS, they didn't really revoke it, did they?
The government will not redeem their Federal Reserve Notes *(dollar bills) with lawful money as required by Title 12 USC Sec 411.
:-:-:-:-:
Last edited by jetgraphics; 01-29-2024 at 10:33 AM..
Well in the past it was strong GDP that will help keep the debt under control but GDP has not grown much while the Fed continues to spend faster than ever. So much that printing has to be done just to pay for the interest on their own loans. The US collects less taxes than the cost of the interest payments. How is that even conceivable.
Well in the past it was strong GDP that will help keep the debt under control but GDP has not grown much while the Fed continues to spend faster than ever. So much that printing has to be done just to pay for the interest on their own loans. The US collects less taxes than the cost of the interest payments. How is that even conceivable.
That isn't true. We collect far more in taxes. We collect $4-5trillions, debt interest $600-700B in 2023.
Did anyone repeal the USCON?
Art 1, Sec 8, and Sec 10 spell it out.
What the bankrupt government has done under "emergency rules" is not "constitutional."
Do not believe me - ask a sitting judge to rule that a "dollar bill" is a dollar.
I did, and he demurred.
There have been no dollars in circulation since 1933.
. . . .
Article 1, Section 8. U.S. Constitution.
The Congress shall have Power
...To borrow Money on the credit of the United States;
...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
Article 1, Section 10. U.S. Constitution
No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any ... Law impairing the Obligation of Contracts, ...
REAL MONEY - Money which has real metallic, intrinsic value as distinguished from paper currency, checks and drafts.
- - - Black's Law Dictionary, Sixth Ed. p. 1264
Note: only gold and silver coin PAY DEBT. And if Congress had the power to create money, it wouldn't need the power to borrow it. Congress can only coin money (stamp bullion). It cannot create bullion.
MONEY - In usual and ordinary acceptation it means coins and paper currency used as a circulating medium of exchange, and does not embrace notes, bonds, evidences of debt, or other personal or real estate. Lane v. Railey, 280 Ky. 319, 133 S.W. 2d 74, 79, 81.
- - - Black's Law Dictionary, Sixth Ed. p. 1005
Federal Reserve NOTES, being debt, are not money. Which is why we have to pay excise taxes on transactions using worthless notes, instead of lawful money.
". . .Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy."
In plain inglitch, CONgress is in violation of Title 12 USC Sec 411, is bankrupt, and dollar bills are worthless IOUs.
Now, you'll have to ask CONgress how they got to use all our labor and property to "back" their kited checks. 'Cause they cannot take PRIVATE PROPERTY for public use without paying JUST COMPENSATION (LAWFUL MONEY). Did "someone" abolish private property?
War and Emergency Powers Acts
United States, Senate Report 93-549 states: "That since March 09, 1933 the United States has been in a state of declared national emergency." Proclamation No. 2039 declared by President Franklin D. Roosevelt on March 9, 1933. This declared national emergency has never been revoked and has been codified into the US Code (Title 12 U.S.C. sec. 95a and b).
"A majority of the people of the United States have lived all of their lives under emergency rule. For 40 years (as of the report 1933-1973), freedoms and governmental procedures guaranteed by the Constitution have, in varying degrees, been abridged by laws brought into force by states of national emergency."
FREEDOMS ... GUARANTEED BY THE CONSTITUTION ... HAVE BEEN ABRIDGED BY LAWS ... UNDER EMERGENCY RULE ...
:-:-:-:
Some folks have noticed that there are several claims that the emergency was ended in 1976, and Title 12 USC Sec 95a, b was revoked. Odd, they didn't change the law in my copy of the 1992 US Code. Curious, isn't it.
Section 2. The revocation, in whole or in part, of such prior Executive orders relating to regulation on the acquisition of, holding of, or other transactions in gold shall not affect any act completed, or any right accruing or accrued, or any suit or proceeding finished or started in any civil or criminal cause prior to the revocation, but all such liabilities, penalties, and forfeitures under the Executive orders shall continue and may be enforced in the same manner AS IF THE REVOCATION HAD NOT BEEN MADE.
WHOOPS, they didn't really revoke it, did they?
The government will not redeem their Federal Reserve Notes *(dollar bills) with lawful money as required by Title 12 USC Sec 411.
:-:-:-:-:
Here, you may find this interesting:
Shows some high level breakdown on who holds the US debt.
And I'd say that the gold-standard-cynics are not exactly wrong.
It all runs on faith and it has for a long time.
Faith in the 1930's recovery of the industrial economy underlying all the promises.
Which, rather critically and quite differently than today, also included a GROWING capacity for new and additional WELL PAID employees.
aka the people who actually make all the rest of it work at all ... a productive symbiosis.
The party ends when we start having to borrow money just to pay the interest on the debt. When that happens US creditworthiness will crash and the government will have to give massive haircuts to government spending throwing us into a solid recession. Higher taxes will be needed to offset deficit spending further slowing economic growth. We’re not there yet but we’ll probably be there in a few decades.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
