11 Responses to Tweet of the Day: Slouching Toward Weimar

1. eah says:

   January 7, 2013 at 9:14 PM

   Why is it troubling?

   What’s troubling to me is that fewer people don’t ask the obvious question: If money is to be created out of nothing, i.e. QE, and put into circulation via federal government spending, why does it have to be created as debt?

   Thomas Edison:

   “If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way. It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People.”

   Why should a sovereign nation, which presumably has the power to issue currency, go into debt in order to do that? If your parents were heavily in debt when they died, would you think it fair if you were held responsible for repaying that debt?

   I’m not arguing for unrestrained government spending and money creation; I’m just asking what seem to me to be obvious, pertinent questions, which normally do not get asked.

   Reply
2. macromon says:

   January 7, 2013 at 9:24 PM

   The money created from QE is sitting at the Fed in the form of excess reserves, which is now starting to leak out into the economy. See our earlier post. We’re with you on the intergenerational transfer thing. Hyperinflation is not the answer. Or maybe it is the only answer.

   Reply
3. Flawse says:

   January 7, 2013 at 9:57 PM

   Clay
   In response to printing the debt will show up somewhere. Presently much of it is sitting in reserves. If it gets into the economy it will show up as some combination of inflation and CAD.
   You get nothing for nothing without production.

   Reply
   • macromon says:

     January 7, 2013 at 10:12 PM

     Amen, Flawse!

     Reply
4. Ramakrishna Shanker (@rshanker55) says:

   January 7, 2013 at 10:59 PM

   I would like our nation to redefine “money” as zero-maturity-Treasury-Bills. Banks can easily be required to offer checking accts/debit cards that will be exclusively invested in these zero-mat Treasuries. Then , discontinue the FDIC . That will go a long way towards bringing some sanity back to our monetary system. All financial institutions will become investment companies and be regulated as such. “money” will be clearly defined. The Fed … well.. ashes to ashes , academics to academia.

   Reply
5. Ramakrishna Shanker (@rshanker55) says:

   January 7, 2013 at 11:05 PM

   Until our congress gets around to thinking straight on these matters – individuals can implement a version of my suggestion on their own: Simply open a Treasury Direct Acct online, link it to your bank checking acct. keep most of what you consider “cash” in Treasury Direct and move money to the bank acct as needed to pay bills.

   Reply
6. Ramakrishna Shanker (@rshanker55) says:

   January 7, 2013 at 11:12 PM

   FDIC guaranteed bank accts , I believe, are in the vicinity of $7-8 trillion. If this money migrated to treasury bills, and the FDIC ceased to exist, banks would probably have to pay at least 4-5% to issue short maturity notes – and the investors in such notes would be forced to actually evaluate the risks of losing their money. Therefore the current system is providing a subsidy to the banking system in the rough region of $300-400 Billion/year. I believe that is larger than the cumulative bank earnings across all banks. It is time for banks to earn an honest living – How you say? Through brilliant investment strategies of course – Folks paid 10-50X the median wage in this country can surely figure that out!

   Reply
7. Ramakrishna Shanker (@rshanker55) says:

   January 7, 2013 at 11:21 PM

   Going back to those dark days of TARP to today , the ever present threat the TBTF banks seem to hang over our collective heads is that if they go under , within hours your money will become inaccessible, the “ATMs will shut down” etc – and the congress inhabitants sweat copiously and do as they are told . That is a totally unacceptable situation that we can easily fix .

   Reply
8. Ramakrishna Shanker (@rshanker55) says:

   January 7, 2013 at 11:56 PM

   Sorry about the chain posting! Finally, it is a basic obligation of the govt to provide something that can be used as money in the economy. My point is that our govt can accomplish this without having to pay protection money to the tune of $300-400 Billion/yr to a select group of people. Quite easily. I honestly believe a move like this will accomplish a lot more than voluminous regulations that nobody reads but everyone debates vociferously.

   Reply
   • macromon says:

     January 8, 2013 at 12:01 AM

     Wow, dude, you are up late! Thanks for the posts. You raise some good points and are essentially arguing for the end of the fractional reserve banking system, no?

     Reply
     • Ramakrishna Shanker (@rshanker55) says:

       January 8, 2013 at 6:10 AM

       Yeah – it would be interesting to flesh out the full economic consequences of doing something like this. I guess new money in this new system could only be created by govt net spending (aka Deficits). :Fractional lending” is an offshoot of the ancient gold standard right? It makes no sense in todays world of pure fiat – except to unfairly enrich banks with govt largesse.

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