How should we punish China?

[Walt]

Indeed.

If you cannot understand that Congress does not print money, you probably should educate yourself before speaking.

 

[Into the Night]

If Trump did nothing, then this downturn is on Obama?

No, this downturn is on mass hypochondria and governors shutting the economy of their States down.

 

[Into the Night]

Congress cannot print the money.

They order the Fed to 'print the money'.

Or technically speaking Congress could repeal all they have done before, and print the money, but they have not done that. The Federal Reserve alone creates money. You do not seem to understand how the government works.

The Federal Reserve 'prints the money' due to the orders of Congress.

The Fed does not follow Congresses orders, and does not print money when Congress asks.

Yes it does.

Congress has never asked the Fed to print money.

Yes it has. And it will continue to do so for the foreseeable future.

It just does not happen.

Yes it does.

The Fed is an autonomous body that decides policy based on monetary stability first and foremost.

Nope. The Fed is created by the government. It is a government agency.

If that were true, we would not have deflation during a recession, like we have had.

We have not had deflation.

We have had below target inflation for 12 years now, slipping into deflation from time to time.

We have not had deflation.

That is DEFLATION, dude.

We have not had deflation.

Of course government can stop a business from collapsing.

No, it can't. Nationalizing a business is essentially a collapse of that business.

The question is whether it should stop them from collapsing.

It can't.

Providing companies with cash on hand starting in September saved almost all of corporate America from technical bankruptcy, but again there is a question: why was there no cash on hand in the American economy?

False dichotomy fallacy.

trump had failed America very badly,

Trump is a proper noun. It is capitalized. Trump has been wildly successful. That's why idiots like you have TDS.

even before the pandemic.

What pandemic? There is no pandemic currently in progress.

The Fed was forced to step in and risk inflation to rescue our economy from trump's incompetence.

Nope. The Fed acts according to Congress. Trump is a proper noun. It is capitalized.

 

[Into the Night]

The Repo market loans are some of the most steady loans imaginable. Corporations are required to have very solid collateral. Those loans are going to be paid back in full, one way or another. The issue there is creation of money for other than fighting deflation.

Historically, quantitative easing has bought very steady debt. More recently, some of the debt has been less steady, but even that is probably going to get repaid. The Fed has not gotten to the point where it is taking on debt with zero chance of being repaid.

WRONG. Increasing the money supply without a corresponding increase in wealth is only inflation. The commodity value of the dollar drops.

 

[Into the Night]

If you cannot understand that Congress does not print money, you probably should educate yourself before speaking.

Congress orders the Fed to 'print money'. They also authorize the issuance of federal bonds, the method that was used for funding the relief payments. Apparently, there were enough idiots to buy them.

 

[Walt]

They order the Fed to 'print the money'. The Federal Reserve 'prints the money' due to the orders of Congress.

You clearly do not understand how an independent central bank works. All policy decisions are made by the Board of Governors. Congress has absolutely no say in policy decisions such as printing money.

We have not had deflation.

And yet we have, so you are wrong.

What pandemic? There is no pandemic currently in progress.

To me, you seem delusional at the moment. This is not an insult, but just a statement of fact.

The Fed acts according to Congress.

Then you would be able to find one of these orders?

 

[Matt Dillon]

Some are suggesting that we don't pay back the money that they loaned us. I say that is a good start...

Economic sanctions. Next!

 

[Walt]

WRONG. Increasing the money supply without a corresponding increase in wealth is only inflation. The commodity value of the dollar drops.

You wrote that in response to a post that I made that most of the loans made by the Fed before recently have a nearly 100% chance of being repaid, not a zero chance, so this is not a response to that.

Inflation would raise the odds of being repaid. If there is more money out there, then it is easier to repay the money.

Inflation is the product not just of money supply, but more importantly the velocity of money. Right now people are afraid to buy, so demand is plummeting. That is causing deflation. There is also a drop in production, but that is almost certainly being dwarfed by the bigger fall in demand. It is possible that the Fed is over producing money also, which would cause inflation, so it is possible we could see high inflation. It is slightly more likely we would see deflation.

Whatever we see, it is going to be bad.

 

[Walt]

Congress orders the Fed to 'print money'. They also authorize the issuance of federal bonds, the method that was used for funding the relief payments. Apparently, there were enough idiots to buy them.

You can repeat as often as you want, but it will not make it true. Congress has no way of ordering the Fed to print money. The Fed makes its own decisions.

For well over a decade, Treasurys have had such low interest rates that they are effectively below zero (taking into account target inflation). That means there are more than enough people trying desperately to get Treasurys, and a shortage in Treasurys to sell them. People around the world need a safe store for their dollars, and are willing to pay the US Government a premium for that safe store. The demand for that safe store goes up in disasters like this, not down.

 

[Into the Night]

You clearly do not understand how an independent central bank works.

The Federal Reserve was created by Congress in 1913. Congress owns the bank.

All policy decisions are made by the Board of Governors. Congress has absolutely no say in policy decisions such as printing money.

Congress owns the Board of Governors.

And yet we have, so you are wrong.

No deflation has occurred since the Fed opened it's doors.

To me, you seem delusional at the moment. This is not an insult, but just a statement of fact.

It is an insult, and a fallacy. Not a fact. Learn what 'fact' means. 'Fact' does not mean 'proof' or 'Universal Truth'. Buzzword fallacy.

Then you would be able to find one of these orders?

See the various acts of Congress relating to the Fed. It's in the Congressional record. I will not repeat it here due to bulk.

 

[Into the Night]

You wrote that in response to a post that I made that most of the loans made by the Fed before recently have a nearly 100% chance of being repaid, not a zero chance, so this is not a response to that.

So now you want to quibble over revising the history of your own posts??? Loser.

Inflation would raise the odds of being repaid. If there is more money out there, then it is easier to repay the money.

The debt is repaid with empty dollars. The originator of the loan loses. He gets paid with less wealth than what he risked in making the loan.

Inflation is the product not just of money supply, but more importantly the velocity of money.

Money velocity has no bearing on it's commodity value.

Right now people are afraid to buy, so demand is plummeting.

People are not afraid to buy. They simply CAN'T buy...by edict.

That is causing deflation.

No, it is not. Overall, there is still inflation. You have probably noticed your grocery bill getting higher? Niche markets like oil and computers is not the entire economy.

There is also a drop in production, but that is almost certainly being dwarfed by the bigger fall in demand.

Demand is there. The product is not. That increases prices, dope.

It is possible that the Fed is over producing money also, which would cause inflation, so it is possible we could see high inflation.

We are already seeing overall inflation. It has never done away since the Fed first opened it's doors for busin4ess.

It is slightly more likely we would see deflation.

There never has been deflation since the Fed opened.

Whatever we see, it is going to be bad.

There is such a thing as healthy deflation caused by increasing wealth due to innovation. The computer market is one example. As better chips become available, memory has become cheaper and cheaper, especially in the form of permanent storage memory (such as disks, SSDs, etc). This is a healthy deflaction. It is, however, only one niche market. Overall, there has always been inflation.

 

[Into the Night]

You can repeat as often as you want, but it will not make it true. Congress has no way of ordering the Fed to print money. The Fed makes its own decisions.

Nope. Congress created the Fed. Congress owns the Fed. Congress sets policies at the Fed. Inversion fallacy. Argument of the stone fallacy.

For well over a decade, Treasurys have had such low interest rates that they are effectively below zero (taking into account target inflation). That means there are more than enough people trying desperately to get Treasurys, and a shortage in Treasurys to sell them.

Bonds have nothing to do with the Fed.

People around the world need a safe store for their dollars, and are willing to pay the US Government a premium for that safe store. The demand for that safe store goes up in disasters like this, not down.

Since, as you say, they are paying for that storage, it's not a safe store, is it? They are losing money to store it in bonds.

 

[Walt]

This is quite simply a waste of my time. Night is just making stuff up.

The Federal Reserve was created by Congress in 1913. Congress owns the bank. Congress owns the Board of Governors.

Technically speaking, the banks own the Federal Reserve. They are required to buy into it to be banks in the USA. The Board of Governors are appointed by the president, and confirmed by Senate. They are appointed for a term of 14 years. Congress does not order the Fed to print money. The Fed is a conventional independent central bank.

In theory, Congress could change the laws, and take direct control. They have not done this.

No deflation has occurred since the Fed opened it's doors.

Massive deflation caused the Great Depression. That happened after the Fed was founded. There was some deflation during the Great Recession too.

See the various acts of Congress relating to the Fed. It's in the Congressional record. I will not repeat it here due to bulk.

There would be news stories about it. It should be easy for you to prove.

 

[Walt]

Money velocity has no bearing on it's commodity value.

Lets take some oversimplified stories to show you are wrong. First imagine a dollar bill that gets buried for a years. It has a velocity of zero, and therefore has effectively been destroyed during that time. It is contributing to deflation. Now imagine another dollar bill that is re-spent every day. It acts as 365 dollars in that year, and contributes to inflation.

Before Keynesian Economics, often recessions and depressions would lead to deflation as people became afraid to spend money. The deflation would lead to more deflation, as people hoarded the money that was becoming worth more. This led to worse economic problems.

There is such a thing as healthy deflation caused by increasing wealth due to innovation.

That would technically be a drop in the cost of living, and not deflation. They look similar, but are not the same.

 

[Walt]

Since, as you say, they are paying for that storage, it's not a safe store, is it? They are losing money to store it in bonds.

If you rent a safe deposit box, you are paying money for safe storage. Safe storage does not mean it will not cost you money, it means you will not lose the principle. So gold costs money to store, but it is still seen by some as a safe store of wealth.

Lets look at a real world example. Hong Kong Dollars are printed by private banks which are required to keep US Dollars assets to backup those Hong Kong Dollars. A bank might need a billion in US Dollar assets. The banker does not care if the dollar goes up or down, he just needs those dollars. He could keep a billion in cash in a vault, but that costs money, and loses about 2% a year to inflation. He could invest in stocks or bonds that might go up in value, but they also might collapse in value, in which case the banker would go to prison. Or he could buy US Treasurys which the banker feels are absolutely guaranteed. They may pay only 1%, less than the 2% lost to inflation, but that is 1% more than just keeping the cash in a vault.

As US Dollar denominated trade has increased, the number of people who need an absolutely safe store of US Dollars has increased. These people do not care if there is inflation, or deflation, they just need someplace to put US Dollars where they cannot possibly lose the principle. If they can get a 1% return, that is great... Even if it is less than inflation.

 

[Into the Night]

This is quite simply a waste of my time. Night is just making stuff up.

Inversion fallacy.

Technically speaking, the banks own the Federal Reserve.

No. The federal government owns the Federal Reserve.

They are required to buy into it to be banks in the USA.

As required by law. That is a law passed by Congress also.

The Board of Governors are appointed by the president, and confirmed by Senate.

In other words, the federal government.

They are appointed for a term of 14 years. Congress does not order the Fed to print money.

Yes it does.

The Fed is a conventional independent central bank.

No, it isn't. It is owned by the federal government.

In theory, Congress could change the laws, and take direct control. They have not done this.

They have direct control.

Massive deflation caused the Great Depression.

Nope. There was massive INFLATION during the Great Depression. The Depression was of economic activity, not of the value of the dollar, which dropped considerably in value during that time.

That happened after the Fed was founded.

Correct.

There was some deflation during the Great Recession too.

Nope. The dollar again inflated during those times (which Great Recession are you talking about?).

There would be news stories about it. It should be easy for you to prove.

There was. See the price of the dollar against various commodities. Historic charts are available.

 

[Into the Night]

Lets take some oversimplified stories to show you are wrong. First imagine a dollar bill that gets buried for a years. It has a velocity of zero, and therefore has effectively been destroyed during that time. It is contributing to deflation. Now imagine another dollar bill that is re-spent every day. It acts as 365 dollars in that year, and contributes to inflation.

Before Keynesian Economics, often recessions and depressions would lead to deflation as people became afraid to spend money. The deflation would lead to more deflation, as people hoarded the money that was becoming worth more. This led to worse economic problems.



That would technically be a drop in the cost of living, and not deflation. They look similar, but are not the same.

Money velocity is unrelated to the commodity value of a dollar bill.
Keynesian economics doesn't work. You can't print your way to prosperity. See the history of Mexico, Germany, and of course, the United States.

Money isn't wealth. It is only a medium of transacting wealth.

You also just nullified your own argument.

 

[Into the Night]

If you rent a safe deposit box, you are paying money for safe storage.

If you store it at home, you are paying money for safe storage.

Safe storage does not mean it will not cost you money, it means you will not lose the principle.

You will lose some principle value. That's the only value an object has. An object is not a loan.

So gold costs money to store, but it is still seen by some as a safe store of wealth.

Gold is not wealth. It is money. It is just another form of money.

Lets look at a real world example.

Define 'real'.

Hong Kong Dollars are printed by private banks which are required to keep US Dollars assets to backup those Hong Kong Dollars.

HKD are a creation of the Hong Kong monetary authority, a central bank. Every single HKD was created by that bank.

A bank might need a billion in US Dollar assets. The banker does not care if the dollar goes up or down, he just needs those dollars. He could keep a billion in cash in a vault, but that costs money, and loses about 2% a year to inflation. He could invest in stocks or bonds that might go up in value, but they also might collapse in value, in which case the banker would go to prison. Or he could buy US Treasurys which the banker feels are absolutely guaranteed. They may pay only 1%, less than the 2% lost to inflation, but that is 1% more than just keeping the cash in a vault.

A central bank does not need to tie anything to the U.S. dollar. Bonds are not dollars. They are loans.

As US Dollar denominated trade has increased, the number of people who need an absolutely safe store of US Dollars has increased.

It is currently decreasing.

These people do not care if there is inflation, or deflation, they just need someplace to put US Dollars where they cannot possibly lose the principle.

They are losing principle value. That's what inflation does.

If they can get a 1% return, that is great... Even if it is less than inflation.

You don't get a return on dollars. Bonds are not dollars.