A Must Read-Economics made simple

Mr. Spite said:
By "monetizing the debt", I meant that the federal reserve is currently printing money and directly buying federal debt with that printed money, which is, admittedly, a very unusual practice for a central bank. I didn't even know about it when I first responded to your article a few months ago, but by the time I read about it your article was already buried deep. I apologize about that; I have thought about it since then, but I thought it would be weird to bring your article back up. I read you saying that the federal reserve was a private organization and I pretty much immediately stopped reading the article and just scanned the rest of it; RS makes a good point here.
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I was sauced when I wrote this. Notice the gratuitous apologies.
 
Ice Dancer said:
BTW, are you the actual author, Michael Mitrosky, of this economic example?
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He seems to have claimed that in previous posts. I wouldn't doubt him; libertarians have a pretty large internet presence. This wouldn't be the first time someone's posted something by a libertarian and the actual author has come to comment on it.
 
Mr. Spite said:
He seems to have claimed that in previous posts. I wouldn't doubt him; libertarians have a pretty large internet presence. This wouldn't be the first time someone's posted something by a libertarian and the actual author has come to comment on it.
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Trippy~~~ He sent me a PM with a question and I forgot to ask him this one.
 
RStringfield said:
I thought the Fed was totally private. If it is then your question needs to be rephrased.

But to answer what I think you meant, the Fed could just print the money and give it to the Treasury, without any debt incurred by the Treasury to the Fed. It would have the same effect as monetizing the debt, but might make the transaction a little more transparent to conspiracy theorist who find dark sinister plots in the shell game.

You are simply over complicating the process. When the government (I can call it that because I do not maintain the silly notion that the Fed is private) prints money it devalues currency. Period. It does not matter if it uses the currency to buy debt from the public or just hands it over to the Treasury. The only thing it could do to avoid inflation caused by the printing press is to immediately burn, destroy, or keep the new money out of circulation entirely.

Edit: deleted my own confusion of the shell game here.
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Well the govt can still create its own currency outside of the federal reserve system... except other than coins, it chooses not to do so. The fed cant just create the money though unless it has some sort of debt instrument.

I have to run out right now but ill finish this later on when I get back.
 
Mike Mitrosky said:
Well the govt can still create its own currency outside of the federal reserve system... except other than coins, it chooses not to do so. The fed cant just create the money though unless it has some sort of debt instrument.

I have to run out right now but ill finish this later on when I get back.
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Feel free not to do that...
 
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