Why borrow money?

[teacherone]

Hello all,

If the FED will monetize Treasury debt upon request, why does the US borrow money from foreign nations to fund itself? Essentially Congress still has the right to "coin money"...the just have to ask the suits at Central to print some up!

[user]

They don't want inflation to approach Zimbabwean levels, even if it's already too high.

[ThePieSwindler]

They don't want inflation to approach Zimbabwean levels, even if it's already too high.

Exactly - thats called seigniorage, and thats how hyperinflation occurs. Thats the worst idea ever.

[danberkeley]

Hello all,

If the FED will monetize Treasury debt upon request, why does the US borrow money from foreign nations to fund itself? Essentially Congress still has the right to "coin money"...the just have to ask the suits at Central to print some up!

Probably because if they did do that, foreigners and other people holding gov'ment bonds would dump those bonds and the dollar would crash because then there seriously wouldn'y be anything of value backing the dollar.

[Fox McCloud]

it's the same thing with the question "If the government pays for most of what it does via inflation, why not pay for all of it via inflation?"

Simple; the government wants to keep up the illusion; if there were 0 taxes, yet the government was incessantly giving out foreign aid, instituting welfare programs, and the like, people would wonder "where do they get this money? We're not being taxed"...not only that, but as pointed out here, it would cause hyper-inflation in a relatively short order of time.

Of course, if the people are totally dumbed down, and on a level as presented in G. Edward Griffin's book...then they could get away with it, as everyone is 100% dependent on the government for everything.

I tend to think that this type of system will not appear until we all carry around cards (or we have implanted chips on our wrist or foreheads), and there is literally 0 currency in circulation (all 1's and 0's)...it's all contained on the chip/card.

[Bruno]

it's the same thing with the question "If the government pays for most of what it does via inflation, why not pay for all of it via inflation?"

Simple; the government wants to keep up the illusion; if there were 0 taxes, yet the government was incessantly giving out foreign aid, instituting welfare programs, and the like, people would wonder "where do they get this money? We're not being taxed"...not only that, but as pointed out here, it would cause hyper-inflation in a relatively short order of time.

Of course, if the people are totally dumbed down, and on a level as presented in G. Edward Griffin's book...then they could get away with it, as everyone is 100% dependent on the government for everything.

I tend to think that this type of system will not appear until we all carry around cards (or we have implanted chips on our wrist or foreheads), and there is literally 0 currency in circulation (all 1's and 0's)...it's all contained on the chip/card.

You're crazy. That would NEVER happen.

[Standing Like A Rock]

You're crazy. That would NEVER happen.

[teacherone]

From what I understand, the interest the Treasury pays on its notes, bills and bonds to foreign lenders is much higher than the token interest it pays to the Fed. Since both borrowing money from abroad and monetizing debt create inflation as both increase the current money supply, it seems more prudent to owe money to a US government created institution than to foreign countries who return with our dollars and buy up our real assets.

[bander87]

There's no such things as a free lunch.