Trying to understand how we print money out of thin air.

[KMX]

Ok I am reading "End The Fed" and I want to complety understand what is going on here. I have a general idea but I want to know what I am talking about when debating or disscusing with someone.

I am trying better understand why we can't just print money. What backs up our money and why is it bad just to keep printing it. Sounds crazy I know lol


It says the Fed can print money based on 3 things. Open market operations, reserve ratios, and messing with the inerest rates.

So I am trying to get a better understanding of what all that means.

The Cental banks lie about how much money they have on hand, make bad deals and loans with the money they so called have on hand and then mess with the intrest rates and lie about thoes? Am I hitting in the right area? Thanks for any help.

[Travlyr]

Money can not be printed out of thin air. Proof: It takes money to buy a car. You can't print a car out of thin air. So, you can't print money out of thin air either. How does that work? Whoever prints money takes value out of production. Money printing is sleight of hand theft by privilege.

Imagine that you could print money in your basement without ever getting caught. There would be no need to ever work again. Now everybody can't do that because if everybody printed their own money, then nobody's money would be worth anything. That is why if you try to print money in your basement... you will get caught and thrown in a cage. The counterfeiters (The Fed) has that privilege by unconstitutional law and they have thugs to hunt competition down and take them out (FBI, CIA, Secret Service, et.al.)

[KMX]

I was more or less trying to ask why the fed can't just keep printing money? More money you print the less it's worth?

What backs up the US dollar?

[matt0611]

Read Rothbard's "What Has Government Done to Our Money?" and then "The Mystery of Banking".

They are free to read online, they will answer probably 90% of the questions you have.

The monetary and banking system that we currently have is so needlessly complicated because of all of the government's intervention and control.

It can get really really confusing (just visit some of the threads in this section and you will see even experienced people still learning and understanding things about our monetary and banking system).

If you read those books they will give you a solid foundation IMO.

http://mises.org/books/whathasgovernmentdone.pdf

http://mises.org/Books/mysteryofbanking.pdf

[Isaac Bickerstaff]

What "backs up" the US dollar is the assumption that people are going to borrow it to actually produce something.
When the FED "buys" treasuries, they are essentially erasing debt and dumping more money into the economy, disrupting the fragile and arbitrary "value" placed on produced items.

In order to keep a debt inspired fiat currency on life support, quantitative easing must be introduced from time to time. One without the other would result in total collapse very quickly. The two working together keeps people enslaved and ignorant.

[Travlyr]

I was more or less trying to ask why the fed can't just keep printing money? More money you print the less it's worth?

Right. Laws of supply and demand. If the economy was completely static, then quadrupling the money supply eventually quadruples prices because four times as much money is chasing a static number of goods & services. Even though the economy is dynamic it works similarly.

What backs up the US dollar?

Oil, the military, and faith.

This is an excellent resource to learn about money and banking, "The Mystery of Banking" by Murray N. Rothbard

[KMX]

Thank you! Much thanks.

[Seraphim]

Well yes and no.

Quadrupling the money supply is far worse then quadrupling of prices.

As the cost of living (relative to wages and savings) raises by said devaluation, the ability to consume beyond NECESSITIES drops precipitously.

Things like TV's tend to double, triple, quadruple in price....FOOD, GAS, HEATING - tend go up 6-10 fold. The flow of the inflation/devaluation pools into necessities far, far more as demand for luxuries dries up for nearly the entire middle class.

The middle class become poor and the poor become destitute (and many die off of starvation and disease).

The Great Devaluation is underway, but the systemic "overnight shock" has not yet been implemented.

WORLDWIDE, there will be a massive, G20 co-ordinated devaluation. It's either that or a 40-70% global debt write off. The devaluation, in my books, is far more likely.

I view hyperinflation as a remote possibility (COULD happen).

I view a bank holiday with the G20 politico class announcing some sort of currency flood - to keep "everyone solvent" as more likely.

Right. Laws of supply and demand. If the economy was completely static, then quadrupling the money supply eventually quadruples prices because four times as much money is chasing a static number of goods & services. Even though the economy is dynamic it works similarly.


Oil, the military, and faith.

This is an excellent resource to learn about money and banking, "The Mystery of Banking" by Murray N. Rothbard

[Black Flag]

What backs up our money and why is it bad just to keep printing it.

To answer that question, you need to answer this question:
"What backs up gold, when it was money?"

[Black Flag]

Right. Laws of supply and demand.

Good!

If the economy was completely static, then quadrupling the money supply eventually quadruples prices because four times as much money is chasing a static number of goods & services.

Bad!

Money does not chase goods.

Stick with your Supply and Demand law, not money chasing goods.

An increase in supply of an economic good - all things being equal - will create a downward push on the price of that good. Increase in the supply of apples -with a static DEMAND- will tend to cause the price of apples to go down.

Because all goods in the market are priced in reference to money, it is a bit more obscure to see what happens to the price of money during an increase in supply of money

So, instead, think barter.

With apples, you need less other goods to barter to get the same amount of apples.

Before oversupply:
1 apple=1 orange

Too many apples, now:

3 apples = 1 orange - the price of apples fell in reference to oranges.

Simply substitute money for apples:

Our reference:
1 dollar=1 orange

Oversupply of dollars:
3 dollars=1 orange.

It takes "more dollars" in trade for the same goods.

There is no "chasing" here.