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Thread: BANKERS TELL IT LIKE IT IS

  1. #31
    Quote Originally Posted by acptulsa View Post
    So, you're saying the banks don't loan the government money, the government sells banks its debt.

    Now, tell us how that doesn't, as a purely practical matter, amount to splitting hairs.

    Splitting hairs is a wonderful thing. You aren't lying. But the casual observer can sure look at your statement, and come away believing something that isn't true. That sure is handy, isn't it?
    Actually, @econ4every1 completely missed the point of my question and never answered it. I asked how Treasury debt is created. Not how Treasury debt finds it's way to a holder, like a bank. That part is at the very end of the process. I asked how the debt issue itself is created. IOW, how does the Treasury create a bond that it auctions off. What is that process?
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals



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  3. #32
    Quote Originally Posted by econ4every1 View Post
    "Can the government spend US dollars without selling a Treasury first?"
    Which government? De Soto Parish, Louisiana?

    Of course existing FRNs can be spent.
    Quote Originally Posted by Swordsmyth View Post
    I don't really care if I happen to be wrong about your positions, you are wrong about mine.
    Quote Originally Posted by Swordsmyth View Post
    I didn't vote for Trump.
    A POX ON BOTH YOUR PARTIES



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  5. #33
    Quote Originally Posted by acptulsa View Post
    Which government? De Soto Parish, Louisiana?

    Of course existing FRNs can be spent.
    Sorry, I thought that was obvious, the US government.

    And no, I'm asking if the government can spend new money before it issues new Treasuries.
    Last edited by econ4every1; 04-18-2018 at 08:22 AM.

  6. #34
    Quote Originally Posted by devil21 View Post
    Actually, @econ4every1 completely missed the point of my question and never answered it. I asked how Treasury debt is created. Not how Treasury debt finds it's way to a holder, like a bank. That part is at the very end of the process. I asked how the debt issue itself is created. IOW, how does the Treasury create a bond that it auctions off. What is that process?

    I didn't miss your point I simply didn't understand what you are asking. Thank you for clarifying the question.

    Can't say I remembered all of this off the top of my head...So, this is what I've come up with after a little reading.

    When it's anticipating a new federal bond issue, the central bank in coordination with the US Treasury first conducts an informal survey about current market conditions and the type of issue investors might prefer. These informal discussions are held with investment dealers, banks and other market participants who have experience with bond issues of the size and type being considered.

    Before the details of the new bond issue are decided, several important questions have to be answered. Most importantly, the federal government must determine the precise purpose of the issue. It can be to "pay for" (offset) military spending, to refund prior securities or to sell new Treasuries at a more favorable interest rate.

    There must be a legal precedent that outlines the conditions under which the bond issue can be undertaken. Such a legal precedent relates to the issue's purpose. For example, when its purpose is to fund a capital project, there must be legal precedents to determine that the issuance serves national taxpayers and the greater good of federal constituents. In the case of the refund of a prior debt issue, the question is whether or not the debt is refundable under federal tax rules.

    Then the government chooses an underwriter for the debt, often it's an investment firm the government has a pre-existing relationship with which it can choose to underwrite bond issuance. If the Amount is large, the Treasury can choose more than one firm.

    In the last phase, the so-called "marketing phase" the details are hammered out and official statements (disclosure docs) are prepared and reviewed where after a short period is given to potential purchasers to review.

    Am I on the right track, or were you looking for something different?

  7. #35
    Quote Originally Posted by econ4every1 View Post
    Quote Originally Posted by devil21 View Post
    Actually, @econ4every1 completely missed the point of my question and never answered it. I asked how Treasury debt is created. Not how Treasury debt finds it's way to a holder, like a bank. That part is at the very end of the process. I asked how the debt issue itself is created. IOW, how does the Treasury create a bond that it auctions off. What is that process?
    I didn't miss your point I simply didn't understand what you are asking. Thank you for clarifying the question.

    Can't say I remembered all of this off the top of my head...So, this is what I've come up with after a little reading.

    When it's anticipating a new federal bond issue, the central bank in coordination with the US Treasury first conducts an informal survey about current market conditions and the type of issue investors might prefer. These informal discussions are held with investment dealers, banks and other market participants who have experience with bond issues of the size and type being considered.

    Before the details of the new bond issue are decided, several important questions have to be answered. Most importantly, the federal government must determine the precise purpose of the issue. It can be to "pay for" (offset) military spending, to refund prior securities or to sell new Treasuries at a more favorable interest rate.

    There must be a legal precedent that outlines the conditions under which the bond issue can be undertaken. Such a legal precedent relates to the issue's purpose. For example, when its purpose is to fund a capital project, there must be legal precedents to determine that the issuance serves national taxpayers and the greater good of federal constituents. In the case of the refund of a prior debt issue, the question is whether or not the debt is refundable under federal tax rules.

    Then the government chooses an underwriter for the debt, often it's an investment firm the government has a pre-existing relationship with which it can choose to underwrite bond issuance. If the Amount is large, the Treasury can choose more than one firm.

    In the last phase, the so-called "marketing phase" the details are hammered out and official statements (disclosure docs) are prepared and reviewed where after a short period is given to potential purchasers to review.

    Am I on the right track, or were you looking for something different?
    Well, first he said what happens after the bond is created, and now he has said what happens before the bond is created.

    You didn't get your question answered, but you got a nice pair of bookends.
    Quote Originally Posted by Swordsmyth View Post
    I don't really care if I happen to be wrong about your positions, you are wrong about mine.
    Quote Originally Posted by Swordsmyth View Post
    I didn't vote for Trump.
    A POX ON BOTH YOUR PARTIES

  8. #36
    Quote Originally Posted by acptulsa View Post
    Well, first he said what happens after the bond is created, and now he has said what happens before the bond is created.

    You didn't get your question answered, but you got a nice pair of bookends.
    @devil21

    Ok, you got me I'm stumped...Please enlighten me.

  9. #37
    Quote Originally Posted by econ4every1 View Post
    @devil21

    Ok, you got me I'm stumped...Please enlighten me.
    Spend some time learning that part, since without it, there is no Treasury bond to be issued. I'll give you a hint of where to start learning the stuff they didn't teach you in econ classes in school. It starts the moment you are born and your mother signs a piece of paper stuck in her face at her most vulnerable moment. That piece of paper turned you into a corporate slave for the rest of your life. The Treasury doesn't just create issues out of nothing. They're secured by something.

    Have fun.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  10. #38
    Quote Originally Posted by devil21 View Post
    Spend some time learning that part, since without it, there is no Treasury bond to be issued. I'll give you a hint of where to start learning the stuff they didn't teach you in econ classes in school. It starts the moment you are born and your mother signs a piece of paper stuck in her face at her most vulnerable moment. That piece of paper turned you into a corporate slave for the rest of your life. The Treasury doesn't just create issues out of nothing. They're secured by something.

    Have fun.
    Oh, and here I thought u were being serious.

  11. #39
    Quote Originally Posted by econ4every1 View Post
    Oh, and here I thought u were being serious.
    Now, see, there's where you and 99% of this forum differ. You think it's a lark having your grandparents spend you into insurmountable debt before you're born and leaving you to spend your life paying it back. Whereas many of us were in on that spending spree back in the day, we see what it's doing to the economy, we know there will be a day of reckoning, and even though we may not be around to see it, we actually love our children enough that we hate the fact. We opposed this lunacy back when it was actually benefitting us, and we hate it now.

    You say, gee, we can keep rolling this stuff over forever and ever. But first interest accumulates, and then interest gets charged on interest, and then it mushrooms. And we don't have faith in a bunch of short-sighted politicians who can't see past their next election to manage it. You say anyone can get all the raises they need to keep up with dollar devaluation, or at least you can and you could give damn-all for anyone else. There's another place you and most of us disagree.

    If you want to hang around, you're just going to have to learn to agree to disagree with the overwhelming majority of us on these things. Perhaps you heard someone say libertarians don't give a fig about their fellow man, so you thought you'd find lots of like-minded souls here. Sorry to disappoint you, but much of what we do we do because we can actually see how the poor got poorer, and we don't like it.

    He's the one treating this topic as a legal and moral issue with real-world consequences for real people. You're treating it as some kind of interesting mental exercise. Tell us again who is, and who isn't, being serious.
    Last edited by acptulsa; 04-18-2018 at 03:00 PM.
    Quote Originally Posted by Swordsmyth View Post
    I don't really care if I happen to be wrong about your positions, you are wrong about mine.
    Quote Originally Posted by Swordsmyth View Post
    I didn't vote for Trump.
    A POX ON BOTH YOUR PARTIES

  12. #40
    Quote Originally Posted by acptulsa View Post
    Now, see, there's where you and 99% of this forum differ. You think it's a lark having your grandparents spend you into insurmountable debt before you're born and leaving you to spend your life paying it back.
    You spend your life paying taxes, not repaying the entirety of debt.

    Quote Originally Posted by acptulsa View Post
    Whereas many of us were in on that spending spree back in the day, we see what it's doing to the economy, we know there will be a day of reckoning and even though we may not be around to see it, we actually love our children enough that we hate the fact. We opposed this lunacy back when it was actually benefitting us, and we hate it now.
    The biggest lie ever believe by the American people. The debt has to be repaid.

    It's always about "the children".

    Quote Originally Posted by acptulsa View Post
    You say, gee, we can keep rolling this stuff over forever and ever.
    That's not the issue.

    Let me ask you and @devil21. I answered your question in good faith. Now you answer mine.

    Let's use China as an example as it is the nation that holds the larger amount of US Treasuries (what you'd call "debt").

    2 Questions

    1. When China buys US Treasuries, what does it buy them with?

    Tell you what, I'll give you the answer to this because it's easy....They buy Treasures with US dollars.

    2. How did the Chinese government come to possess a total $3.2 trillion US dollars (About $1.1 trillion in Treasuries and $2 trillion in US dollar savings)?

    The Chinese government hasn't sold $3.2 trillion dollars worth of goods to US consumers. The Chinese government doesn't tax its citizens in US dollars. So tell me, how did they come to possess so many US dollars. Please explain.


    Quote Originally Posted by acptulsa View Post
    But first interest accumulates, and then interest gets charged on interest, and then it mushrooms.
    Here (below) is US interest as a percentage of GDP going back to 1940....Where is the "mushroom"?

    70 years of "the sky is falling, the sky is falling!!" "We're going to crushed under the weight of future debt, our kids will pay for it!!"

    And what are the solutions I hear so often?

    Cut spending on Medicaid, Social Security cut funding to schools and food for the elderly.....So basically, the solution is to make the poor, the children and the elderly pay for it now? Right?





    So there it is....in 2014 we were paying the same rate as we were in 1945, 1955 and 1973. The historical range for interest paid as a percent of the economy is between 0.7%-3.2%.

    The problem that you have when you look at the future debt costs is that;

    1: You are measuring in absolute dollars rather than as a percentage of the size of the economy. If your salary went to $300k tomorrow, don't you think your bills might increase just a little?

    2: You aren't factoring in that 1/3 of all interest payments the government pays to itself (effectively canceling out $33 out of every $100 paid in interest). Another roughly 1/3 is paid to the US private sector. As long as there are things that people need and want to purchase, those dollars won't cause rampant inflation they will add to economic growth. The last 1/3 is paid to the foreign sector who does what with it? Buys bonds?

    Quote Originally Posted by acptulsa View Post
    You say anyone can get all the raises they need to keep up with dollar devaluation, or at least you can and you could give damn-all for anyone else. There's another place you and most of us disagree.
    No, I never said, "anyone can get all the raises they need to keep up with dollar devaluation". I said that anyone can use discretionary money to avoid inflation. As far as salaries, I think people should be paid more, but the only way to ensure salaries go up is to ensure unemployment is low and people have the opportunity to reach their potential ensuring that markets for labor are competitively fueled by an economy driven by demand for the kinds of things that people will create.

    Also, I don't appreciate you trying to paint me as someone who doesn't care, you don't know me, you don't know (or understand) my motivations, but I assure you that the policies I support help those that need it most.

    Now I won't accuse you of not caring, but I will say that I believe that Austrian economics would lead to a society where the stratifications of income of poverty are even greater because you've falsely identified the currency and government as the problem and you don't understand the nature of today's "debt".

    Quote Originally Posted by acptulsa View Post
    You're treating it as some kind of interesting mental exercise. Tell us again who is, and who isn't, being serious.
    Anyone who claims I'm a slave because my mother signed a birth certificate isn't being serious.

    Now I'd be happy to explain why anyone that beleives that is wrong, but you have to stay engaged.

    Respecfully,

    E4E1



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  14. #41
    @econ4every1
    I'm attempting to teach you what they didn't teach you in school, nothing more or less. After all, if they told you that you are a securitized asset of a corporation calling itself a government, working literally to pay interest on debt that you are not responsible for, would you continue your "training" as if everything is the same? If they taught you that the capital letter name on the social security card is NOT YOU, would you continue as if everything is the same? The rabbit hole is deep but if you are truly a student of economics then you should be seeking to understand the entire system and how it operates, not just kicking around numbers.

    The Chinese government hasn't sold $3.2 trillion dollars worth of goods to US consumers. The Chinese government doesn't tax its citizens in US dollars. So tell me, how did they come to possess so many US dollars. Please explain.
    What makes you think they haven't? According to this link, Walmart alone has accounted for approx $3T in US domestic sales between 2008 and 2018 alone.
    https://www.statista.com/statistics/...e-by-division/

    If you add in Target, Dollar stores, online, Alibaba, etc it's not only possible but highly probable that Chinese sales to Americans has far exceeded $3.2T.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  15. #42
    Quote Originally Posted by devil21 View Post
    @econ4every1
    I'm attempting to teach you what they didn't teach you in school
    First, stop with this nonsense. I went to school in the 1980's and 90's and studied technical drawing and design.

    Quote Originally Posted by devil21 View Post
    What makes you think they haven't? According to this link, Walmart alone has accounted for approx $3T in US domestic sales between 2008 and 2018 alone.
    https://www.statista.com/statistics/...e-by-division/

    If you add in Target, Dollar stores, online, Alibaba, etc it's not only possible but highly probable that Chinese sales to Americans has far exceeded $3.2T.
    What on earth does that have to do with my question?

    The Chinese government hasn't sold $3.2 trillion dollars worth of goods to US consumers. The Chinese government doesn't tax its citizens in US dollars. So tell me, how did they come to possess so many US dollars. Please explain.
    Now I should probably rephrase that some because in the history of our trade deficit with China, $3.2 trillion only represents what the government of China has saved, not the sum total of all sales between the US consumers and the Chinese government since China began carrying a large account of US dollars. The point is that most of the dollars that transact between the US and China, most of those dollars are paid to Chinese firms, not directly to the Chinese government. Granted, some of those firms are partially owned by the government, but the majority are privately held. Yes, their system is more restrictive and a bit more convoluted, but for the point, I'm going to show you it makes no difference.

    The US government owned a stake in GM for a while, but when GM sold cars in China, the US government didn't earn Chinese dollars, GM did. GM converted those dollars to US dollars by trading some or all of them in the international money markets and paid taxes, profits purchased supplies etc in US dollars....So even if you make the argument that the Chinese government owns a stake in large Chinese firms and does sell directly to the US, my point is that the Chinese government does not accept the profits made in US dollars. They have to be converted to Renminbi before the government will accept them, just like the US government.

    Thus, firms in China that earn US dollars need to exchange (at least some) US dollars for Renminbi on FOREX to pay workers, pay taxes and buy supplies etc in China.

    Would you agree or disagree?

    Thus, my question still stands. How did the government of China come to possess $3.2 trillion US dollars? Money they use to buy US Treasuries.

    Last edited by econ4every1; 04-19-2018 at 11:22 AM.

  16. #43
    Quote Originally Posted by econ4every1 View Post
    First, stop with this nonsense. I went to school in the 1980's and 90's and studied technical drawing and design.
    So, iow, your knowledge of econ is only as far as what you've learned on your own. OK. Perhaps others have a deeper understanding of more than moving numbers around. There are legal portions, historical portions, esoteric portions and others that you haven't studied. I'm just trying to help you with other components that you haven't covered.

    What on earth does that have to do with my question?



    Now I should probably rephrase that some because in the history of our trade deficit with China, $3.2 trillion only represents what the government of China has saved, not the sum total of all sales between the US consumers and the Chinese government since China began carrying a large account of US dollars. The point is that most of the dollars that transact between the US and China, most of those dollars are paid to Chinese firms, not directly to the Chinese government. Granted, some of those firms are partially owned by the government, but the majority are privately held. Yes, their system is more restrictive and a bit more convoluted, but for the point, I'm going to show you it makes no difference.

    The US government owned a stake in GM for a while, but when GM sold cars in China, the US government didn't earn Chinese dollars, GM did. GM converted those dollars to US dollars by trading some or all of them in the international money markets and paid taxes, profits purchased supplies etc in US dollars....So even if you make the argument that the Chinese government owns a stake in large Chinese firms and does sell directly to the US, my point is that the Chinese government does not accept the profits made in US dollars. They have to be converted to Renminbi before the government will accept them, just like the US government.

    Thus, firms in China that earn US dollars need to exchange (at least some) US dollars for Renminbi on FOREX to pay workers, pay taxes and buy supplies etc in China.

    Would you agree or disagree?

    Thus, my question still stands. How did the government of China come to possess $3.2 trillion US dollars? Money they use to buy US Treasuries.

    I'm not clear on why you're talking about the origins of Chinese dollar holdings since I skip most of your long posts and I'm not sure why they're on a thread about banker's quotes in the first place or what point you're trying to make. I'm bored of trying to help you understand parts of the puzzle that you clearly have no interest in so moving on to another thread.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  17. #44
    Quote Originally Posted by devil21 View Post
    I'm not clear on why you're talking about the origins of Chinese dollar holdings since I skip most of your long posts and I'm not sure why they're on a thread about banker's quotes in the first place or what point you're trying to make.
    You like asking questions but bail when asked to answer them.


    Quote Originally Posted by devil21 View Post
    I'm bored of trying to help you understand parts of the puzzle that you clearly have no interest in so moving on to another thread.
    So the US "borrows" US Dollars from the government of China, and you're not just a little bit curious where they get them?

    Fine, move on, but I will keep reminding you of how you feined boredom to keep to keep from having to come to the realization that you aren't quite as smart as you think.

    No problem. Move on.
    @acptulsa - What about you, you want to give it a shot or will you make up some excuse?

    Respectfully,

    E4E1
    Last edited by econ4every1; 04-20-2018 at 05:34 AM.

  18. #45
    Quote Originally Posted by devil21 View Post
    I'm not clear on why you're talking about the origins of Chinese dollar holdings since I skip most of your long posts and I'm not sure why they're on a thread about banker's quotes in the first place or what point you're trying to make.
    Here, let me expand a bit on this.

    Do you believe that China could decide to stop purchasing US debt (as is speculated on by those that speculate on the weakness of fiat).

    If so, do you know what the consequences would be for the US and China?

    Understanding why the Chinese government holds US dollars in the first place and how they acquired them will help you understand the relationship between the US and China with respect to purchasing US treasuries and why it's extremely unlikely to happen as long as China is a Net exporter and the US is a net importer.

    Respectfully,

    E4E1

  19. #46
    Just a note: "Foreign held US Treasury notes" do not just include notes held by the governments of that country. It includes all holders- individuals, banks, investment firms, retirement funds, the government.

    http://ticdata.treasury.gov/Publish/mfh.txt
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    Quote Originally Posted by Swordsmyth View Post
    Yes, that is the new tactic from all the trolls.
    They just assert lies over and over no matter how often they are exposed.
    I am Zippy and I approve of this post. But you don't have to.

  20. #47
    Quote Originally Posted by Zippyjuan View Post
    Just a note: "Foreign held US Treasury notes" do not just include notes held by the governments of that country. It includes all holders- individuals, banks, investment firms, retirement funds, the government.

    http://ticdata.treasury.gov/Publish/mfh.txt
    Of course, but the government does have a sizeable position.

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