Originally Posted by
The Gold Standard
Not a problem.
Pretty much. Of course, that was the entire purpose for creating the Federal Reserve in the first place, so I wouldn't count on any of that stuff going away anytime soon.
Right, even if they balance the budget right now, they would still have $21 trillion in treasuries out there that would either have to be paid back with tax dollars when they come due, or they would have to borrow the money again to redeem them. And no, the $21 trillion does not include interest. Hundreds of billions of dollars of the federal budget each year is spent on interest, and it would be much more, in the trillions, if that debt had to be rolled over at higher interest rates.
Well, that and supply and demand. If banks can't create money out of thin air to lend to the federal government, how much money is really available for them to buy treasuries? And how high would the interest rate have to be for banks to lend this scarce money to the federal government over more profitable private endeavors?
Essentially yes. Technically, the Federal Reserve isn't part of the U.S. government. It's considered a private institution. But in reality yes, they can buy their own debt, buy the debt of foreign governments, lend foreign central banks the money to buy U.S. debt, and prop up the entire system. If a welfare/warfare system could affordably be run on honest money and you just soak the taxpayers to pay for it, then you wouldn't need a central bank to have such a system. But for millennia, governments haven't managed to do that and have had to inflate to pay for these things, the Federal Reserve being our way of doing it.
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