Re:Economist Mohamed El-Erian warns about the risk of 'zombi...
by candiodari on Thursday June 18, 2020 @06:44PM
(#23568971)
No it doesn't. The fed is the only source of dollars in existence, and it only ever loans out dollars. Therefore, if every dollar were to be paid back, how many dollars exist ?
Zero.
Since that is clearly not what people want, you're right about it never happening.
In a modern fiat money system paying back central bank loans changes the money supply. You might be confused because the US did at one point pay back all the government debt (which isn't the Fed's money, that's a separate thing), however looking a bit more closely you might notice that that did not take place in a fiat money system, but in the gold standard (for one thing the Fed didn't even exist when that happened).
Analysing yet a bit further you will quickly find out that, if you had the choice, you want to live during a time where the government debt increases, and the number economists vehemently deny is a wild guess on page 5 of every economy book out there (but really, it is a wild guess), is 2% per year, or at this point 330 billion per year.
The real US number is about 3.8% per year, and calculating it for many years might make you notice that it seems to follow big mac inflation. That's not a coincidence.
Zero.
Since that is clearly not what people want, you're right about it never happening.
In a modern fiat money system paying back central bank loans changes the money supply. You might be confused because the US did at one point pay back all the government debt (which isn't the Fed's money, that's a separate thing), however looking a bit more closely you might notice that that did not take place in a fiat money system, but in the gold standard (for one thing the Fed didn't even exist when that happened).
Analysing yet a bit further you will quickly find out that, if you had the choice, you want to live during a time where the government debt increases, and the number economists vehemently deny is a wild guess on page 5 of every economy book out there (but really, it is a wild guess), is 2% per year, or at this point 330 billion per year.
The real US number is about 3.8% per year, and calculating it for many years might make you notice that it seems to follow big mac inflation. That's not a coincidence.