Originally Posted by Wrong Weatherwax
To a point, some of this is true. However, while yes, a nation like the United States practices monetary sovereignty and is able to print at need, there are still the very real constraints of inflation and deflation to consider.
! What's wrong with deflation despite a higher amount of circulating CASH
money? When it lead to prices like back then when a gallon of fuel at the gas station was less than $0.49, what would be wrong with that? When people could life from their salaries -- but also no-one earned 10s or 100s of Millions as a board member? What would be wrong with that?
What's wrong with the idea of forcing banks to back up all money 1:1 with CASH instead of debts
, so that banks had to cover each and every cent they give out with real existing cash
instead of the signatures of debtors? Oh! They couldn't invent money anymore! The interests would drop! A catastrophe, no profits anymore for the gamblers! I'd say, SO WHAT, the less profit gamblers can make, the better!
Just because they "can" print exorbitant amounts of money doesn't mean that the effects are somehow mitigated by fiat of exchange rates.
Did you know that less than 5% of all circulating money is actual cash
? The other >95% are virtual money, nothing more than promises to pay. Just as real currency as L$.
I'd say better the government
prints exorbitant amounts of money and gives everyone the chance to pay off their debts asap - than private banks
invent exorbitant amounts of money through debts and keep everyone in debt through interest.
The Eurozone, however, doesn't enjoy the similarly pertinent monetary effects since individual nations in Europe are currency users, rather than a concentrated issuer.
I always said the Euro belongs gotten rid of.
The governments in the Eurozone showed their submission to the industry and banks by allowing to introduce it in the first place. "La kajira, company X/bank Y" - for all who don't know what that means: "I am slave". Is that what a government should do? Submit to the will of banks and companies? No! A government has to serve the People, not companies - and no, companies are NOT people. And serve it shall, not as a slave, but as a team of trusted employees with rights, even privileges, and duties towards their employer: the People.
You are also somewhat right about rating agencies, however, don't jump too far ahead and assume that the ratings given are without effects. While the US isn't reserve constrained, you still have to balance the idea of perception. No matter the operational realities of sovereignty, if everyone "thinks" your rating is crap, then you are going to be dealing with crap.
Everyone? Or rather just the gamblers and criminals at the Stock Exchange? And yes they are criminals in my book. All of them, including those self-entitled "rating agencies".
If the US government said "From Today on, the Dollar will stay at the same exchange rate to all other currencies as it has today at 12pm EST
", then it wouldn't matter how much actual CASH (= printed money) is around, because the exchange rate wouldn't change no matter what. It would always stay at "x" Euros, at "y" British Pound, at "z" Yen etc. It's just that the US government idiotically allows the Dollar to stay on the stock market where it can be gambled with by the traitorous criminals there. And yes, I consider each stock exchange broker a much worse traitor than any whistleblower who sends data to wikileaks.
That said, Eunoli is correct. A country who suddenly decides to pursue their paradigm goals by fiat, without due consideration to the private markets they do business with is an assured creator of the perception of inability or unwillingness to pay.
Fuck the private market! If they protest, nationalize them, as easy as that: it takes a signature on a paper to do that.
Company 1 wants a bailout despite making profit and paying its managers Millions on salary? Nationalize it and arrest the board members for fraud.
Company 2 manipulates their books to pay less taxes and still mourns the taxes for companies are too high? Nationalize it and arrest the board members for tax fraud.
Company 3 sends lobbyists to bribe and/or blackmail Politicians? Nationalize it and arrest the board members and lobbyists for their bribery and blackmailing.
Company 4 openly spreads lies and broadcasts speeches that include death threads to the President? Nationalize it, and arrest the board members for traud and treason.
Company 5 hands out credits worth Billions but has only a few Millions in cash to back these credits up? Nationalize it and arrest its managers for fraud.
Company 6 dares to move their headquarter to the location of some minor dependancy abroad? Get them for tax evasion and fraud, and nationalize their assets.
Company 7 fires most of its employees and closes effectively down after being bought by some gamblers? Arrest those gamblers and their appointed managers for theft and fraud, nationalize the company and open it up again.
Company 8 uses the money paid by its custumers for private profit instead of delivering the service it is supposed to deliver? Arrest the managers for theft and fraud, and nationalize the company. Easy as that.
The side effect of such strict reglement would be that no company even dared
again to even try to make an attempt of influencing the politics or economy of the country, or risking health and life of the People for profit. Yes, it would basically lead to a different kind of economy, but what's wrong with that?
While the Federal Reserve can still set asset prices for bonds, if no has confidence in the fundamentals of the monetary supply, then renters will seek other holdings, exchanging dollars for other avenues. This WILL create a system of public failure. Furthermore, contract law is one of the foundations and cornerstones of the US legal system and revoking that assured protection through sudden seizure (or severance without redress) will further erode confidence in the market AND the justice system.
You have confidence in the market? As long as the market is not strictly controled by the government with a strong hand, and as long as currencies, companies, and estates are gambled with as if it were chips on the Roulette table, I have no confidence in it.
The managers or board members of a company go out of their way and bribe or blackmail or threaten the government, rob their customers off, gamble with their customers' money instead of their own, refuse to pay taxes, refuse to pay reasonable wages to the employees but pay Millions to themselves instead, risk the lives of people intentionally? Off they go to jail, and all their assets, including the company, become state property or national property.
All it takes is a government with a SPINE.