There Is No “Debt Doomsday” Approaching … Fiscal and Monetary Operations

Posted on Dec 30 2015 - 1:43pm by Sharpe Trade

This entry is a part of our larger series … “There is no ‘Debt Doomsday’ Approaching“.   The first entry in this series can be found here at this link

We continue the discussion from the last entry.

We often find that many individuals attempt to comment on the economy, and confuse two very basic components of economic functions.  Namely, the Fiscal and the Monetary operations of the United States.  These are two separate entities that attempt to balance aggregate demand within the economy.

To review from the last entry, the Fiscal branch is composed of Congress and the President that uses Spending, and Income Taxes in an attempt, not to pay back debt … but to balance aggregate demand of the entire economy.  The Monetary branch is composed of the Central Bank, or Federal Reserve Bank of the United States who monitors economic data to balance interest rates; again, not to ‘pay back debt’.  But in an attempt to balance aggregate demand of the economy.

But how exactly do these two branches of our ‘economic ecology’ function?  

This is vital to understand.

Remember, that the entire focus and surrounding context of this series we are presenting is to demonstrate that there is no “Debt Doomsday” approaching for the United States economy; in which the Federal Government is trying to ‘raise revenue’ to pay back ‘debt’.  A story that many who peddle fear and doom like to sell the uninitiated.  If you understand how and why these two branches of economic policy function … ones can more easily see that the above ‘Debt Doomsday’ narrative is simply a boogeyman story, with no basis in fact.

Therefore, this entry of Mr. Delzio’s discusses the functions of each branch as they attempt not to back back debt, but balance aggregate demand …

(After the following video, you can find the next video in this series at the following link)

2 Comments so far. Feel free to join this conversation.

  1. NewLife December 31, 2015 at 3:33 pm - Reply

    I admit total ignorance on this subject so I won’t pretend to be able to understand what is being in this video series, but I do have a somewhat related question.

    Some out on the net would say that there will be a dollar collapse, and that one of the catalysts will be a weakening dollar parallel with foreign nations requiring repayment of debt in dollars.

    Wouldn’t that be a total disaster for foreign countries who will receive payment in dollars? I assume that if we owed them payment of a dollar amount, and at a fixed interest rate from the time of loan, it would seriously injure them to receive that payment in US dollars which have now been seriously reduced in value.

    Maybe that’s not how it works, but it can’t be worse than some of the things I’ve read 🙂

    • Dan January 1, 2016 at 10:56 am - Reply

      Heyya mate,

      Then you should like the next entry (Friday’s).

      All payments have to be made, in U.S. Dollars (as you’ll see in Friday’s explanation). Sinc eit ALL has to be completed in Dollars, then

      A) It’s be truly strange for every nation to want ‘repayment of debt’. I mean … as all these entries have shown, it’s not really debt. At all. It’s an accounting ledger. That’s it. So why would all nations want “debt repayment”. That’s just really odd.

      B) All the debt is, is an accounting entry, paid by computer keystroke (Friday’s entry) All interest? They know what they’ll get up front in terms of interest. Buying the 10 year bond today? Ok, you know from day one, if you are Malasia and buying a 10 year bond, you are going to get 2.25% interest on the money, payable in, U.S. Dollars for what the bond cost you, and you’ll get the 10 year bond principal back as well

      So C) It’s just paid by keystroke. The U.S. Dollar Index goes down to 50. Boom, Type, type … BOOM … here’s your interest and you’re money. Unless the keyboard is somehow broken at the Fed, in which case, I just imagine they would then grab another keyboard.

      It’s all Interest in U.S. Dollars, paid in U.S. Dollars, redeemable in U.S. Dollars, which the Federal Government has total monopoly control over.



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