Quote:
Originally posted by hardflex
So, it used to be pegged to the gold standard, now it's not. What mechanism is there to keep the Fed from just printing money ?
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The Cartel doesn't print money, the Treasury does. The Cartel issues the debt, our government monetizes it. So if I replace "printing" with "lending" in your question above, the answer is - Nothing. The amount of debt/money (the astute reader will see that it's the same thing) in circulation is only regulated by borrower. Cheap money (low prime rate) equals a rapid expansion of the money supply. Expensive money (high prime rate) equals a slower expansion of the money supply (rarely do we see deflation, or actual contraction of the supply. Deflation is not in the best interest of business that creates wealth through debt). The prime rate, of course, is left entirely to the discretion of the chairman of the Fed.
The Fed can and will lend money to the US Government any time -- no questions asked. That's where politician’s out-of-control deficit spending enters the scene. Of course our government also borrows money from other sources to fund it's endeavors, but it's still borrowed money, repayable with interest.
As I said earlier, the Fed/Cartel is not our country's only problem.
Please guys, read, read read. And I don't just mean Yahoo and Pelican OT. Politicians love of an uninformed constituency. All the easier to pull the wool over your eyes. That's why I really worry when I see a guy with
9000 posts imply that I don't know what I'm talking about.