Quote:
Originally Posted by Robbie
I've never thought of it like that. Technically isn't our dollar not backed by anything? Just a "system of floating rates"?
No matter what...the govt. just prints money. And of course "borrows" money (it's never gonna get paid back) creating the giant deficit.
The whole damn thing is insane.
The politicians long ago figured out that they could just make it an unlimited amount of money to spend and began enriching themselves by funneling astronomical amounts of money back to their cronies.
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money worldwide in this days is not backed up from anything. actually the gold in fort knox nobody have seen in the last 30 years and even IF it would be seen you would not know to who it belongs to. Germany wanted to check their gold there a few years ago and it have been denied. so all they know is that they have theoretically a few hundred billion in gold there.
unfortunately money is a good today and the value is depending on supply and demand.
as there are many international trades (including oil) are still made in dollar, there is always a high demand on it that makes it quite stable.
it is a fairly tale that governments can simply print money as money supply would automatically decrease the value of a currency and increase inflation.
this is why countries do have debt.
it is also not generally a bad thing if a country do have dept - it is just a question how much and how fast the debt is increasing. look at japan - their total debt (total = private, government and companies) is at around 400 % to GDP what looks insane when you compare it to the 233% of the USA.
so HOW can that work there and why it is dangerous in the USA ?
the answer is very simple: japan lends the money from the japanese and US borrows the money from foreign countries. the foreign dept to GDP is USA is 100% and in japan 50%.
China´s foreign dept to GDP is only 9%. so if a country borrows from it´s own citizens, tha payback plus the interest will run right back into this country. if a country borrows from other countries the payback and the interest will strength the foreign nations gross income.
if you look at the dept situation in US under this aspect you will see the real problem.
last month the US credit rating from moody´s have been downgraded the first time in decades because of this problem. that means that it will become more expensive for the US to lend money outside and with a lower tax-income and higher spendings in things like a wall or military spendings (what will not bring any profit but additional costs) it will be impossible to pay it back.
the oxymoron in MAGA is that the country that depends mainly on foreign nation´s capital wants to lead. this is the same as when a bank gives a unsecured credit to someone and this someone wants to become the manager of this bank.