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Who prints money and who owes who?

I thought the Federal Reserve printed money and we owed interest on every dollar but this explanation confused me.. is this guy correct?

Quote:

First, the Federal Reserve does NOT print money. The printing of the money is the responsibility of the Bureau of Engraving and Printing which is a part of the U.S. Treasury.

Second, the Fed does not loan money to the U.S. Government. In fact, it is prohibited by law from doing so. See 12 USC 355 http://www.law.cornell.edu/uscode/text/12/355

The Federal Government borrows money by issuing U.S. Treasury securities. These securities are sold at auction where anyone may buy them, even you. These securities are sold with a set maturity date and the money does not have to be paid back until the maturity date is reached. If a holder of these securities wants to get their money before the maturity date, the only way to do that is to find another investor willing to purchase the security from them. This buying and selling Treasury securities before maturity but after original issue is what creates the open market. It is only on the open market that the Federal Reserve may buy the securities that it holds.

The Federal Reserve doesn't hold 2/3 of the debt either. The total U.S. government debt is approximately $15 trillion. The Federal Reserve only holds about $1.6 trillion of the debt. However, it is actually beneficial for the Federal Reserve to hold this debt since the Federal Reserve is REQUIRED BY LAW to pay its net earnings to the U.S. Treasury every year. This is even reported in the news...
http://www.usatoday.com/money/econom...ent-record.htm
http://www.nytimes.com/2012/01/11/bu...-treasury.html
http://www.forbes.com/sites/beltway/...d-to-treasury/
http://money.cnn.com/2012/01/10/news...sury/index.htm

As for your question about how it is possible for loans to get repaid when anyone who takes out a loan has to repay it with interest is the simple fact that money CIRCULATES throughout an economy. Banks do loan money and do collect interest on that money. However, do you think they just stuff that collected interest in a jar and bury it? No, the banks spend their earnings on purchasing buildings, paying employees, etc. etc. You should take a class on Money and Banking and courses in Macroeconomics and Microeconomics.

he is correct untill proven incorrect in a court of law. The chinese own our debt, we will either go to war with them or be owned by them in the not to long future.

This is from over a year ago. Unfortunately we have racked up another 1 trillion + more debt since then. China owns about 8% of the US debt.

http://www.mygovcost.org/wp-content/...sept-20101.png

It's thought the Greeks might vote in a Government that will call Germany's bluff and go for a straight gift of money. That's the only way to look at it as they have zero chance of ever paying back the escalating debt. Yet the EU still hangs onto the flawed model of the Euro.

It appears Greek hospitals are running out of drugs and basic things like gauze, holiday makers are worried about going there as they fear a collapse. Not sure if this is scare mongering but it seems Greece can't afford itself, is living way above it's means and some Greeks want Germany and a few others to support them.

The big question is WHY? What does or will ever offer to warrant support? Olives, beaches, ????. The only reason they were in the Euro was political, the only reason they stay in the Euro is political. Yes when they get out they will default on the loans or devalue the Drachma to a level that repaying it will be worthless and then who will be next?

It's no longer a question of if, it's only when. Slinging them out of the Euro and maybe the EU, so the Spanish, Portuguese, Italians and even the UK Labour party can see what happens when mounting debts aren't repaid. Yes the UK Labour Party is saying the UK should start borrowing more in the hope they can stay immune from the coming EU recession.

Can the US afford to borrow more?

Can the US afford to cut taxes?

My view says no. Because they're both going to mean more debt and that means postponing the inevitable.