can someone explain to me why a balanced budget is so important?

[zephyrprime]

So in this respect the U.S. government does print money, whenever it wants. It just sells bonds to the Fed.

From your own explanation, it's the fed that gets the money. The government doesn't print money any more that I do when I borrow money from my credit card. Remember that the Fed is a private coampany.

 

[sandorski]

Originally posted by: chess9
Don't worry about Michigan. If re-elected, Bush has promised it to Blair since he will shortly be a man without a country. Blair plans to turn Michigan into the American version of Cost Rica, but with snow as a fringe benefit. You'll all be putting out Intel P5s in 2005. Just chill for a few weeks....

Send your resume today to: His Royal Toadiness, 1 Downing Street, London, England. I'm sure an early "entry" will get you one of the $10/hr jobs.

Balanced budgets are not necessary to a healthy state economy. Hasn't your governor heard of trickle down economics, supply side economics, and the high value of outsourcing? I knew Michigan was backwards. Move to Ohio, where enlightenment reigns...and the weather is almost as bad.

-Robert

Psst, that would be "10" Downing St

 

[chess9]

Sandorski:

Thanks for telling just me.

At 61 I figure my memory is failing at 2% a year, which means by age 80 I'll be able to remember as much as Bush now thinks he knows.

-Robert

 

[LordMagnusKain]

Originally posted by: zephyrprime

So in this respect the U.S. government does print money, whenever it wants. It just sells bonds to the Fed.

From your own explanation, it's the fed that gets the money. The government doesn't print money any more that I do when I borrow money from my credit card. Remember that the Fed is a private coampany.

You add new money to the economy when you write a check that's un-cashed; same thing when the gov. runs a deficit.

not always a bad thing, but certainly a danger to inflation: depending on how often the money added is spent.

and yes, loans from a bank all fall into what's known as the money-multiplier.

 

[Dissipate]

Originally posted by: zephyrprime

So in this respect the U.S. government does print money, whenever it wants. It just sells bonds to the Fed.

From your own explanation, it's the fed that gets the money. The government doesn't print money any more that I do when I borrow money from my credit card. Remember that the Fed is a private coampany.

No, the Fed gets bonds. The Fed does not get the money, the government does. The government pays the Fed interest on the bonds and what not, but here is the trick. Every year the Fed turns over like 97% of its profits to the Treasury, so it goes back eventually. If the Fed were a regular corporation and didn't have to pay the money back it would be the most profitable corporation in the U.S. So in essence the government ends up getting almost all the money.

This is basically how it works:

1. Government wants to borrow more money.

2. Government prints up a bond.

3. Government sells bond to Fed.

4. Fed buys bond from government with money that was created from "thin air" and makes a simple bookkeeping entry about how much money was given to the Treasury.

5. Government takes money and puts it into government accounts.

6. Government pays employees with the new money.

This is part of the reason why the U.S. has had inflation almost every year since 1913 (the year the Federal Reserve act was passed), 1500% total to be exact. Funny thing is, not 1 person in a thousand can figure out the scam because the process is so complex.