What they did not teach you about money in business school..
#bitcoin 🧡 https://video.nostr.build/ff908315546513c552311f089f81016397a78701c1c38fd4ea99a2d21a6467c5.mp4
Discussion
I have a old "friend" who now mocks me in text messages.
"I bet nostr:npub1nu9m6k6dca28f9humvq0ad334a3czu0qrevw0pd4ml2pzaumx0mqyr3ars will say WhY DoN't tHEy JuSt pRinT MoAr MoNEy ?!?"
Blinders.
nostr:note1095lxj6exj8pkc26654vwy95vkuehqt7zq23qltqyc3u0mgxslxsgnafvh
I cut it and posted it as WhatsApp Status 🤣
It is such an over simplification of a nuanced idea .. it is like saying a public corporate can print as many shares as they want .. hence they don't need to run any business 😕 :-)
I have been arguing that the dollar is not backed by nothing, it is backed by "the full faith and credit of the United States," faith that the U.S. government will continue to extract taxes from it's subjects, whose labor creates the real value that the dollars represent. It's why the 16th Amendment allowing the government to tax incomes was also passed in 1913, the same year the Federal Reserve was created; the two go hand in hand. The taxes prop up the U.S. government, of course, as well as the dollar. If U.S. subjects stopped paying taxes, both would collapse.
I've also heard people naively say that since the government can just print money they don't need to collect taxes. While this is false (see my previous note), if enough people believe it, perhaps we could start a movement to eliminate income on that basis. 😏
I mean , yes .. there is some truth to it .. but over simplificatiion blows my mind .. first of all we need to understand that the people buying sovereign debt are not stupid .. and they have thousands of choices to invest their money it rather than simple T-bills ..
The world needs dollars because important resources, such as oil, are settled in dollars. Most debts are settled in dollars. When there is a market crash, global demand for dollars goes through the roof, called a rush to liquidity, because people sell assets to acquire dollars to cover margin calls.
In a sufficiently late-stage money printing regime that the US finds itself in, taxes levied are increasingly irrelevant. Right now, 76% of all income tax goes to pay the *interest* on the government's debt. So Bukele is not wrong that the US runs on printed money, and not taxes.
The dollar is still accepted because of the faith people have in it (which I think is based on US taxes and military force), and this also gives it some value because there is demand for dollars.
But if taxes are irrelevant then I'm all for a movement to scrap them!
I would add, some of this demand for dollars is still there because the US is still paying interest on its debt, which comes from the taxes, as you point out. But if the US stops servicing its debt or declares bankruptcy, the demand for the dollars will be gone, and then the money printing will no longer work, right?
There is and will continue to be demand for dollars because it is a dollar-backed global monetary system. The US really fucked the world with it. The US is infinitely rich with dollars, so it cannot default. Paying taxes creates confidence in the system because it makes people think they are sustaining it, and all that is needed is to balance the budget. 🤡
Hope everyone understand that Fed is forced to increase the interest rates because the buyers demand higher interest .. a direct implication of printing more .. In the process Fed loses money .. in billions ..
So printer is not without cost - even to US ..
Most people think Fed is fighting the inflation - that is just an aftereffect !
Interest rates are supposed to freely float, not be set by some clowns pretending to be protectors of the economy.
But why? They intervene for our benefit, with professionalism. Don’t you feel the benefit of inflation? The benefit of increased taxation?
Rates are determined by investors - not the Fed ... If Fed wants to give a negetive yeild - do you think anyone would buy T Bills today ? Its like selling a home - you can list a price but auction will determine weather you can sell or not ... isn't that free -float ?
The point being , the way a securtites investor watches Apple price and make a call - similiarly soverign investors (and banks ) watch the fed .. They watch the money supply , wasteful spending and available opportuniities in the international market .. even retail investors can participate ..
So the idea that Govs can simply print money is bogus .. there are checks and balances ... saying it any other way is misguiding the naive public ..
I mean - if that was true - Venezuela would buy all the real estate in America :-)
Love your satire. Well done 👍😃
"subjects"
oof, felt that one
Inflation is a covert tax, deceiving the holders of the inflated currency of its value.