Quote:
Originally Posted by Lisnaholic
^ No, I was able to understand what you meant by "say 5%", I could even understand your arithmetic, which is why I didn't comment on either item.
^ What with the cost of ink, paper and printing machine, how much does it cost to print a $100 bill? Let's say $1. That's approximately what a government will pay a printer to make a $100 bill. The government doesn't have to pay a hundred dollars just because that is what's written on the bill. That's the part of your explanation for burgeoning government debt that I was questioning. 5% is a fine number, but isn't relevant because it's an interest rate on a loan which doesn't exist: governments don't have to borrow money from printers in order to have money printed. It's probably a very cheap process for them, compared with building a hospital or airport for example.
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The government isn't getting the currency simply for the cost of parts and labor. If the mint spends a nickel to print a $100 bill, they don't have a piece of paper worth a nickel, they have a piece of paper worth $100. The central banks who loan the currency to the governments don't view it is a 5 cent piece of paper, they view it as a $100 asset, and lend it out as so.