Quote:
Originally Posted by IamAlejo
You really mix yourself up sometimes, and it's starting to mix me up. I can't tell if you are referencing the national debt of the government or debt of the American people?
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Well, sorry, I guess...you keep making me backtrack and repeat myself. The national debt is the debt of the American people. Yeah, the government spent it but we pay it. I guess you might have confused what I meant with an individual's debt to a bank, but when I said debt of the American people I did mean the nation in general. Their debt is our debt, in other words.
Look, it's getting really tiring having to explain every line. I apologize if you don't get what I'm trying to say. OMO's determine the base money. This is determined by the Federal Reserve. The Federal Reserve controls how much money is in circulation as well as the loans that are given out to the banks and the government in general. The fractional reserve increases inflation by its very nature, pretty much guaranteeing increased spending and debt every time the amount of money in circulation is increased. Since all of our money originated from a loan from the Federal Reserve, every single dollar bill we have is debt we owe to them. Considering the Federal Reserve is autonomous (as in, not controlled directly by the government), anything we take from them contributes to the national debt.
I hope that made sense. Now, if you have some points as to why a central bank and a fractional reserve and everything I just mentioned might be good instead of just picking at my posts, I will be glad to hear it.
Edit: I never said an OMO was a loan. An OMO is the way the bank figures out how to operate. I said the Fed loans...because they do...that is the whole basis of their existence.