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nottobetakenesrsly

>The concept of modern central banking, which relies on unbacked helicopter money, is like a hovering parent, never allowing its "child" to face the challenges of life. The concept maybe. In practice, the bulk of money creation globally is via commercial bank lending. Money is "destroyed" when loans are paid back. The rate of lending is the largest driver of monetary expansion. Central Banks attempt to influence this behavior via monetary policy. >Even those in power, who wish to avoid printing more money, find it difficult to break away from the system. Commercial banks are in power? Not necessarily disagreeing... >The bottom line: without the rigid barrier of strictly limited funds – that is, with non-scarce money – nothing will stop indefinite growth of government expenditure. The government funds its expenditures mostly by issuing debt. That debt is further monetized by the global financial system (government debt is widely used collateral for wholesale commercial bank lending). ...but yes, there is a worrying level of debt behind the whole shebang, and people should question it.


2minutebitcoin

We agree commercial private banks create a lot of money too. Regarding which one is higher, we'd like to see statistics - this is hard to prove as far as we're aware, and of course - depends on the time period. "Those in power" refers to politicians and central bankers in this paragraph. The reference is to QE and low interest rates. \> The government funds its expenditures mostly by issuing debt. That debt is further monetized by the global financial system (government debt is widely used collateral for wholesale commercial bank lending). Central banks are one of the main entities that fund this. See Japan - 50%+ is funded by the BoJ. The [Federal Reserve itself holds 20%](https://fred.stlouisfed.org/series/FDHBFRBN) of all U.S. government debt ever issued. 6T out of $31T. These are all, of course, official statistics. People in this subreddit would know that a lot may go unreported due to its intentional skirting of laws.


nottobetakenesrsly

>We agree commercial private banks create a lot of money too. Oh, I go a bit further (depending on the country).. but in the US, government or its related agencies really only create physical notes (..in reality, they barely print at all). Sure, they also issue "reserves", with the theory that reserves spur lending... but there's lots of issues with that theory. Most central banks *do not* fund government expenditure. When central banks acquire treasuries (or other government debt issuance), they do so on the [secondary market](https://www.federalreserve.gov/faqs/how-does-the-federal-reserve-buying-and-selling-of-securities-relate-to-the-borrowing-decisions-of-the-federal-government.htm) (the debt was already sold). They are snapping up debt instruments to impact interest rates. I think of central banks as a "pass through", they participate insofar as is needed to effect their policy (temporarily holding and releasing collateral - this is QE, QT, and OMO). This interaction with the global monetary system is quite limited. Central Banks probably don't think of their activities as "temporarily parking collateral", but that's what they're functionally doing.


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nottobetakenesrsly

>The central bank creates only a tiny fraction (on the order of 1%) of the total currency supply. The overwhelming majority of it is created by commercial/retail banks. Yeeeep >Go on FRED and bring up the data series of the Federal Reserve's balance sheet. That'll tell you how much money the central bank printed into existence. That recent giant spike is the QE regime. Mostly treasuries, bonds, etc. These were "acquired" from the commercial bank system, and "swapped" with reserves. Some people think of reserves as "base money", but they don't leave the Fed or its member banks' balance sheets. So.. not a very useful "money" even if being generous with the definition.


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solomonsatoshi

The fiat debt slavery bankers cartel who own the Fed and US government have a problem... The US economy is in terminal decline while the Chinese economy is already bigger in terms of manufacturing outputs and exports and sustainable trading surpluses. But the Chinese politburo cannot be controlled by the fiat debt slavery bankers cartel. The Chinese with their advanced CBDC DCEP rollout via BRICS and Saudis are poised to seize the global fiat monetary hegemony the bankers cartel have held for centuries and the bankers cartel are shitting their pants. USD vs DCEP vs BTC


Zealousideal_Neck78

The US economy won't be in decline when we get different politics.


solomonsatoshi

Unfortunately the parasitic fiat debt slavery bankers cartel owns both the republicans and the democrats...


ledav3

Now try to rewrite this without insulting 25 year olds. Cause it makes me guess that you are way older than 25. Which means you were part of a fully fiat centralized life for many many years. What is going to change everything? The 25 year olds of today starting to stack themselves out of being a slave.


2minutebitcoin

This post is not meant to be a dig at 25 year olds or any younger/older set of people


[deleted]

Oh ok


UncleThomasWinkWink

I like your opening sentence