Trump: U.S. will never default 'because you print the money'

Obama admin prints money for 7 years. Not a peep.

Trump says we can print money, suddenly people are interested.

a reply to: jjkenobi

99% of the people in the economy dont understand how it works.

originally posted by: 2012newstart
a reply to: Profusion

Trump, you are STUPID!

ehh oooh.

Yeah i would learn more about currency and interest rates and what printing money and lowering and raising interest rates does to what why and how.

originally posted by: onequestion
Print more money = lower interests = money worth less

Use money to buy back bonds

Raise interest rates = money worth more = bought at discounted rate ( weaker currency )

That only partially influences the M2 money supply. Banks, no longer tied to reserve requirements, except on transactional deposits (checking) can issue large denomination CD's and use money market deposits to loan to corporations who issue commercial paper. Consumer loans also are created via savings deposits which means that they too do not have reserve requirements.

This means that even with the Federal Reserve raising or lowering rates the M2 supply can be influenced by private banks.

a reply to: onequestion

Some claim increasing interest rate increases the rate of currencies.

Sometimes increasing interest rates has the opposite of the expected effect.

Real economies tend to produce real results, artificial economies sometimes react in unpredictable ways when fed and watered.

Trump does not know what he is talking about regarding much of anything.

a reply to: AugustusMasonicus

Thanks for the info.

Do you know where i can find some info on the rules regulating those transactions?

a reply to: onequestion

These are the formulas used in money multiplication. The reserve ratios vary by country/institution, some countries have no limit on reserve requirements, such as Canada, while even the United States, which has requirements, they are a ratio of deposits held, not makeable loans. For United States based banks it is a net 30 day cash flow coverage expectation on larger institutions ($250Billion and up) and for smaller ones it can 21 or lower.

a reply to: onequestion

www.federalreserve.gov...[/url]

This may be a good place to start.

originally posted by: onequestion
a reply to: Liquesence

Uhhh, let me think this through.

Print more money = lower interests = money worth less

Use money to buy back bonds

Raise interest rates = money worth more = bought at discounted rate ( weaker currency )

Did i get that right or is that not how hard assets are bought and sold such as gold and real estate?

Isnt this financial planning 101.

When money is worth less interest rates increase because you need to incentivize creditors to invest. Doing the opposite doesn't necessarily make money worth more though. Money is going to be worth what it's worth in a fiat system. We aren't tied to a commodity with a fixed value, it's just supply/demand (and the factors that go into that) which determine monetary worth.

It is not at all how gold is bought and sold.

a reply to: MyHappyDogShiner


Your going to have to explain how the debt 'increases' due to printing more fiat.


Yes , the current value decreases, but the original debt is locked in at a specific number, dollar-wise, and isn't changed merely to value fluctuations.


The dollar being worth less also means the debt with it's fixed amount is 'worth less'.

originally posted by: nwtrucker
Your going to have to explain how the debt 'increases' due to printing more fiat.

Yes , the current value decreases, but the original debt is locked in at a specific number, dollar-wise, and isn't changed merely to value fluctuations.

The dollar being worth less also means the debt with it's fixed amount is 'worth less'.

If you only ever had one debt, correct.

Governments do not. They have a continuous flow. As your dollar value drops, the interest on the security being sold increase. Ergo, more debt.

If you are in a position where your deficit is decreasing...not a major issue. Chances are, your savings on the initial debt will outweigh the losses on the future debt.

If you are in a position where your deficit is flat or increasing, it is a major issue.

When you are a Western nation (the vast majority of, any who), where your current debt and deficits are going to take decades to reduce...it is a major risk in the mitigation calculations.

a reply to: Liquesence

You can't just print X trillion dollars to pay off debt.

Except when its your countries turn to do that.

Japans national debt is twice their GDP (because they have been printing money and putting it on their books as debt) yet the value of their currency is still relatively high?

a reply to: peck420

That would only be the case if you continued to fund debt repayment by the issue of more debt. If you ran the deficit (including debt repayments) with new money then you have no concern over interest rates.

originally posted by: ScepticScot
That would only be the case if you continued to fund debt repayment by the issue of more debt. If you ran the deficit (including debt repayments) with new money then you have no concern over interest rates.

If I want toilet paper, it would be cheaper to buy actual toilet paper...more comfy too.

If you print an endless stream of money, with absolutely zero backing, as you have proposed, you best have every single resource required inside your boarders, because that is the only place your money will hold any value.

a reply to: Profusion

Breathe a sigh of relief based on this news?

At first i wanted to write that someone must be really anxious about Trump winning and thus starts a smear campaign.

But holy **** ... It is Trump himself who is saying this.

a reply to: peck420

The dollar isn't backed at the moment. Neither is any other countries currencies. Doesn't stop them having value.

a reply to: peck420

Ah, Got it, Thank you.


The Gordian Knot........

a reply to: peck420

Double post

originally posted by: ScepticScot
The dollar isn't backed at the moment. Neither is any other countries currencies. Doesn't stop them having value.

The dollar is most certainly backed by 'something'. It is backed by the wealth of the nation. Resource wealth, human wealth, even ideological and cultural wealth.

If it was backed by nothing, we wouldn't know what debt is, as we would never have had it. We would have simply printed more money.

originally posted by: rockintitz
a reply to: Profusion

I think we can breath a sigh of relief based on this news. Not that Trump could have actually ever renegotiated the national debt of the United States to begin with, it could never happen. Not only becauseit's probably unconstitutional but it's also unethical and it would destroy the US economy. 

Economics 101 tells us that printing more money will not fix the problem.

But.. renegotiating debt is far from unconstitutional.

Is Trump's idea about renegotiating the national debt unconstitional?

Quoting the US Constitution:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. [...]

What does "validity" mean? Here's a link to the definition according to Black's Law Dictionary:

thelawdictionary.org...

Definition of VALIDITY: This term Is used to signify legal sufficiency, in contradistinction to mere regularity.

I'm not an expert but my understanding of the above is the debt of the US has the equivalence of any other US law. That means that the terms of the debt must be followed exactly by everyone IMHO, period.

This is how I read it:

The validity (equality with all other laws) of the public debt of the United States...shall not be questioned.

Since it doesn't say who cannot question it, we must assume that, constitutionally speaking, no one can question it. Neither the US government nor its creditors. If either side questions it (and that precludes renegotiating it), it's unconstitutional. That's my conclusion.