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Originally posted by Gregarious
I need some insight from someone who knows more about this than I. If the banks have counterfeited, say $100, and loaned it out. The loan went bad and that $100 disappeared. Then the government comes in and prints money to replace it. So the money supply went from (x + $100) to (0), to (x + $100). The public no longer is occupieing the banks real estate, and now the government owns it. Sure, the debtors got screwed by being so in debt, the banks got screwed when they engaged in counterfeiting, and a few profit by getting work with the expanding bureaucracy. But what other economic effects will this have on others who use greenbacks? I am on government subsistence, and it is increased every 12 months to account for the governments fictitious inflation numbers. So if the money I get drops in value by, say half, until it is increased a few percent, I get screwed royally. But what would cause the inflation? The government only is printing what just disappeared from the counterfeit put out by the banks.
On a side, that new money that was issued with the invisible pics and new design? Why? Because China was counterfeiting in order to buy nukes from Russia, telling the Chinese people that they will hit us with them, payed for out of our own pockets. The bills were changed in an attempt to thwart the counterfeiting. But it is irrelavent. They can print the new way, as well, and are. At least the banks don't have to print it, they just write it into the borrowers account.