The Treasury has the authority to emit money at no cost, yet we “borrow” it from the Fed, which injects the funds, and then charges U.S. interest to borrow our own money. In the event of hyperinflation, the results are well-known. But what happens when a currency crashes and the “full faith and credit” of the U.S. requires us to repay tens of $$trillions in accumulated debt?
The Treasury doesn't borrow from the Fed, the Treasury sells Bonds at an auction.
The Bonds are bought by Primary Dealers and anyone who wants to buy on-line at http://www.treasurydirect.gov/
and then charges U.S. interest to borrow our own money.
Yeah, borrow money, get charged interest.
And what do you mean by "our own money"? If we have to borrow it, that's a big clue it isn't "our own money".
In the event of hyperinflation, the results are well-known.
You're worried about hyperinflation, a sentence after you say the Treasury should "emit money at no cost".
I have a very strong feeling you don't understand how hyperinflation works....among other things. LOL!
“But what happens when a currency crashes and the “full faith and credit” of the U.S. requires us to repay tens of $$trillions in accumulated debt?”
Oh, that’s simple: the Treasury Department prints more Treasury bonds, sells them to The Federal Reserve Bank (The Fed) for “money” The Fed conjures out of thin air, and then repays any existing bonds that are maturing with that new “money”.
It’s a Ponzi scheme that can go on forever, though it eventually becomes pretty pointless when the currency itself becomes worthless from over-printing. Still, because of this Ponzi scheme, the U.S. will never fail to pay back a maturing bond, even if the face value of what they pay it back with is worthless.
As a side effect, the outstanding bonds themselves become worthless to everyone (except The Fed), since everyone knows that they are going to be paid back with something that’s worthless, which is why the exercise becomes pointless. And The Fed doesn’t care that the bonds are worthless because they are buying them from Treasury with worthless currency in the first place.
In the mean time, of course, toilet paper costs the peasants a wheel barrow worth of “money” per roll, at which point it’s more economical to simply wipe your ass with the money itself. Oh, and the “money” is also becomes useful for starting firewood to warm yourself in the winter, though, once again, it might become more economical to simply burn the “money”, skipping the more expensive firewood middleman.
The Constitutional framers forbid the U.S. government from printing “specie”, but didn’t think far enough ahead to forbid them from printing I.O.Us and exchanging them for “specie” printed by others. After it was too late, Thomas Jefferson realized what was going to happen, and he once said that if he could go back and change a single thing in the U.S. Constitution, he’d forbid the U.S. government from borrowing money (printing I.O.Us).
“The Treasury has the authority to emit money at no cost, yet we “borrow” it from the Fed,”
We don’t ‘borrow” anything from the Fed. They are the monetary authority, not the fiscal authority, a fact that seems to elude most everyone. The only borrowing “we” do is when Congress increases the national debt and the Treasury sells bonds to finance it.
” which injects the funds, and then charges U.S. interest to borrow our own money. “
The Fed “injects” funds by buying Treasuries. If you think that enables them to charge the US interest, then every bond buyer in the country would be able to “charge the US interest”. It’s nonsense.