Replies

So, I go to McDonald's, and ask them for a Big Mac. They go to the Fed and ask them if I have credit, which I evidently have, so they give me a Big Mac, and have the Fed reduce my credit and increase McDonald's credit? Is that right?

I have one addition to this novel idea. How about the Fed give us little metal and paper tokens that represent our credit, and then we can just trade goods and services with these tokens? We can call these tokens "money".

No that's not correct. Man, I thought I had explained it clearly. You would always know how much credit you can extend before you ever go to McDonald's. From their the process would be identical to using a credit card only it's from the bank you own, not the one you owe. Since you would have a lending limit (as all banks do), what you credit to McDonald's would be subtracted from you lending limit so, no you wouldn't have unlimited lending.

If you wanted cash, you could simply extend credit to yourself- as I stated before.

"I have one addition to this novel idea. How about the Fed give us little metal and paper tokens that represent our credit,"

They don't need to *give* us anything because we willingly borrow the tokens, at interest.

" and then we can just trade goods and services with these tokens? We can call these tokens "money". "

We ought not call it money because it isn't money. Its proper name is credit and it is being used AS money. Credit used AS money USED to be used. Money is gold and silver coin. Everything else is a money substitute of some form or another.

Finally, the word token implies that the token itself stands for something, the way a poker chip at a casino can be cashed in for currency. Even a one dollar silver certificate qualifies as a token because it was redeemable for one silver dollar. If the us paper dollar is a token, what is it a token for? What do you get if you try to redeem it? Answer: another dollar just like it, which gets you nothing. So, of what is it a token? Nothing. If it is not a certificate, and is not a token, what is it?

"How about the Fed give us little metal and paper tokens that represent our credit, and then we can just trade goods and services with these tokens? We can call these tokens "money"."

Bingo! you win the prize for understanding that this is currently how our system (and the system of every other 'civilized' society on the planet) operates.

Another detail to add though... all money (literally ALL money) is in fact created via the extension of credit (it's a long description, but it's true, just trust me at this point).

So all money is initially created as an extension of credit AND (this is important) that extension of credit includes interest.

Thank about that.... there are a many very significant meanings to this, but the primary thing to consider is that in the system as a whole, there is NEVER enough total money in circulation to resolve the total debt. It is mathematically impossible for all individuals to balance their annual accounts at the same time that all governments balance their accounts. It simply cannot happen as there is just not enough "money" in existence to equal the amount of "debt" in existence.

The design of the system requires that debt be over extended and then cancelled at various points in the process.

Now consider the concept of a balanced federal budget. If all the citizens balance their own accounts and there is no trade surplus with other countries, the feds simply can NOT balance their budget without drastically removing "money" from circulation, a LOT of money would be removed from the system and unavailable for extending further credit and fueling commerce.

It's all in the design of any Keynesian economic system and has been from at least 1913.

This is likely one of the more important of all the esoteric topics ordinary citizens could dwell on.

Think about it a bit.