if the federal reserve can print as much money as they want why do us pay taxes?

[NZStreetBaller]

Seriously.... from what ive read the us economy runs on a currency that is produced out of thin air (fed printing).

And the point of paying taxes is so the government has money to do whatever.

But if they have an unlimited supply of money why the hell do they make all the people pay taxes??

[Eric Cartman]

Debt slavery or inflation.

[Draz]

Inflation.

[bluechox2]

someone got left back in kindergarten

[NumberSix]

Federal reserve =/= the government

[CavaliersFTW]

Is this a serious question? Print too much paper money and it loses its value. Have too much of anything and it loses its value this is simple economics.

[CavaliersFTW]

Federal reserve =/= the government
This. It's private. The name is misleading, it's basically a privately owned bank for the rest of the Nations banks.

You go to your privately owned banks to let them handle your money. Your bank, and everyone else's look up to the privately owned Federal Reserve to handle their money.

[Patrick Chewing]

Good question. Complex answer. Still, USA #1.

[NZStreetBaller]

did anyone even answer my question??
I dont care if i look stupid I wanna bloody know!!!

[CavaliersFTW]

did anyone even answer my question??
I dont care if i look stupid I wanna bloody know!!!
They don't have an "unlimited supply of money" this is a false question.

That's your answer. That your false question can't be answered.

Let's say they hypothetically doubled the amount of paper money in circulation. Guess what, all the paper money drops in value by half. You can't just print money and expect it to be worth the deficit you are trying to fill (in this instance, taxes) it doesn't work that way.

[NZStreetBaller]

They don't have an "unlimited supply of money" this is a false question.

That's your answer. That your false question can't be answered.

Let's say they hypothetically doubled the amount of paper money in circulation. Guess what, all the paper money drops in value by half. You can't just print money and expect it to be worth the deficit you are trying to fill (in this instance, taxes) it doesn't work that way.

the fed literally prints money out of thin air its something stupid like so many millions a day.... which is why the national debt is increasing dramatically and your dollar is losing its power.

[Fawker]

they don't print money as they want

[CavaliersFTW]

the fed literally prints money out of thin air its something stupid like so many millions a day.... which is why the national debt is increasing dramatically and your dollar is losing its power.
In theory, paper money is supposed to represent what resources the Nation actually possesses in terms of gold, silver, etc.

In actual practice I'm sure it isn't that simple I'm sure there is some mishandling of our financial resources. That being said, what you propose is deliberate misuse and misunderstanding of federal bank notes. It's not supposed to be printed to pay for deficits. Because the paper money itself isn't actually worth anything.

[NumberSix]

did anyone even answer my question??
I dont care if i look stupid I wanna bloody know!!!
I did.

The government doesn't print money. The federal reserve does.

[KevinNYC]

the fed literally prints money out of thin air its something stupid like so many millions a day.... which is why the national debt is increasing dramatically and your dollar is losing its power.
The US Treasury prints money through the Bureau of Engraving and Printing.

This newly printed currency is distributed through Federal Reserve Banks.

You're getting a more fundamental question and that question is what is money?

The Debt is rising due to the actions of Congress and the Executive branch, not the Fed.

[KevinNYC]

Also, you're from New Zealand? The Reserve Bank of New Zealand seems to operate pretty much the same way.
http://en.wikipedia.org/wiki/Reserve_Bank_of_New_Zealand

http://en.wikipedia.org/wiki/Fractional-reserve_banking
http://en.wikipedia.org/wiki/Fiat_money
http://en.wikipedia.org/wiki/Money_creation

[KevinNYC]

Federal reserve =/= the government
It has public and private functions. It was created by the Congress and the federal government as the mechanism for the Federal Government to carry out monetary policy.

[FreezingTsmoove]

did anyone even answer my question??
I dont care if i look stupid I wanna bloody know!!!

The money would also lose value to other countries

You think US would accept money for trades from a country who lets say Kenya who just prints out a bunch of money? No their money has no value

[The Iron Sheik]

because resources on earth aren't infinite and need to be controlled. and regular people aren't planting crops or drilling oil or doing anything that keeps society afloat, so we need money. money is just a substitute for an actual skill that keeps society functioning. so, the more money that exists, the less its worth because society would crumble if everyone could buy anything they wanted at anytime.

[Godzuki]

think of the basis of everything valuable being based on supply and demand..... that is the one rule of value you can always count on. so long as there is a demand it will give value to something, and supply is the basis of how much of it can be offered. If that supply is low then it will obviously be more valuable.


So lets say we have gold vs paper printed notes(dollars). many people today do not trust dollars and put their investments into gold because its not as easy as printing money. printing money sounds easy, right? but that leads to inflation.. inflation leads to the dollar becoming less in value in relation to world currencies. its complicated and imperfect with a huge margin for error. so much so that most people don't have a clue about the ...


i'm tired, i'll finish this lesson u won't read anywhere out later. just keep in mind most people are dumbasses who think shit, and maybe the world works their way up to a point, but when shit hits the fan lets see what really happens.

[Lensanity]

OP thinks jet fuel can melt steel beams

[ROCSteady]

In theory, paper money is supposed to represent what resources the Nation actually possesses in terms of gold, silver, etc.

In actual practice I'm sure it isn't that simple I'm sure there is some mishandling of our financial resources. That being said, what you propose is deliberate misuse and misunderstanding of federal bank notes. It's not supposed to be printed to pay for deficits. Because the paper money itself isn't actually worth anything.

This.

The NY Fed Branch carries most of America's gold and whatnot.

There are 12 Federal Reserves in diff cities in case OP didn't know

San Francisco
Minneapolis
Boston
NEW YORK
Philadelphia
Richmond
Kansas City
St Louis
Atlanta
Chicago
Cleveland
Dallas

& Board of Governors

[JohnFreeman]

OP this dumb?

[KevinNYC]

The NY Fed Branch carries most of America's gold and whatnot.


There's a lot of gold there, (http://www.newyorkfed.org/aboutthefed/goldvault.html) but it's not "America's."


None of the gold stored in the vault belongs to the New York Fed or the Federal Reserve System. The New York Fed acts as the guardian and custodian of the gold on behalf of account holders, which include the U.S. government, foreign governments, other central banks, and official international organizations. No individuals or private sector entities are permitted to store gold in the vault.The US Bullion Depository (http://en.wikipedia.org/wiki/United_States_Bullion_Depository) is better known as Fort Knox.

[KevinNYC]

Fun fact. The US Fed made a profit of 99 billion last year and 500 billion since 2008.

That 99 billion goes to the US Treasury.

[ROCSteady]

Thanks for the clarification.


I'm stoned

[NZStreetBaller]

OP thinks jet fuel can melt steel beams

nope it doesnt suprise me if the us government killed its own people. although im unaware of the motive. I havent looked to much into it.....

[NumberSix]

What 99% of people don't understand or haven't thought about is, inflation is a massive hidden tax.

They don't take your money, but the money you have saved loses its value. You might say "but, if the money is worth less, aren't the taxes the government collects worth less too?". Yes. Dollar for dollar it's worth less, but they collect a higher volume of dollars.

People bitch about the poor getting poorer and the middle class disappearing, but nobody seems to notice that the constant over printing of money steadily devalues what little the poor and middle class have.

[NZStreetBaller]

maybe i just need to stop watching this guy

https://www.youtube.com/watch?v=76UPHYlM2mU

https://www.youtube.com/watch?v=SNcMUHwK4bE

[joe]

There are two reasons the federal reserve does not simply pay all Americans taxes/debt with printed money.

1) It would be so obviously irresponsible. Everything the fed does is irresponsible, but that would just be noticeably irresponsible to everyone. You cannot just print money, money does not work that way. Yes, the federal reserve does that every single day, but most people do not notice or care. Paying all of our taxes with printed money would draw too much attention, especially from the average person off the street.

2) Paying our taxes does not further their interests. The federal reserve is not here to help US citizens pay our taxes. The fed is here so that politicians never have to say no. They can keep promising new investments in EVERYTHING; education, military, health care, without having to raise taxes at a tremendous rate to pay for it all. Sure, taxes have gone up over time, but not in perfect harmony with our ridiculously obese budget. Politicians can keep telling voters yes to new programs, no to higher taxes, and everyone is happy. Sure... it now takes 2 or more incomes to afford the lifestyle that you used to be able to afford with 1. But if nobody realizes that is mainly due to the federal reserve, that is our problem, not theirs. In their minds of course.

[plowking]

Do you understand the term scarcity?

The more scarce something is, generally it is more valuable. Same goes with money. You print more, it loses value.
No point printing more money when it will lower the value of your dollar, leaving you in the same position in terms of paying your debts.

[UtahJazzFan88]

Lol there's no value in money if you just print it to the moon

[ArbitraryWater]

OP, did you go to school?

[Batz]

What baffles me is that this wasn't like an ELI5 thread, which would've passed right on by, but rather the OP coming in acting like he broke the system and found a loop for the ages.

Just print more f*cking money. Why aren't we funding this?

[Dresta]

Do you understand the term scarcity?

The more scarce something is, generally it is more valuable. Same goes with money. You print more, it loses value.
No point printing more money when it will lower the value of your dollar, leaving you in the same position in terms of paying your debts.
Except that's exactly what they've been doing, for decades, inflating away the wealth of people who save and live off their wages (poor & lower middle class), while propping up gigantic stock and housing bubbles and making a small percentage of the population extremely rich. Also, you seem to be missing that a primary reason for inflating the currency is to inflate away some of the national debt (some economists even suggest piling on the inflation to get rid of the debt - i think this shows how reckless and disconnected these people have become).

I find it interesting how the definition of inflation has changed over the years to suit the agenda of power elites (along with their ridiculous fear of falling prices):

[QUOTE]American College Dictionary, for example, you will find the first definition of inflation given as follows:

[dunksby]

Money can be printed infinitely but to what purpose? Since printed money is more convenient than precious metals for most uses, you don't see the gold, silver, stones etc behind it. Common sense says that you shouldn't print money more than what you have in those resources, overprinting money creates an illusion of prosperity but leads to inflation.

[Draz]

ELI5
Why we can't print infinite amount of money

[plowking]

Except that's exactly what they've been doing, for decades, inflating away the wealth of people who save and live off their wages (poor & lower middle class), while propping up gigantic stock and housing bubbles and making a small percentage of the population extremely rich. Also, you seem to be missing that a primary reason for inflating the currency is to inflate away some of the national debt (some economists even suggest piling on the inflation to get rid of the debt - i think this shows how reckless and disconnected these people have become).

I find it interesting how the definition of inflation has changed over the years to suit the agenda of power elites (along with their ridiculous fear of falling prices):





Since 2000, the US money supply has again doubled (it doesn't take a genius to realise that these exponential increases cannot possibly be sustainable over the long term).

The reality is that 'inflation' is always much higher than any official measurement will tell you, as things usually get cheaper to produce over time. The gains are so dramatic in some industries (tech & electronics), that people see significant price decreases in spite of this dramatic inflationary pressure. What should happen when the economy is weak is that prices should naturally deflate, easing the blow of a recession with lower consumer prices. But because we are obsessed with the abstract and inaccurate GDP stat (based on identity equations, which are heavily flawed, and have a massive bias in favour of government expenditure, as this raises 'GDP' even if it be spent on something utterly unproductive), people obsess about a completely arbitrary 2% inflation target, and actually consider it a good thing for the consumer when their food prices are going up :roll: . Politicians and economists obsess about this ridiculous number as if it were the be-all and end-all, even though it requires an incredible leap of faith in favour of positivism in economic science (and into 'macroeconomics' as a discipline) - everyone follows and worships the stat, yet if they knew and understood the theory behind it they would be a whole lot more sceptical. It's an illogical methodology that can only be justified if your aim is to elevate professional economists to the ridiculous statuses they inhabit today, to increase the power of economists, effectively.

Right now we have a bunch of economic data that shows a weak US economy, and you've got politicians applauding an increase in the CPI. In what kind of backwards world can stagnant wages, low growth, and high inflation be portrayed as a good thing?

:hammerhead:

It's literal madness that stagflation is being presented to the general public as a good thing.

I realize all this, I'm doing a masters on it. :oldlol:

OP asked a simple question, I gave him a simple answer. :oldlol:

[FillJackson]

Except that's exactly what they've been doing, for decades, inflating away the wealth of people who save and live off their wages (poor & lower middle class), while propping up gigantic stock and housing bubbles and making a small percentage of the population extremely rich. Also, you seem to be missing that a primary reason for inflating the currency is to inflate away some of the national debt (some economists even suggest piling on the inflation to get rid of the debt - i think this shows how reckless and disconnected these people have become).

I find it interesting how the definition of inflation has changed over the years to suit the agenda of power elites (along with their ridiculous fear of falling prices):





Since 2000, the US money supply has again doubled (it doesn't take a genius to realise that these exponential increases cannot possibly be sustainable over the long term).

The reality is that 'inflation' is always much higher than any official measurement will tell you, as things usually get cheaper to produce over time. The gains are so dramatic in some industries (tech & electronics), that people see significant price decreases in spite of this dramatic inflationary pressure. What should happen when the economy is weak is that prices should naturally deflate, easing the blow of a recession with lower consumer prices. But because we are obsessed with the abstract and inaccurate GDP stat (based on identity equations, which are heavily flawed, and have a massive bias in favour of government expenditure, as this raises 'GDP' even if it be spent on something utterly unproductive), people obsess about a completely arbitrary 2% inflation target, and actually consider it a good thing for the consumer when their food prices are going up :roll: . Politicians and economists obsess about this ridiculous number as if it were the be-all and end-all, even though it requires an incredible leap of faith in favour of positivism in economic science (and into 'macroeconomics' as a discipline) - everyone follows and worships the stat, yet if they knew and understood the theory behind it they would be a whole lot more sceptical. It's an illogical methodology that can only be justified if your aim is to elevate professional economists to the ridiculous statuses they inhabit today, to increase the power of economists, effectively.

Right now we have a bunch of economic data that shows a weak US economy, and you've got politicians applauding an increase in the CPI. In what kind of backwards world can stagnant wages, low growth, and high inflation be portrayed as a good thing?

:hammerhead:

It's literal madness that stagflation is being presented to the general public as a good thing.
http://img1.wikia.nocookie.net/__cb20121220181149/glee/images/f/f1/Fools!.gif

[GimmeThat]

Well, we dont need the O-zone to breathe. But we are certainly going to need something exhances the Sun.

[Jailblazers7]

Dollar losing its power? The USD is the strongest it's been in a long time.

[CavaliersFTW]

http://img1.wikia.nocookie.net/__cb20121220181149/glee/images/f/f1/Fools!.gif
:oldlol:

[NZStreetBaller]

Im well aware that constant printing causes inflation and decreases the value of the dollar why do homos keep repeating that like they're taking me to school or some crap.

And dont tell me they arent constantly printing because they are. its how they tried to pull you guys out of the recession in 2007. They called it quantitive easing. But all its doing is reducing the currencies value.

I just wasnt sure why people had to pay tax if their is an unlimited supply of money (yes there is) .... sounds stupid to me.

apparently everyone in ish is an economist.....

[shlver]

Im well aware that constant printing causes inflation and decreases the value of the dollar why do homos keep repeating that like they're taking me to school or some crap.

And dont tell me they arent constantly printing because they are. its how they tried to pull you guys out of the recession in 2007. They called it quantitive easing. But all its doing is reducing the currencies value.

I just wasnt sure why people had to pay tax if their is an unlimited supply of money (yes there is) .... sounds stupid to me.

apparently everyone in ish is an economist.....
Quantitative easing is a bit more than just printing money. Its purpose as monetary policy is to inject liquidity into the economy. How does it do this? The Federal reserve or a central bank buys up investment products from banks in exchange for liquidity/money that the bank can loan. The problem is the supply has skyrocketed to the thousands of billions and significantly outpaced demand with QE2 and QE3. This coupled with the uncertainty of the great recession leads to the banks sitting on liquidity and people not borrowing. This is why we haven't seen significant inflation.

[KevinNYC]

Im well aware that constant printing causes inflation and decreases the value of the dollar why do homos keep repeating that like they're taking me to school or some crap.

And dont tell me they arent constantly printing because they are. its how they tried to pull you guys out of the recession in 2007. They called it quantitive easing. But all its doing is reducing the currencies value.

I just wasnt sure why people had to pay tax if their is an unlimited supply of money (yes there is) .... sounds stupid to me.

apparently everyone in ish is an economist.....

A. there is not an unlimited supply of money.
B. It's not reducing the currencies value. Especially not on my trip to Europe I have planned this fall.

C, Your question now seems to be, why didn't quantitative easing leasing lead to inflation if its just "constant" money printing or some rhetorical question of having the FED pay taxes.

The answer to C it's not constant money printing and perhaps the Fed made the right call.

Perhaps when the Fed decided to expand its balance sheet to do the bond buying it did, they realized they could do this in present circumstance without causing inflation. We stopped "easing" back in October and have yet to see a spike in inflation. The FEDs balance sheet is still greatly expanded, but it's going to sell of the bonds it has very slowly or hold some until maturity. The Fed is earning interest on these bonds and last year earned a $100 billion in profit on them. As I said before that $100 billion goes to the US Treasury

[Godzuki]

truth is all forms of exchange are based on blind faith in those accounting for the currency. whether its dollars or gold, its all based on the faith in the currency being sold to the masses. while dollars are much easily printable, gold is constantly mined, and both aren't as accounted for in circulation as much as we all assume. dollars are mass counterfeited these days, ask any business owner how often they come across counterfeit bills. they can print a billion new dollars into the economy and if its not accounted for it can still be in the economy without it affecting inflation, because ignorance is bliss. the accounting is what makes us see it. gold is as much of a made up currency as dollars, other than its more difficult to mine than print. that is the only thing separating the two.

necessities are the bottom line valuables whenn the shit hits the fan. if everyone got hurricane katrina'd, bottled water would be like gold/dollars. if most of the world population/animals/etc died and there were a few left then it'd be stuff like meat, canned stuff, etc. in a recession obviously the dollar loses value where as gold rises, but thats whats of value we have created to be true, and the masses perceive therefore it becomes reality.

its all blind faith in forms of currency at the end of the day.

[9erempiree]

There is nothing federal about the Federal Reserve. They are equivalent to Federal Express, also known as FEDEX, the shipping company.

The USA doesn't actually print this money. The Federal Reserve prints this money in conjunction with the USA. They are technically loaning us the money.

[KevinNYC]

The USA doesn't actually print this money. The Federal Reserve prints this money in conjunction with the USA.

The Fed doesn't print money. The US Treasury does. The Federal can create credit for its member banks though which is money creation, but no printing is involved.

[9erempiree]

The Fed doesn't print money. The US Treasury does. The Federal can create credit for its member banks though which is money creation, but no printing is involved.

You're technically right and while they don't physically do it, they control the supply. The Federal Reserve manages the amount of capital that is available to spend or invest. The total amount of capital is known as the money supply and if they wanted to, they can 'print' money.

[dubeta]

Lol op needs some ECON lessons

PM me to learn, boy