Re: Money supply and national debt -- need help on this subject

On Sun, 23 Apr 2006 15:15:16 GMT, "Mark M." <markm@xxxxxxxxx> wrote:

S. Doo wrote:

True, lots of other countries have financed their fiscal deficts by
issuing new money to cover their bills, with results as seen in the
Weimar Republic, but the US has been quite good at not going that
route.

In any case, the system requires constant addition of money. As long as
too much money isn't introduced, the people greatly benefit from
government spending funds directly into circulation as opposed to debt
based money controlled by a central bank. This is the history of the
Civil War Greenbacks.

All fiat money is debt-based, whether issued by the central bank or
long ago by the Treasury, as in the case of Civil War greenbacks.

In a modern inconvertible money system, i.e. fiat money system, the
central bank creates it by monetizing the debt securities of the
Treasury. The Treasury simply recirculates it through its spending,
taxing, and debt sales to the public if necessary. On balance the
Treasury does not create new money.
.

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