Quote:
Originally Posted by retiredguy123
None of this makes sense to me. To me, debt does not create wealth, the lack of debt creates wealth. I have done very well by staying out of debt. Interest rates should be controlled by the market based on supply and demand, not by the Government.
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First, the government is the opposite of a consumer or a corporation. The goal of the government is NOT to be a consumer and not to be a corporation, each to maximize after tax cash flow. That is the mistake that most people make after listening to certain viewpoints criticizing the government when compared to a consumer or a corporation.
The federal reserve only affects the interest rates to the banks, called the federal funds rate.
The treasury only affects the interest rates on the sales of treasury bills, notes and bonds. Mortgage rates, money markets, bank savings account interest rates, are all set by the private market, but the influence from the treasury and the fed is not zero. .
The bank has also a third role as the lender of last resort, to keep the banking system from imploding, and banks going under. So that requires the ability to create money to give to the banks to prevent runs and insolvency.
I would also say that the immense govt borrowing does not originate with the fed or the banks or the treasury. The source of debt is the spending by Congress for their projects. The federal government manages the infrastructure, safety and defense, the common spending of the 50 states of the republic. The government blends that role with the employer of last resort. Many of people I know who have a hard time staying employed in the private sector, have found jobs in the government/public sector. The problem with the government is that is a legal system, and it's run by lawyers. Lawyers have the same human biases, greed and power as the rest of the population, but somewhat more so as they want to look like servants, but still act as they would in the private sector. . Therefore there are more sociopaths than actual servants to the people.
So your gripe about the debt is more with congress than with the banking and treasury system. And all the election rhetoric about taxes is mostly just voting pandering than real policy. However, lawyers believe in precedence, and maintaining the status quo of the system, that's how they are trained, and work. So
good luck to us.