Where are we getting the money for the bailouts...

[WATYF]

I'm looking for a detailed answer to this question. "The Fed prints it" will not suffice. I'm looking to explain this to someone, and any kind of "conspiracy sounding" rhetoric will not help. I'd like an objective answer.

I need to know the technical process of how we get all this money to fund these bailouts and I'd also like some info on the money supply in general. For example, do we borrow the money or "create" it, or a combination of both? And how is the total supply of money set, and once it is increased, how does that increase happen, and how does the gov't tap into that "new" money?

Can anyone point me to any links or nutshell it for me?

WATYF

 

[LiveFree79]

http://www.youtube.com/watch?v=xNehYxy77RI&feature=related

 

[WATYF]

So is there where all the money is coming from for these bailouts, or are we borrowing money from other countries as well?

WATYF

 

[LiveFree79]

http://www.youtube.com/watch?v=hEZfMruLMSI&feature=related

 

[LiveFree79]

So is there where all the money is coming from for these bailouts, or are we borrowing money from other countries as well?

WATYF

It comes from the selling of "bonds". Do you understand what bonds are? This is how China props up our spending. They buy "bonds" that are backed basically by the full faith and credit of the US Government i.e. you and me. The Government has the power to "issue" these bonds as the FED has the power to create the money to buy the bonds. then this "money" circulates throughout the economy.

Sorry to answer your question. Yes the "printing" of money is where the money is coming from.

 

[torchbearer]

 

[Chester Copperpot]

So is there where all the money is coming from for these bailouts, or are we borrowing money from other countries as well?

WATYF

IF nobody else is willing to buy the bonds, then the federal reserve will buy them...


ANd of course to buy them, they create money out of thin air to do it..

 

[LiveFree79]

http://www.youtube.com/watch?v=PkFXdj1y3mE&feature=related

 

[HOLLYWOOD]

So is there where all the money is coming from for these bailouts, or are we borrowing money from other countries as well?

WATYF

The Federal Reserve LOANS money to foreign central banks and governments. This is the ILLEGAL actions of the Federal Reserve, US Treasury, and Executive branch.

Reverse Engineering the FED and what they are doing with money is quite difficult since they are secretative.

But the standard operations is to call it "Currency Exchange"

We loaned money to the governments of New Zealand, Austrailia, Denmark, England, Iceland, and I'll have to research the exact countries, but it's all NATO, Ally countries to the US

 

[WATYF]

It comes from the selling of "bonds". Do you understand what bonds are? This is how China props up our spending. They buy "bonds" that are backed basically by the full faith and credit of the US Government i.e. you and me. The Government has the power to "issue" these bonds as the FED has the power to create the money to buy the bonds. then this "money" circulates throughout the economy.

Sorry to answer your question. Yes the "printing" of money is where the money is coming from.

My question was, in addition to the creation of money by the Fed, does the gov't also borrow money from other countries to pay for the bailouts?

WATYF

 

[LiveFree79]

My question was, in addition to the creation of money by the Fed, does the gov't also borrow money from other countries to pay for the bailouts?

WATYF

The borrowing of money is the selling of bonds. But yes. Nobody gives us money for free but we give other countries money for free all the time. LOL We are suckers!

 

[fj45lvr]

I have asked this question before several times.


If the bonds equal a EXACT exchange of monies (I don't know if they take foreign currency or our own dollars directly) then there is NO NET INCREASE IN "dollars"

They DO NOT just print more federal reserve notes then....these notes are an EQUAL EXCHANGE of funds from other people that are going to get back the purchase price plus some interest....

If people fail to buy the bonds then the Gov. and Fed are going to be in a pickle......(ponzi scheme will be defunct).

 

[JordanL]

My question was, in addition to the creation of money by the Fed, does the gov't also borrow money from other countries to pay for the bailouts?

WATYF

That's what a bond is...

 

[tangent4ronpaul]

China and Saudi Arabia are the main purchasers of our debt. China currently holds just over 500 Billion in our debt and we will need other countries to loan us Trillions - which they won't do. There is another thread in this sub-forum about China being worried about our creating all this money and devaluing their investment and that they might dump those loans if we create too much. That would result in the dollar loosing even more value on the world market.

Guess the Fed will have to buy it with dollars they create.

-t

 

[WATYF]

Alright, I must be missing something then.

A bond is when the gov't gets money that is created by the Fed. A loan is when, for example, china, gives us a billion dollars of their money (i.e. not being created by the Fed). Are these not two different things?

WATYF

 

[jy006m]

bonds and loans are the same thing

if you issue or sell a bond, you are taking out a loan

the buyers of the bonds are the lenders which may include individual investors, foreign countries, or the FED

 

[enter`name`here]

the fed creates money when ever it buys any asset.

 

[fj45lvr]

Could someone FINALLY settle this lack of knowledge that most of us have around here:

The FED cannot just have the treasury "print" up notes without a "payment" to the Treasury, RIGHT??? the cost of the NOTES (1,5,10,20,100) = _______(what?? varied?? fixed?)....



Are their Federal reserve BONDS and treasury bills (bonds) BOTH types or is their only ONE of these??

Bonds sold have VARIABLE rates of return based on the interest amounts paid back but the "PRINCIPLE" up-front cost of buying the bonds is required and this "principle" is deposited to whom??? Can it be paid with foreign currency OR do they have to convert their currencies prior to purchase??

 

[fj45lvr]

seriously, someone should write a BOOK


"monetary policy FOR DUMMIES" to explain how it works because from my experience hardly ANYBODY gets it. Like other things when you fail to grasp an important aspect it deterriorates the whole IDEA and you are LOST (either you know you are, or you DON't and that is the worst type of ignorance).

 

[Zippyjuan]

The government gets it money by selling Treasury notes. This is borrowing. The bonds are sold at auction and the more interest (demand) in the auction, the higher price the buyers are willing to pay and thus the lower interest rate on the bonds (the notes have a face value of say $10,000- the bidders say how much they are willing to give up now to get $10,000 when the note matures- the more they pay now the less above that amount they get later and thus a lower percent rate of return- the Treasury issues them at the lowest price to sell all the bonds- the buyers all pay the same price). The rate on Treasury notes is fixed until it matures but Treasuries issued at different points in time may have different rates. They issue notes with varying times until maturity from one month to 30 years. For a list of those plus current rates of return (yields): http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml Usually longer term notes offer higher rates of return due to higher risk of inflation in that time.

These notes can be bought by banks, investors, or even foreign governments or even portions of the US Government (including Social Security Administration and the Fed- both of which buy them on the open market at fair rates- not directly from the Treasury). The US government is actually the biggest holder with about half of the debt. I know it sounds strange. More info here: http://www.msnbc.msn.com/id/17424874/

If the notes are purchased by somebody in this country, the money supply does not change- somebody is giving up money they could spend now to the government who spends it instead. If somebody outside the US buys them, then the US money supply does increase. Our debt is about $10 trillion and of that some $3 trillion is held by foreigners (as of November 2008). http://www.treas.gov/tic/mfh.txt

Right now demand for shorter term (two years or less) Treasuries has been so high that rates are nearly zero percent.