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To me it seems illogical because a stimulus is an action, and thus, "action is due to an action," which to be true would mean there is no beginning action.
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[quote user="meambobbo"]reid, the bank's reserves do not have to be loaned out to enter circulation.[/quote] Circulation is the wrong term. Obviously the moment the Fed created the new money and credited the banks' accounts to increase their reserves that put the money in circulation. I should have said that the reserves have to be
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[quote user="nirgrahamUK"] please offer an explanation why people must increase their debt load in order 'to get the currency running through the system' ? [/quote] Are you new to Austrian economics? I recommend you read on this website the many resources on how money is created.
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[quote user="Stolz25"]The Fed could also monetarize the country's outstanding debt as well.[/quote] The federal debt was monetized upon issuance, so I don't know what you mean by this. They can't re-monetize it. [quote user="Stolz25"]Also, things like the stimulus bill could be paid for directly with new money, taking
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[quote user="nirgrahamUK"] if you know so much about it, why are you asking? [/quote] I ask because many Austrians say that we are experiencing deflation because of the forced liquidation that has resulted from the bursting of the inflationary bubble of the Greenspan era. I agree. Austrians also say that we will experience massive inflation
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The process the Fed uses requires borrowing, whether it be government borrowing or private borrowing.
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[quote user="Stolz25"]I think he was asking what the actual method would be for increasing the money supply without loans.[/quote] Is there a method for doing so in the U.S.? I believe our entire system is based on monetizing debt. There is no money unless it is borrowed. Thus the original question. Are we tapped out? Are we at the end of
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[quote user="nirgrahamUK"] http://en.wikipedia.org/wiki/Quantitative_easing [/quote] Quantitative Easing or the Fed's open market operations, all require borrowing to get the money circulating.
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[quote user="Spideynw"] What is needed is privatization of the currency. [/quote] I agree, but I'm just wondering how massive inflation will take place (again) when no one can borrow because they are already overloaded with debt.
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Help me out here. I know that bank reserves have gone from $40 billion to $800 billion from September 2008 to December 2008 due the Fed's generosity in creating new money, but those newly created dollars are just sitting there. I also know that the effects of inflation and additional inflation (money multiplier) will only take place if that newly