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Who Owns Us? We Do.

29 March 2007

Hillary not withstanding, Americans hold most of the US Federal debt. Actual the Feds hold most of the Federal debt. How is this possible? Well, first of all they are the government and they own the printing presses and they own the Federal Reserve. It’s basically their party.

From the The Skeptical Optimist.

I still trying to wrap my head around this concept. Either it is the most brillant ploy in economic history or it’s……really dumb. Assume Federal Dept A wants to build a bridge and the US Congress lends them money, the money is backed by bonds from the US government. If Dept A defaults, then the US government writes off the bad debt, and the books are balanced. The only way this can work is if the Federals print the money (or some equivalent bookkeeping entry) that is given to Dept A and the money is “paid for” by equivalent issues of bonds. Well they do own the printing presses, don’t they!

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