Talk:Monetization/Archives/2013

When the central bank holds a bond to maturity

The article says:

"If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury."

This is simply not true, and it is confusing inflow with outflow. Central banks neutralize liquidity by holding onto bonds until they mature.

128.123.207.77 (talk) 15:31, 4 October 2013 (UTC)

Julie was not sure this terms existed.

I need to know how many times the Fed has monetized the debt. Is this the first time that it has done this? Where can I find a chart of the times that the Fed has started the printing presses to create more money out of thin air and inject it into the economy? I heard that the Fed did this is 2000, or a bit before then, and we got the cheaper money to invest into the "new economy" of the internet, which all resulted in the "dot com bust". How can I find the times the Fed has done this?

I will remove this section once someone answers.—Preceding unsigned comment added by 70.167.218.115 (talk) 08:50, 12 November 2010 (UTC)

The Fed typically monetizes only a small portion of government debt every year. Technically it's continuously monetizing debt if it holds Government bonds to maturity. Since many of the bonds the Fed buys are short term in nature, some monetization is unavoidable, however the current FOMC prevents it wherever possible. The Federal Reserve in its history has never monetized US debt to any appreciable extent.

Before the Fed existed, debt monetization happened frequently, usually any time the country went to war and needed a way to pay for it (the best example is the civil war). The US government (and others, most notably England during the Napoleonic wars and WWI) would suspend the gold standard and simply print paper money causing inflation. The cure for this after the war was to restore the gold standard at the old par, however this caused an immediate contraction in the money stock causing a prolonged period of deflation and recession. (130.74.123.143 (talk) 18:22, 4 September 2012 (UTC))

Fake word coined by fake people

"Monetize" is a fake word made up by people who think they sound more learned by using a strange and somewhat difficult to pronounce term.  Goods or services may have monetary value—they aren't "monetized."  Everything has potential monetary value, so everything is "monetized."  "Monetize" is in the same class "crowdsource."  Let's remove stupid, Yuppie-sounding terms like "monetize" from the English language! Yea right, monetized is a big word like mayonnaise.

As for "monetized debt," that would be redundant if "monetize" and its derivatives were real words. —Preceding unsigned comment added by 67.16.216.5 (talk) 13:32, 21 August 2009 (UTC)

it is popular in the present for venture capitalists (and similar business press) to talk about "monetizing" companies, meaning to extract a profit or a positive cash flow from (for example, by making money from visits to a popular website). This is a new usage that is a "fake word by fake people". But the traditional meaning from the field of economics as explained in this article is not a fake word; it is important to be able to use a verb to speak about changes in the money supply. The comment to which I am responding is keen with regard to popular culture, but ignorant of economics. —Preceding unsigned comment added by 71.190.66.244 (talk) 16:17, 19 March 2010 (UTC)

High powered money, monetization and the misadventures of Rudy the Reader..'

Yes this article is very poor. Seems like someone is reciting a text book. Notice in the section Monetizing debt We have "They must instead pay with currency already in circulation, else finance deficits by issuing new bonds, and selling them to the public or to their central bank so as to acquire the necessary money. " and later " This process of financing government spending is called monetizing the debt. Monetizing debt is thus a two step process where the government issues debt to finance its spending and the central bank purchases the debt from the public."

And the next section begins: When government deficits are financed through this method of debt monetization the outcome is an increase in the monetary base, or the money supply" Ok so what are the other methods and which do not lead to inflation. This whole section seems designed for misunderstanding. Does the author equate "financing" with paying? and does the author believe that both printing money and issuing bonds is inflationary. And what da heck is high powered money? I'd love me some o dat dere high powered loot ta take down to da track fer some high powered bettin, iffin ya catch my high powered drift? Spiker 22 (talk) 23:54, 19 May 2010 (UTC) spiker_22

Economists. They are university trained (tricked?). The books from which they are trained / indoctrinated may be embedded with a trick being played against the tax paying public that might say that "inflation is caused by governments," when actually it is simpler than this: inflation is the over supply of fiat or other currency--the market adjusts to this supply level, et voila. It does not matter from where this over-supply comes.

It is said that this is a trick because the amount of oversupply is governed by several factors. One certainly is the degree to which the fractional reserve banking system loans or does not loan out (calls in existing loans--credit crunches) money. MoneySupply = GovSpending + debt + interest + FractionalReserveLoans. In the case of debt-free money, the equation is the same, but the growth of the debt should be near to zero or negative depending on the generation of new wealth in the economy such as trade surpluses, etc. The trouble is that the Fractional Reserve Loans can be almost any multiplier (from near 0 to 20 or so) on the existing supply itself. So the trick is that private bankers can adjust the inflation rate by merely adjusting how little or great the credit / loans are that they supply to people or companies, etc. This multiplying factor is set as a policy decision and policy can be made to flood the economy with money or the opposite--starving it.

In addition, a monetized debt based monetary system has inflation built in by the rate of interest charged since new debt (a supply of money) is incurred borrowing to pay those interest charges (unless increasing taxes are made that pays down that interest plus the current budget deficit or possibly more), and all money is a measure of debt. It is quite likely that taxes cannot be raised that high or massive starvation and civil unrest would result (all of this because of money created from nothing by the right people / monopolies / cartels).

Witness the recent (2008-2009) economic downturn based mostly on crunching credit markets based on traders making and then bursting the quadrillion dollar credit default swap derivatives market based on mortgage failures. A quadrillion dollars is several times the world's economy so obviously credit for such trades were invented on the fly by the traders themselves.

Historically international bankers exist. Rothschilds, and so on. They and their organizations (World Bank, IMF, BIS) get upset when governments spend debt-free money into the economy--largely circumventing their potential contributions and profit making potential. To punish governments for debt free spending, these people pull the strings of the private banks, start rumors that result in bank runs, and cause various sorts of economic upset by intervening in markets, fluctuating the fraction policy, and so on, until they get what they want--monetization of the country's spending deficits (taxes collected minus budget spent into the economy) so that compound interest on an accumulating debt is owing to them.

The result is that eventually the leaders of the country see themselves as leading a "bankrupted nation" who owe these bankers for money created out of nothing and backed by nothing. While some private US citizens do own some of the debt in the form of a handful of US T-bills, the majority of it is owed to foreigners who have huge amounts of their own gold reserves and world-wide wealth--who own multinational corporations running the factories in the Far East, etc.

Right now (May 2010) Greece is in trouble from a debt crisis. Why did they borrow in the first place (excepting that they got involved in the EU and borrowed Euros--a currency they did not control)? How much interest was being charged on their budgetary deficits and outstanding debt? Keep in mind that the people behind the push towards a world government are the same people behind the formation of the EU--international bankers. Countries like Greece and those of indebted African nations will be forced by the IMF, World Bank, and Bank for International Settlements to privatize all sorts of key infrastructure to foreign / international corporations for small amounts of money that will never come near to covering the amount of even the interest owed per day (often privatized for pennies on the dollar of original investment due to fire sale pressures). These infrastructure assets are real--unlike the check book money created out of nothing and then supposedly loaned to the government--this money did not exist until the loan was "created out of thin air" (since it is fiat anyway)--just as debt-free money is created out of thin air--the only difference is "who" is made happy when interest is paid them and when the country is bankrupted. The making of laws becomes influenced by the bankers--resulting in tyranny. Another group also benefits: those who get the government contracts because they receive the newly spent money entering the system. Those who lose are the ones in an up economy who borrow on margin to buy stocks, and then later encounter an economic contraction forcing them to sell the stocks at a loss, and then pay back the loans plus interest out of after tax money they must earn in their jobs (or other income streams--a form of slavery to serve the bankers).

All of this is outlined in multitudes of videos that are decried by some as not WP:RS, and perhaps defacto "conspiracy theories." You can decide by watching a few videos via Google video searching for >federal reserve< or >banksters< or >fiat empire< or >Amenstop productions< or >international bankers< or >"the money masters"< or any related such videos. While things here and there in various of these videos may be mistaken or slightly inaccurate, much is arguably factual. Most videos attribute their quotations to notable historical figures like certain of the US founding fathers, etc.

Where are they and am I wrong?

• Can any of this information be placed in to the article from WP:RS?
• Can the article include what assertions in current economic models say that fractional reserve banking does not play such a large factor in the economic cycles?
• Can the article include what laws and enforcement / audits are in place to prevent / preclude this undue private banker influence over inflation / deflation, the money supply, and the economic cycles? Oldspammer (talk) 06:13, 23 May 2010 (UTC)

Wrong? How bout dead wrong?

Oldspammer: If this were a site like youtube, I'd say you were talking out of your ass. Since this is wikipedia I'll settle for your essay is spun out of thin air. Where for example have higher tax rates " led to massive starvation and civil unrest"? Tax rates during the 70's were much higher than today yet their was no "massive starvation and civil unrest" and the same goes for the rest of your analysis. There's no empirical basis for any of your conclusions much less the assertions leading to them. It's all pure fantasy.Then again maybe your trying to (trick/indocterinate?) readers. If so, the mere fact that you base your conclusions on "multitudes of videos" is a dead give away or at minimum proof that you have absolutely no idea what you're talking about. Perhaps the videos were embeded with a trick being played against you that there is another source for money outside government. What do you think fiat currency means? Your logic is absurd: "inflation is the over supply of fiat or other currency--the market adjusts to this supply level, et voila. It does not matter from where this over-supply comes" Murder is premeditated killing. John Wilkes booth shot Lincoln, Lincoln "adjusted to this oversupply" of bullets, "et voila. It does not matter from where the oversupply came." JWB must be innocent Spiker 22 (talk) 09:36, 25 December 2010 (UTC) Spiker_22