In a world where money is debt and debt is garbage

Here’s a shout out to Bill Still, a strange guy (who isn’t strange these days?) I debated once when some monetary reform group headed by Crackpot Israeli Academic Chicagoan Friedmanite Monetary Totalitarian Socialists invited him to Israel to speak with Moshe Feiglin, and he had me take up the liberty side.

Still is obsessed with an accidental feature of the monetary system, a problematic one but an accidental one nonetheless – that money comes into existence through debt. This is true. It means that the creators of money buy bonds with the money they create, and whoever they give the new money to (always government) always owes the money back to the Fed.

Every dollar in existence is owed back to the Fed because it represents a government bond that was purchased. The government will get the money to repay the bond by taxing us. Therefore, every dollar that exists, that you have, will be paid back to the Fed at interest.

This sounds bad, and it is. But it is not a necessary part of the current fiat monetary system. Why not? Because the Fed does not have to buy bonds with the money it creates. It could buy anything it wants. It could buy my old dilapidated desk chair, or the desk I’m working on right now that I found abandoned on the street before Pesach.

If it bought real assets instead of debt, then no one would have to pay the money back. It could circulate indefinitely. It wouldn’t represent debt. It would just be value stolen from taxpayers that was used to buy my desk.

The real evil is not that money is debt. That is just an added layer of evil on top of the main sickness, which is that printed money – ANY printed money that must be used by law to pay taxes, whether it is printed initially to buy debt or a desk I found in the garbage, is theft of value from the previous holders of that money.

So Bill Still wants to change printed money from money used to buy debt, to money that is just injected into the economy used to buy nothing. Just distributed. For free. And he thinks this would solve everything. The guy is nuts, and his followers are obsessed with a purely accidental feature of the monetary system.

But my shout out to Mr. Still is that insofar as money is debt these days, however accidentally, and debt is garbage, then money is garbage. When the debt loses all nominal value because it simply cannot be repaid anymore, then the money goes with it.

And debt is losing value fast now in Europe.


3 thoughts on “In a world where money is debt and debt is garbage

  1. I don’t comment often but this site is one of the first I check into on a daily basis. A light in the darkness and chaos. Thank you Rafi

  2. So what you’re saying – versus State – is that while State flies high on social humanitarianism presenting us progress that we (people) are being given money (for work, thus freeing us from slavery) it actually sells us money and then it makes us pay again for the State’s debt? So in reality the working class (:P besides being a term it’s a definition) is enslaved by this organization called “state” who did something that cost them money (we’ll never know what they did) and now they want us to pay their debts AND to pay them (so they come out with a profit).
    Well of course this explains why the State NEEDS all the solving-global-issues-and-diseases propaganda, because nothing screams “guilty!” more than pointing the finger to someone else (God, life who made diseases, other social systems that create problems and make people suffer, anyone further from the State that is actually the guilty party).

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