Re: Peak Nonsense
Posted: Thu 07 Jun 2007, 19:02:10
mkwin wrote: The government deficit is a function of our monetary system - if the government runs a deficit the central bank creates the necessary funds out of thin air and gives them to the government. The government then spends the funds on what they need to. This money then enters the money system when the government buys goods and services leading to an increase of the money supply (and your right, inflation).
Good lord, man...I am the last person on this site who needs to be schooled on money creation. I think you need to read that thread. Somebody has to buy those govt bonds or securities. Currently, that is about $3 billion at day from China, Taiwan, Japan, and South Korea.
Who will buy those bonds with no assurance of a return in a declining energy world?
Most of the money creation takes place at the banks, not at the FED. Banks will not be making loans. We have the Great Depression to give us a trial run. Lots of goods and services, but no money due to no loans and the retirement of principal.
This time, it will be no goods and services and no money.
Energy does not create money. Money has no correlation to energy.
No correlation? Energy creates growth and growth creates money.