One of the primary functions of the U S Government is to 'print money'--Alexander Hamilton (a Republican Tea Party hero) could have told you that--- Alexander Hamilton was also the creator of the U S Federal Reserve System with the first centralized national bank in America. He also believed in a strong , centralized Federal government capable of stabilizing markets and maintaining order in the states. Now, back to the Government role in printing money. "By long tradition, and by general consensus among anyone who ever thought much about it, seigniorage belongs to the sovereign power that issues money. In our system, that’s us: we, the people. But in the largest subsidy program ever instituted by any government anywhere, most of our seigniorage is given away free to the institutions that create most of our money supply: private banks." ... "How much is that seigniorage worth? The money supply on which the U.S. economy operates is $7.7 trillion. Of that, scarcely a tenth–only $746 billion–is actual currency issued by the Treasury, the seigniorage on which goes into the public coffers. The rest,$7 trillion, is bank balances in various forms. And since the cost of entering pixels into databases is negligible, the seigniorage is almost equal to the supply of money created this way. Seven trillion dollars is more than the federal government has spent on two world wars, Korea, Vietnam, Iraq, the moon mission, and Social Security combined."<quoted text>
The Feds are printing money to keep the economy afloat.
It's all just an illusion. But like John Sebastian, you believe in magic too.
Steven Russolillo, co-author of The Wall Street Journal's MarketBeat:
The Fed’s efforts to keep interest rates extremely low and maintain its easy money policies have been among the main catalysts that have pushed the prices of stocks and bonds into unprecedented territory. Those same efforts are also among the biggest risks lingering in the markets: Once the Fed pulls back on the stimulus spigots, there’s no telling what happens next.
Inflation. That's reality.
"Capturing seigniorage for the public treasury presents no technical challenge. To make money creation the exclusive prerogative of the sovereign, the money-creation activity of banks could be curtailed by a 100% reserve requirement on demand deposits. The change could be phased in gradually, as Herman Daly and other ecological economists have advocated. Banks could earn their income not from seigniorage but by charging for such legitimate and useful services as safekeeping, accounting, check clearing, and mediating loans between savers and borrowers." ...Check this out: http://www.frontporchrepublic.com/2010/05/mak...