Posted 5 years ago on March 3, 2013, 2:30 p.m. EST by ProblemSolver
This content is user submitted and not an official statement
Here is why :
The government sells bonds to pay off it's debts.
How are bonds purchased? From money that is already in circulation.
As bonds are sold, the debt increases. The money recieved from the sale of bonds is redistributed back into circulation. This does not increase the amount of money in circulation, but does increase the size of debt.
As the size of debt increases more bonds are sold to cover debt interest. Again money is taken out of circulation to purchase bonds and than redistributed back into circulation. And again, the debt increases but the money in circulation does not increase.
This is a run away system .. as with each bond-sale cycle the debt increases but the amount of currency in circulation remains the same. Placing a heavy burden on the tax payer to pay the ever increasing debt interest ..with the same amount of taxable resources..
This system is not self correcting.
Governments should not be allowed to sell bonds.
if Governments need money taxes should be their only resource, or the printing out of thin air method can be used.
Yes , printing out of thin air in this system will create inflation.
Inflation is good for those locked into debt.
Here is why:
When locked into debt, your payments remain the same, but as inflation increases , so do wages . Therefore, as your wages increase and your payments remain the same , the debt ratio burden is reduced. If you were earning $50 per day when you went into debt and your payments were $10 per day .. and now with adjusted inflation and wage increase you earn $100 per day but your payments locked in at $10 per day , inflation actually eases the streess load of your payment.