The basis of modern finance

Reading this could be hazardous

One problem with the debt ceiling negotiations is they lead us to question things Man Was Not Meant To Know:

  • Could the treasury just mint a couple of brass coins with a face value of a trillion dollars each, and deposit them in the Federal Reserve, and then write checks for two trillion dollars?
  • Two trillion is the numeral two followed by twelve zeros. I spell it out because writing the number feels like saying “Voldemort.”
  • The US government borrows forty-three cents of every dollar it spends. What combination of economic growth and inflation is necessary to sustain that?
  • If we confiscated the entire net worth of every millionaire who isn’t in the Senate, how much of the federal debt could we pay off?
  • “The Trust Fund has plenty of money, more than enough to make Social Security payments for years. The money is in the form of Treasury Bonds, but those are as good as cash. If Social Security needs to send checks, they cash in their bonds. When a bond is cashed in, the Debt is diminished by the amount of the bond: meaning that they can then sell another bond and not go over the debt limit. Social Security payments have no effect on the National Debt. You don’t have to raise the Debt Limit to pay Social Security.
  • Just below I misspelled Roosevelt and the computer suggested Sevenfold. That’s got to mean something.
  • A dollar bill is really just a zero-coupon perpetual, isn’t it?

If too many people think too deeply about any of this, they’ll see that really, there is no money, and hasn’t been for a couple of generations. Somehow Nixon or Roosevelt or someone was been able to monetize human greed and credulity, and that’s the basis for the financial system.


3 Replies to “The basis of modern finance”

  1. I began to suspect this ’round about sixth grade, but everyone said something along the lines of, “Oh, it’s not like that; it’s real money. Also, shhhh.”

    Now I just put it out of my mind every time it comes up.

  2. I always figured the financial system is based on the fact that everyone else is too dumb to know that money is worthless. Sure, *I* know it’s worthless, but since I can give it to the dumb store owners to buy what I want, I’ll go ahead and let my boss pay me with it. I’m not being dumb like everyone else, though; *my* decision is based on common sense. :)

  3. It seems the value of a Nickel as metal is about six cents. So maybe the humble nickel is the real basis of the world financial system. Anyway, I’ll spend the dimes and keep the nickels in my sock drawer, just in case.

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