Hello Wayne,

[..]

 WH>>> Let me begin with these questions only.  Thank you.

 >> The Congress does not spend money. It merely appropreates funds.
 >> That is what most folks fail to realize, or simply do not understand.
 >> Bankers understand the process, and how to make money work for them.
 >> You see, money is nothing more than a medium of exchange. And as you
 >> know, no real money ever passes hands in Congress.

 WH> I think you answer the questions above, but not in an explicit way as I
 WH> need to.  I'm slow.  I need more explicit help.  You might be saying the
 WH> Fed provides Congress with the money for buying out the bonds the people
 WH> did not buy, but it's not clear.  If you're saying that, I'd need you to
 WH> say it explicitly and hopefully with a pointer of the accounting events
 WH> that would show it.

Griffin does not have a very good grasp on how things work. The
Congress does not spend money. It appropriates funds. The Department
of the Treasury is part of the Executive Branch, not the Legislative
Branch. How can the Department of the Treasury sell what it cannot
own?

It's kinda like robbing Peter to pay Paul. There has to be a victim,
even if that victim never realizes he/she is the victim.

Paper bills and coins made of metal have no real value. People are
able to spend it as "legal tender" only because government endorsed
it. Otherwise, those paper bills and coins made of metal would be
just as worthless.

IOW, people spend it because they believe it has value. If they did
not believe it had value, it would be used for something else.

Some people like to save it rather than spend it. But what they
are actually doing is allow other people to spend it since they are
not spending it themselves.

See how that works? Are you catching on yet?

What Griffin calls the "Mandrake Mechanism" is his way of trying
to put the blame on inflation as being the root cause of all evil.
But if you take the time to analyze what is really happening, you
will find deflation to be far more destructive than inflation.

If you want to make money you have to spend money. Preferably
other people's money. Saving money is losing money, since all money
loses value over time. And you are talking about paper bills, which
have no value to begin with.

Austerity has never worked in the past. It will not work now.
And it will never work in the future. What happens, is people just
wait. And wait. And wait. For prices to drop. And drop. And drop.
That is no way to build an economy.

The idea of fiat money, or scrip, is nothing new. People place
value on objects of their own choice, or what the leaders of their
tribe have dictated. Even primitive societies use fiat money.

We could just as well be using snake oil. The people of Yap use
giant round stones as their currency. They haul these giant stones
from island to island, hoping their canoe does not sink along the
way.

How much gold is stored at Ft. Knox? Or at any vault in the US?
If Germany requested the US to return its stash of gold being held
in US vaults, would the US comply? I doubt it.

Suppose the US no longer has the gold it was storing for Germany.
What would happen to whatever investments the US has in Germany?
If I was holding your gold, and you wanted it back, and I couldn't
find it, you would not be a happy camper.

Back to the original question.

How can the Fed give money to the Congress when the Fed has no
money of its own?

The Fed can print money. Or what it calls money. As much, or as
little, as it wants. It can raise interest rates. It can lower interest
rates. It can do lots of other things. It can create, and control, what
is commonly called "money". But what happens when all the money that
is printed gets out of control?

We know what happened in Germany. People had so much money they did
not what to do with it. Then came Hitler, who gave Germans everything
he promised, and more.

We also know what happeed in the USA. People had no money, and did
not know what to do. Then came FDR, who gave Americans everything he
promised, and more.

Yep. If you want to make money, gotta spend money, preferably other
people's money. Kinda like robbing Peter to pay Paul.

--Lee

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