What is /biz/'s opinion on the US Federal Reserve being an independent entity and all those "conspiracy-theorist" videos on YouTube?
Who owns the US Federal Reserve? Why isn't it ran by the U.S. government? What about the claims that all the central banks are owned by the same groups of people?
Why are more countries in debt now than ever before and why is this amount of debt constantly increasing?
tfw dont know what is real and what isnt
The federal reserve is in the hands of an independent entity because politicians shouldn't directly control the source of funds for the government. The funds need to be allocated in a proper, organized way (like a budget bill) so that things don't get out of hand (or into the hands of congressmen). Basically it keeps elected officials' skin out of the game. It doesn't matter who owns it really, as long as they're not incompetent and the government can audit them then things should be fine.
Debt increases for countries because governments don't make enough money. The money they make is poured into defense contracting and other stuff that requires funding while they neglect things like healthcare for their own citizens and paying back bonds (governments have passed laws for healthcare, and citizens meet the requirements, but they are delayed in giving the benefits out. thus creating debt). Most of the US debt is owed to its citizens for exactly this reason. But, a government in debt isn't a bad thing. We just need to keep deficits (continual loss) down and we're good. People eventually get paid their benefits and the country moves on.
The reason central banks aren't run by the government is that it would be a terrible fucking idea to give the control of the money supply to career politicians and bureaucrats.
Instead, central banks were created by their respective governments and made independent. They employ and promote people who have instead dedicated their lives to the research and analysis of macro and monetary economics, financial markets, etc.
They're usually bound by some sort of charter that aims for monetary stability, economic growth and full employment.
>Debt increases for countries because governments don't make enough money.
It doesn't work like that.
If I loan you $1 at %10 interest you owe me $1.10.
How do you pay back $1.10 when you only have the $1 I loaned you?
It's not a loan. The government doesn't owe its citizens extra money or benefits due to there being a delay in providing the benefits. People's healthcare gets pushed back more or even canceled with economic deficit.
Basically this. Politicians are not bankers and every time they try to fuck with something as subtle and powerful as the money supply they fuck it up.
Just look at the recent pool of candidates, would you like any one of them to be able to influence money directly.
The answer is no b/c that is the quickest way to despotism.
Ok, so this isn't something that a youtube video or some casual reading is going to get your head around.
But essentially you want it to be out of government control but with tie in "goals" so that our schizophrenic congress can't destroy the world (remember the debt ceiling hostage negotiation that gotn the countries credit downgraded?)
You want fiat currency, fractional reserve is a good thing for everyone, if we didn't have a fractional reserve system money would just stop flowing, you'd never get a credit card, or a car loan or a mortgage without already having silly ass valuable shit to put down as collateral.
Our debt, although crazy high (18 trillion) takes a meager amount to pay off, paying it all off would be inconsequential to the public good, the way you run finances and a government does are not the same.
But yes their is corruption and the "same people" with thumbs in all the pies (world bank etc) and its not all being done for the good of the average citizen but, think of a better policy and let us know.
The fact that not enough money exists to pay all outstnading debts in the world is moot, we're only a closed system in the sense that we live on one planet.
The reason a credit card company can gamble on giving 5k to a 20 year old is because enough people pay to cover those who default.
>The fact that not enough money exists to pay all outstnading debts in the world is moot
It's not moot. That's the correct answer to why debt keeps growing is because it has to.
No, enough people can't pay to cover those that default. That is what the near collapse of the entire financial system in 2009 was about. In that event, more money is printed to make up the difference. It has to expand continuously or it collapses.
There really is nothing to worry about. It is very difficult for most people to understand the sheer amount of money that is transacted between parties in the financial market, and the amount of economic data and money controlled by the FED. Because it is mysterious, conspiracy theories arise as a result. I am surprised this isn't a scientific law by now.
The FED is not out to create a global elite sector and enslave the rest of the world. They are genuine economists, bankers, and financiers who want to see economies rise (and soften the landing when they inevitably fall). Sometimes the FED does think too much about investment, especially when they decided to raise the FED Funds Rate last quarter despite no major improvements in our economy, but they certainly are not out to destroy America.
Regarding global debt, I like to use this analogy. Tim, Bill, and Sarah are in a group.
Tim asks Bill for 5 bucks.
Bill is now in 5 bucks of debt.
Sarah asks Bill for 5 bucks.
Sarah is now in 5 bucks of debt.
The group is now in a collective 10 dollars of debt, but there is only 5 dollars in existence. It gets more complicated when you factor in that Bill spent the 5 bucks, and still loaned money on Sarah, who also spent the 5 bucks.
Countries can do this, in fact the banking system does this. A whole system of banks loan out more money than what was originally deposited in the first bank.
These countries can pay back the "5 dollars" by making smart investments and expanding their economy. If they are advanced enough to have their own system of controlling the money supply, the increased investment will lead to new economic oppurtunities and more money. They will make back the 5 dollars, and then some, and pay back the loan.