geeps20

Simple question..where is it coming from?

Fox is running down some of the projects where the money is going,,,enough to make any sane person throw up....absolutely ridiculous...maybe next time some of our elected officials will actually read a bill they vote on.

BirdEye

I will try my best to explain this.

In 1918 via the Federal Reserve act the US gov. delegated congressional duty of the coining and printing of currency to the Federal Reserve. Before this act all bills said US Note and after the act they say Federal Reserve Note.

The Federal Reserve then and today is in control of our currency. They create the currency and manage the economy in which is supports and works. The Fed (Federal Reserve) then makes the foundational money supply and loans it to the US govt at interest. The interest is about $40Mil per hour on the money supply of 2003, which is the last date it was released. While the US does pay interest it pays interest with the very currency that it is borrowing so to sidestep that, the US govt has put up its citizens and the taxes they pay for collateral for these loans.

Now when something like the stimulus is needed, the Fed gov. obviously does not have the money. So the Treasury auctions TBills or Treasury bills which are bought in public auctions. Everybody is able to buy these TBills and again the collateral for the US gov. is the American People. Since anybody is able to buy these bills, sometimes it is a foreign country and sometimes it is the federal reserve itself. When it is the federal reserve, they the Fed simply print the money and buy the bill. The newly printed money is then added into the money supply and the US Govt pays interest on it (the 40Mil goes up).

So to make it short the govt needs the money and puts up a guarantee for the money. The fed reacts by printing the money and then buying the guarantee. The govt then owes the fed that money borrowed as well as the interest determined.

If the Fed govt needed $100 and this put up for auction a treasury for such a garentee. The Fed buys it, and they pay for it with newly printed money. The new money is one new crisp $100 bill, which costed the Fed $.2 cents to create. The US govt now owes the fed the principle plus the guarantee incentive, as well as the interest.

The fed which is a private and not a part of the US govt just made for itself a guaranteed $99.98 with guarenteed expected interest.


I hope that explains it well.

soccerguy315

well, they didn't read the energy one

NJres

I think what Birdeye is saying, which is pretty accurate, is that the stimulus money is funded with both borrowed and created money. I especially like the created money.

zotan

Faux Noise is always so on top of things.

Ask any one of its viewers to actually substantiate why the stimulus is bad though, and they fall flat on their face. There are reasons why economic theory argues for massive government spending in times like this you know ...

geeps20

what other network has gone over these projects?...Are we not supposed to care?

The problem Z is that there isn't much "stimulus" in the package..lots of pork..disgusting....

soccerguy315

if it was really a stimulus, it would've been spent by now, and not a list of political projects for the next 4 years.

LogicWarrior

It wasn't a stimulus bill, it was a spending bill with a relatively small amount of stimulus packaged in. We would have seen the results of $800 billion of stimulus by now.

BirdEye

No amount of Stimulus money can repair the economy. Anybody who believe so is foolish. While it may bring us back to a artificial level of living. We will just continue to see the results of the business cycle.

zotan

Care to explain the end of the Great Depression to me then?

Keep in mind, World War II was essentially a massive public works project along the lines of what Keynes had been advocating for all along.

mam1959

zotan - the problem with your assertions is that the size of the debt is so monstrous relative to past periods - including 1937, the year many point to as FDR's "mistake" year because he relented in his considerable spending - that historical models in my view are dangerous and misleading.

Krugman of course is arguing for more stimulus - but he doesn't tell you what underpins his thoughts. If you scratch the surface he believes we can finance the massive debt that we are now incurring because he thinks the Chinese will use their excess savings to continue to invest in the United States. Underpinning that belief in turn is the view that the Chinese will do so because it is in their interest (they continue to need a captive market for their exports) and because they don't have other places to go with that amount of money. Ironically, many trained macro-economists (of which Krugman is not one) think that the debt will be so constraining that the bond market will step in and cause Obama (if he can stay in office) politicians to settle the debt come heck or high water, thus eclipsing stimulus activity.

This all makes me nervous. We have just experienced a bursting of a bubble where many economists and investors failed to account for extreme events that we though would never happen. Banking on China to effectively run a multi-trillion dollar economy doesn't make sense to me. At some point soon we must settle the debt - hopefully sooner than later - and that will involve spending discipline.