Ok, I'm still digesting basic economy.
As I understand it, governments (lets say the US or canadian government) have a certain amount of money they get from the taxes. This they can spend for whatever they spend money for.
If they need more money then they need to borrow it.
If they borrow it, they have to pay it back with interests.
From Wiki: "Most developed country governments are prohibited by law from printing money directly, that function having been relegated to their central banks. However, central banks may buy government bonds in order to finance government spending, thereby monetizing the debt."
Now , who makes "the law". And why has a central bank to make SO MUCH profit?
http://moneymorning.com/2011/03/30/...ks-record-82-billion-profit-red-flag-warning/
Isn't that the money that increases public debt every year???????
Is there an alternative to that system? Like nationalizing all banks?
Logically the government wouldn't have to pay interests on borrowed money. It could print its own money if needed and wouldn't depend on money created out of thin air by banks (http://en.wikipedia.org/wiki/Reserve_requirement).
Also logically, eventually we will get more for our tax money OR tax amount will decrease.
Or what am I missing here?
As I understand it, governments (lets say the US or canadian government) have a certain amount of money they get from the taxes. This they can spend for whatever they spend money for.
If they need more money then they need to borrow it.
If they borrow it, they have to pay it back with interests.
From Wiki: "Most developed country governments are prohibited by law from printing money directly, that function having been relegated to their central banks. However, central banks may buy government bonds in order to finance government spending, thereby monetizing the debt."
Now , who makes "the law". And why has a central bank to make SO MUCH profit?
http://moneymorning.com/2011/03/30/...ks-record-82-billion-profit-red-flag-warning/
Isn't that the money that increases public debt every year???????
Is there an alternative to that system? Like nationalizing all banks?
Logically the government wouldn't have to pay interests on borrowed money. It could print its own money if needed and wouldn't depend on money created out of thin air by banks (http://en.wikipedia.org/wiki/Reserve_requirement).
Also logically, eventually we will get more for our tax money OR tax amount will decrease.
Or what am I missing here?