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Why are Governments borrowing money from banks? (Read 2641 times)

culldav Gold Member Offline Australian Politics Posts: 2020	Re: Why are Governments borrowing money from banks? Reply #15 - Sep 8^th, 2010 at 12:00pm Definately a scam, but how many Australians know its a scam, and what would they do if the majority found out about it. The sad thing about all this is that these bastard pollies know about it, and keeping its peole in economic slavery because they are too gutless to do anything about it.
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Re: Why are Governments borrowing money from banks?
Reply #16 - Sep 8^th, 2010 at 3:34pm

Please delete wrote on Sep 8^th, 2010 at 11:36am:

The Constitution says that the government SHALL print money, to facilitate commerce.

Conventional wisdom says that the government SHOULD NOT do this without regard to economic stability.

In overly simplistic terms:

Australia is worth a certain amount (net worth).
We print a given number of dollars.
Each dollar is backed by a certain fraction of our net worth.
We print more dollars.
The value of net worth behind each dollar decreases.
Each dollar therefore buys less (we need more dollars to buy what we did before printing more of them).

That's one of the mechanisms behind inflation.

Not technically correct (the value of the nation isn't static, for example, and there isn't a strict 1 to 1 relationship), but near enough.

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freediver Gold Member Offline www.ozpolitic.com Posts: 49985 At my desk.	Re: Why are Governments borrowing money from banks? Reply #17 - Sep 9^th, 2010 at 1:19am Printing money to generate government revenue is a bad idea. If you are borrowing money, you should shop around for the best deal. People complain about the big 4 banks ripping them off with fees etc. So don't use them.
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culldav Gold Member Offline Australian Politics Posts: 2020	Re: Why are Governments borrowing money from banks? Reply #18 - Sep 9^th, 2010 at 10:50am Why some people would prefer their tax dollars paying back interest on foreign loans is simply beyond belief. Wouldn't every dollar created for certain projects also increase and add value to Australia through those porjects being created.
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perceptions_now

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Re: Why are Governments borrowing money from banks?
Reply #19 - Sep 9^th, 2010 at 11:59am

culldav wrote on Sep 8^th, 2010 at 11:36am:

The Reserve Bank is a foreign owned bank since 1960.

That is incorrect -
1. What is the Reserve Bank of Australia and who owns it?
The Reserve Bank of Australia is Australia's central bank. Its role is set out in the Reserve Bank Act 1959. The Bank conducts the nation's monetary policy and issues its currency. It seeks to foster financial system stability and promotes the safety and efficiency of the payments system. It also offers banking services to government.
The Bank is wholly owned by the Australian Government, but is not a government department. For more information see about the RBA.
Link -
http://www.rba.gov.au/qa/role.html

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freediver

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Re: Why are Governments borrowing money from banks?
Reply #20 - Sep 9^th, 2010 at 12:06pm

Quote:

Why some people would prefer their tax dollars paying back interest on foreign loans is simply beyond belief.

Not exactly. Just about every Australian businessman has some debt. Who you owe it to doesn't really matter. Why should a government be any different?

Whether you pay upfront or pay interest, you still end up paying for what you get.

People who can't distinguish between etymology and entomology bug me in ways I cannot put into words.

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perceptions_now

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Re: Why are Governments borrowing money from banks?
Reply #21 - Sep 9^th, 2010 at 12:11pm

# wrote on Sep 8^th, 2010 at 3:34pm:

Please delete wrote on Sep 8^th, 2010 at 11:36am:

The Constitution says that the government SHALL print money, to facilitate commerce.

Conventional wisdom says that the government SHOULD NOT do this without regard to economic stability.

In overly simplistic terms:

Australia is worth a certain amount (net worth).
We print a given number of dollars.
Each dollar is backed by a certain fraction of our net worth.
We print more dollars.
The value of net worth behind each dollar decreases.
Each dollar therefore buys less (we need more dollars to buy what we did before printing more of them).

That's one of the mechanisms behind inflation.

Not technically correct (the value of the nation isn't static, for example, and there isn't a strict 1 to 1 relationship), but near enough.

Maybe not, but for the sake of this discussion, your description is more than adequate!

Our $ is backed by what others perceive its value to be and if we simply print more, then the value of what the OZ$ will buy overseas and what investments are put into OZ from overseas, will be De-valued commensurately!

There is only one country who is even remotely in a position to try printing its way out of Debt and that is the USA.

That said, even in their favoured position as the Global currency, if they try to "use" that position, they WILL GET BURNT, as is actually already happening!

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jenny.smith

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Re: Why are Governments borrowing money from banks?
Reply #22 - Sep 17^th, 2010 at 2:11pm

Governments get the most out of their money by taxing those living under its jurisdiction. However, several times the amount of money spent by the government exceeds the amount of money available. It was then when governments begin to accumulate debt. These debts can come from the wars, the improvement of national health care, and the government provides services and other activities.

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culldav

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Re: Why are Governments borrowing money from banks?
Reply #23 - Sep 17^th, 2010 at 3:42pm

culldav wrote on Sep 8th, 2010, 11:36am:
The Reserve Bank is a foreign owned bank since 1960.

That is incorrect -
1. What is the Reserve Bank of Australia and who owns it?
The Reserve Bank of Australia is Australia's central bank. Its role is set out in the Reserve Bank Act 1959. The Bank conducts the nation's monetary policy and issues its currency. It seeks to foster financial system stability and promotes the safety and efficiency of the payments system. It also offers banking services to government.
The Bank is wholly owned by the Australian Government, but is not a government department. For more information see about the RBA.
Link -
http://www.rba.gov.au/qa/role.html

If the Australian people or the Australian Government OWN the Federal Reserve Bank, they why is the Government not borrowing money from them instead of borrowing the money from China and other countries?

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