Rugoz wrote:The FED sets the (short-term) interest rate according to its monetary policy objectives, which include price stability and employment. Funding the government isn't part of it. The two can coincide if the government isn't stupid though.
That is nonsense. The seigniorage is small, almost everything is paid with tax dollars.
Which is the whole point of low interest rate, to make you invest or consume instead of holding cash.
No, that's not the whole point, from the savers point of view, as I suggest, buy gold to 'invest'-yes-, from any government's point of view, their appetite for spending other people's money knows no bounds.
A government wants you to consume, because it increases it's revenues(yummy,yummy, more-spending-money),net result means consumers spend more money which is borrowed.
This allows the central bank to raise more money electronically, to feed that consumer spending, which increases inflation by raising demand in the economy, which allows government to increase it's revenues.
It then steals money from those who depend on that revenue spending , by producing fake inflation statistics, which allows a government to reduce it's spending on those dependents, like pensioners, benefit recpients et'c, by uprating the annual increases below the real inflation rate, as opposed to the real higher rate.
The increased demand for spending, increases overall debt levels in the economy, add increasing government debt into the equation & you have the perfect recipe for increasing inflation.
Your wealth, even though you have more cash to spend, is not real wealth adjusted for inflation, it's inherent value is always decreasing if the GDP rate of increase is not increasing in excess of real inflation each year.
For most people, their incomes increase only nominally each year & not in real terms at all.
People are lulled into a false sense of financial security when their incomes rise, against that is the inflation when they spend, plus the increase in taxes they pay as a result of inflation when they do spend that money.
Just a simple price increase, also includes more sales tax going to the government when you spend money on any item whose price increases each year.
The only power that a 'consumer' has, is a choice on whether to buy or not, if you spend your money, not only have you paid income taxes, when you spend your disposable income, you pay even more taxes, taxes are theft, because they are levied, with nothing for the consumer to show in return for it.
It's why it's better not to spend, as it's counter-inflationary, invest for the long term in precious metals instead.