QUESTION: Do you you really think Trump would let the Central Banks Default? He said we would write off PoteRicos debt maybe he plans to write everything off can he do that? If this really did happen wouldn’t the dollar be worthless?
S
ANSWER: It seems as though far too many people ASSUME that all central banks were createdEQUAL. Sorry – that is just not the case. These people who do not really know what they are talking about assume that just because the Fed has the power to create elastic money, that therefore the ECB can do the same thing. SORRY – WRONG!!!!
There is a substantial difference between the Federal Reserve and the European Central Bank (ECB).
The accounting at the Fed allows for it to CREATE money as needed. Now the fiat crowd will argue that the Fed can just create money in a very ELASTIC money supply. This is true and it was intended from the very outset that when economic declines appeared, the leverage within the system would implode and thus to ease that contraction in the supply of money. Hence, the shortage of money resulted in defaults and assets decline in value relative to the contraction in money supply. Therefore, the Fed was created with the power to create ELASTIC money based upon the system of Clearing House Certificates that had pre-existed during the 19th century. The Clearing House would issue its own money and then after the crisis, that money was retired – hence the term ELASTIC.
So how does this contrast with the ECB? Here in lies the problem. The ECB is NOT authorized to create an ELASTIC MONEY SUPPLY.
…click on the above link to read the rest of the article…
