Whether the Fed is broke or made of unlimited funds is less obvious than one would hope. So I'll give him a pass on that.
The whole monetary system is based on debt and fails the day people stop paying their interest. Arguably, being owed money is not the same as having money, but common practice is to treat it like it is.
It's hard to say all that in like 4 words.
They don't have a bunch of gold that's worth what the money supply works out to; promise that.
Whether the Fed is broke or made of unlimited funds is less obvious than one would hope. So I'll give him a pass on that.
The whole monetary system is based on debt and fails the day people stop paying their interest. Arguably, being owed money is not the same as having money, but common practice is to treat it like it is.
It's hard to say all that in like 4 words.
They don't have a bunch of gold that's worth what the money supply works out to; promise that.
It also fails when people start questioning the legitimacy of the currency, or stops using it.
So I'll take your point. I'd still argue they're not currently broke...but it's a very fair point that they could suddenly get broke very quickly.
They may not be broke, but they're living high, paycheck to paycheck.
That's a good way to put it.
They've got tons of money (on paper), but they're also spending tons of money. If the income dries up, they're suddenly very broke.