Q & A with Andrew

What is the “crowding-out” effect?

When you go into the economy and you issue a bond to build a railroad which will cost one-third of all of the money in existence, you’re pretty much going to put a stop to the rest of human enterprise. Until that railroad is built, and that money has worked its way back into the system, there [...]

Does the Fed buy or own Municipal Bonds?

Here’s the official line from the Federal Reserve, and I’ll quote it: “The Federal Reserve does not buy or sell gold.” That’s technically true, I guess. The Federal Reserve system may not buy anything, but the Federal Reserve Bank of New York surely buys and sells [...]

Whom do the underwriters sell the bonds to?

To institutional investors. In this case, the banks themselves. The Federal Reserve. If an underwriter has a project that no one wants to buy and that everyone figures is a failure, that bond’s value is going to erode. There’s a danger that it’s going to default, and institutions [...]

Are Guernsey notes backed by precious metal?

When the Guernsey notes were originally issued, a Pound Sterling was a known quantity of silver. The silver backing has since been withdrawn. Guernsey is on the same fiat standard we are, but they have a way of measuring what their monetary needs are based on the British Pound. The Pound is still [...]

Is the Public Treasury system in operation anywhere today?

Yes. In Guernsey. It’s part of the Channel Islands of Great Britain. It’s where those famous cows come from. Their money is denominated in Pounds, drawn by the States of Guernsey. Their public treasury system started right after the Napoleonic Wars, around 1820. Legend has it that the [...]
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