When I say the "same" I mean they are both something created out of nothing.
In the many times I have had this argument, I have found that the guy on the other side does not understand the nature of money.
"Money" and "currency" are not the same.
Currency are the dollar bills you have in your pocket. Money is a medium of exchange, a unit of account and a store of value. Here are the different types of money.
http://en.wikipedia.org/wiki/Money_supply
Money is "created out of nothing" in that human beings assign a value to whatever it is they use for currency. For example, in prison, cigarettes are often used as money. Milton Friedman gives the example of sea shells on the bottom of the ocean that nobody can touch or exchange as money because people
believe that is money.
If you mean wait for the business cycle, the banks have created everyone of the business cycles by devalueating the dollar. When a country slips into a recession or depression it has to what?.......borrow money to get the economy started. Who do you think they borrow it from?
The problem with this analysis is, of course, if you've studied economic history, you understand that throughout most of America's existance, up until a few decades ago, depressions and recession were usually met with the collapse of banks. Often times, many banks. Also, if you have ever analyzed actual banks today, you know that they prosper in a good economy, not a bad one. When credit is tight, bad loans rise, profits fall, multiples fall, stocks go down, balance sheets shrink, cost of borrowing rises as risk premiums rise, people are fired, executives lose their jobs, etc., etc., etc. So to say that banks engineer recessions and depressions is not only completely at odds with economic history, it fails to understand the economics of banking, or even the very nature of banking itself.
"The Treasury today announced the call for redemption at par on May 15, 2004 of the 9-1/8% Treasury Bonds of 2004-09, originally issued may 15, 1979, due May 15, 2009 (CUSIP No 9112810CG1). There are $4,606 million of these bonds outstanding, of which $3,109 million are held by private investors. Securities not redeemed on May 15, 2004 will stop earning interest.
These bonds are being called to reduce the cost of debt financing. The 9-18% interest rate is significantly above the current cost of securing financing for the five years remaining to their maturity. In current market conditions, Treasury estimates that interest savings from the call and refinancing will be about $544 million.
Payment will be made automatically by the Treasury for bonds in book-entry form, whether held on the books of the Federal Reserve Banks or in Treasury /Direct accounts.
And?
Corporations do this all the time. If you have the opportunity to replace high cost debt with low cost debt, you don't do it? If you don't, you should pop down to the local community college and take a course in basic finance.
BTW, America is currently going through the longest time period without a bank shutting its doors since WWII.
