Wednesday, 11 April 2007
Why not just print the money? -
OK, so the problem with simply printing money to pay for government programs is that it causes inflation, which is bad because everything will then cost more, the money that people have saved up will be devalued. Deflation, while it sounds cool to have prices go down, is also bad. It comes with decreasing wages, and while the value of anything we took out a loan to buy goes down, the value of our debt goes up. This includes the national debt. According to the latest consumer price index, we experienced a 1.9 percent declinehttp://www.bls.gov/news.release/cpi.nr0.... This could mean very bad things to come for our economy, and for anyone who has a mortgage or any significant debt. Since we have entered a very dangerous cycle of deflation, it almost seems like the cure will have to be printing off a bunch of money to induce the necessary inflation to offset the deflation. This creates a unique opportunity for the government to use this newly printed money to pay for the rebuilding of our infrastructure, while also establishing better mass-transit systems, building bicycle lanes, and taking other measures to reduce oil dependency. Of course, there will be a lot of workers needed to complete all of these projects, and since the government is already going to be spending on unemployment and welfare benefits for all the construction types who have found themselves out of work in the wake of the housing crash, why not make them earn their pay? I, however, am no economist. Can someone give me a clear explanation as to why I might be wrong?|::::|Deflation is NOT bad so long as everything stays in sync. You are looking at stealing from savings for example of elderly who prudently saved all their lives and can t make it up by higher wages because they are too old. You are, amongst other things, stealing their independence and forcing them to become public charges. - you are robbing wealth to pay your debt. Debt is bad, not deflation. the fed and treasury are stealing from those who were more prudent to deal with their own earlier bad judgments which already stole from us with inflation. Peg the dollar to gold, and we get stability and no need for the Fed. Both good things. However, we d have to budget. Another good thing.|::::|Because you just can t print money to have an increase in the money supply without a corresponding increase in productivity (e.g. businesses growing, people with jobs, technology advances, etc.) because inflation would be through the roof, and that s not good for anybody.|::::|That does sound like a good thought, BUT the more money the government prints out, the less the American dollar amounts too!!!
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