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Why It's Absurd When People Say: "Well, The US Can Always Print Its Way Out Of Debt"

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posted on Aug, 9 2011 @ 11:13 AM
this is a great article that explains why most of us are all jumping on Greenspan for his comments that we can just print our way out of this recession.

One reason, probably, there's been so much incredulity at the S&P downgrade of US credit is the simple fact that the US pays all its debts in dollars.
Former Fed Chair on Alan Greenspan summed up the sentiment: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press.

This is basically true, but it's also interesting that Greenspan in the past has expressed alarm about the ballooning size of the national debt.
So it would seem that the Greenspan view of the debt is: It's a big problem, but if the US needs an escape hatch, it can always reach up and hit the PRINT button, and take care of things.

But the printing press is not an escape hatch, or an emergency measure.
It's actually the basis of how the US spends money. Currency in circulation has done nothing but go up for basically ever.

And it's got nothing to do with The Fed or anything like that. While the Fed Funds rate has gone lower over time, no period of "tightening" (reverse printing, if you think about it that way) has ever had an impact on the amount of money there is out there.

There's also no discernable correlation between the amount of currency out there, and the value of the dollar. For a long time, the value of the dollar rose alongside the amount of currency.

Finally, one more. There's definitely no relationship between the amount of money out there, and the rate of inflation, which generally has trended lower since the early 80s.

So, the bottom line is, currency continues to go up without inflation, regardless of the Fed's activities, and basically independently of the value of the dollar.

In other words, we're always printing. It's not an escape hatch where we go into inflation overdrive to pay our debts. It's just what we do every day. And the market is fine with it.

The Greenspans and the S&P's seem to think that printing is an emergency measure. The market intuitively gets that it's not a big deal.. That's why US yields don't spike when credit is downgraded. And it's why UK CDS (a country that prints money) are now lower than German CDS (a country that can't print money).

Where printing money is the foundation of the monetary system, markets don't freak out about the debt. Countries that are reliant on a third party to print money (like Italy hoping that the ECB will bail it out) do have problems. Source

so there it is don't worry if you are confused I am too.

basically this article explains the lie that is our monetary system and how it ONLY relies on the people to give it value.
why are we so special that we can increase our paper cash reserve with nothing to back it up and still have no inflation. it just doenst make sense, but thats how it works and how we are all used as slaves.

$$$$$$$ is not worth the paper its printed on PERIOD.
edit on 8/9/2011 by -W1LL because: img

edit on 8/9/2011 by -W1LL because: (no reason given)

posted on Aug, 9 2011 @ 11:17 AM
They didn't think of printing more fake money to pay the fake debt? Yeah right, that's too obvious a solution.

Maybe they need more printing presses as the few they operate are not covering the volume necessary.

Save the fake economy! Build 10 more printing presses.

What a joke.

posted on Aug, 9 2011 @ 11:26 AM

Originally posted by -W1LL
this is a great article that explains why most of us are all jumping on Greenspan for his comments that we can just print our way out of this recession.

Note also the numbers from the graph.
Currency in circulation is about ONE trillion dollars.
But since the debt is nearly FIFTEEN trillion dollars, those printing presses are going to have to be rather busy.

Or to put it another way, to pay off the US debt, that dollar bill in your pocket will plummet to one sixteenth of its current value. But yeah, technically speaking, the debt will be paid off.

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