Noob/ serious question. Why can't the USA just print more money to pay off the $19 trillion debt?

a reply to: NeoSpace

There is nothing inevitable about hyperinflation. Pretty much every developed economy has a fiat currency. How many have had hyperinflation?

originally posted by: Richsac89
I never paid any attention in economic class and had just barely caught on as to why raising the minimum wage comes with a catch. So serious and amateur question, why can't America just print more money to pay off the $19 trillion debt to foreigners?

Perhaps a better question is to ask why is every country in the world in debt and to whom are we in debt too. Please don't say each other because that would means that all we had to do was to forgive each others debt.

But back to your question.

The Governments in countries other than the US has the power to create and issue the nations money free of interest. The evidence for this is that it was the government itself that gave the banks the authority to create money out of thin air. Where do you think the banks got it from otherwise? Do you think they got it from being a higher level of government than the government we elect?

We the people elect the government to serve our interests so why would the government not reserve for itself and therefore the people of the nation they are supposed to serve, the power to create money and credit? Giving away this right to the banks only raises questions as to their motives for doing so..

If they had kept this power for itself, it could create all the money it needs for the best health, education, social security, defence and national infrastructure such as roads, ports, railways, scientific and technical research etc, that money could buy.

What do you think of a government that refused to retain for itself the privilege to print money it gave away to the banks and now you have to pay tax simply because as the government now cannot create the money it needs, so it has to go cap in hand and borrow money from the banks which you pay the interest on.

For the govt to refuse itself a privilege it has given to the banks is the height of what? Where is the loyalty of those forming the govt who did this act.

For the Government to refuse to itself a privilege it has granted to the banks, is the height of imbecility!
If the Government issued its own money for the needs of society, it would be automatically able to pay for all that can be produced in the country, and would no longer be obliged to borrow from foreign or domestic financial institutions.
The only taxes people would pay would be for the services they consume. One would no longer have to pay three or four times the actual price of public developments because of the interest charges.

The governments, despite statements that are often stupid, are perfectly aware of the iniquity of the creation of money by private companies, but they dare not to challenge the money power, for want of support among the population.

The only thing that is lacking is the education of the people, to show the falseness, the absurdity, and the injustice of the present financial system, and the existence of a corrective system. - Ref: David Kidd

In a sense this is what the Fed has actually been doing since 2008.

Most of the money created by Quantitative Easing has been used to buy government bonds, or government debt. Propping up the value of those bonds.

There is currently a vast and unprecedent excess of money in the system, thanks to all the QE. And nobody quite knows what will happen because we're in uncharted waters.

Central banks around the world have recently been toying with plans to try and get some of this excess cash that is sloshing around back out of the system. But that's likely to slow already stagnant growth and trigger recession.

So they've basically created a huge problem, and nobody really knows what to do about it.



However to answer the exact question more directly, as others have said, you can't just create 19tn in cash and use it to pay off the debts, because that triggers hyper inflation. It makes the existing money be worth, well, exactly 19th less than it was before you created it.

The reason they've been using QE money to buy government bonds, rather than pumping it directly into the economy is, I think, to avoid the problem of inflation. If the money had just been going straight into the economy, then a loaf of bread would be costing you $20 now.

When it takes a barrow load of one million Mark notes to buy a loaf of bread, (Weimar republic) that is why printing money 24/7 does not solve a nations monetary crisis, I used to have a million mark note, black printed on white paper, one side only, I wish I still had it, and could upload a scan.

Reminds me, I'll google that, see if there are any pictures.

Good lord, yes there are! one hundred million mark notes!!!!!!!! I typed in million mark notes on Google.

originally posted by: pikestaff
When it takes a barrow load of one million Mark notes to buy a loaf of bread, (Weimar republic) that is why printing money 24/7 does not solve a nations monetary crisis, I used to have a million mark note, black printed on white paper, one side only, I wish I still had it, and could upload a scan.

Reminds me, I'll google that, see if there are any pictures.

Good lord, yes there are! one hundred million mark notes!!!!!!!! I typed in million mark notes on Google.

I think what the OP means is not to print 19 trillion and release it to the publich (which would create hyperinflation), but use that (printed) money to pay off the debt outside the US.
So, for example if US is owning China 1 billion dollars --- then they load a plane full of printed money (1 billion) and send it to China

And so on ...

a reply to: Richsac89

when they print money - immediate debt is attached to it. So yes they can print ,but you will be in more debt and just go around in circles.

once the Fed-reserved call in the debt and it cant be paid. It will lead to a depression where money is worth nothing.
so how does one pay off the debt - with meaningless paper with pictures on it? No....more like assets that are worth a real value. Such as land, Armies etc etc

originally posted by: imjack
... what is the current m2 money supply? 12 Quadrillion.

The current United States money supply is 12.5trillion.

Second source.

originally posted by: AugustusMasonicus

originally posted by: imjack
... what is the current m2 money supply? 12 Quadrillion.

The current United States money supply is 12.5trillion.

Second source.

But modern money mechanics says any deposit can be inflated 10x!

Jk.

a reply to: Richsac89

A dollar is like a tiny little check in a sense. It represents something of real worth somewhere that has been produced in the economy. At least, that's the what way it's supposed to work.

In the oldest days, people bartered their real goods and services back and forth. Currency was created to allow more complex exchanges. After all, I can trade you 5 chickens for side of beef, but if I am a scribe and you have the beef I need but you have no use for my skills, we cannot directly trade. I either need to go through some convoluted process to acquire the direct goods you do need, or I am out of luck.

Currency was a means of circumventing this. My scribe skills do have worth and the currency lets us both trade the value of my scribe skills to you in currency for your beef. You can then take the currency and go trade it for what you need.

So, getting back to the US, if we suddenly just print $19T dollars, they are not representing anything of worth that our economy has actually produced. They may as well be so much monopoly money. Unleashing them into the economy as though they do represent something of worth, however, means that everything of worth currently in the economy and being produced must be represented by that many more empty dollars, or is what is called devalued meaning each dollar stands for that much less than it did before and you and I must them pay more dollars for each item based on the new adjusted value.

a reply to: Richsac89

Because if you could...you yourself could print some in your kitchen and pay off the debt for us. Use a kitten saying "PAID IN FULL!"

Obviously, you, we, they, them...can't just print more money. It would be worthless.

More financially astute members will explain below. I just thought it a ridiculous question whereas the answer is obvious...even to the most basic understanding of why conterfeit $$ is worth zero.

Sorry...respectfully speaing.

originally posted by: imjack
But modern money mechanics says any deposit can be inflated 10x!

If you say so, your number was still incorrect by several magnitudes.

a reply to: sHuRuLuNi

It would still cause the same problem. It is basically worthless paper backed by nothing. But hey, I'm sure China would be cool with being ripped off.

a reply to: AugustusMasonicus

I made some good points though, I even got a star.

It's almost sad the conclusion was madness.

originally posted by: imjack
I even got a star.

It's almost sad the conclusion was madness.

Wonderful. It shows that two people do not understand basic macroeconomics.

originally posted by: AugustusMasonicus

originally posted by: imjack
I even got a star.

It's almost sad the conclusion was madness.

Wonderful. It shows that two people do not understand basic macroeconomics.

Wasn't terrible for a first try.

Can you answer my question, what is the US money supply (in the US) against the money supply of US dollars worldwide? Seems pretty relevant for who inflation really affects if other people have lots of our money and we can print more.

a reply to: ScepticScot

Us debt is created by that very moving of those reserve notes, money, which are worth zero as they are created out of air because those Reserve notes, not Treasury notes, are backed by nothing.

NOTHING.

a reply to: Richsac89

We can print as much as our heart desires but if there is no gold, oil backing what we print, what we've printed is "i.o.u"s to the Federal Reserve. $1 dollar printed is a note (i.o.u.) back to the Federal Reserve, which is a PRIVATE CORP. (Like McDonalds is private, meaning not a US gov't agency)

When you write a check, you have money in your bank account to cover or back that check, aka note. But when you have no money in your checking account and you keep writing checks...you are now in debt to the bank.

Get it?

a reply to: Richsac89

I'll try it all in one comment:

Yes, the more of something that is out there, the lower the value of said thing. Therefore, if the Federal Reserve (Fed) begins just printing $19,000,000,000 dollars to pay off debt, the value of said dollar decreases dramatically, and what we owe other countries would increase dramatically to compensate (in theory).

Per the Fed:

There was approximately $1.4 trillion in circulation as of February 18, 2016, of which $1.38 trillion was in Federal Reserve notes.

Using very simple math, we can use that to understand that if the Fed did what you are asking, they would have increased the amount of reserve notes by 1,377%. In doing so, you see the value of each reserve note decrease massively, and a pack of hot dog buns that costs $2 now would end up costing (and this is just a guess based on the percent of increase mentioned above) $2,754. Again, that's just a semi-educated guess to make the point about what inflation does to the cost of things.

Now, also be advised that, as reserve notes (money and coins) age, the Fed can and does destroy it, and in doing so, keeps inflation in relative check (otherwise any time that they printed new money, it would increase the sum total in circulation, therefore decreasing the value of each dollar).

I don't think I need to get any further into detail on it. But just keep in mind that the Fed doesn't print every dollar that exists in the economy--there are digital monetary totals that exist out there without even a reserve note to back it up, so just because there is only $1.4-ish-trillion in circulation does not mean that this comprises the entirety of the US economic value in dollars.

originally posted by: SlapMonkey
But just keep in mind that the Fed doesn't print every dollar that exists in the economy--there are digital monetary totals that exist out there without even a reserve note to back it up, so just because there is only $1.4-ish-trillion in circulation does not mean that this comprises the entirety of the US economic value in dollars.

I believe the actual amount of printed/minted dollars in circulation world wide is roughly $600billion.