The cost of printing money

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GR8TFUL's picture
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The cost of printing money

Except from an article in today's New York Times:

 In the case of the Fed, the money comes from its authority to print dollars from thin air. Since late August, the Fed has expanded its balance sheet from about $900 billion to more than $2.2 trillion, creating $1.3 trillion that did not exist to replace some of the trillions wiped out by falling house prices and vengeful stock markets. The Fed has taken troublesome assets off the hands of banks and simply credited them with having reserves they previously lacked.

In the case of the Treasury, the money comes from the same wellspring that has been financing American debt for decades: Investors in the United States and around the world — not least, the central banks of China, Japan and Saudi Arabia, which have parked national savings in the safety of American government bonds.

Americans have gotten accustomed to treating this well as bottomless, even as anxiety grows that it could one day run dry with potentially devastating consequences.

The value of outstanding American Treasury bills now reaches $10.6 trillion, a number sure to increase as dollars are spent building bridges, saving auto jobs and preventing the collapse of government-backed mortgage giants. Worry centers on the possibility that foreigners could come to doubt the American wherewithal to pay back such an extraordinary sum, prompting them to stop — or at least slow — their deposits of savings into the United States.

That could send the dollar plummeting, making imported goods more expensive for American consumers and businesses. It would force the Treasury to pay higher returns to find takers for its debt, increasing interest rates for home- and auto-buyers, for businesses and credit-card holders.

“We got into this mess to a considerable extent by overborrowing,” said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. “Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch, and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”

To see the full article:

Gregory K. Soderberg's picture
Gregory K. Soderberg
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Posts: 32
Re: The cost of printing money

I don't understand how a nation with the authority to coin money must ever need to borrow, be in debt or lacking for money. Would you be in debt if you could create your own money? Would you borrow it from yourself and pay yourself back with interest? America's medium-of-exchange has been switched from an evidence of wealth to an evidence of debt. We're not free. We're in economic servitude. Let's once again create and put all new money into circulation debt-free.

jneo's picture
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Joined: Jan 7 2009
Posts: 742
Re: The cost of printing money

Gregory K Nailed it.  This country was taken over in 1913, and the power of the people does not matter to these bankers.  

 In the past every time a government or established society issued it's own debt-free currency, economic freedom, expansion, low to no unemployment was happening.  Also inflation was none existing.  Due to the money supply increasing at a rate that matched the economic growth through goods and services.  Along with peoples purchasing power was also in line too.  Funny thing is, every time economic growth was happening, somehow a WAR broke out forcing governments/established societies to borrow money.  From the times of Christ till now, the same pattern repeats.  

 So it's not Conspiracy theory.  It's established fact. CONGRESS NEEDS TO ISSSUE IT'S OWN DEBT-FREE CURRENCY. With strict fiscal responsibilities.  No nation building.   

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