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Archive for the ‘Can You Just Print More Money To Save The Economy?’ Category

Is the government really printing money to get us out of debt? The answer is yes. This is a question that is not much of a debate, because if you just look at other countries who have done this then you know what happens. This is a public post I found from someone named Carmela who is from Argentina:

“Well, I grew up in South America where our government in Argentina did this many times through my growing up years.  We had to live within our means no matter what but I thought that was just the way life was!  We stocked food, and always had cash and savings for a rainy day.  Our peso was pretty worthless.  I remember many times when the government came up with new currency so our bread wouldn’t cost a $1,000.”

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Anyone who is aware of a situation where this has happened, or who has had history lessons knows the outcome of this ‘great idea’. It is very important to take a look at history before we make catastrophic decisions that affect others. I am by no means an economist, but I can quote one from the history news network:

Just how much money is the U.S. government printing to meet its debts? Steven Horwitz, professor at St. Lawrence University, and co-author of The Austrian Economists blog, explains that the amount of money printed in the past few months since the October economic crisis, has been absolutely unprecedented in U.S. history. “Since September, the ‘monetary base,’ which is the measure of currency plus bank reserves, has doubled from about $850 billion to $1.7 trillion, about $600 billion of which is in the form of bank reserves,” he says. When the Fed wants to raise money for the government it sells government bonds. The more bonds it sells the more money it raises. As long as there are buyers the government can raise as much money as it needs. If the buyers grow skittish the government can raise the yield on the bonds to make them more attractive. Most of the time the Treasury sells bonds either to private investors of governments like China. But it can also sell them to the Federal Reserve. When the Fed buys bonds it can pay for them simply by printing money.

If there is more of something, then it is worth less. Imagine you had thirty hungry people and thirty bowls of rice. You could sell each bowl of rice for whatever price you choose…lets say $2.00. But if you had fifteen bowls of rice and thirty hungry people, the rice would be worth $4.00…because there is less of it. So essentially by printing more money we are making it worth less.

I really don’t have much to say about that. The numbers and history books speak for themselves. So what DOES happen if someone tries to print more money to get out of debt? The answer is in one word: Inflation. We may quite possibly be about to see the highest inflation rate to ever hit the United States, and the money in your bank account may not be worth as much as it is now.

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