Why printing money makes sense

[CHIMO]

President Reagan once famously quipped that everyone who is supports abortion has already been born. In the same vein, it is worth noting that all the policymakers who don't think we should worry about 9.6% unemployment have jobs.

This simple fact cannot be repeated enough times because it explains a huge amount about current economic policy. For the tens of millions of people who are unemployed, underemployed or have given up looking for work altogether, we are in a crisis. The economy is an absolute disaster, ruining their lives and also jeopardising the futures of their children and grandchildren.

But that is not the way that the people paid to contemplate economic policy in Washington see things. This gang is busy congratulating themselves because things could have been worse. They point out that if they had been even more incompetent that we could be in a second Great Depression with unemployment staying in the double digits for a decade.

Instead of worrying about the millions of unemployed workers today, they are worried about their deficit projections for the years 2018, 2020 or even 2025. This crew, which could not even see the $8tn housing bubble that was about to wreck the economy, wants the whole country to genuflect before their projections of deficits for 10-15 years into the future. This situation really would be funny if it did not lead to so much unnecessary suffering.
http://www.guardian.co.uk/commentisfree/cifamerica/2010/oct/11/useconomy-usemployment

[DeSwiss]

1. K&R

Very well said.

[whyverne]

2. But the U.S. has to save money for it's old age or something.

Anyway, stop making sense.

[Art_from_Ark]

3. What the author fails to mention with his scenario

is what happens to people left holding the counterfeit notes when they are finally recognized as such. They lose whatever value they thought they had-- every bit of it. $2 trillion in counterfeit notes would be the equivalent of $6666 for every man, woman and child in the USA. What sort of economic repercussions would there be for people left holding the bag, as it were?

As for countries printing their way to prosperity, Zimbabwe is but the latest example of countries that went that route and failed.

[Po_d Mainiac]

4. The author fails to consider lots of little realities

Like the fact that lots of extra money starting to show in a short time-frame will create enough demand that someone will realize they can RAISE some prices. And then someone else gets out an old dictionary and they find this word that fits the situation real well.

That someone is so proud of this newly discovered word, he actually utters it out loud in a crowded theater. Thousands in the balcony hear the word, and hundreds die as they all try to use the exits simultaneously, because they all know the last guy out is always ruined.

The word of coarse is "inflation

ps...The Zimbabwe stock market had some unbelievable gains!

[Art_from_Ark]

5. A few more comments about the counterfeit note scenario

That one have to be one hell of a sophisticated operation. Not your garden-variety boiler room counterfeiting operation, that's for sure. It would require involvement at the government level.

The highest denomination note currently in circulation is the $100 bill. Uncle Sam at one time also issued $500 and $1000 notes (last printed in 1969), but the sudden emergence of millions of crisp new $1000 or $500 notes would raise quite a few eyebrows, in banking circles and in the numismatic community, not to mention the Secret Service. And I will guarantee you that the numismatic community, at least, would be able to spot fakes of these older notes pretty quickly, even if the Secret Service was stumped! So for all practical purposes, the counterfeiters would be limited to a maximum face value of $100 per note.

Assuming now that the counterfeiters limited themselves to $100 notes, they would have to print up a minimum of 20 billion notes. 20 billion notes would require a hell of a lot of paper and ink, not to mention plates and presses. And you can't just go down to Home Depot and load up on paper and ink, either. The "paper" used in US notes is actually a very special kind of linen (that is why it survives ordeals in washing machines), and the ink is also a special kind that does not smear or run.

If the notes were passed off in the US, they would have to be passed VERY discretely-- a few at a time, and not too many in the same place. It would take a long time to dispose of so many notes in this way.

However, if some rogue government were behind such an operation, which is in all likelihood the only way it could be pulled off, then the notes would most likely be passed overseas, out of the US, probably in 3rd world countries, former Soviet republics, etc., so they really wouldn't have any effect in stimulating the American domestic economy anyway.

[golfguru]

6. I have a friend who works for the Secret Service

He spends more time chasing counterfeiters than protecting VIP's.

[Art_from_Ark]

7. I have no doubt that the Secret Service guys are on top of things

with regard to currently circulating currency-- I just wonder about how skilled they are with regard to the obsolete stuff. I do know that in the numismatic community, there are dealers who specialize in paper money, as well as paper money certification services, and it would be pretty tough to get a fake $500 or $1000 note past them. At any rate, with paper money specialists and the Secret Service looking out for fakes, it seems extremely unlikely that that hypothetical $2 trillion counterfeit note scenario could ever be pulled off in the US.