When I use “Funny Money” I’m talking about printing money in excess. IOW let’s say we “Funded” the stimulus bill by simply adding 800B$ to the current system. As your article points out this can lead to inflation and with such an “Excess” this would almost without question lead to inflation.
I once watched a thing on the discovery channel about the fed and and bureau of printing and engraving. The one thing that really amazed me is how odd it must be to be the people actually “Printing” the money. I’m sure it’s one of those things you just “Get used to”, but standing next to a pallet of 100$ bills…crazy.
What we’re really taking about is living a realistic, non inflated, sustainable lifestyle. I agree this needs to be our goal, I just don’t see what we are doing now leading to that.
On Friday say “Hey China, sorry all of those bonds you have are worthless.” Then boom, we have removed all of that debt obligation.
As long as you took away the asset value from the Balance Sheet at the same time. The latest H.4.1 release from the Fed is sitting at $1.853 Trillion as of Feb. 4.
It is up $1 Trillion since Feb. 08, when it was at $873.8 Billion.
I’ll give you a hint: While it is true that the government cannot create wealth, it can create money.
Not that I disagree, but here’s another one. While it is true that the Government has the Constitutional authority to be in charge of the monetary system; we’ve “outsourced” that priviledge to a quasi-private entity with the name “Federal Reserve System”. Not Federal, no Reserves, and the only part of the system that is working is the part where that Cartel enriches itself by creating money out of thin air and charging the Country and Americans Interest on that inflationarly money that the Government could have created on its own without the added interest fee.
and read “The Creature From Jekyl Island” which is a (scary) history of the Fed. Last chapter is extraordinarily frightening. It’s a “what if” scenario on how the US could eventually succumb to utter and complete economic chaos and the bad part is that most of it has already happened…
China will keep buying US debt not because it has too, but because its the least painful way forward. It wants a strong US dollar to keep it’s currency down so that it is competitive and people will buy its products. Additionally, the US is the largest consumer market in the world so it’s in China’s interest to try and keep the US strong and buying.
This will not be popular but its the truth. Make no mistake about it, the US is just as dependent on China as China is on the US. The two countries are locked together and if anything, its arguable that China has the upper hand. If China wants to sink the US (and I mean pearl harbour sink) all it has to do is stop buying treasuries. Its that simple. The treasuries market would collapse as would the dollar as would the US. It would collapse like Madoff’s ponzi scheme and the truoble so far would seem insignificant.
Would this hurt China? Absolutely, it would hurt the whole world, but it would hurt the US *FAR *more. China could focus on accelerating it’s transition to a domestic demand driven economy but America without access to cheap products and international money it just plain fvcked. It really is that simple.
Bear in mind the Chinese are already losing money on the treasuries they buy. They keep buying them because the least painful way forward is trying to support the USD and generally helping the US out. It is not the only option though.
Why do you think the “buy america” provisions were removed? Becasue if the US sends China the message that it won’t buy it’s products anymore China has the power to send the US to the gutter. This will continue to be the case until Americans start leading as MJuric puts it “realistic, non inflated, sustainable lifestyles” and balancing budgets.