Friday, July 10, 2009

Can we really print our way to inflation?

I read an interesting article at one of my favorite blogs. He basically came up with the idea that if all countries were to bail us all out of our current debts via printing money, then we could get back to an inflationary scenario, while currencies would remain comparatively unaffected.

The blogger at "Economic Disconnect" (it's a great blog) always gives me food for thought. Here is the article

My reply to the article is what follows:

I was hit by the same thought as you. It is quite the head scratcher. Except for the fact it is not free money that is being printed. It is money we the tax payers will have to pay back.

Also most of this printed money is going into big pockets, not my pockets, yet I who get no benefit, retain all the burden of that debt. The only way the inflation scenario could work is if the bailouts bailed me and the rest of the middle class out of all our debt. If that happened then our money could once again chase products, causing their value to rise, causing demand to rise, causing production to rise, thereby causing inflation to overcome deflation which could lead to a reversal of the unemployment problem.

The only problem is this does not appear to be the true underlying goal. The true underlying goal appears to be big financial takes care of itself and eachother and the rest of us and our children can pay for it although we recieved no benefit.

Even if my better scenario actually could come to pass, and we the people were bailed out, we would not really be bailed out. If we were in a system where the treasuries of all the countries printed more and bailed us out then it could possibly work, for all money would devalue at the same pace, as is true with our past. (todays dollar is worth a nickle comapared to 1930's).

But We are not in a system where the treasuries can print and bailout.

We are in a system where we borrow the bailout money from the Central banks. Therefor in our current system even if we did bail out ourselves, it would not be a true fix because our taxes would have to be raised by extreme amounts to pay back the central banks to keep this party going.

The only true fix is to take our punishment, suffer through the correction that needs to take place, stop borrowing (enslaving ourselves to the central banks), and Abolish the Federal Reserve.
Sign the petition here.

1 comment:

  1. Hello,
    I am the author of the article you referenced in this post. I wanted to say thanks for linking to me and thanks for the kind words. I am glad you like my writings! I think your response is both well reasoned and sharp. Keep up the great work.