Here is why printing money is little different from selling Gov. Bonds to deficit spend. - Page 2 - Politics Forum.org | PoFo

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Everything from personal credit card debt to government borrowing debt.

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#14984066
Steve_American wrote:@Crantag,
I respect your opinion and will not argue against it. But, it is just an opinion.
Also, you gave no reason or evidence to back it up so I can't argue against your reasons.

Would it solve your bookkeeping problem if the Fed. bought some bonds and never redeemed them or just rolled them over forever? It seems like it might.

I'm not sure you know how much of this I'm advocating. I'm not even sure I know how much I'm advocating. As much as necessary, I guess.

BTW, I have seen reports that during WWII the Fed. bought about half of the war bonds that were sold. This is an example of massive "dollar printing" and it didn't seem to cause any problems during or after the war. But, we must remember that during the war there was rationing in place for food, fuel, and tires, etc.

PS --- Did you mean 'real world negative consequences' or "real big negative consequences"? I assumed real world.

This is a place for kicking around ideas.

I raised that as a consideration.

I didn't resort to evidence, because I instead resorted to logic, and accounting technique.

As a practical matter, dollars are probably printed all the time, because they can be, and because people want dollars.

A more prescient case is probably that of Euro Dollars. The dollars that are received to purchase oil in the Middle East don't return to the US, at least as a matter of design. Instead they go to Europe, and are used in the dollar trade, or something like that. This was set up at least by the 1970s (perhaps as an aspect of Kissenger's deal in Saudi Arabia, to end the oil crisis, if I'm not mistaken).

That's not tangential to this topic; what it amounts to is a huge pool of dollars, which also is able to be tapped into; at the same time, the intended function of it is to prevent the resultant proceeds in dollars of the oil trade from effecting the US domestic 'money supply'.

Sorry if my posts are too vague for you, but my considerations are also vague. Paradoxically money is a matter which is rarely dealt with in economics, and so we are sort of left to feel our way through the wilderness.

I've been thinking deeply about money, and reading a bit about it, for years, but still don't really understand it.

My intuition is still that printing dollars willy nilly is a very bad idea, mostly for the reasons usually mentioned (currency depreciation). I would in fact point to the Euro Dollar institution as an example of the powers which be making the same judgement, because the result of the dollars which purchased oil flowing back to the US directly would be somewhat analogous to the excessive printing of dollars.
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