Printing Money or Borrowing Money: Which Are We Doing, and Does It Matter?

One of those headlines you basically only see on Drudge now notes that the Federal Government is borrowing 50 cents out of every dollar it is now spending--which is one way of looking at the 2 TRILLION dollar deficit we are now facing (as spending absolutely explodes out of all reason and control). Does anyone doubt my entry last week about President Obama being a "comic genius". Remember his "promise" (lol) to put the Federal Government on a "pay as you go" basis? The man is hilarious.


"Wait", you say. "How can the Federal Government "borrow" that much money without crowding out private credit and causing interest rates to rise--cutting off any possible recovery?


It can't, and it isn't. You forget the "solution" of the newly minted economic fascists ("socialism with a capitalist veneerm" on Wall Street to this "problem"--a "solution" adopted by the Obama Admiistration and the Fed. How do you "lower" interest rates at the same time the government is borrowing os much money? Easy. Have the government buy its own IOUs. I kid you not. The government is "financing" its own debut, and artificially lowering interest rates, by "buying" its own paper. It is like a company financing its actities with a loan, and then "paying off" that loan by lending the non-existent money to itself by issuing an IOU. When a government does this it is merely PRINTING money, which only the Federal Government can do. It is further making a SUSTAINABLE recovery impossible, since both inflation and interest rates are only kept in check so long as the economy is flat on its back.


Drudge actually makes this point with the main Drudge headline right now (below the subheadline about "borrowing" 50 cents of every dollar the Federal Government is spending). "Printing" is that simple, and accurate, Drudge headline, under a picture of money.


That is exactly what we are doing. We are preinting money. If "economics" were this easy, think of how dumb the wole world has been all of these centuries (inclluding kings hving to raise money--which had more to do with the eventual rise of parliament and democracy than probably any other factor). How deluded everyone was before the Age of Obama and the new "theory" of economic fascism adopted by Wall Street. All we had to do was PRINT MONEY to "solve" the Great Depression, and any other problem we ever had--NOT.


The Weimar Republic (Germany) tried that. The result was Hitler. The idea that you can arrive at long term prosperity by this kind of central planning and printing of money HAS been tried. It has never worked, and theoretically CAN'T work.


Too bad for us that we are committed to this course of action. Do you wonder that this blog is pessimistic, and has suggested that we are in the equivalent of the last days of the Roman Empire (not having lasted, of course, nearly as long as the Roman Empire).