As of February 2010 the United States Federal government was $12.4 trillion in debt.
http://www.marketoracle.co.uk/Article1571.html
By July 2007 State and local governments owed $2 trillion (and this would be around $5 trillion by now if state and local debt has increased by the same percentage as the federal debt has from July 2007 to now).
Government in America at each level is allowed to rack up financial liabilities that a corporation is bound by law to count as current debt, but which state, local and federal governments don?t count yet. Including what the federal government would owe in the future for things like Social Security and government pensions would put the federal debt somewhere around $60 trillion by July 2007. At the same time the average American household owed $112,043 in mortgage, credit card, auto loans and other consumer debt obligations.
The American economy is hogtied by debt. Our economy cannot get out of recession, let alone grow, as long as Americans carry their current debt load. Other than declaring bankruptcy and allowing our creditors to seize our physical assets, the quickest way to reduce our debt is to inflate the money supply. Printing money would mean more money in circulation so more money would be available to pay off debt.
But, paying off debts with inflated money means that debtors will not pay back as much as they borrowed since the money that was borrowed could buy more than the money that is paid back can because of inflation. Loaning a dollar that could buy an 8 ounce cup of coffee and getting paid a dollar that could only buy a 7 ounce cup of coffee means that the lender has lost money.
Having lenders take a hit wouldn?t necessarily be a bad thing since lenders that have offered easy credit for the past thirty years deserve some of the blame for the economic bubble that burst in 2008. Both lenders and borrowers were equally greedy. They fed off of each other and they took equal advantage of each other.
However, I still have vivid memories of the Carter Administration. What had been an annual inflation rate averaging 6-8% or so under Nixon and Ford became a monthly inflation rate that was often measured in double-digits under Carter. Carter?s economic fiasco was based on printing money (as opposed to the Reagan/Bush/Clinton/Bush/Obama economic fiasco that is based on borrowing). I fear inflation more than I fear any other disaster, natural or manmade short of a WMD attack. Intentionally inflating the money supply to pay off our debt could also increase consumer prices to the point that the economy would be just as bad off.
As a conservative I support sound money, but more and more I worry about what our debt will do to our future. We are in a hard place and it will likely get harder no matter what we do or don?t do. But if our future is to be destroyed, perhaps an inflationary money supply, that we may be able to recover from in time, will be better than being foreclosed on by the likes of the Red Chinese.
http://www.marketoracle.co.uk/Article1571.html
By July 2007 State and local governments owed $2 trillion (and this would be around $5 trillion by now if state and local debt has increased by the same percentage as the federal debt has from July 2007 to now).
Government in America at each level is allowed to rack up financial liabilities that a corporation is bound by law to count as current debt, but which state, local and federal governments don?t count yet. Including what the federal government would owe in the future for things like Social Security and government pensions would put the federal debt somewhere around $60 trillion by July 2007. At the same time the average American household owed $112,043 in mortgage, credit card, auto loans and other consumer debt obligations.
The American economy is hogtied by debt. Our economy cannot get out of recession, let alone grow, as long as Americans carry their current debt load. Other than declaring bankruptcy and allowing our creditors to seize our physical assets, the quickest way to reduce our debt is to inflate the money supply. Printing money would mean more money in circulation so more money would be available to pay off debt.
But, paying off debts with inflated money means that debtors will not pay back as much as they borrowed since the money that was borrowed could buy more than the money that is paid back can because of inflation. Loaning a dollar that could buy an 8 ounce cup of coffee and getting paid a dollar that could only buy a 7 ounce cup of coffee means that the lender has lost money.
Having lenders take a hit wouldn?t necessarily be a bad thing since lenders that have offered easy credit for the past thirty years deserve some of the blame for the economic bubble that burst in 2008. Both lenders and borrowers were equally greedy. They fed off of each other and they took equal advantage of each other.
However, I still have vivid memories of the Carter Administration. What had been an annual inflation rate averaging 6-8% or so under Nixon and Ford became a monthly inflation rate that was often measured in double-digits under Carter. Carter?s economic fiasco was based on printing money (as opposed to the Reagan/Bush/Clinton/Bush/Obama economic fiasco that is based on borrowing). I fear inflation more than I fear any other disaster, natural or manmade short of a WMD attack. Intentionally inflating the money supply to pay off our debt could also increase consumer prices to the point that the economy would be just as bad off.
As a conservative I support sound money, but more and more I worry about what our debt will do to our future. We are in a hard place and it will likely get harder no matter what we do or don?t do. But if our future is to be destroyed, perhaps an inflationary money supply, that we may be able to recover from in time, will be better than being foreclosed on by the likes of the Red Chinese.
