More rants of a dead man

Today’s lesson on economics:

Economics 101 says if you (the government) print money it devalues very quickly because each bit is worth less because there’s more of it. Supply and demand, yada yada.

So our government is wisely not printing money. Yet.

Instead they are passing laws to spend Hundreds of Billions of Dollars on rescue programs and take-the-edge-off schemes to keep the hardest hit from getting hit harder. Okay. I’ll buy that.

But where’s all this money coming from? Well, we’re (again the govt) already trillions in debt, we don’t actually have this money. We have to borrow it.

Now we’ve been borrowing money for decades, and now we’re borrowing lots more mostly from asian countries from what I hear. They say if you owe somebody 10 dollars you’ve got a creditor. If you owe them a million you have a best friend. It’s in that person’s best interest to not let you fail so you can at some point pay him back.

Well, at this point, it seems unreasonable to assume that the U.S. will every actually pay off all its debts, and really, it should not (we need all the friends we can get), as long as we keep up paying the interest, everybody will be happy. (That only goes so far though because eventually you borrow so much you can’t make your interest payments.)

But since we have no realistic intention of actually paying back this money, how is it different from printing it?

Fascinating isn’t it.

This entry was posted on Monday, October 27th, 2008 at 8:11 am and is filed under Notes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.