Discussion in 'Economics' started by morganist, Nov 4, 2010.
Why do you think the fed in printing money?
Unlike eg China, which can and does devalue by fiat, the US has to physically print more to keep up with the rest of the world.
The fed is printing because a larger portion of money is going to pay down debt in both the consumer sector and in the business sector. The fed cannot print enough to either
A: make up the difference between historical levels of money supply in the economy and the currently depressed levels
B: Provide sufficient money supply to keep debtors from defaulting on their debts
Lower rates serve the function of B, but A is difficult if not impossible to do without large job creation projects and large main street style investment projects which the administration is so indifferent about. The psychological of a balance sheet recession is well documented, and massive amounts of indiscriminate stimulus often only stimulate more downpayment of debt, and reduction of any new debt.
I have a small business and the bank keeps literally offering me more credit cards 3% above prime so I can grow.... the manager calls and is putting on the sell, if thats not a sign of a balance sheet recession in the business sector, I don't know what is.
To help Obama get re-elected.
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