Money Printing Nirvana

A huge quote from one of my favorite economic meltdown sites:

Economic Disconnect: Money Printing Nirvana:

Money Printing Nirvana

'...the weak economy likely will keep prices in check despite growing concerns that the trillions it's pumping into the financial system will ignite inflation.'

The FED feels that because wages are static or going lower and the price of an XBox is static or going lower they can create money unabated with no consequence.

Now, Economic Disconnect, you might say 'all that money is not going into new credit, hence there is no velocity of money, thus no inflation as it can only cover debt destruction'. And of course you are correct and the next step is deflation.

To this I would ask;
-If wages could be kept low (by economic factors or edict)
-If consumer prices could be kept low (by lack of demand or edict)
-If banks will not lend out money, but instead use it to write off debt (this may well be what is going on)

Then would it not be nirvana to simply print enough money to cover all debt, call it 'cancelled out' by all the new paper, and start all over again?

Indeed, this seems so devilishly simple I would wonder why every nation in the history of the world has not had this as their economic centerpiece.

And I think this leads me to my 'inflation' predisposition. You may define inflation as an increase in the money supply, but I could define it as de facto devaluation. If the US prints say 10 trillion dollars to absorb mortgage losses, credit card losses, commercial real estate losses and other losses not yet known then yes, that money never enters the money supply as new capital. But it was used to pay for the debt that was taken on and could not be paid back in real money. As a creditor you just got paid back with printed money that came from nowhere. At this point the currency has no moorings in reality (not that it does now, but if kept as a slow process the world accepts this as a cost of doing business) and thus any creditor will want either MORE of the dollars, or they will not want them at all and demand payment by other means.

This is the danger of the 'printing press', not hyperinflation because of a sea of money, but inflation due to limited desire for a particular money or a lack of belief in a particular money form.

Hence my concern we're getting severe inflation relatively soon (3 - 12 months). I think it's already started - I judge by our own costs and not some random government number based on eating hamburger instead of steak. *Sigh*.




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