Liberal free for all coming to an end

[TracyCoxx]

Originally Posted by randolph

The debt can be paid back in cheaper dollars.
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The dollar amount of the debt does not go up, the "value" of the debt goes down by printing more money.

Yes, the debt would have to be paid back in 'cheaper' dollars. But that doesn't mean the debt is smaller now. I don't have time to look up the actual numbers, but let me try and illustrate where I'm coming from. Let's define the dollar as 2008$ and 2009$. For this example, let's assume we have a balanced budget and the debt remains constant at 10 trillion 2008$.

So then in 2009 the treasury prints a trillion dollars. Is America suddenly richer? No.

11 2009$ = 10 2008$ (again, not real numbers, just an example)

So in 2009 the debt, which remained constant, is now 11 trillion 2009$. Yes the dollars are now cheaper dollars. i.e. 1 2009$ = .91 2008$. But all that means is we have to pay more cheaper dollars to pay off the debt.

So the dollar amount of the debt DOES go up (in the new value of the dollar). But the value of the debt remains the same. (assuming a balanced budget). The value of the dollar drops, so in turn we owe other countries more, so the overall value (in terms of what we owe other countries) remains the same.

Originally Posted by randolph

"Deflates the value of our money" True, what I meant to say is that printing more money can cause inflation. That is, a rise in the price of goods, which is happening right now while we are still in a recession. All the money poured into the economy is being negated by rising prices.

The money poured into the economy is not negated by rising prices. Like you said in the same quote, it causes rising prices.

So anyway, where does this leave us on this?
It's never good practice to routinely run a deficit unless it's a national emergency.