My take on it thus far is this: We didn't actually print all that much more money but instead borrowed it. Borrowing money is other people betting that our GDP will continue to grow, that we'll keep inflation relatively low and that the increase in tax dollars coming in will make the debt worth something.
Printing money though is a different matter. Since we don't have a gold standard or anything the "value" of the dollar is based roughly on what our country produces. If we start printing a bunch of money without an increase in the value of what our country produces, then the "value" of the dollar decreases, which means inflation. It also means that our debt being held abroad decreases in value which pisses off a bunch of people that we'd prefer not to piss off. It would make it easier for us to pay off that debt but if the value of what we are giving them is not what they expect then people aren't going to be buying our debt anymore, which puts us in a sticky situation. US government debt is fairly liquid, there are plenty of people out there to buy it...as of now. If people stopped buying our debt then we'd run into the same sort of credit crunch that we have been dealing with in the banking industry. The US has monetary obligations just like companies do and like companies the revenue inflow isn't constant and there is need to invest here and there to make things work and grow. So yes, we want to pay debt down but not in such a way that it means that people don't want to buy our debt anymore because even with a balanced budget (ha!) we'd still need access to debt markets. Printing up a giant amount of money would threaten those markets by making the dollar value plunge and also by causing volatility in other markets that are pegged to the value of the dollar. That secondary effect would probably mean that we'd cause such an upheaval elsewhere that we'd *really* screw the market for our debt. Anyway, that's my basic understanding on it. Take it with a grain of salt as not only am I not an expert, I think that this is an area where the "experts" aren't even really experts because the situation is rare enough and the system complex enough that we don't have enough data to really say exactly how it would go. Judah ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:286492 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
