“In my view,” says John H.Makin – a visiting scholar at the American Enterprise Institute writing in the Wall Street Journal – “the least bad option [in fixing the financial crisis] is for the Federal Reserve to print money to help stabilize housing prices and financial markets.”
“America is a country that owes money,” agrees Philippa Malmgren, a former Bush advisor and now head of a risk consultancy in London. “It is natural when you are a debtor that you lean in the direction of inflation, because it makes paying it back so much easier.”
The logic is simple: inflate the number of Dollars in issue, and you’ll shrink the real value of each outstanding Dollar you owe.
“US money supply growth is running at a 47-year high,” notes Bedlam Asset Management, “as the authorities seek to inflate away the debt bubble and prop up house prices.
“Clearly printing such huge amounts of money is not great for the exchange rate. A weak Dollar has forced the hand of other central banks as they try and keep their currencies competitive with it.”
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Posted by ian 5 hours 29 minutes ago (goldnews.bullionvault.com). Views: 7
Tags: debt housing bubble economics inflation
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