is printing extra currency to clear debts a sound economic tool?
August 10, 2011 8:48am CST
Warren Buffet in one of the interviews said that the problem with downgrading of the US economy is much deeper than merely clearing its international debts. If clearing debts alone was the issue then it was only a matter of printing additional currencies to clear off the debts. Is this suggestion a sane one based on established economic principles??
2 people like this
10 Aug 11
It is not. Unless the money is based on gold and even if it is not, the money printed is worth less. The best way is to cut regulations except for the obvious - not polluting and wasting - and increase production. Also get rid of duplicates of entitlements, and decrease excess spending.
10 Aug 11
Hi Preethaanju, China will not like it if US keeps printing money to devalue the currency. Imagine lending someone a dollar, and get back just twenty cents. Since US owes so many countries, it will offend many people by printing more and more money. I think Rich Dad Poor Dad is right about the US dollar being a monopoly money. Even if US manages to reduce the debt by having tons of useless money floating around, the Americans are the greatest victims. If a person earns $15 an hour, and that amount is enough to pay for three meals now, his earning will have less purchasing power in the future. If $15 is just enough to buy coffee from McDonald, then you can see how hard he has to earn in order to buy a set meal. He may have to work 4 hours just to buy lunch, when in the past, he just need to work 20 minutes to buy lunch. That is the devastating effect of printing money.
• United States
11 Aug 11
I thought the same thing when I was younger but I guess it isnt something that would work. I've always been told if they print more money it will make the value of it go down and it wont be worth as much. I dont really understand why that would be. I wish that this was just an option then the United States could get out of this rut we are in.