Comment 75916

By A Smith (anonymous) | Posted April 13, 2012 at 15:06:08 in reply to Comment 75894

>> Printing money can be disastrous in terms of hyperinflation and knocking the economy out of whack.

Most of the money printed in the U.S. is just sitting on bank's balance sheets...

http://research.stlouisfed.org/fred2/series/EXCRESNS

This "printed" money isn't circulating within the economy, which is why consumer spending has only averaged 2.24% over the past three years. In contrast, since 1929, it has averaged 6.20%.

In order to get inflation, you need nominal GDP to grow fast. For example, from 1970-80, nominal GDP in the U.S. increased by an average of 10.4%/year.

In contrast, nominal GDP in the U.S., from 2008-2011, went up by only 1.8%/year. In Canada, from 2008-11, nominal GDP averaged just 2.3%.

>> By printing money, wealth gets funneled to the first recipients of the money. (bankers and the feds)

Not necessarily. If the feds cut the GST from 5% to 0%, that's approximately $30 billion that stays in consumers pockets. And it is also money printing.

How would that not help our economy?

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