Continuing Bad Ideas


 

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In a new press release , the Federal Reserve has announced that they plan on buying up more debt, which is equivalent to print more money out of thin air. As the Federal Reserve and the Treasury keep printing money and forcing credit rates at artificially low numbers to try to force the country out of its economic woes, it is important to consider why this is such a bad thing. Even though the above video was created during the Fed’s shenanigans during the Bush administration, it is even more relevant today.

It may seem like a great idea to simply create money to get out of financial problems at first, but it does not hold up to any scrutiny. Who doesn’t want more money? There are two major problems with this line of thought however.

The first, and most obvious, is that the more of something you have, the less it is worth. Imagine if you had an original Mickey Mantle baseball card or the first issue of a Super Man comic. You would be very happy because they would have an incredibly high value. Wouldn’t it be great if everyone could also have those things? The problem is that they would then be almost worthless. The same thing happens to the money supply as the Federal Reserve keeps creating more out of thin air!

The other problem is a much more devious one. The government and the businesses that get this money directly from the Federal Reserve never have to see this inflation when they introduce this new money into the market. Just like the boys in the video, they get to spend the money at the current market value. It is not until this new money circulates that the overall value decreases. Since they do not feel any of the pain of their practices, they continue pumping the market with this money, and the rest of the American public are left seeing what they have decrease in value.

If these practices did not hurt the value of a currency, then why is counterfeiting illegal?

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