The vast majority of what you hear about "printing" isn't actually printing. It is fiddling around with numbers on a screen. You need to understand the difference between money and credit (Geld und Schuld. Es gibt ein grosse Unterschied). We have been tricked into believing that they are the same thing. For decades they were the same, because debt was "liquid". Now it is illiquid. Creating more of it does nothing.
Even if it was attempted to actually print physical notes on a scale that would have some overall impact on the total supply of money and credit, you need to have the demand for those notes to be used for accumulating assets in order to create inflation. If the Fed creates notes and gives them to the banks, they will just sit there. Nobody needs them to carry out their activities. If the Fed just shipped the money to every American (which is preposterous and likely illegal), people would just take it to the bank and pay off some of their debts. The bank would have all the money again, and send it back to the Fed.
There is only demand for physical currency at a certain proportion to the size of the entire economy (~5%). The problem is that debt is 400% greater than the entire economy. It's like pissing in the ocean. Sure, if you piss enough, you might start changing the sea levels. But it's not going to create Mel Gibson's Waterworld all over again.
Sorry that I do not answered before, but I was quite busy those days.
I understand your stand point, but for me it looks like you would not want to see situation from another one.
Besides all these ridiculous comments (NOT yours) - which appear sometimes on this forum and the "mother site" like:- "somebody ... somehow will bail out us ..." - (of course - USA is state of question... )
- "the United States of America (US Treasury) can default on its debt - but USD will remain strong..."
.... I think that you are not in those nonsense
too deeply, as some...
(Perhaps because you are not an American - but Canadian citizen.)
The text: (China daily - Who will 'feed' the US?
):http://www.chinadaily.com.cn/bizchina/2 ... 8783_2.htm
(please try to understand that - influent people OUTSIDE US do not think
as US citizens...)
I am giving you a text OUTSIDE from American paradigm thinking.
(The "American paradigm thinking" is - "we (Americans) are the World. If we going down (even if we deserved!) - everybody going down!"....
Of course you are clever enough to understand that WILL NOT happened! "Others" experienced huge problems because of American misguided economy - BUT will also find the way OUT... undoubtedly.
You are (unfortunately) so fixed as many on this side on the "credit destruction".
That - automatically (according "deflationists") - mean "monetary deflation" because they understand each sort of Deflation - as Monetary deflation... AND sice the "credit is same as money" - that shoul be the one "monetary deflation". (Or this "very ugly one" (according deflationists of course!) - similar as in 30-ties last century)
Of course - this is NOT true! AND everybody can see it until now!
Unfortunately, the crises is quite complex, and the main cause (the US government(s)) even if they are the main guilty - try to camouflage the real situation and deepness of it.
- If we looking just on the "credit destruction" - that YES.
You have right.
It means a huge "deflationary" power which try to press PRICES (!) down.
If PRICES (!) of housing, commodities etc - falling down - it does NOT mean automatically "the monetary deflation".
It means "DEFLATION" in the prices
of housing (commodities?) - but NOT monetary deflation.
(Even US government (with President Franklin D. Roosevelt) was simply proved it in March 1933 when they NOT just "brake the deflationary spiral" in the time of COUPLE WEEKS(!!!) but actualy started huge inflationary spiral at this time.
Simple measures, as.... - taking the United States government off the gold standard – effectively confiscating all investment gold from US citizens at a 41% mandatory discount)... With simple words - fiat money "printing"
The Deflation in prices of houses - would continue for sure. Those are simple - overvalued! If you would like to call it - as "deflation" - OK... be my guest.... But I would rather call it "market correction".
On the other side - if you looking of a company which "survived - deflation"...:
- it will probably need credit too
- the credit is expensive those days
- since they have not much competitors after many "defaulted on debt" and on the other side their production is become more expensive - this company can ONLY increase their prices
Outcome - is clear. Monopoly positioning and increase of the prices... even in "deflationary environment".
How you call it?In simply words (as paraphrase to title on your blogg) - the Deflation (monetary one) - is impossible in fiat money system!
- your last statement about "demand for physical currency
" is in my opinion - quite right!What FED making now - is NOT to "print money out of the thin air"...
They CAN NOT do it at all!
NO.They "printed" REAL money!
The "money out of the thin air" can only be printed by commercial banks - but they do not giving any credits anymore! They fight for - survival!
On this blogg many people just "forgetting" that increadibly much money is used by State too. (Espetialy in the case of the United States of America!!!... With all those "democratic wars", control and financial and military to other states, "removing of regimes".... and so on!!! Somewhere I found that 70% of all citizens in USA are dependent of - military
!!! Scary. Isn't it?)
So Privat, industry and banks are OUT of money!
On the other side - THE STATE (!) desperately need "real money" and FED - helping it diligently!
I think that ONLY problem for now is that US biggest note is 100$ bill
(Am I right?)...
To achieve goal (i.e. to bail out the State debt (Treasury)) - FED need to go at least to the 1000$ bill!
How you could call it?
- Regarding "non-American" view on the GFC - I sent a link from China Daily and with comments of one influent Chinese and Japanese on it.As sooner Americans understand:
1. they are NOT the "center of the World", but unfortunately "Center (and cause) of the GFC"
2. that people in the other parts of World MUST to think to best of THEMSELVES (NOT for "American best"!)
3. that process of - Crush of US Empire is irreversible - and it is started for while ago.
American citizens (as well other citizens of the Planet) can only positioned themselves better.
Nonsense of type I read on this site:
- buy US Treasury (they are "safe investments")...
- US was "first in the crises and will be the first - out."...
- USD will "remain strong" (even if the State US collapsed)...
-.... and so on....
CAN NOT HELP one average American investor or citizen!
Those just blinding them!
Thank you for me.