The Federal Reserve loves to print money. Governments love to spend it. So maybe the problem isn’t that the Fed has been printing too much money – the problem is that the Fed hasn’t been printing enough money to keep up with government spending.
The Global Slant blog suggested that the Fed initiate a fourth round of quantitative easing – where it purchases bonds to keep interest rates low and pump money into the economy. The blog suggests that our central bank could print enough money to pay off the federal debt. But why stop there?
For starters, let’s have the Fed go back to actually printing money, rather than producing it by buying bonds. There just aren’t enough bonds to buy. And even if there were, what could the Fed possibly do with all of those bonds? Dumping trillions of dollars’ worth of bond onto the market would cause it to collapse, as supply would outstrip demand pretty quickly.
Plus, keeping up with the Fed’s demand for money would create lots of jobs. Printers haven’t had much work since the Internet became popular, so why not just buy a few thousand printing presses and keep them running 24 hours a day? It may add a bit to the federal debt, but we’ll just print enough money to make up the difference.
Once the ink dries on the new money, we can use to pay off all of that accumulated debt. The Fed will be happy, because it can keep printing money, and all of our debts will eventually be paid.
Think of the consequences:
- The stock and bond markets will only go up. With no risk, we can be all in and we won’t be stressed out worrying about corporate profits, since they will be irrelevant. We won’t have to worry about the market acting rationally if we know that it never will.
- Once we pay off all federal debt, Congress can start over and spend even more money than it already spends. The current budget is only a few trillion dollars a year, but the poverty rate hasn’t gone down a notch, so clearly we’re not spending enough.
- Fed Chair Janet Yellen will be able to one-up predecessor Ben Bernanke. Maybe she can even name QE 4, 5 and 6 after him as a tribute.
- Once all federal government debt is history, the Fed can just keep on printing and retire state, municipal and consumer debt. It can make American corporations even more competitive by also paying off corporate debt.
- It doesn’t have to stop there. Since “income inequality” is such a big issue, the Fed can keep on printing and distribute millions to every American. Imagine how popular the federal government would be if it gave you money instead of taking it away.
Of course, the so-called experts will claim that printing so much money will cause hyperinflation. What do they know? After more than $3 trillion worth of QE, the inflation rate remains below the Fed target of 2%, so it’s pretty clear that printing money doesn’t cause the inflation rate to increase.
The experts will also claim that our debtors will not be happy with us. But seriously – who really cares what China thinks? And we can always print enough money to pay everyone else’s debt. What’s another $57 trillion? Once America bails out Europe, Japan and the rest of the world, it will be more popular than Russia at the United Nations.
Unfortunately, printing all that money won’t do a thing to help the economy. But don’t worry. No one will notice. They didn’t notice after the first three rounds of QE, why would anyone notice now?
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Brenda P. Wenning is president of Wenning Investments LLC in Newton, Mass.
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