Posts Tagged ‘Printing Money’
Sunday, March 7th, 2010
Another way to raise the funds for federal budget deficits is to create new money (the popular term is print money) for the government to spend. While a growing economy requires a larger volume of money in circulation (called the “money supply” by economists), it is dangerous to increase the money supply too quickly. The inevitable result of such a policy would be severe inflation, as the excessive amount of money in circulation forces prices up rapidly. Thus, while it may be tempting for the government to simply “print money” to finance its budget deficits, this should be done only within limits, so as to avoid increasing the money supply by more than the economy can absorb without rapid inflation.
*The government does not actually physically print new money for itself to spend. The process is more subtle than that, and will be examined in detail. However, the economic effects of such a policy are such that it can reasonably be described as “printing money.”
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Tags: Amount Of Money, Auto Finance, Circulation, Economic Effects, Economists, Economy, Federal Budget Deficits, finance, forex, Government Money, Inevitable Result, Inflation, Money Supply, New Money, Print Money, Printing Money
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Thursday, February 4th, 2010
While it is true that the net federal government debt rose from about $3 billion in 1939 to over $22 billion by 1975. In practice, it is common for budget deficits to be financed by a combination of borrowing and “printing,” a practice that can be economically beneficial as long as the “printing” of money is kept within reasonable limits.
Part B: The National Debt
We have seen that the use of government fiscal policy to stimulate the economy during recessions requires that the government borrow money (mostly through bond issues) in order to finance its budget deficits. The total amount of federal government debt thus incurred – the amount of money owed by the federal government – is called the “National Debt.” By 1983 the National Debt will amount to over $100 billion, or nearly $4000 for every man, woman, and child in Canada.
The National Debt has, over the years, been the subject of a great deal of misunderstandings, fears, myths and political hypocrisy. Many Canadians believe, for instance, that the National Debt is owed to other countries and that Canada may go bankrupt because of it. Both of these are myths. On the other hand, few Canadians appreciate the real dangers concerning the National Debt. We will examine first the myths, then the real dangers.
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Tags: Amount Of Money, Auto Finance, Bond Issues, Borrow Money, Budget Deficits, Canadians, Economy, Edmonton, Fears, Federal Government Debt, Fiscal Policy, Government Money, Hypocrisy, Keynesian Policies, Man Woman And Child, Misunderstandings, Money Owed, Myths, National Debt, Printing Money, Recessions, Woman And Child
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Monday, January 18th, 2010
That depends largely on how the budget deficits are financed. If they are financed by printing money, there is a real danger that rapid increases in the volume of money in circulation (the “money supply”) will cause rapid inflation. This is the most obvious danger in excessive budget deficits, and the one with which most observers are familiar. However, there is another, more subtle, danger in excessive budget deficits: they can also contribute to slow economic growth, or economic “stagnation.”
The Perils of Budget Deficits
Budget deficits can be likened to drinking liquor, in that if they are properly timed and used in appropriate quantities, they will not be harmful and in fact can be beneficial. However, as with liquor, excessive budget deficits can have severe side effects, including a “hangover” of severe inflation accompanied by stagnation, or “stagflation.” And, like a hangover, it can be considerably easier to get into this situation than it is to get out of it.
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Tags: Auto Finance, Budget Deficits, Circulation, Economic Growth, Economic Stagnation, Excessive Budget, Hangover, Inflation, Liquor, Manitoba, Money Supply, Observers, Perils, Printing Money, Quantities, Rapid Increases, Stagflation, Winnipeg
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Monday, September 14th, 2009
Another way to raise the funds for federal budget deficits is to create new money (the popular term is print money) for the government to spend. While a growing economy requires a larger volume of money in circulation (called the “money supply” by economist), it is dangerous to increase the money supply too quickly. The inevitable result of such a policy would be severe inflation, as the excessive amount of money in circulation forces prices up rapidly. Thus, while it may be tempting for the government to simply “print money” to finance its budget deficits, this should be done only within limits, so as to avoid increasing the money supply by more than the economy can absorb without rapid inflation.
In practice, it is common for budget deficits to be financed by a combination of borrowing and “printing” a practice that can be economically beneficial as long as the “printing” of money is kept within reasonable limits.
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Tags: Alzheimer, Amount Of Money, Antihistamine, Auto Finance, Auto Financing, Car Dealers, Circulation, Economist, Economy, Federal Budget Deficits, finance, Finance Car, Government Money, Inevitable Result, Inflation, Medication, Money Supply, New Money, Online Pharmacy, Print Money, Printing Money, Vancouver Lower Mainland, Winnipeg, Wpg
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