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Source link: http://archive.mises.org/8022/the-magic-printing-press/

The Magic Printing Press

April 14, 2008 by

John H. Makin, American Enterprise Institute, writing in the WSJ, on avoiding nationalization by destroying the dollar:

In my view, the least bad option is for the Federal Reserve to print money to help stabilize housing prices and financial markets. Yes, use reflation to soften the pain for Main Street and Wall Street. If instead we let housing prices fall another 25%-30% – as predicted by the Case-Shiller Home Price Index – it’s almost certain that Washington will end up nationalizing the mortgage business…. Printing money is a radical step that enables the Fed to stop pegging the federal-funds rate and start increasing market liquidity directly.

I post this so that no one can say that hyperinflation doesn’t have its advocates.

{ 10 comments }

Alvaro April 14, 2008 at 12:31 pm

Truly amazing. Even here in Uruguay the ruling left-wing coalition (comprising social-democratic types, Cuba-loving socialists, Cuba-worshipping communists and Cuba-trained ex-guerrilla & terrorists) they know better than to unleash hyperinflation.

The man is from the American Enterprise Institute…. amazing.

James Crosswell April 14, 2008 at 1:10 pm

More incredible still, they actually printed the fruit loop’s comments in the Wall Street Journal!?

Fephisto April 14, 2008 at 6:15 pm

Why does the Wall Street Journal have any credibility left?

Jardinero1 April 14, 2008 at 6:53 pm

Back in ’68, they had to destroy the city of Hue in order to save it. It’s the same kind of thing.

Dan Mahoney April 14, 2008 at 9:55 pm

Uhm, where exactly does Makin advocate hyperinflation?

P.M.Lawrence April 14, 2008 at 10:34 pm

Just to clarify, hyperinflation isn’t simply another word for a lot of inflation, although of course it comes with that. It has a specific meaning, inflation at such a level that the function of currency in transmitting economic signals breaks down. These people are contemplating inflation that would do that, but they aren’t contemplating the breakdown – they think they can inflate enough for their purposes, but it hasn’t occurred to them that they would get a breakdown too (or maybe it has, but they have faith that their levels wouldn’t get that high).

pazlenchantinrocks April 14, 2008 at 10:49 pm

Would hyperinflation end the US dollar hegemony?

After all, it seems to me that having the complete destruction of the USD would remove at least one of the mechanisms the state uses to extort wealth from the masses.

How could the state have and continue to hold the empire it has obtained (for any length of time) without the use of the printing press?

Propaganda only goes so far. As stated in a recent article posted on mises.org, mainstream economists are now recognizing that the Fed’s policies have an effect on the housing market.

If “saving” the dollar and nationalization of the mortgage business were to occur, would this not be even more control the state can exercise against the people?

Is there anyone here that would condone the continued encroachment upon liberty through the use of the printing press? If so, then would you consider yourself libertarian? If so, why?

Alvaro April 15, 2008 at 10:16 am

@Dan Mahoney

when he says
“If instead we let housing prices fall another 25%-30% …”

and

“Printing money is a radical step that enables the Fed … start increasing market liquidity directly.”

One would think he wants to print to “keep house prices stable”. Very few people can or want to pay for houses nowadays, so he might as well print until he runs out of ink.

@pazlenchantinrocks
“Would hyperinflation end the US dollar hegemony?”

Dollars used to be the reserve currency of a lot of people, including yours truly. Inflation was encroached so long here in Uruguay, that foreign currency accounts became widespread as well as valuing expensive goods (cars, houses) in dollars.

A few years ago two other types of accounts appeared: Euro accounts and Indexed Units accounts. The Indexed Unit is pegged to the Consumer Price Index of Uruguay.

So you see, in the face of current US dollar devaluation, institutions and individuals around the world are dumping their dollars in favor of other currencies or value stores.

Oddly enough, our Central Bank (and Chile’s , and God knows what others) are _buying_ US dollars so that its price won’t fall relative to the local currency and hurt exporters too much. They then issue debt instruments to soak up the money they have just injected (to buy the dollars).

But I digress. To sum it up: inflation is already eroding the once dominant position of the dollar.

krishna baralo April 8, 2010 at 8:18 pm

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krishna baralo April 8, 2010 at 8:19 pm

WE HUMBLY AND MOST RESPECTFULLY REQUEST YOU THAT PLEASE KINDLY SEND ALL THE INFORMATION OF YOUR PRODUCTS INCLUDING PAST AND PRESENT CATALOUGES AND IF POSSIBLE PLEASE SEND A SAMPLE TO THE FOLLOWING ADDRESS BY POST MAIL ONLY AS SOON AS POSSIBLE. ADDRESS-MR.KRISHNA BARAL FEDERATION OF SMALL AND MEDIUM ENTERPRISES OF NEPAL MACHHAPUCHHRE TOLE-7 DHAD POKHARA NEPAL TEL-977-61-464513 MOBILE-9846138891 E-MAIL-CYBERCRIMINAL69@HOTMAIL.COM POKHARA NEPAL

Read more: The Magic Printing Press — Mises Economics Blog http://blog.mises.org/8022/the-magic-printing-press/#ixzz0kYsBlJjA

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