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From: dolson@den.mmc.com (David W. Olson)
Subject: Re: A Day Late and $75 Trillion Short?
Message-ID: <1994Sep15.225214.26146@den.mmc.com>
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Date: Thu, 15 Sep 1994 22:52:14 GMT
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In article <0iRuGcW00iV00BicZK@andrew.cmu.edu> Ernesto Arteta <ea28+@andrew.cmu.edu> writes:
>If the government is the biggest borrower, it could simply print all the
>money it wants to pay back its debts as they are denominated in US $.
>Since the Fed is already monetizing the debt, it is probably what they
>would do which would make it another sell. The idiots in D.C. think a
>weak $ is good.

That cheats the lender, and would work once, and once only.  The next time
the government tries to borrow would-be lenders would have no interest.

The government, instead, has been doing it a little bit at a time: paying
back $1 of debt with currency worth only $0.98.  Lenders don't like it
and they increase the interest rate charged to cover their expectations
of currency debasement.  We (the public) should not like it either.

(a topic better for alt.politics.economics than for misc.invest.stock)

David W Olson

