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Old 12-27-2011, 06:40 PM
badhatharry badhatharry is offline
Join Date: Jul 2009
Location: eastern sierra
Posts: 5,413
Default Re: Katherine's pants are on fire

Originally Posted by Don Zeko View Post
Monetary stimulus, on the other hand, consists of the Fed creating money out of thin air and loaning it out to banks, so it doesn't increase the deficit. So when people add these loans that must be paid back by the borrowers to spending that must eventually be paid for by the taxpayer that wrongly implies that the government is spending far more money on stimulus than it actually is, since monetary stimulus by the Fed isn't government spending at all.
Well, I'm glad I was able to spot the difference between fiscal and monetary stimulus. And certainly one should be distinguished from the other but doesn't the Treasury borrow from the Fed to finance the debt? And who will be paying that back? Aren't the taxpayers the borrowers in this case? So you're definitions aren't quite so black and white.

But other than that, this monetary stimulus sounds like a win-win. Make money out of thin air, juice the economy and have someone else pay for it! No down-side at all.

However, as someone quite revered once said:

The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
So, according to this guy, in apparently lots of ways, the taxpayer does end up eventually paying for monetary expansion.
"By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Adam Smith

Last edited by badhatharry; 12-27-2011 at 07:13 PM..
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