Difference between revisions of "Debt monetization"
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'''Debt monetization''' is when the government pays off debt via the process of printing more money to pay its creditors.[http://www.investorwords.com/3099/monetizing_debt.html] Debt monetization leads to [[inflation]].[http://www.investorwords.com/3099/monetizing_debt.html] According to Richard Fisher the President of the Dallas Federal Reserve Bank, "Throughout history what the political class has done is they have turned to the [[central bank]] to print their way out of an unfunded liability.[http://online.wsj.com/article/SB124303024230548323.html] | '''Debt monetization''' is when the government pays off debt via the process of printing more money to pay its creditors.[http://www.investorwords.com/3099/monetizing_debt.html] Debt monetization leads to [[inflation]].[http://www.investorwords.com/3099/monetizing_debt.html] According to Richard Fisher the President of the Dallas Federal Reserve Bank, "Throughout history what the political class has done is they have turned to the [[central bank]] to print their way out of an unfunded liability.[http://online.wsj.com/article/SB124303024230548323.html] | ||
| − | Fiscal conservatives and libertarians complain that it is larceny on the grand scale.[http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/] Rather than a government repaying what it has borrowed, when a government monetizes debt the a government merely prints up extra currency and uses it to pay its loans.[http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/] When a government debt monetized is it is transformed into an increase in the money supply which decreases the value of its money.[http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/] | + | [[Fiscal conservatism|Fiscal conservatives]] and libertarians complain that it is larceny on the grand scale.[http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/] Rather than a government repaying what it has borrowed, when a government monetizes debt the a government merely prints up extra currency and uses it to pay its loans.[http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/] When a government debt monetized is it is transformed into an increase in the money supply which decreases the value of its money.[http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/] |
== External links == | == External links == | ||
*[http://economistsview.typepad.com/economistsview/2005/09/what_is_debt_mo.html What is Debt Monetization? When is it Automatic? Is it a Risk?] | *[http://economistsview.typepad.com/economistsview/2005/09/what_is_debt_mo.html What is Debt Monetization? When is it Automatic? Is it a Risk?] | ||
Revision as of 08:24, August 16, 2009
Debt monetization is when the government pays off debt via the process of printing more money to pay its creditors.[1] Debt monetization leads to inflation.[2] According to Richard Fisher the President of the Dallas Federal Reserve Bank, "Throughout history what the political class has done is they have turned to the central bank to print their way out of an unfunded liability.[3]
Fiscal conservatives and libertarians complain that it is larceny on the grand scale.[4] Rather than a government repaying what it has borrowed, when a government monetizes debt the a government merely prints up extra currency and uses it to pay its loans.[5] When a government debt monetized is it is transformed into an increase in the money supply which decreases the value of its money.[6]