Noob/ serious question. Why can't the USA just print more money to pay off the $19 trillion debt?

I never paid any attention in economic class and had just barely caught on as to why raising the minimum wage comes with a catch. So serious and amateur question, why can't America just print more money to pay off the $19 trillion debt to foreigners?

a reply to: Richsac89

Every reserve note printed by the Feds are backed by air....they are worthless. They are debt. Everytime you use the Reserve notes you are contributing to the increase of debt because your notes are backed by air too. Nothing can't pay off something.

a reply to: Richsac89

One word answer: inflation.

The longer version, the FOMC (decision-making arm of the Fed) has abandoned an unemployment mandate, and instead gotten back to their original mandate: monetary policy.

a reply to: Richsac89

Let me break down to noob level

Whenever there is lots of something...value decreses. Printing more money lowers the value of said currency. That goes for most commodities.

originally posted by: MarioOnTheFly
a reply to: Richsac89

Let me break down to noob level

Whenever there is lots of something...value decreses. Printing more money lowers the value of said currency. That goes for most commodities.

LOL that made the most sense to me so far.

So this thing about inflation, care to explain it on a noob level as well please? Is there a limit we're only allowed to print annually to prevent inflation, devaluing of our currency? Is this just a national effect or global?

a reply to: Richsac89

They can (and indeed do at times) however there is a limit of how much this can be done. An increase in the base money supply without an increase in output can be inflationary.

Worth pointing out that only about a third of the national debt is owed overseas not the 19 trillion you mention. It is also worth pointing out that having debt owed overseas is not inherently a bad thing for an economy.

They could. And then the entire Us economy is destroyed and the money of every person and company is worthless.

originally posted by: NewzNose
a reply to: Richsac89

Every reserve note printed by the Feds are backed by air....they are worthless. They are debt. Everytime you use the Reserve notes you are contributing to the increase of debt because your notes are backed by air too. Nothing can't pay off something.

Yes it can. The US currency is created electronically. US debt is created electronically.

Using one to pay off the other is a easy as moving numbers on a spreadsheet.

To put things in perspective, each person in our country would have to pay about 54,000$ to pay off the debt of our country. This means that a family of 5 owes over 250,000$ to the government.

a reply to: Richsac89

Have a look at what Zimbabwe did with their money.

They suffered massive hyper inflation, printing one hundred trillion dollar notes, which were worth 40 US cents.

www.wsj.com...

originally posted by: cooperton
To put things in perspective, each person in our country would have to pay about 54,000$ to pay off the debt of our country. This means that a family of 5 owes over 250,000$ to the government.

Debt is also savings. You would as well saying that each person in the country has savings worth $54,000.

Both statements would be equally wrong,

originally posted by: Chadwickus
a reply to: Richsac89

Have a look at what Zimbabwe did with their money.

They suffered massive hyper inflation, printing one hundred trillion dollar notes, which were worth 40 US cents.

www.wsj.com...

Zimbabwe printed high denomination notes because of major economic problems. Printing the notes did not cause the problems (although it did't solve anything either)

Because the US doesnt own their money. The federal reserve is not the US government. So the feds print money on something worthless and sell that worthless paper to the government, plus interest because it is considered a loan. The US dollar does not belong to the US is the short answer. Printing money does the opposite of what you think, it actually creates more debt, great sham of a system!

a reply to: Richsac89

They do not own the dollar, they own treasury bonds, which is what the debt is based on. (treasury bonds are i owe yous). They trade treasury bonds (indebtedness / the national debt / ious) for other peoples' currency (even for dollars from their own citizens).

In theory, for each dollar the u.s. is in debt, someone else has a dollar worth of treasury bonds. So basically, the debt is already their way of printing money to pay foreigners, and so printing more debt to pay for debt would cancel out the printing (actually it would increase the debt since dollars cost more to borrow than they are worth -- for each dollar loaned from the fed, there is interest to pay back on it.)

Edit: oh yeah... there's also the fact that they sell treasury bonds at a loss, since technically bonds are self sold debt. e.g. i sell you an iou worth 5 bucks for 4.50.

That's why we're in debt.

a reply to: Richsac89

Look up fiat currency and you will realize why we are in debt. Printing is just a fraction of why.

a reply to: IBossJekler
The way the US issues money is convoluted and largely unnecessary. However the end effect is the same that the US government is the monopoly supplier of the US dollar.

a reply to: Richsac89
most national debt is owed to our own government.

a reply to: Bleeeeep

Only short term bonds (t-bills) are sold at a discount as they do not pay interest. Other government debt is priced via auction.

Printing more cash so quickly would lead to hyperinflation and you would need a truck load of money to buy a few groceries, it happend in Zimbabwe, at one point they had a 100 Trillion dollar note and it cost more to print money than it was worth leading to more devaluation then more printing.

In the end all fiat currencies take the same path of hyper inflation, it's all about how long can the governments delay the inevitable.