The Danger of Printing Money to Pay Down Debt:

As Washington continues to rapidly spend money it does not have, the Federal Reserve has resorted to creating funds to buy U.S. Treasuries, a practice known as “monetizing debt.” The Fed is essentially printing new money to buy our own debt.

Beyond the paradox of printing new dollars – money that did not exist – in order to cover current debt, this practice threatens to devalue the dollar and lead to runaway inflation. Moreover, it could lead to the U.S. losing its AAA international credit rating, which would be disastrous for our economy and financial markets.

On Friday, along with three of my colleagues in the House, I sent a letter to Federal Reserve Chairman Ben Bernanke asking him to halt the practice of monetizing debt. You can read more HERE.

Rather than creating new money to pay for our debt, Congress needs to cut spending and reduce borrowing. In other words, we need to start paying down our national debt with money we actually have.

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One response to “The Danger of Printing Money to Pay Down Debt:

  1. Pingback: The U.S. Debt Auction: Witnessing the Mortgaging of our Children’s Future: « Representative Erik Paulsen’s Blog

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