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| User Info | Fekete - Inflation and deflation all at the same time?; entered at 2007-12-01 15:43:53 | |||
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Genesis Posts: 117804 Registered: 2007-06-26 
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Quote:What happens if the tax revenues are down and the government has to meet its expenditures. Every time they cut a cheque spending money they did not collect does that not devalue (inflate) the existing dollars? Treasury issues bonds in exchange for money which they then spend. They finance this through the coupon on the bonds, which is why your taxes keep going up. If Treasury decides to "just print money" the result is an instant explosion in the interest rates charged by those with money for them to borrow. Remember, you can't force people to lend. You must entice, and the only way to do that is to pay. 2007-12-01 15:43:53
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