Posts Tagged ‘printing money’

Please tell me that this was just a slip of the tongue

14 December 2008

As President-elect Barack Obama and Congress shape a stimulus package, the president-elect made a strange departure from his prepared remarks to a governors conference, telling them that despite his support of a fiscal stimulus, “We are not, as a nation, going to be able to just keep on printing money” (Washington Post, 2 Dec. 2008.  Not surprisingly, conspiracy-minded commenters on a Ron Paul bulletin board were all over this one).

Hello?  Does Obama believe we currently finance our deficits by printing money, as opposed to selling Treasury bonds?  I sincerely hope that this was just a garbled version of his usual, and reasonable, point that although we need a big fiscal stimulus now, we need to bring the national debt under control in the long term.   (Some, like David Stockman back in the 1980s, have sketched a worst-case scenario in which our national debt gets so out of control that eventually the government has to print money to pay its bills, thereby causing a hyperinflation.  Possibly Obama was alluding to those fears, but since they’ve been basically groundless all along in the U.S. case, he’d be better off not feeding those fears.)

My larger concern is that when President Obama’s brilliant economic advisers disagree with each other, as economists are known to do, will he be knowledgeable enough to make the right call for the right reason?

(modified from a 2 Dec. 2008 post)

UPDATE, 17 DEC.:  Listening to NPR’s Marketplace this morning, it occurred to me that Obama just might have been referring to the dramatic steps taken by the Federal Reserve this year, which are basically equivalent to creating money.   But his next sentence — “So at some point, we’re also going to have to make some long-term decisions in terms of fiscal responsibility” — implies he was talking not about monetary policy but fiscal policy.  The concern still stands.