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lete28099s assume the US govt strats printing which in my opinion it really did. And let;s assume that people want to get out of the greenback.. So the $ collapses. Maybe 3$ = 1 EUR. So what?If the US government (or Fed) began printing money in any kind of quantity, the dollar would quickly be worth something like 10,000 Euros in a week. That IS a big deal, and there would be riots in the streets. Worse, the US government would suddenly be completely unable to finance it’s debt anymore (i.e. since no one would want to buy worthless t-bills anymore), and the populace would be incensed that government services were grinding to a halt. The only way t-bills could be sold is to offer some incredibly high interest rate, which would likewise cause absolute chaos in society. Middle-class home-owers would be burning the capitol if interest rates rose above 20%.As painful as deflation might be, it is far preferable to the destruction, and opprobrium, that would be leveled at the politicians if they were to choose the hyper-inflationary path.Just to be clear, the US government (and Fed) are not printing money in any significant quantities right now. The Fed has spent a little under $300 billion in a t-bill monetization program (which they are ending), but that was a piffling sum, and didn’t mean much. Almost all the money the government is spending in stimulus and bail-outs results from BORROWING, which is a completely different thing than printing money. Rate this comment: 0 0

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