Letter: Avoid ‘boogeyman’ inflationPublished 10:38am Wednesday, June 26, 2013
Concerns about the world’s debt, economy and money shortages are similar here in America, resulting in actions to help our economy like cutbacks, tax increases, the sequester, austerity and increasing the money supply through the Federal Reserve’s “buying of bonds.”
When the Fed “buys” government Bonds, one of the 12 Fed banks writes a check on itself creating bank credit in “number form” that never existed before. It “lends” us the new numbers called money and receives our promise to repay. Our debt increases adding to our debt problem. Isn’t adding more debt to a debt problem like giving a drunk another drink to help him until he gets sober again?
If the federal government can give a federally chartered bank authority to write a check on itself to create money to make a “purchase,” why can’t the federal government do it? The United States Constitution gave the power create money to our federal government not the banking system. Think how much it would help the economy if our federal government created all the numbers “money” needed to bring our transportation system up to class A condition and spent it into circulation debt and interest-free instead of taxation or borrowing?
The money supply would increase without debt but with an increase in production causing no “boogeyman” inflation. There would be a huge tax break as we would no longer need to tax or borrow to build and maintain roads and bridges. Thousands of people would go to work receiving paychecks.
Gregory Soderberg, Austin