The government doesn’t get enough money through taxes to subsidize all the programs it has. It can either borrow the remainder of the money from other countries. (Mainly China and Japan) Or print more money. Printing money of course dilutes existing money.

Why don’t they stop printing money? Because they can’t promise as much during elections

BTW, the government signed away the right to print money themselves, now they have the federal reserve do it for them, and they BORROW the newly printed money (with interest to the Federal Reserve). Where they of course eventually have to pay it back.

That brings me to the 2nd biggest reason they inflate. If you inflate a debt enough it will eventually be worth next to nothing and be easy to pay off. However the government is still in a never ending cycle of having to do so since they would have to borrow NEW money from the federal reserve with interest as well.

The current system is based on DEBT, which means if you pay off your debts money actually disappears from existence.

So even if the government raises taxes high enough to pay for all the excess spending (and thats not even possible anymore even taxing us 100% of our income) The excess money would disappear and the government would still only be left with the option to borrow from the Fed or other countries (with more interest) to continue to pay things off.

Yes this means they are in a hopeless situation. And this is why there are “doomsayers” warning people to get the hell out of the American dollar.

Honestly isn’t a very popular topic these days it seems.

Welcome to the February 15, 2008 edition of Carnival of Everything Finance.

We had over 130 really good articles submitted for this edition. Unfortunately I could not include all of them.
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