The Federal Reserve has been quietly printing money (well, not so much printing as issuing electronic credit) and buying US debt, which is the equivalent of me printing money to pay for my wife's spending. However, the Fed is going to sharply increase quantitative easing (a nice euphemism for 'printing money'') with a planned outlay of $600 billion dollars. This is angering out creditors, which is just about everybody (China, Japan, UK, South Africa, Germany,...). The reason of course is that printing money without a corresponding increase in GDP (Gross Domestic Product) results in a devalued dollar, which not only devalues the debt owned by other nations, but also devalues the dollars in our own pockets. In addition, I learned something shocking that I never knew before. While the US Government pays interest on the money it borrows, it doesn't pay anything to reduce the principal. In other words, we pay interest only! No principal. The idiocy of that needs no explanation.
So what is the answer to our problem? Bring spending under control. No more bailouts, no more too big to fail (too-big-to-save should be our policy), no more handouts to political constituency groups. In fact, I advocate a Balanced Budget Amendment to the Constitution. It's been tried before, but the politicians lacked the political will to finish the job. We need it now more than ever.
Addendum: As I have previously stated, no matter the type of government each of us desires or envisions for this country, it must be founded on sound fiscal principles to survive or to succeed in its goals. One cannot defy gravity forever.
