Greenspan: US Will Never Default Because We Can Just Print Money
**Written by Doug Powers
Try the “I printed the money” approach in any high school accounting class to explain how you fixed ugly discrepancies on your balance sheet and you’ll fail the course. Do the same thing as a former Fed Chairman you’re an economic guru.
David Gregory, moderator of “Meet The Press” on NBC: “Are U.S. treasury bonds still safe to invest in?”
Alan Greenspan, Former Chairman of the Federal Reserve: “Very much so. This is not an issue of credit rating, the United States can pay any debt it has because we can always print money to do that. So, there is zero probability of default.”
It’s amazing America is solvent at all.
Click the pic to roll tape:
*****
Warren Buffet agrees.
“You mean the Warren Buffet who just got downgraded too?”
Yeah, that one.
**Written by Doug Powers
Twitter @ThePowersThatBe
See what others have said
Note from Michelle: This section is for comments from michellemalkin.com's community of registered readers. Please don't assume that I agree with or endorse any particular comment just because I let it stand. A reminder: Anyone who fails to comply with my terms of use may lose his or her posting privilege.
Comments
You must be logged in to post a comment.
 |
GOP Texas primary fight: Desperate Dewhurst slimes conservative challenger Ted Cruz
May 25, 2012 07:31 PM by Michelle Malkin
7 CommentsWho’s funding Brett Kimberlin?
May 25, 2012 01:52 PM by Michelle Malkin
27 CommentsObama’s Land of the LOST
May 25, 2012 01:42 PM by Michelle Malkin
51 CommentsObama’s latest campaign angle: I’ve been saving America from wild Republican debts
May 24, 2012 04:33 PM by Doug Powers
53 Comments
Senate finally passes a budget approves bill striking word ‘lunatic’ from federal law
May 24, 2012 11:22 AM by Doug Powers
193 CommentsStammertime: Jay Carney asked if Chicago protests have soured Obama’s support for OWS
May 23, 2012 07:44 PM by Doug Powers
54 Comments
S.E. Cupp, Hustler, and the four stages of conservative female abuse
May 23, 2012 02:13 PM by Michelle Malkin
142 CommentsPig Maher’s boy Bill Burton mocks my support of Hatch challenger Dan Liljenquist
May 23, 2012 11:37 AM by Michelle Malkin
32 CommentsFree speech blogburst: Show solidarity for targeted conservative bloggers; Update: It’s Everybody Blog About Brett Kimberlin Day; Donation fund for targets
May 23, 2012 05:59 AM by Michelle Malkin
114 Comments
Categories: Politics
JustOneMinute
» Patterico And The Brett Kimberlin GangBabalu Blog
» U.S. Manned Space Flight in The 21st CenturyVillainous Company
» Must Read Post of the Day. Possibly, the Year
Whirled Peas said:
It could be as much a matter of his retreating back to a friendly crowd and basking in the glow of sheer adoration than anything to do w/ money?
Oh he’ll take the money don’t get me wrong! His ego is so fragile he can only exist for so long without heaps of praise from hometown friendly crowds.
He’s hiding from his problems.
So would putting them in a room full of shovels and telling them to take their pick.
Heads apoppin’ doncha know!
The guy married Andrea Mitchell, that alone is proof that he is a moron.
And quite possibly anosmic.
All weekend I pictured him at Camp David, in a corner, curled up in a fetal position, sucking his thumb and whimpering. Hep me, hep me, sumbuddy hep me!
I’m totally serious. Further, other than his first 8 or 10 weeks in office he has had NOTHING but an ever rising stock market as wind at his back!
This is his first correction. One of his own making I might add. How’s making all those ‘invetments’ working out for ya’ Barky?
Freddy (#99) got it right. Greenspan was not going to get into the minutiae on MTP, however he is essentially correct.
Bernanke, though, could do one thing besides printing money that would start our economic machine back up. He could raise the Federal Funds Rate. This would force banks to quit playing games (albeit profitable games) with treasuries and start earning their money by lending it again.
Banks aren’t just for savings. They’re supposed to be the facilitators of the entrepreneurial side of America. Right now, they have zero incentive to make loans.
Shake ‘em up, Ben, and we can increase the money supply the old fashioned way: by creating wealth.
Somehow I picture Boehner sitting in a room crying, while McConnell is stuttering something like, “but, but, they told us if we passed it then no downgrade.” While dialing the phone number Obama gave him but each time it connects it connects to Dominoes Pizza.
Too bad it is one of those pre-paid events otherwise it would be funny if the donors turned around and told Obama that after their losses today and last week they don’t have anything to give him, but thanks for the free food and drink.
Raging At The Dying Of Their Light
…. the comparison between Keynesian economics and global warmism is on target. Both are liberal dogmas disguised, increasingly thinly, as science. Both are supported by circular logic, and thus lack falsifiability, a necessary characteristic of a scientific theory. If the weather gets warmer, that’s because of global warming; if it gets colder, that’s “climate change” and proves the theory too. Had unemployment stayed below 8%, as the Obama administration promised it would, that would have proved the “stimulus” worked; since it peaked at 10% and has held steady above 9%, that proves the stimulus wasn’t big enough. Heads I win, tails you lose.
To Weisberg, the failures of the Obama administration prove not only that Republicans are “intellectual primitives” but that you are stupid: Among the “sobering lessons” that “we” have “learned,” he writes, is “that there’s no point trying to explain complicated matters to the American people.”
http://www.americanthinker.com/2011/08/raging_at_the_dying_of_their_light.html
Even after all that has happened in the past week Obama is still out there spending money we dont have:
I believe I have a Monopoly game somewheres about. I guess I can use that money now that we’re making up the economy as we go along.
“print more money” so that’s all there is to fixing the problem, but but but isn’t that what Germany did in the 20′s. My history book says that didn’t work out so well for Zimbabwe also. This clown is partly responsible for the mess we find ourselves in now.
Just goes to show ya, you don’t need to be an economist to fix the givernments money problems…talk about a wasted education.
Hey, Barry!
What about the drought in Texas, Oklahoma, Kansas, Nebraska, Eastern Colorado?
You don’t even need to be an Ivy League graduate to solve the government’s money problems. Its only a problem to those with common sense, and not to those out to get rich on the backs of the taxpayer.
Yeah, and it’s probably only a fraction of what he’ll approve for spending overseas. It’s not like any parts of our own nation is suffering drought and could use federal financial aid to combat it, with money we don’t really have anyway.
Doug,
Not to pick nits, but America IS NOT solvent currently. All it takes is for companies to stop buying the junk that the Treasury is selling and the whole house of cards comes down. Poof! Instant governmental evaporation. The problem isn’t that the Tea Party will march on Washington and disperse the cesspool current inhabiting our Nation’s highest offices, it’s that they’ll all be long gone by the time we rouse everyone for the march.
It’s much much more distributive when you take it out of the country, don’t ‘cha know!
DougT said:
Doug, you’re not seriously suggesting banks get off the dime, stop playing the risk-free carry trade and actually start earning their paychecks ARE you!?
Nope, me neither, banky like cronyism! Isn’t that what La Cosa Nostra means “this ‘thing’ of ours”?
Green eyed Lady,
What does Clarice Feldman’s being Jewish have to do w/ anything!? Oh, or does The Left just assume all educated Jews are “on board” 100% lock-step w/ the Prog agenda?
This is the drum they’ve been bludgeoning since this began. Anyone that doesn’t see things thier way is an intellectual inferior!
Allah help the “man” who tries to put a burka over Shelia Lee’s weave! She’d go all pizzed off Wezzi Jefferson on they dum azzes.
/sarc? I postulate, you decide!
Soros probably jerked bho around to get things set up for a bet against the US dollar. Soros walks away with a bunch of money and if bho can’t make it for another term, Soros will find someone else. Little Timmy Halfwit did his job perfectly. Greenspan the Moron should slink away before he drools on someone. Printing money will result in paying back loans with dollars that have less purchasing power. I want to slap all the pundits that think that is such a great idea. It leaves us with money that is worth less too and it doesn’t fix the over-spending problem.
Good thing you included the Wicked Witch of Botox or that would have sounded… wait for it… RAAAACIST!
rambler said,
Who said it was “a great idea”? It would be a last resort to avoid default, which was Greenspan’s point.
And it wouldn’t lead to the hyperinflation that others have mentioned. For an economy this size that would take quadrillions of dollars in additional paper and a complete loss of confidence in the American economy to happen. We can lose confidence in the government, but that isn’t the same as losing confidence in the economy.
Agree with you completely (and Greenspan would undoubtedly agree to) that preventing an imminent default would not address ridiculous levels of government spending, but it was never intended to do so.
Marshall_Will said,
Well…yeah. But the chairman thinks that will cause…inflation! Can’t percolate the economy because prices might rise even higher. Geez.
The spouse and I are headed to the cooper for our barrel-fittings tomorrow. Getting some custom made oak models with iron rings. Hope they don’t rust right away.
Greenspan. Isn’t he another Nobel prize winner? I forget. Pardon me, my cheap bourbon is calling my name now.
Re: Banks
I remember my mother getting a Bank Americard back in the ’60s. She was excited, but my father lectured her sternly against running the balance up to the limit of $300. At 8% APR, that is a lot of money to pay back.
As a chuckle, the APR on my Sears card (zero balance, by the way) is about 24% and the limit is $12,000.
The interest rate on borrowing hasn’t kept up with the interest rate on savings, has it?
DougT said:
Hey can you get a pair made up for Mrs. Will and I while you’re there? Lol. Not to break my arm off patting myself on the back any more than usual but we bubble-bloggers called this one on the money as well.
Bankers are chickens by nature. They’ll take the sure thing any day of the week. You know.., the old 3,4,5 Principle? No, not pythagorean.
Borrow money at 3%, loan it out at 4 ( and be on the golf course by 5! )
Hangfire said:
Hang, even you were willing to go out on a limb, buy some Mater Ltd. Partnership and leverage to high hell you ain’t getting 24%.
( What could the downside be? ) sarc
Great Idea!!
If we make Trillion Dollar coins,
The debt would stack nearly 1 and a half inches high!!
Rest assured kiddies, Odumboears speech drove the foreign markets deeper, as I type, the HSI is down again 5.5%, DOW already poised for a 2.3% hit. No He Can’t!
We need to print more money for the Mexican truck project to take back to their homies.
The Usurper is determined to make us a third world country.
What a doofus! Greenspan claims that U.S. Treasury bonds are still safe to invest in because the United States can devalue its currency to pay them???????
That’s like telling a mortgage company that it’s safe for them to loan you money because you can always pay them with forged checks so there is zero probability of default.
Greenspan is a bit mixed up here. Academia has always used the premise that US Treasuries are risk free for calculation purposes. However, such calculations never assumed that printing money wouldn’t cause massive inflation.
I bet you were one of those women that blamed the Jews when Hitler invaded Poland.
corkie said,
No, it isn’t like that at all. Forged checks are worthless. Increasing the money supply makes the dollar worth less, but it is still a dollar.
Devaluing a currency would be a last resort method to avoid default. Certainly not anyone’s first choice. Greenspan was just saying that if it came to that, instead of default, we would devalue the dollar.
If academia (why wouldn’t it be more important what investors thought instead of professors?) uses the premise that treasuries are risk free it would make more sense to go with the lesser risk of inflation than the much greater harm of not paying the debt at all.
But the point is moot. This is much ado about nothing. Folks might not like Greenspan, but he knows what he is talking about.
Yeah…”just print more money!”
YEAH, that’ll work!….’doesn’t need GOLD backing, nor is it backed by oil,coal,silver,copper,wheat,corn, doesn’t need it, just keep printing paper.’
@&**%*#@#$ &^%$&* #$@>? &@(&)*(&)##$#@ MORONS!!!!!
Boy…do I feel better.
Sidebar… I just noticed that the URL for this post is rather odd…
…as if Doug had started writing a completely different post, then changed the post title and content without remembering to change the wordpress URL assigned to the original post title…
http://michellemalkin.com/2011/08/08/moore-obama-arrest/
Moore Obama arrest???
Probably a mix up with a new stroy MM is working on in which Michael Moore said that if Obama had more guts he would arrest the head of S&P for what they did.
Hey, Obama promised to fundamentally change America. And he did!
What are folks complaining about?
oh lordy, now you done it.
Ah, the Reagan years…how my money did grow. Isn’t that so bourgeouis of me?
Luckily, if the US Mint can’t print the money fast enough I hear Parker Bros has the capacity to take up the slack, especially since they can print $500 bills.
True, but the latest polling data is showing that we are in fact loosing confidence in the economy:
I’ll be honest I do not know how low it would have to go before we are seen as having totally lost confidence in the economy, but it does appear we are headed in that direction (I just hope we never get there).
You know, had I been President in ’93, Somalia wouldn’t be facing this famine. Just as there wouldn’t be any Somali pirates…
No Somalis = no famine, no pirates.
Exactly. The left prefer to treat conficts as law enforcement and humanitarian issues.
To the left the Somali pirates are as much “victims” as the people facing famine, instead of enemies engaged in war.
I hear that the pirate business is booming. Might be a good investment.
Happyscrapper on deck with a war skillet would leave them shakin in their deck shoes.
Yes, but how long will people continue accepting money that’s worth nothing more than the fibered paper it’s printed on? Is Greenspan really this stupid?
Is this the same philosophy as, “I can’t be out of money! I still have checks left!”?
No, you’re wrong. There are absolutely similarities.
Claiming that an investment is safe because the issuer of the securities is capable of devaluing those securities is completely stupid. There is absolutely no way for you to defend Greenspan’s statement.
Tell me why you would want to avoid default? What’s wrong with default? Is it because default causes investors to doubt the issuer’s ability to insure the expected return on a security? Devaluing a currency does the same thing. Devaluing a currency causes investors to doubt the issuer’s ability to insure the expected return on a security. So, again, Greenspan’s comment that a U.S. Treasury investment is SAFE because the U.S. has the ability to devalue the currency is completely asinine.
It much more important what investors think. That’s exactly my point. Greenspan is spouting academia crap instead of reality.
1) You don’t know the definition of default. A default doesn’t mean that no payment occurs at all. Default means that the issuer of the debt doesn’t completely comply with repayment terms. A late repayment is a default.
2) Would you consider a safe transaction one in which I devalued my car AFTER you bought it from me? Would you consider it a safe investment to purchase a share of an apartment building if you knew that your partner was planning to devalue the apartment building after you purchased your share?
3) Academia’s premise has always been flawed. Assuming U.S. Treasuries are risk free (without the risk of devaluation) isn’t a sound premise which means that this concept has been taught incorrectly for generations. This major flaw hasn’t mattered until now because this is the first time that the issue needs to be addressed.
What I’m telling you is that people, such as Greenspan, that are relying on this flawed premise are stupid. Times have changed. Reality is different. It doesn’t take a rocket scientist to understand this.
There’s a difference between accurately spouting academic crap and understanding reality. Greenspan doesn’t understand reality, therefore he doesn’t know what he is talking about.
It would have been accurate to state that the U.S. is able to avoid default by printing more money. That statement is incomplete but not inaccurate.
However, it’s completely inaccurate to state that U.S. Treasuries are “very much so” safe because the U.S. can print money.
You should have thought more carefully about this before you decided to irresponsibly defend him.