WILL FED BE ALLOWED TO MONETIZE ALL IOUs?
"I have long predicted that the trend toward negative social mood will unleash political forces that will keep the Fed from monetizing all the debt currently outstanding. I don’t think it will be allowed to monetize all the credit card debt, auto debt, mortgage debt, bank debt, city debt, county debt, state debt, corporate debt and derivative-triggered debt. Political pressures kept the Japanese central banks from doing it, and similar pressures are mounting in the U.S." said Robert Prechter
The total private debt to be monetize is about USD42 trillion in 2008, by now (end of 2010), it is about USD60 trillion. Will the American allow Fed to do that? In Japan's case, she can't. What about the unfunded social security and medicare, say another USD50 trillion. And what about the derivatives, which is not mentioned, about USD250 trillion (USA alone)
MONEY PRINTING MYTH
EWI president Bob Prechter explained in a June 2010 interview why the term "money printing" is a misnomer: "To begin with, the printing analogy is flawed. The Fed does not operate a press, as the government of Zimbabwe did. It creates new money only when it buys IOUs. This may seem to be a distinction without a difference, but it’s actually very important. ... Even if the Fed were to monetize every dime of currently outstanding, dollar-denominated debt, it would create no net inflation. The money-plus-credit supply would be the same."
So, did CHINA print USD800 billion during the 2008/9 crisis?
MyView
Think about it from the perspective of money-plus-credit supply. What about Japan government debt increase to 200% of her GDP? Why then the yen did not become toilet paper?
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