Dave believes that the solution to the U.S. financial crisis is printing more money. Excuse my language, but… are you fucking kidding me? Does he believe that he must still have money in his bank account because he hasn’t run out of checks yet? Does he believe that somewhere, a bunch of economists are reading his blog and saying “Holy crap, guys! Why didn’t we think of this??”
Even though I’m not an economist, I’m pretty sure that the US government can print money.
So if we have a $1 trillion deficit this year, that does not imply that someone has to lend us $1 trillion and it does not imply therefore that someone will have to pay someone back that money at some date in the future. If there’s an economist listening who thinks this is not true, please say so and everyone else ignore what I’m about to say.
The most hilarious part about this, though… is this:
He asks people to correct him if he’s wrong, and then he closes the comments. Now, I don’t know if he closed them before he had 1,000 people tell him this is a really idiotic thing to propose or if he did it in anticipation of that, but either way: “not an economist” doesn’t even begin to cover it.
To be fair, there are some economists who believe that printing more money is a valid way to claw the US from the current crisis. The problem is in getting the markets to believe that they will stop printing when the economy gets better.
In any case, the issue is complex and by just saying “print a trillion bucks and remove the deficit” isn’t really gonna cut it.
I will never understand what motivates Dave’s writings. In times like this, I wonder if he just decides to throw whatever contrarian shit he can think of against the wall to see if it will stick. In this instance, either it’s a one-off wild idea that, if never implemented, he can point to as an example of his creative thinking (the likely case), or, if some economists down the road do promote it, he can point to the blog post and say ‘I told you guys.’
I’m probably becoming too conspiratorial and cynical.
Dave Winer: “i chose to close the comments cause people were being abusive. had nothing to do with agreeing or disagreeing.”
http://friendfeed.com/e/309f9666-cbda-dea9-1d45-c38d5afe7080/Even-though-I-m-not-an-economist-I-m-pretty-sure/
I’m sure it had nothing to do with the fact that this is a terrible idea. “Abusive” is Dave’s term for “disagreed with me without kissing my ass enough.”
3 people left comments (including me) saying that printing money will not work.
Dave commented back that he thought only smart people read his blog.
I commented back, “eye-on-winer is going to love this”.
Dave closed comments
@Gustaf – Can you point to an economist that says that? There might be some out-of-left-field theory that I just don’t know about and I actually would be interested in reading it because to me this is pretty simple.
Even without a gold standard money represents wealth. So the more money you print the less it’s worth because in the end the wealth your country represents is finite. I honestly don’t see how anyone could dispute that.
“Dave commented back that he thought only smart people read his blog.”
His biggest problem is that smart people do read his blog. That’s why he has to close comments so often when he floats these ridiculous theories.
@Tom I’ve been geeking out on finance and macroeconomic blogs for a while now, so I don’t really remember the reference. But I believe it had more to do with a hypothetical benefits program (i.e. a payment to families or similar) which would be “financed” by the government basically making money and putting it in a giant account for the relevant agency.
When Japan entered its recession a plan was to flood the money markets with yen, thereby creating inflation and reducing nominal debt. The problem was that Japan is not Zimbabwe. Investors knew that as soon as the economy recovered the Bank of Japan would restrict supply. So basically they kept the money being produced.
More here: http://en.wikipedia.org/wiki/Quantitative_easing
I’ll try finding the original reference!
@Gustaf – I see what you are talking about now but I don’t think what you are talking about is the same thing that Dave was talking about. Let me quote him for a sec…
“Even though I’m not an economist, I’m pretty sure that the US government can print money. So if we have a $1 trillion deficit this year, that does not imply that someone has to lend us $1 trillion and it does not imply therefore that someone will have to pay someone back that money at some date in the future.”
Now to me he seems to be saying he thinks we can pay off the deficit by just printing a trillion new dollars. That’s not Quantitative easing which tries to jumpstart an economy and create more value by pumping money into a country’s internal economy.
Yes, I meant quantitative easing. Dave seems to have a more… naive view of how this works.
You can pay down debt by printing money. The only problem is that the resulting inflation makes the little guy pay while the rich get richer:
http://thebubblegoesbang.blogspot.com/
http://d8c.org/2009/01/17/no-i-invented-weblogging/
Dave invented twitter!