Quote:
Originally Posted by JSH
On the other side the USA owes all of our debts in US dollars. We cannot default on these debts unless we chose to do so for political reasons. We could quite literally pay off all our debts tomorrow by printing money. That would be stupid, devalue the dollar, and dry up our borrowing opportunities but it is an option.
Today people are paying to loan the US government money - that is a good position to be in.
But this is a thread of gas prices. Rising prices and not falling. Gas is below $5 a gallon again around me. Costco's current price is $4.99
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Well, at this point in time the US is effectively printing money to pay off debt because foreigners are net selling US debt. When times were "good", lots of debt was unloaded onto foreigners, and now those foreigners are paying for some of the inflation/money printing.
If the federal government runs a deficit, even if the central bank is "independent", the central bank isn't going to let the government collapse, so it will go along with the program and print however much money it takes to keep the government afloat. Right now we're entering a recession so prices are moderating a bit but the inflation will be persistent going forward.