What does "monetize our debt" mean?

[FloridaPat]

[meti57b]

1. It means print more money and use it to pay off your creditors

[amerikat]

2. when the federal government prints money to pay the debt

that they owe. It tends to devalue the currency already in circulation. It can lead to inflation.

[ewoden]

3. It means . . .

The repubs, the party of conservative spending and fiscal responsibility, turn the debt into and excuse for money for their rich constituency. Artfully using increased Federal spending, to ratchet up the deficit, to provide an excuse for ever more trikle down economic voodo in the guise of tax cuts for the most wealthy Americans. Sort of a fiscal mobius strip

Then again I could be wrong:-)

[katsy]

4. Print more money...

pay no debt = risk of inflation

[firefox]

5. A current link at GoogleNews

http://www.freemarketnews.com/Analysis/106/3425/2006-01-12.asp?wid=106&nid=3425

Another notable and highly relevant piece that ‘caught my eye’ was Robert McHugh’s most recent offering, The Fed's Money Supply Armament is Underway. In this well timed, well researched effort McHugh gets at the heart of the soon to be discontinued M3 issue when he reveals,

M-3 has been launched into outer space, up another $56.3 billion last week, up $92.4 billion over the past two. This is some real horsepower. Over six weeks, the meaningless figure, ahem, is up $177.8 billion. These annualized growth rates are 28.7 percent, 23.6 percent, and 15.3 percent respectively. Those are the seasonally adjusted figures. The raw, non-seasonally adjusted, figure is up $293.3 billion over the past 12 weeks, on a pace to add 1.2 trillion in money to the economy. Wow. There must be a need for this. Maybe the master Planners see a coming need to monetize our debt? To support markets? They tell us the economy is good, so clearly they cannot be stimulating our way out of a recession. There's a lot of money flooding the economy and it has to go somewhere. Right now it is lifting markets.

That’s right folks – soon to be discontinued money supply data ALREADY showing annualized growth rates in excess of 28% - and the Fed would have us all believe that this is a non event. McHugh opines that the “master Planners” perhaps see a coming need to further monetize our debt?

[firefox]

15. This link explains "monetize the debt" best

http://www.safehaven.com/article-4403.htm

The following is pure educated speculation: What if Iran goes through with its threat to sell oil for Euros instead of U.S. Dollars? Well, then Dollars won't help you much if you want to buy oil from Iran. So, you sell the Dollars you are holding for Euros. Whenever anything is sold en masse, its value drops. This means less demand for Dollars, which means the Fed will not be able to print excessive amounts of Dollars without further driving down the Dollar's value. There would simply be too much supply. Right now, the Fed can print all the Dollars they want because the demand for Dollars has been on the rise, especially as the cost of oil has risen. In other words, lately it has taken more Dollars to buy oil, so the demand for Dollars has been up. Again, this extra demand has allowed the Fed to print all it feels like with little consequent damage to the Dollar.

However, if the Dollar were to tank - and the Iran oil Bourse should push the Dollar in that direction - it puts pressure on Treasury Bonds and other U.S. financial assets to fall as well, since they are denominated in a declining-value currency. In this event, the Fed would have to step up its buying of U.S. financial assets to lend support to these asset prices - to stabilize U.S. markets. In other words, the Fed would have to monetize the U.S. Treasury's debt, and also monetize equity markets (be the buyer that keeps prices from falling). This would take so much fresh money that the Fed would need to create it in secret. Thus, they would have to announce that they are no longer going to transparently reveal the level of the money supply, but will hide it. The alternative is to punish Iran for - and make no mistake about this - effectively declaring economic war against the United States.

If this speculation is true, then the Master Planners are likely preparing accordingly. But if this is true, you just wish there would be more forthright communication with the American people.

M-3 has a direct but lagging impact on financial markets. Look at the chart on the prior page. Whenever M-3 rises, the Dow Industrials rise. Whenever M-3 is flat or declines, the Dow Industrials decline. The Dow Industrials are a bellwether for the economy. If we can monitor M-3, we can better monitor the future path of equities and the economy. It is wrong for the Fed to stop its disclosure for this very reason. Investors need to know in a free market economy, because M-3 infusion is centrally planned intervention into a free market system.

[applegrove]

6. Lower dollar. Maybe they pushed and pushed the Chinese to

stop hording dollars so the outsourcing of jobs would slow down running up to 2006 election. And they don't trust the Chinese to sell dollars fast enough (chinese keeping their $ artificially low allows them to integrate more people into the market - and they still have a Billion people they want to put into factory jobs).

So it may be a "lower the dollar" create jobs for the 2006 election strategy.

Who thought they would actually not try and influence the economy to win an election?

Could be - with workers getting lower salaries that that will fight inflation enough to make it a net gain in jobs.

That would be my guess.

Only the stock market, housing bubble in areas, and the military industry is going like gangbusters. Rest of economy has been left out.

[Mike Niendorff]

7. it means ...

... that right-wingers are infiltrating this site and trying to inject their conspiracy theories onto this board under the guise of anti-Bush critiques.


MDN

[MisterP]

13. uh?

it's not a Mises Institute critique designed to overthrow Keynesianism

[mmonk]

8. We now copy Rome in everything.

We move from democracy (I know, representative democracy) to Imperial America and hyperflate the economy.

[FloridaPat]

9. Thank you everyone! Now I got it. Nice trick.

[hang a left]

10. Will someone list a set of reasons for why they want to hide the M3?

What kinds of events could take place that would make it necessary to print a whole bunch of money.

Another war?
Iranian oil bourse(sp?)?

[orwell]

14. If...

...you hide M3 you hide the most effective measure of Fed money supply creation because you hide much of the Federal Reserve's actions. In other words, if the Fed is about to go on a money creation binge, hiding M3 could effectively hide their shenanigans.

[mmonk]

11. Fool the people into thinking they are

flush with money while they drown in debt.

[mmonk]

12. Luckily, I have already started betting

against the dollar by purchasing euro ETF's through the new euro monetary trust.

[FloridaPat]

16. How do you go about doing that?

[mmonk]

17. Contact a broker.

The symbol is FXE. The cusip is 29871P109.

[mmonk]

18. The shares

are priced according to the exchange rate. Interest is also paid out according to the euro bond rate.