He missed one crucial point. Printing money is not the problem per se. Government paying interest to a private corporation to print this money is the problem.
Governments can print interest free money on their own as long as they are backed by resources and productivity. This is the secret that can get president killed.
I think printing money IS a problem because it causes inflation. Inflation is a tax on people charged by banks.
Thought Experiment #1: You put $1,000 into the bank. The bank buys, say silver, you go back after a year of 10% inflation and take your money out. The bank sells the silver for $1,100 because of inflation, it gives you $1,000 and pockets the change.
Thought Experiment #2: Imagine you want to buy a house for $100,000. You borrow the money from a bank who can happily "print" that $100,000 for you. Suppose another person does the same. The house owner now has two offers of $100,000 so someone needs to offer more. The owner accepts $101,000 and is happy with the price increase but, in reality, his house is worth exactly what it was. The value of the money has fallen.
Thought experiment #2 is null and void in this example because I said governments can print money (and only if its backed by assets or productivity), not banks.
With Thought Experiment #1:
If government is printing more money its because it is backed by more assets, which means the price of silver doesn't go up as in your example and hence wont cause inflation.
When a bank lends out other peoples' money several times over that is the equivalent of "printing money" in my book. It is money that does not exist that other people can now spend.
As for "backed by assets," creating a piece of paper called a government bond or treasury note and then pretending it is an asset when it received by the Fed is somewhat disingenuous. Again, it is money from nothing but the government has pledged to pay it back, somehow.
I agree with the first part of what you said. Charging interest on money you have just created out of nothing is a bad idea. How it is not criminal, I don't know.
As for the second part, you included: "as long as they are backed". The problem is that there is no real backing.
He missed one crucial point. Printing money is not the problem per se. Government paying interest to a private corporation to print this money is the problem.
Governments can print interest free money on their own as long as they are backed by resources and productivity. This is the secret that can get president killed.
Most people have no idea the fed is a private corp.
I think printing money IS a problem because it causes inflation. Inflation is a tax on people charged by banks.
Thought Experiment #1: You put $1,000 into the bank. The bank buys, say silver, you go back after a year of 10% inflation and take your money out. The bank sells the silver for $1,100 because of inflation, it gives you $1,000 and pockets the change.
Thought Experiment #2: Imagine you want to buy a house for $100,000. You borrow the money from a bank who can happily "print" that $100,000 for you. Suppose another person does the same. The house owner now has two offers of $100,000 so someone needs to offer more. The owner accepts $101,000 and is happy with the price increase but, in reality, his house is worth exactly what it was. The value of the money has fallen.
Thought experiment #2 is null and void in this example because I said governments can print money (and only if its backed by assets or productivity), not banks.
With Thought Experiment #1:
If government is printing more money its because it is backed by more assets, which means the price of silver doesn't go up as in your example and hence wont cause inflation.
Its FIAT printing money that causes inflation.
When a bank lends out other peoples' money several times over that is the equivalent of "printing money" in my book. It is money that does not exist that other people can now spend.
As for "backed by assets," creating a piece of paper called a government bond or treasury note and then pretending it is an asset when it received by the Fed is somewhat disingenuous. Again, it is money from nothing but the government has pledged to pay it back, somehow.
Unfortunately you are arguing against something completely different. Please read my original comment fully
I agree with the first part of what you said. Charging interest on money you have just created out of nothing is a bad idea. How it is not criminal, I don't know.
As for the second part, you included: "as long as they are backed". The problem is that there is no real backing.
And there in lies the problem. That is the crux of what I was trying to say.
Printing money is not the problem, but the fact that it is not backed by anything AND we pay interest on it are the real problems.