Thursday, March 19, 2009

We can manufacture money domestically as Federal Reserve is doing

We don't have to import all our money from China and places like that. We can make it locally.


The Federal Reserve has printing presses, or the electronic equivalent there of.

In an age when so much of the American economy is outsourced, local manufacture of money might spur local production of other things like oil. I read that one of the early consequences of the recent move to monetize lots of debt by the Federal Reserve is an increasing price for oil on the world market.

More money chasing after same amount of oil means inflation of prices in that commodity. Rising oil prices can increase domestic production from American oil fields, such as in North Dakota where there's still some oil, but it's expensive to extract. Also higher oil prices can boost alternative energy and use of alternative things like the bicycle. Boost health also.

Value of the dollar is starting to decline which can help American export industries.

So, printing money domestically could lead to making more of other things domestically.

Inflation created by new money can be a problem, but it's nothing new. The housing bubble of a few years back was inflation. Now, even after some housing price declines, housing is still expensive compared to what people, on average make for wages.

If the dollar declines, domestically produced things become less expensive relative to world markets. Then our export industry might increase.

During the housing bubble, America was awash in overseas money, oil and products. This situation may have spoiled us. It's like we have become more of a consumer economy and less of a producer economy.

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