Money Printing is NOT Dollar Debasing

Originally posted on 13th July 2011 at Mike Norman Economics:

This is going around a lot. It’s this ridiculous false notion that the Fed is printing money and that it has “debased” the dollar.

First of all, the Fed has NO ABILITY TO CREATE NEW MONEY. Only the government can do that via spending. The Fed can only affect the DURATION and COMPOSITION of financial assets held by the private sector. PERIOD!!

Now, on this point that the Fed “money printing” (NOT) has caused the value of the dollar to decline, let’s look at the facts.

Below I give you the US Dollar Index and the size of the Fed’s balance sheet.

Date                 Dollar Index Value             Fed’s Balance Sheet
3/14/2008            71.66                                        $921 bln
7/13/2011            75.24                                        $2.9 TRILLION!

So, here are the FACTS…over the past three years the Fed expanded its balance sheet by $2 TRILLION and the dollar went UP!!!!!!!!!!!!!!!!!!!!!!!!!

The lesson here: DON’T LISTEN TO THESE IDIOTS ON CNBC AND FOX OR ANYWHERE ELSE IN THE MEDIA!!!!!!!!!!!!

Comment over at Mike Norman’s

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