I’m an eco-ignormaus, but when the Treasury puts more dollars into the system and thus devalues the dollar, how does that play out domestically?

My admittedly ignorant understanding is that more dollars would be inflationary, thus requiring US consumers to have more dollars to purchase the same goods just as the consumers’ purchasing power was tanking.

That’s the effect I see the Treasury’s special lending with CDO collateral having. It’s just putting money into the system and not producing anything. Putting money into the system for infrastructure, using let’s say a new WPA would put those dollars to productive use. Improvements in infrastructure ultimately mean more productivity which tends to bring prices down.

I think monetary policy is deliberately trying to cause inflation, to try to keep the housing bubble from collapsing entirely as that would put a floor under asset prices in nominal terms. The loss of purchasing power isn’t reflected in the nominal market value of the underlying collateral, which puts a tax payer supported floor under the toxic waste debts.

I’m not sure that paying off debt in an inflationary environment is good policy – if you have a mortgage for example with interest rates below inflation then you are in a position where you are paying the debt off with dollars that are devaluing faster than the interest charges.

I’m an eco-ignormaus, but when the Treasury puts more dollars into the system and thus devalues the dollar, how does that play out domestically?

this can be done succesfully, if we invest in infrastructure and if we insist on retirement funding, those dollars realize actual product and if played correctly don’t get dumped on the market wholesale since they are going to retirement funds, food, etc, they can be used to “pay down the debt” and get actual assets at the same time, the dollar influence on the market could be offset into the future

unlike the bailouts where the dollars printed affect the market immediately and do cause inflation

simce money is always being printed anyway, we can instead of printing new paper to heat up the economy we can use devices differant devices to get those dollars out of savings and into the market when they’re needed and back into bank accounts when otherwise there are too many greenbacks in the market.

My admittedly ignorant understanding is that more dollars would be inflationary, thus requiring US consumers to have more dollars to purchase the same goods just as the consumers’ purchasing power was tanking.

I’m probably missing something painfully obvioushere, so I’ll look forward to learning…..

perris, are you still here?

still here, not a stable internet connection though, what’s up?