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<p>[QUOTE=&quot;Cloudsweeper99, post: 781453, member: 3011&quot;]This is basically true.&nbsp; Money isn&#039;t really being printed and circulated as many internet authors indicate is the case.&nbsp; The US government is going into debt to prop up the banks and a few other companies.&nbsp; So it is really a transfer that puts debt on the balance sheet of the Treasury and puts an offsetting asset in the form of a Treasury bond on the bank&#039;s balance sheet to increase their reserve.&nbsp; This enables the banks to lend more, but they are choosing not to.&nbsp; As long as this remains a balance sheet transaction and the US government can service the debt, in theory there shouldn&#039;t be an inflationary impact.</p><p><br /></p><p>Now if other countries get worried about the rising level of US debt and start dumping dollars, the exchange rate for the dollar will fall and the price of imports will rise.&nbsp; This might be inflationary or deflationary depending on how it is financed.&nbsp; If the Fed doesn&#039;t increase the money supply, it will be deflationary or neutral since rising import prices will be offset by drops in other prices.&nbsp; But if the Fed finances it by increasing the money supply as they did in the 70s to finance the purchase of oil at rising prices, then and only then will we experience the generally rising price level for all goods and services that is commonly thought of as &quot;inflation.&quot;&nbsp; </p><p><br /></p><p>So things are not as straightforward as many internet gurus with doubtful economic credentials but large egos will have you believe.[/QUOTE]</p><p><br /></p>

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