Until U.S. debt becomes another investment rather than the global reserve money supply, Krugmanomics has the edge over free-market principles.
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If that judgment is right, the squalls stirred up by the credit crises have moved at least one currency the world's reserve money closer to fair value.
My counterargument is that you don't go directly and immediately from reserve and money creation to rampant inflation.
If misrule matters so much for development, should it reserve its money for committed reformers, turning its back on the reform-shy?
Firms may be booking much bigger restructuring charges than they should, creating a reserve of money to draw on to boost profits in a difficult future year.
Banks have little incentive to make money the old-fashioned way (by lending) if they can lazily tap the Federal Reserve for free money and then buy long-term U.S. Treasurys yielding 3.5%.
Simply said, if the Federal Reserve ceases their money printing ways, it will be a deflationary one.
But we do have this problem where, under that statute from 75 years ago, the Federal Reserve gave the money without any conditions.
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The markets also took heart from a robust defence of the Federal Reserve's money-creating quantitative easing policy by its Chairman Ben Bernanke, giving testimony before Congress.
Loans are then made from The Reserve's money market accounts.
After the collapse of the Bretton Woods system of fixed exchange rates in 1971 the Federal Reserve allowed the money supply to increase at 12% a year or more.
The fact is that human desires are unlimited, and (assuming that the Federal Reserve provides stable money, which it has not over the past 40 years) supply creates demand.
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Treasury yields have zoomed from 4.72% in October to today's stratospheric levels because of fears that the Federal Reserve will tighten money more even though there are no realistic signs of inflation.
So with the rebound factor from a down cycle, a Federal Reserve that prints money like mad and a federal government running huge unprecedented deficits we are growing at how much? 1.3% Small Business is clamoring for a good plan and good leadership.
Yet the bankers, together with the central banks, want Europe the fabricate money just like the Federal Reserve in the U.S. A money creation machine is the dream of all bankers.
Reason: The Federal Reserve's easy money means that funds for overnight lending aren't worth anything.
Subsidies for staples depend on governments having enough money in reserve to cover the costs.
Look at what's happened since the Federal Reserve began creating excess money in 2004.
Why couldn't the Treasury Department or the Federal Reserve simply have advanced money to the FDIC?
What the Federal Reserve does is loan money to banks at a given rate, zero percent at the moment.
But this left less money in reserve to cushion against lower share prices.
Fractional reserve banking expands the money supply without regard to real wealth, and this is inflation, resulting in price increases.
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The Federal Reserve got into the money markets on Tuesday, its latest move to try to thaw out gelling credit markets.
If the Federal Reserve instead continues its money printing ways ad infinitum, it will be an inflationary, possibly even a hyperinflationary one.
On balance, is the global cash glut mainly the result of the U.S. Federal Reserve's loose money and the resulting lax loans?
Why was the Federal Reserve printing so much money, exporting inflation to China and other countries, and putting strains on exchange-rate relationships?
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Blitzer expects the Federal Reserve to keep pumping money into the housing market as long as inflation remains below 2.5% and unemployment above 6.5%.
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By requiring clearing houses to hold more money in reserve, the authorities hope to protect such firms against a major customer hitting a financial crisis.
Some investors are concerned that the market's gains this year are being fueled by the Federal Reserve's easy money policy, and will disappear once the Fed reverses course.
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