Jun 1 2012

The ‘Printing Money’ Phobia

Monetary stimulus as crime against nature

If you oppose the idea of restoring the economy by expanding the monetary supply (Extra!, 2/12), you have a ready rejoinder: You can accuse the government of “printing money.”

Washington Post columnist George Will (5/9/12) chided, “An axiom of scarcity is understood by people not warped by working for the federal government, which can print money when it wearies of borrowing it.”

Investor’s Business Daily’s Mike Getlin (4/25/12) dismissed signs of economic recovery, writing, “The problem is that these improvements are not built on actual wealth invested in these markets, but on printed money created from thin air.”

“Whatever restraint [Obama’s] had to reduce spending or cut that, those are off now, and he’s going to do whatever he can to get re-elected,” charged Fox News analyst K.T. McFarland (Fox Business Network, 5/7/12). “I think President Obama means full-steam ahead spending, forget about balancing the budget. Print the money.”

“The loss of freedom comes in many forms,” warned Fox News’ Andrew Naplitano in the Washington Times (4/9/12), “like when the government prints money to pay its bills and, as a result, all the money you already have loses much of its value.”

When you think about it, it’s an odd complaint to make about money: Where would it come from, if they didn’t print it? The phrase’s pejorative use suggests erroneously that money is really some kind of natural resource whose quantity is fixed—or whose abundance, at least, ought to be out of human control. Increasing its quantity is treated as a crime against nature, whose consequences can only be malign, and can certainly never help us.

“If the government is running out of money, it can print more money,” declared right-wing economist Thomas Sowell (Creators Syndicate, 5/20/12). “That does not make the country any richer, but it quietly transfers part of the value of existing money from people’s savings and income to the government, whose newly printed money is worth just as much as the money that people worked for and saved.”

Mike Moffatt of the New York TimesAbout.com website, answered the question “Wouldn’t We All Be Wealthier if We Printed More Money?” by writing:

If we print more money, prices will rise such that we’re no better off than we were before…. Increasing the amount of money does nothing to increase the amount of wealth or more plainly the amount of stuff in the world. Since the same number of people are chasing the same amount of stuff, we cannot on average be wealthier than we were before.

Asked by a reader why “the printing of money by the U.S. government is such a bad idea”—particularly “in a society that is glutted with goods, services, capacity and unemployed people as is America today”—the Nashville Tennessean’s Richard Grant (5/13/12) explained, “Although in the short term it appears that more money means more wealth, all we really have is more money.”

Besides writing regularly for the Tennessean, Grant is an economist at the Beacon Center (funded by benefactor of right-wing economics Richard Mellon Scaife). But his inquiring reader appears to know more about economics than he does: When a society has large numbers of unemployed people and other forms of unused capacity—which is true today of the United States and most other developed nations—it can indeed become wealthier simply by creating more money.

As economist Dean Baker, in a Guardian column (10/12/10) headlined “Why Printing Money Makes Sense,” explained:

In normal times, the economy is, at least partially, supply-constrained. Collectively, we want more goods and services than the economy is capable of producing…. In our demand-constrained economy, how- ever, there is no problem of inflation. The economy can produce more of almost anything right now. The reason that we are not doing it is simply the lack of demand.

Money is simply a human-created tool, and there can be too much or too little of it—no matter how many times it’s asserted that making more of it is automatically a perversion of nature. Rep. Ron Paul (R.-Texas) and economist Paul Krugman summed up the clash over the idea of “printing money” when they argued about Fed chair Ben Bernanke on Bloomberg TV’s Street Smart (4/30/12):

PAUL: You want him to print more money faster.

KRUGMAN: Well, of course I do.