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You're assuming the US government can just simply print money. It can't: the Reserve and the Treasury are two different entities. While I might agree that defau

You're assuming the US government can just simply print money. It can't: the Reserve and the Treasury are two different entities. While I might agree that default and inflation both have costs, with inflation perhaps costing more, you're ignoring the time value of money and elasticity of supply/demand. You better believe default on loans by the US gov't would cause panic and economic stagnation. The purpose of this whole economic and central banking system is to smooth out the economic peaks and valleys, not to be perfectly efficient and/or "morally" correct. It's far more important that people continue to have food on their tables than the economy and government operate at peak efficiency.

anamax 16y ago
> You're assuming the US government can just simply print money. Actually, I'm not. I'm assuming that the US govt can enact policies that cause inflation, which is pretty much agreed on. (And, while the Fed is formally separate from the formal US govt, it's part of govt monetary policy. That goes beyond the US govt's power to replace the Fed leadership....) > While I might agree that default and inflation both have costs, Do you really think that there's some possibility that either one is free, especially at the levels required to deal with current debt levels? > with inflation perhaps costing more, you're ignoring the time value of money and elasticity of supply/demand. How do you know that I'm ignoring the time value of money or elasticity? I never said that default would be pain free. My claim is that the pain is likely to be less than inflation. Note that neither of us are providing any numbers. > The purpose of this whole economic and central banking system is to smooth out the economic peaks and valleys, not to be perfectly efficient and/or "morally" correct. That's nice, but irrelevant because no one is arguing for efficiency or correctness. Note that inflation can cause serious panic and damage. Feel free to provide examples of default causing as much pain as inflation wreaked on post-WWI Germany or Zimbabwe.

anamax 16y ago

> You're assuming the US government can just simply print money. Actually, I'm not. I'm assuming that the US govt can enact policies that cause inflation, which is pretty much agreed on. (And, while the Fed is formally separate from the formal US govt, it's part of govt monetary policy. That goes beyond the US govt's power to replace the Fed leadership....) > While I might agree that default and inflation both have costs, Do you really think that there's some possibility that either one is free, especially at the levels required to deal with current debt levels? > with inflation perhaps costing more, you're ignoring the time value of money and elasticity of supply/demand. How do you know that I'm ignoring the time value of money or elasticity? I never said that default would be pain free. My claim is that the pain is likely to be less than inflation. Note that neither of us are providing any numbers. > The purpose of this whole economic and central banking system is to smooth out the economic peaks and valleys, not to be perfectly efficient and/or "morally" correct. That's nice, but irrelevant because no one is arguing for efficiency or correctness. Note that inflation can cause serious panic and damage. Feel free to provide examples of default causing as much pain as inflation wreaked on post-WWI Germany or Zimbabwe.