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« Haiti Earthquakes - Adoption Credit | Main | Here Comes the Pain – Bush Tax Cuts are Scheduled to Expire »

06/30/2010

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As you rightly point out, money itself is a form of debt. Thus paying off the national debt is EASY: just print money and buy back the national debt. The effect would NOT be all that inflationary because Treasuries and cash are not (as you rightly point out) all that different from each other!

To the extent that the above ploy IS inflationary, there is a simple remedy: implement a DEFLATIONARY method of buying back the debt: get the requisite money from raised taxes and/or reduced government spending.

To summarise the INFLATIONARY and DEFLATIONARY method of buying back the debt can be mixed to produce a NEUTRAL “buy back” effect. Problem solved, as I point out here: http://printingmoneyisgood.blogspot.com/

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