In one of the more unbelievable things heard in recent memory, former Federal Reserve chairman Alan Greenspan has said that the United States’ credit is fine and its treasury bonds are safe because, “we can always print money.”
David Gregory, moderator of “Meet The Press” on NBC: “Are U.S. treasury bonds still safe to invest in?”
Alan Greenspan, Former Chairman of the Federal Reserve: “Very much so. This is not an issue of credit rating, the United States can pay any debt it has because we can always print money to do that. So, there is zero probability of default.”
Huh? Every country has a printing press and the ability to print money. Should Zimbabwe have a AAA credit rating too? After all, they too can pay off all of their debts by simply printing more money.
Ah, but what happens to the value of that money? Everyone who has taken high school economics knows that rapidly increasing the supply of something will ultimately diminish its value. Everyone, except for our former Fed Chairman apparently. The point is not that the United States can’t pay off its debt, it is the fact that it would have to resort to the printing press in the first place.
Yes, we certainly have the ability to print and pay our way out of default, but at what cost? Destroying our currency? Those who have purchased our bonds do not want to be paid back in US dollars that have greatly depreciated in value and that is the reason for last week’s credit downgrade.
Is he serious? Was this guy really in charge of the Federal Reserve for 18 years? And some wonder why our country’s economy is so screwed up.