I grow very tired of the hair on fire statements, not based on fact, that say we are devaluing our currency by 'printing' money. The endless rending of garments that certain groups (you know who you are) have gone through would stock a clothing store a 1,000 times over.
Our ability to issue currency into the economy is not backed or limited by gold, bank reserves, bank deposits, debt, how many taxes we collect or GOP whining. In fact, it's not even limited by Congress. Our currency is not a commodity. It is however, an accounting tool to measure the store of value we owe each other based on an agreement between two or more parties.
If I agree to work for you, you will tell me how many dollars you will pay me for my labor. It is my labor that is the value, and the dollar is used to mark how many hours of labor I worked and it's worth in the market place. I am then given a piece of paper (or more realistically, numbers stored in a computer at a bank of my choosing) to measure the labor I have given to my employer. I will then take these dollars out into the market place and exchange my stored value of labor to someone else for a product I need or want to buy. My labor is the commodity, the dollar is only the vehicle for exchanging my labor, it has no value in and of itself.
What exactly does this mean?
I could go deeply into the history of money and how we came to believe it needed to be a commodity first, before we could call it money, but suffice it to say, our U.S. dollars are no longer a commodity. This has been true since 1971.
In a fiat currency system, the currency has legitimacy because of legislative fiat: the government tells us that’s the currency and then legislates it as such. The currency has no intrinsic valueWhat does give us the incentive to use dollars?
One of the most important powers claimed by sovereign government is the authority to levy and collect taxes (and other payments made to government including fees and fines). Tax obligations are levied in the national money of account—dollars in the US, Canada, and Australia, Yen in Japan, Yuan in China, and Pesos in Mexico. Further, the sovereign government also determines what can be delivered to satisfy the tax obligation. In all modern nations, it is the government’s own currency that is accepted in payment of taxes.What IS devaluing our currency is this; our constant refusal to recognize that we no longer operate under the gold standard, that our dollar bills are a fiat currency, and the U.S. Government is the Monopoly issuer. We cannot ever be broke because we can't run out of dollars.
Every time John Boehner cries on the house floor that we are broke, he devalues our currency. Every time the Tea Party idiots threaten to not raise the 'debt' ceiling, they are devaluing our currency. What they are basically doing is telling the world that we will renege on our promise to pay for the agreements we have already made. The really sad part is, that we decry the GOP as the stupid party, but we have bought right into their talking points hook line and sinker. It's plain pathetic.
So just how much money can the Fed print before we get into trouble?
Our real opportunities for economic progress are grounded in our ability to apply work, cooperative activity and creative ingenuity to the real resources we already possess. By the enterprising application of our industry and intelligence, we transform the things we have into different and better things, and exchange our work and the products of our work among ourselves to make our lives better. Our real limits, then, are the constraints imposed by our inherently finite nature: we only have so many resources; we can only work so hard; our cognitive capacities are only so great; we only live so long, etc.To answer that question more succinctly, our current spending limit could be measured this way;
Estimated $2.2 Trillion in infrastructure upgrades
$1.2 Trillion in Student Loans
23 Million unemployed
40,000 factories idled since 2000
Failing electrical grid
50 million without affordable health care
1 in 4 kids living in poverty
I could go on...
So instead of buying into the false meme that we have too much debt, and that we are broke, lets recognize what our real limits are and then get to work.