Money-printing authority becomes one of the hottest financial issues among the experts. Is printing money the right economic policy? Does it answer many questions on the nation’s economy? The idea of printing money is adopted by a number of movements, which look like socialists’ drive in the US as well as other countries. As a result, it becomes one of the hottest issues discussed in mainstream media or among politicians.
Why Money Printing Becomes Financial Issues Today
A number of factors determine why discussion about money printing becomes one of the main financial issues now. They include the following:
The Talks about Free Money
Implementing ‘free money’ policy becomes a practical political approach that politicians are talking right now. Examples of free-money policy include free college subsidiary, paid total healthcare, guaranteed basic income, basic housing allowance, and many more. These policies have a similar concept, namely, providing the people with ‘free stuffs.’
The idea of free-money policy will be adopted by more countries in the world. Many politicians say that the policy is doable, as ensuring that the citizens can meet their basic needs is necessary for the general welfare. Others say that even the richest countries now spend more to ensure that their citizens get basic income and wealth.
As a result, the discussion on money printing will be even more intense. As public spending for free-money policy increases, the government will have to find strategies to provide the money. Politicians will ask the government to increase public spending or at least make free-money policy as spending priorities.
A Recession Is Coming
Many people predict that the USA will suffer from a recession. This is evident from a number of facts. For instance, deficits keep increasing and unemployment rate keeps increasing too. If the recession really happens, private investments will be in harsh shocks.
Then, the recovery process after the recession will be much slower. As a result, the political situation may be affected. As financial crisis and recession are along the way, change is unavoidable. The government may need to print money to recover the situation.
Facts about Money Printing
Actually, the Fed does not have authority to create money. Only the federal government, particularly the US Treasury, has the authority. The US Treasury can create money and issue the debt into private sectors. On the other hand, the Fed can buy the debt and add it into the balance sheets. This process is called quantitative easing.
Actually, the Congress has tried to modify the regulation by creating an agency that can use the Federal Reserve to create money. This kind of agency is mostly ruled by the Supreme Court. However, if the Fed is to create money, the Federal Reserve Act should be amended first. This is actually doable, but it is not a simple process.
Discussions on financial issues become much more relevant during the pre-election period. Politicians are looking for strategies that benefit the citizens and themselves as well. Why? When the citizens have better satisfaction to the government policies, the politicians will get the benefits.