Congress writes the budget and prints money

[marylandblue]

20. Lw of supply and demand

Inflation has been low these past few years because the Federal Reserve has taken measured steps to shore up bank balance sheets to prevent deflation. Although there is a big increase in money supply this extra money is mostly sitting on bank balance sheets rather than circulating. If the government started paying for goods and services by printing money rather than taxation, this would put a large amount of money directly into circulation. Every country that has tried this has ended up bankrupted by hyperinflation. If the US is just seen as a giant corporation, then it would be the equivalent of a corporation raisong funds by issuing new stock. Everytime it does this, the stock drops because more stock is in circulation. This is okay, if the money is used to grow the corporation and make it worth more.down the road. But if they simply printed stock to pay for everything rather than pay out of revenues the value of the stock would drop.to zero.