Economic fix: print more money?! (Insider Report).

"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply," explained a Harvard-trained economist during a November 21st speech before the National Economists Club in Washington. "But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.

Sounds like an accurate critique of the fiat money system inflicted on our nation with the 1913 creation of the Federal Reserve System, doesn't it? Well it would--except that the speaker was Federal Reserve Governor Ben Bernanke, and his remarks were an endorsement of using inflation--an increase in the money supply--to "cure" deflation--falling prices and declining asset values. Bernanke ended his little sermon on the supposed value of a fiat money system by concluding, "under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

A brief, accurate translation of Bernanke's remarks, noted New York Post economics writer John Crudele, is, "we'll just print more money if the economy doesn't respond to traditional remedies." But while Bernanke insists that the government can print new money "at essentially no cost," Crudele supplies the historical context that the Fed governor artfully avoided: "The printing press image is a hot button with economists because that's exactly what the Germans did in the 1920s when that country was faced with huge budget deficits because of World War I." The resulting hyperinflation obliterated the German mark's value, leading to the imperishable image of German citizens having to drag wheelbarrows full of money to stores to buy a day's worth of groceries.

"Those economic problems eventually led to the political upheavals in Germany that brought Adolph Hitler to power," observed Crudele. "Enough said? Bernanke should shut up." Actually, Bernanke's devastatingly candid remarks should be given the widest possible audience.