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posted by martyb on Monday July 06 2015, @08:57AM   Printer-friendly
from the getting-what-you-asked-for-may-not-be-getting-what-you-want dept.

The Greeks voted no to the European Union's terms, despite warnings from the EU that rejecting new austerity terms would set their country on a path out of the Eurozone. 62% voted "No" while 38% voted "Yes".


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  • (Score: 4, Informative) by TheLink on Monday July 06 2015, @02:10PM

    by TheLink (332) on Monday July 06 2015, @02:10PM (#205626) Journal

    You just can't tell a government that sometimes it's OK to spend more than you take in.

    Printing money actually works quite well when you are printing the petrodollar (US Dollar).

    It's quite simple really: when you create more of a currency, each unit of that currency becomes worth less (may take some time for people to realize it). Thus those with net positive amounts of it (including being owed debts in that currency) become poorer. Thus when the US Gov creates[1] US dollars it transfers wealth from those who have US dollars to itself. Its much like an involuntary tax.

    Similarly when the Zimbabwe Government printed Zimbabwe dollars, it transferred wealth from those holding Zimbabwe dollars to Mugabe and his friends.

    The big difference is hardly anyone outside of Zimbabwe held Zimbabwe dolllars, in contrast much of the world keeps around trillions of US dollars to buy and sell petroleum, CPUs, DRAMs, wheat, juice, planes, weapons, financial securities, etc it means the US Gov becomes richer and the rest of the world becomes poorer (exporting inflation).

    So when Mugabe printed Zimbabwe dollars, everyone else laughed. But when the USA printed US dollars, those with a clue didn't laugh[2].

    In the old days the US Gov may have spent some of the wealth on worthwhile projects (e.g. highways) thus benefiting the US citizens, but nowadays the US Gov ("Mugabe") doesn't seem to regard the US citizens as good friends anymore and seems to be giving the transferred wealth to a smaller group of friends.

    Other governments can still succeed when printing money and transferring wealth from its citizens, but the difference is since they are just transferring wealth within the country and not from the rest of the world, they need to spend that "taxed" wealth on quality projects with better return on investment (ROI) than leaving the wealth with the people. If you pick the right projects it helps the country, otherwise you can end up like Zimbabwe. However it is not that easy to get a good ROI so it's harder for other countries to make themselves wealthier that way compared to the US Gov printing money and taxing everyone else.

    But keep in mind, I'm not an economist. So feel free to show where I'm wrong and how.

    [1] Doesn't really matter that much whether the US dollars are created outright or via "Quantitative Easing" or other means.

    [2] The Gov of China wasn't laughing during the USA's various Quantitative Easing. Only the ignorant or stupid say the US is in deep shit because it owes China trillions of US dollars. If necessary the USA can go "OK China, here's the 2 trillion US dollars we owe you", fresh from the Fed Reserve.

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