On 12/31/12 11:33 AM, hamilton wrote:
On 12/31/2012 12:42 AM, Tom Del Rosso wrote:
Les Cargill wrote:

My initial comment was that the Federal budget is fundamentally
different from a family budget. I like Dave Ramsey too, but he's
off base on this particular thing.

The difference is that a government can print money, and if that is
done for

Please eplain, how do they print money, then pay interest on it ?

The new printed money devalues existing money. This is called inflation.
At a base level, inflation is good for debt holders as it decreases the
magnitude of their debt. It is bad for savers, and it decreases the
magnitude of their assets. It is also bad for the working class,
because wages don't typically increase along side it, and they are
usually in debt with an interest rate far higher than inflation.


The fed uses inflation as a tool to lessen the amount of debt they have,
but the interest is still paid.

However, the net effect is that those entities with assets in USD are
having their cash's value transferred to those with debts in USD. One
argument for having inflation is that it encourages "savers" to become
"investors" and cause a positive feedback into the economy.
Unfortunately it also encourages people to become over leveraged and we
have the Housing Crises and other issues.

Just my 2 cents (adjusted for inflation).