How can you tell if the government is printing more currency?

Question

I found this

http://www.federalreserve.gov/releases/h6/Current/

am I right in saying that the government isn't really printing off money or am I reading it wrong?

I ask because I hear a lot of arguments saying that the government prints off a lot of dollars which is what is bringing down the value of the dollar.

Answer 1

Low interest rates = high supply of currency.

The government prints, but The Fed tries to control how much is in circulation through the open-market mechanism.


The value of the dollar has gone down because our DOLLAR amount of imports have gone up as oil prices have increased. There's more "dollars" on the international market because we're sending $70 to the Middle East for a barrel of oil instead of $30 like in 1997; so international supply is high.

Answer 2

You are right that that measure of the money supply has not increased.

The exact mechanics of how the government expands or contracts the money supply or other financial assets is not necessary to get into for the moment.

If the economy is at full employment or doing nicely and the fed decides to loosen monetary policy, the effect will cause both inflation and a worsening of our dollar. It will cause inflation because there no new goods can be produced to meet the new money. Prices must rise. The exact same mechanism works for foreign goods: foreigners are not going to pay higher prices for our goods simply because we raise our prices. So they will purchase goods elsewhere and the demand for dollar will fall.

If the economy is not at full employment, then a rise in the money supply will encourage more products to be made and there won't be a rise in prices or a fall of the exchange rate.

At any rate, the fact that we have no inflation means the Fed is doing a good job - leaving aside exactly what it is doing. This action of the FED is not what is causing the dollar to fall.
It also means that economic arguments against the Fed - like those who want a gold standard - are wrong.

As to what is causing the falling dollar - that is another question.

Answer 3

Money supply, according to Friedman et al. is a driver to inflation. Increase MS and inflation will rise; decrease it and inflation will diminish all other things equal. [See source.] This line of thinking is called the Monetarists Theory for which Friedman is famous.

Like any commodity, the value of money rises and falls according to the well-known laws of supply and demand. So you are right...more printing of more money can raise the supply over demand and the value of the dollar will decrease all other things equal.

There are all kinds of government web sites that have money supply tables by date. You can read them over to see the rise and fall of varies types of money supplies (e.g., M1, M2) Just browse the key words "money supply tables" and you'll find a bunch of them.

Answer 4

One of the reason is currency is linked to the gold reserve in this country. There are other stronger reasons for that to happen in this day and age. Some of them are the value and need for our products in the world, currency trading in commodity markets, foreign investments in the USA> All these are also related to the value of the dollar as well, so its a catch-22 situation, which is why economics is complicated. And there are many other reasons...General peacefullness and safety of a country, trust in the values, laws and infrastructure of a country etc.

Answer 5

The Gov. constantly prints money to replace worn out currency

Answer 6

You should watch this documentary about the Federal Reserve. It explains the whole pyramid scheme better than I could.

http://video.google.com/url?docid=-7247856011674561110&esrc=sr2&ev=v&q=Money+Banking+and+the+Federal+Reserve&vidurl=http://www.youtube.com/watch%3Fv%3Dm2pxW7D1Vao&usg=AL29H23vtemtSgL5r82YkQ4r_ZhqVG9FQQ

Answer 7

Greenspan usually tells us.