[laughfactory]

Your last sentence is frighteningly flawed. Because it suggests that the US is borrowing from other economies around the world at obscenely low rates. This is not true. Sure, we're borrowing a little bit from China as we've always done, but they're less and less interested in loaning us money (essentially).

So now what we have is a powder-keg with a fuse which has already been lit. We've started borrowing from OURSELVES. This is who we can make it look like we're only paying 1-2%. When you pay one hand from the other, you can say whatever you want about how much it's costing you.

The reason this is a profoundly bad idea is because essentially we're diluting the value of every dollar already out there floating around. As we print more money, and issue more IOUs in exchange for it, all we're doing is creating shadow-inflation by diminishing the value of each existing dollar. The only reason we're getting away with it so far is that the rest of the world is worse off (fiscally) than we are and so our dilution of the dollar is essentially a tax on everyone who comes into contact with dollars. This is essentially our way of extracting wealth not just from our own citizens, but from abroad.

If however dollars start being kicked to the curb abroad, then the shadow tax will begin being felt more acutely here in the form of inflation and suddenly higher prices.

Again, there is no free lunch. It's the single truest thing that economics has to say. Yet people somehow persist in believing that there MUST be one, if they could just figure out how to have their cake and eat it too.

[gph1]

Increasing the money supply is not in and of itself inflationary, nor does it logically imply a depreciating exchange rate. This is true no matter how many times Austrians and confused monetarists say so.

[laughfactory]

I suppose we'll just have to agree to disagree on that.

[gph1]

I'd be delighted to revise or update my views in light of any evidence you could provide.