I hope you figured out my post on April 1st was an April Fools Joke. I do not think that printing money is a solution. It might end up being a part of the solution, but if that is the only solution offered to the crisis I see coming in 3 to 7 years, we are doomed.
Money is whatever I say it is! But there is a truth to modern monetary theory that "hard money" types like me can be blind to. Fiat money, as long as it is not excessively created, can work. This was the position of Milton Freedman and the Chicago School. He advocated a set increase in the money supply every year of 3%. The idea is to set the increase in money to the traditional rate of productivity increase. Sounds reasonable at first. But there are several downsides. First it was the government capturing the entire productivity of the nation every year forever as the increase in money would be a tax. But will the Central Bank limit the increase in money to a set number? No American Central Banker has done this for 30 years.
Another problem is one of measurement. It is similar to the question I asked recently, "What is Money?" What figure do you use for your base? Here is Mesh Shedlock's suggestion as to what "money" might be.
Base Money Supply: $2.9 Trillion- M1: 2.4 Trillion
- M2: 10.4 Trillion
- Total Credit Market Debt Owed: $56.3 trillion
As you see the base has a large amount of possible variations. If you or I make a mistake, we can live with it. But a national whoopsie is not a good thing. Just ask Zimbabwe.
We may soon be able to ask Japan if Modern Monetary Theory, or as I like to call it Magical Monetary Theory, works. As John Mauldin said, "Japan is a windshield in search of a bug." I predict that it will work as long as Japan does not cross the tipping point and cause inflation. Such a tipping point does exist, but we lack the ability to calculate it. Thus the risk of a whoopsie is very very high.
What does Modern Monetary Theory say about Japan?
What does Kyle Bass say? (Note that I have used Bass in a video before. This is not a great video because you cannot see his charts, but it is still illustrative of his point. I am troubled by his suggestion to buy semi-junk bonds.)
Watch World News... er, Watch Japan. A crisis in Japan will probably increase the value of the dollar. It will serve as a warning to those who are looking.