Wouldn't this cause massive inflation almost instantly? We could have the next Zimbabwean Dollar (http://en.wikipedia.org/wiki/Zimbabwean_dollar). Isn't this extra just 'printing money' the type of thing that you learn in Econ 101 is about the worst possible thing for an economy? Sounds like the medicine will be worse than the disease?
Not necessarily, though $5 trillion all at once would probably not be a good idea. The money supply is a bit tricky in these days when most transactions (especially large ones) don't actually use cash. Issuing new debt in a sense already is like printing money, because bonds can be used as cash-like instruments in many situations. That's particularly true of U.S. Treasuries, because they're safe and liquid enough that they can be used as quasi-cash, especially for large transactions, e.g. settling part of a debt by transferring title to Treasuries. It's a bit of an open question to what extent just printing $500b would be different from issuing $500b in new bonds, and heavily interacts with the background situation (e.g. prevailing interest rates, demand for Treasuries, liquidity situation).
There are a decent number of economists who think that the U.S. a year or two ago should've fought deflation by just printing $500b or $1 trillion or something, rather than pursuing the quantitative easing (QE) scheme, which uses financial trickery to get some of the same effect without officially printing money. The just-print-money option may have actually worked better, been more transparent, and had the added bonus of reducing our national debt.
It can only cause inflation when the money actually hits the economy. The effect would be no different than raising the debt ceiling. Some special book keeping (which is what this whole mess is) will do nothing by itself.
the coin doesn't hit the economy but it enables further borrowing which does.
surprised at all the 'no this is actually quote ok' arguments. you can't print value out of thin air. you only print volume which taxes the holders of existing USD.
We've already printed and spent quite a bit of money, and while it has produced increases in commodity prices it has not produced hyperinflation. Replacing debt-backed money with debt-free money, while leaving the amount of money more or less the same, would also not cause hyperinflation.
