I was recently watching a movie that involved the newspaper industry. The deadline had passed and the main characters were in the factory where presses were printing the next day’s papers and the rollers were folding and transporting them. There was a furious debate about the feature article being wrong. It was apparently too late to change the paper, but the brave editor gave the order, “Stop the Presses!”
That scene has probably been in a dozen movies and most of us have seen it one time or another. Imagine a slight change in the scene. We still have the large printing presses running in the background, but instead of black and white print we see green print on special paper. Like the newspaper production, the presses are continually spewing out paper only this time it’s money.
The United States Bureau of Engraving and Printing has locations, Washington D.C. and Fort Worth Texas. According to their web site;
“You’ll see millions of dollars being printed during a tour of the BEP. As the U.S. Government’s security printer, the BEP is responsible for the design, engraving and printing of all U.S. paper currency. The Fort Worth, Texas facility was created to meet increased currency production demands – it opened its doors in 1991.”
A friend (Thanks Rich) sent me a link to a segment on Fox News’ Glenn Beck show. Mr. Beck’s shows can be a little gloomy, but honest. In the segment Mr. Beck sneaks onto a colleague’s set to use a large screen to reveal a chart showing just how much the BEP is printing. The statistics presented are staggering. Please watch the clip here.
As I watched the segment I was reminded of the above movie except that there wasn’t anyone yelling to “Stop the Presses.” Our government is just printing money. My guess is that the way elected officials are passing stimulus bill after stimulus bill, an individual working at the BEP would have some job security. Maybe that is what the President meant when he said he would create jobs. They’ll all be at BEP.
Unfortunately for those of us who work, money does not necessarily equate to wealth. Real wealth is what a country produces, not the paper used for commerce. Henry Hazlitt addresses this issue in his book, Economics In One Lesson:
“the government could solve all our problems merely by printing money…They would have it print just enough to make up some alleged “deficiency” or “gap.” Purchasing power is chronically deficient, they think because industry somehow does not distribute enough money to producers to enable them to buy back, as consumers, the product that is made…more knowing inflationists recognize that any substantial increase in the quantity of money will REDUCE (emphasis added) the purchasing power of each monetary unit.”
It only makes sense that when a government prints more money without an increase in production (manufactured goods or services), the cost of those goods and/or services will eventually inflate to balance the additional money printed. Your $20 bill may only have the purchasing power of $10 in a few years. Stop the Presses!
Another way to look at the BEP’s actions is like our government charging the stimulus plans on a giant credit card. There will be interest charges and it will have to be paid back…by us, our children, our grandchildren, their children….
If you are thinking that this in merely an academic exercise, think again. Last year Zimbabwe announced that it was dropping ten zeros from its currency only a week after they introduced the 100 billion dollar note. The report noted that the new 100 billion dollar note wouldn’t even be enough to buy a loaf of bread.
Zimbabwe has a lot more going on than its government cranking up the printing press, but it illustrates the effect inflation can have on purchasing power. The connection to us is that the frenzied printing of money by the United States government can only lead to increased prices.
We may have to have a contest to see which political figure to put on our billion-dollar bill. I’ll nominate Senate Majority Leader Harry Reid, Speaker of the House Nancy Pelosi or President Obama.
STOP THE PRESSES!