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Tuesday, May 18, 2010

"Ooooo...'out of thin air!'"

David Andolfatto reacts to Ron Paul's worries that the Fed can create money "out of thin air":

On Ron Paul and the Fed, by David Andolfatto: ...The Fed has the ability to create money "out of thin air!" Whenever I hear this expression, I chuckle. We all have the power to create debt out of "thin air." When Microsoft creates shares to finance an acquisition, it creates the shares "out of thin air." If you bum a beer from a friend and promise to repay him next week, you create a debt obligation "out of thin air." Ooooo..."out of thin air!" ...

    Posted by on Tuesday, May 18, 2010 at 04:05 PM in Economics, Monetary Policy | Permalink  Comments (115)


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