Could the US Run Out of Money?

The US could never run out of money, at least according to one independent candidate for US Senate in Connecticut. In fact, to back up his supposition, Warren Mosler is offering $100 million of his own money to put toward paying down the federal budget deficit if any if any sitting Congressman or Senator can prove him wrong. Though it is not entirely clear, it seems that Mosler believes that simply printing money is the solution to problems ranging from future social security insolvency to our tremendous debt to China.

It seems highly doubtful that Mosler will ever be forced to make good on the bet. In addition to the the fact that it is unlikely that a lawmaker would validate Mosler by going toe to toe with him, he is technically correct. Of course the government could print more money. Indeed it has done so during the current recession, and has plans to fire up the printing presses again before the year is over. Therefore, the country will never 'run out' of money. However, to suggest that printing money is a panacea for the ills of the American economy without consequence is foolish at best.


There are just too many problems with such a concept to properly address them all in detail, but a few are so self-evident that they deserve mention. First among equals would have to be the inevitable wave of hyperinflation that would engulf the country. The breakdown of international relations with countries that hold our debt, which happen to be major trade partners China and Japan as well as the countries the US gets its oil from would be another. The dollar would lose its status as the international currency of exchange, eliminating one of the safety nets that policymakers have utilized without explicitly noting its existence. In addition to problems for the US itself, it is not a stretch to think that in our highly systemic and mutually dependent world, such a breakdown in currency controls in the foremost trade partner of most of the countries of the world would cause nothing short of chaos in the global economy.

Of course Mosler is no economist (though presumably, and this is admittedly an assumption, he has come across some basic theories of economics in his role as a hedge fund manager). Luckily, he is also unlikely to be a Senator any time soon either; the Independent candidate was not invited to the latest debate between the Democratic and Republican offerings and poll numbers suggest that nothing short of both of those candidates dropping out of the race would be enough to lead to a Mosler victory.