In this video, Ed Butowsky illustrates the principle that increasing the quantity of something diminishes its value. Specifically, he highlights how the act of printing more dollars, often done to meet interest payments on the national debt, results in the devaluation of the US Dollar.
Summary
- Basic supply and demand economics: Creating more of something often leads to decreased demand and lower value.
- US government’s uphill battle: With a debt surpassing $34 trillion, the government must keep printing money to manage interest payments on the debt.
- Risk of inflation: Introducing more USD into the economy carries the potential for rampant inflation.
In the economic landscape, a fundamental principle emerges: the more of something you create, the lower its demand and value. This basic supply and demand concept forms the backdrop for the challenges faced by the US government. With a staggering national debt exceeding $34 trillion, the government finds itself in an uphill battle. To manage interest payments on this monumental debt, they resort to continually printing more money. However, this strategy comes with a significant risk. The influx of additional USD into the economy raises concerns about triggering rampant inflation, a delicate balance the government must navigate to address immediate financial obligations without compromising the overall value of the currency.
As a prudent investor, it’s important to be aware of what is going on in the economy. While short-term fluctuations do not matter to the long-term investor, small actions lead to big results in the finance world.