Government Prints Money

We used to laugh at small country dictators who, once having ruined their country's economy and having borrowed beyond their country's capacity to pay, decide to inflate their currency.  Their inflated currency worked for a short period of time, allowing debt repayments with cheap cash, and then created hyperinflation.  The United States, through the IMF, used to lecture these small country dictators on the inappropriateness of the tactic -- advocating reduced government spending and balanced government budgets.  Now, we are the violators.  The government is buying billions of its own debt (Treasuries and Fannie and Freddie debt) from banks and crediting the banks with cash through the banks accounts with banks in the Federal Reserve System.  It is the equivalent of printing money; it increases the supply of money in circulation and, unless reversed, will lead to hyperinflation.  The government believes they can time the credit markets -- increase the money in circulation and then, when inflation appears, decrease funds in time to stem inflation.  It is a dangerous gamble, too dangerous.