“Print the Money”: Trump’s “Reckless” Proposal Echoes Franklin and Lincoln

By Ellen Brown, EllenBrown.com.

“Print the money” has been called crazy talk, but it may be the only sane solution to a $19 trillion federal debt that has doubled in the last 10 years. The solution of Abraham Lincoln and the American colonists can still work today.

“Reckless,” “alarming,” “disastrous,” “swashbuckling,” “playing with fire,” “crazy talk,” “lost in a forest of nonsense”: these are a few of the labels applied by media commentators to Donald Trump’s latest proposal for dealing with the federal debt. On Monday, May 9th, the presumptive Republican presidential candidate said on CNN, “You print the money.”

The remark was in response to a firestorm created the previous week, when Trump was asked if the US should pay its debt in full or possibly negotiate partial repayment. He replied, “I would borrow, knowing that if the economy crashed, you could make a deal.” Commentators took this to mean a default. On May 9, Trump countered that he was misquoted:

People said I want to go and buy debt and default on debt – these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you, okay? So there’s never a default.

That remark wasn’t exactly crazy. It echoed one by former Federal Reserve Chairman Alan Greenspan, who said in 2011:

The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.

Paying the government’s debts by just issuing the money is as American as apple pie – if you go back far enough. Benjamin Franklin attributed the remarkable growth of the American colonies to this innovative funding solution. Abraham Lincoln revived the colonial system of government-issued money when he endorsed the printing of $450 million in US Notes or “greenbacks” during the Civil War. The greenbacks not only helped the Union win the war but triggered a period of robust national growth and saved the taxpayers about $14 billion in interest payments.

But back to Trump. He went on to explain:

I said if we can buy back government debt at a discount – in other words, if interest rates go up and we can buy bonds back at a discount – if we are liquid enough as a country we should do that.

Apparently he was referring to the fact that when interest rates go up, long-term bonds at the lower rate become available on the secondary market at a discount. Anyone who holds the bonds to maturity still gets full value, but many investors want to cash out early and are willing to take less. As explained on MorningStar.com:

If a bond with a 5% coupon and a ten-year maturity is sold on the secondary market today while newly issued ten-year bonds have a 6% coupon, then the 5% bond will sell for $92.56 (par value $100).

But critics still were not satisfied. In an article titled “Why Donald Trump’s Debt Proposal Is Reckless,” CNNMoney said:

[T]he federal government doesn’t have any money to buy debt back with. The U.S. already has $19 trillion in debt. Trump’s plan would require the U.S. Treasury to issue new debt to buy old debt.

Trump, however, was not talking about borrowing the money. He was talking about printing the money. CNNMoney’s response was:

That can cause inflation (or even hyperinflation), and send prices of everything from food to rent skyrocketing.

The Hyperinflation that Wasn’t

CNN was not alone in calling the notion of printing our way out of debt recklessly inflationary. But would it be? The Federal Reserve has already bought $4.5 trillion in assets, $2.7 trillion of which were federal securities, simply by “printing the money.”

When the Fed’s QE program was initiated, critics called it recklessly hyperinflationary. But it did not even create the modest 2% inflation the Fed was aiming for. QE was combined with ZIRP – zero interest rates for banks – encouraging borrowing for speculation, driving up the stock market and real estate. But the Consumer Price Index, productivity and jobs barely budged.

While the Fed has stopped its QE program for the time being, the European Central Bank and the Bank of Japan have jumped in, buying back massive amounts of their own governments’ debts by simply issuing the money. There too, the inflation needle has barely budged. As noted on CNBC in February:

Central banks have been pumping money into the global economy without a whole lot to show for it other than sharply higher stock prices, and even that has been on the downturn for the past year.

Growth remains anemic, and worries are escalating that the U.S. and the rest of the world are on the brink of a recession, despite bargain-basement interest rates and trillions in liquidity.

Helicopter Money Goes Mainstream

European economists and central bankers are wringing their hands over what to do about a flagging economy despite radical austerity measures and increasingly unrepayable debt. One suggestion gaining traction is “helicopter money” – just issue money and drop it directly into the economy in some way. In QE as done today, the newly issued money makes it no further than the balance sheets of banks. It does not get into the producing economy or the pockets of consumers, where it would need to go in order to create the demand necessary to stimulate productivity. Helicopter money would create that demand. Proposed alternatives include a universal national dividend; zero or low interest loans to local governments; and “people’s QE” for infrastructure, job creation, student debt relief, etc.

Simply buying back federal securities with money issued by the central bank (or the U.S. Treasury) would also get money into the real economy, if Congress were allowed to increase its budget in tandem. As observed in The Economist on May 1, 2016:

Advocates of helicopter money do not really intend to throw money out of aircraft. Broadly speaking, they argue for fiscal stimulus—in the form of government spending, tax cuts or direct payments to citizens—financed with newly printed money rather than through borrowing or taxation. Quantitative easing (QE) qualifies, so long as the central bank buying the government bonds promises to hold them to maturity, with interest payments and principal remitted back to the government like most central-bank profits.

As Dean Baker, co-director of the Center for Economic and Policy Research in Washington, wrote in response to the debt ceiling crisis in November 2010:

There is no reason that the Fed can’t just buy this debt (as it is largely doing) and hold it indefinitely. If the Fed holds the debt, there is no interest burden for future taxpayers. The Fed refunds its interest earnings to the Treasury every year. Last year the Fed refunded almost $80 billion in interest to the Treasury, nearly 40 percent of the country’s net interest burden. And the Fed has other tools to ensure that the expansion of the monetary base required to purchase the debt does not lead to inflation.

An even cleaner solution would be to simply void out the debt held by the Fed. That was the 2011 proposal of then-presidential candidate Ron Paul for dealing with the debt ceiling crisis. As his proposal was explained in Time Magazine, today the Treasury pays interest on its securities to the Fed, which returns 90% of these payments to the Treasury. Despite this shell game of payments, the $1.7 trillion in US bonds owned by the Fed is still counted toward the debt ceiling. Paul’s plan:

Get the Fed and the Treasury to rip up that debt. It’s fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed.

Congressman Alan Grayson, a Democrat, also endorsed this proposal.

Financial author Richard Duncan makes a strong case for going further than just monetizing existing debt. He argues that under current market conditions, the US could actually rebuild its collapsing infrastructure by just printing the money, without causing price inflation. Prices go up when demand (money) exceeds supply (goods and services); and with automation and the availability of cheap labor in vast global markets today, supply can keep up with demand for decades to come. Duncan observes:

The combination of fiat money and Globalization creates a unique moment in history where the governments of the developed economies can print money on an aggressive scale without causing inflation. They should take advantage of this once-in-history opportunity . . . .

Returning the Power to Create Money to the People

The right of government to issue its own money was one of the principles for which the American Revolution was fought. Americans are increasingly waking up to the fact that the vast majority of the money supply is no longer issued by the government but is created by private banks when they make loans; and that with that power goes enormous power over the economy itself.

The issue that should be debated is one that dominated political discussion in the 19th century but that few candidates are even aware of today: should creation and control of the money supply be public or private? Donald Trump’s willingness to transgress the conservative taboo against public money creation is a welcome step in opening that debate.


Ellen Brown is an attorney, Founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com. She can be heard biweekly on “It’s Our Money with Ellen Brown” on PRN.FM.


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  • diogenes

    We needn’t look all the way back to Lincoln to find this kind of monetary proposal seriously entertained in Congress. In 1939 Progressive Congressman Jerry Voorhis introduced a bill (H.R. 4931) proposing to buy out the private owners of the Federal Reserve with Treasury-issued money and liquidate the national debt by purchasing the Reserve’s holdings of Treasury bonds as they mature “in the same manner in which the banks bought the bonds originally — namely with newly created money.” Although 150 congressmen were pledged to vote for it, it was referred to committee and left to die there when the term of the 76th Congress expired.

    In 1946 Wall Street took Voorhis down. He was defeated by Richard Nixon in the first of his dirty-tricks campaigns, heavily funded by Wall Street figures including Prescott Bush. “The campaign was capped by an episode somewhat reflected in the Watergate episode some twenty years later. The Voorhis office wa broken into one night, and much of the Voorhis literature was taken. The next day, men hired through theatrical agencies rang doorbells in the Twelfth District. They were dressed in caps, tightly buttoned coats and high collars. They spoke in guttural English with a Russian accent. Handing a piece of Voorhis literature to a housewife, one would say, ‘We are Russians and we want you to vote for Mr. Voorhis.'” (Supreme Court Justice William O. Douglas, The Court Years p. 341).

    This is a good example of the kind of filth who rule America and whose primary device for strip-mining Americans is the Federal Reserve.

    • jadan

      Good post!

      • diogenes

        The first paragraph comes from my essay series, The Distribution of Wealth In America, posted elsewhere on this site. If you haven’t read it you might want to check it out for far more context and implications. The second comes from Douglas’s excellent book — the second of his memoirs, both excellent and telling eyewitness history by a great American patriot. Nixon and Ford tried to impeach him in 1971 but — oops — Nixon got impeach instead and — ow — Warren Commission conspirator Ford became president and — socko whammo — the likes of Cheney and similar filth began their installation in the hidey corners of the Federal bureaucracy, along with VP Rockefeller and other oligarchic operatives.

  • jadan

    If the right of the people’s government to issue its own money was one of the principles for which the Revolution was fought, then one has to say that Alexander Hamilton was a counter-revoutionary. The US did not assert its sovereign power until Lincoln’s government issued the greenback, temporarily, as an expedient during the Civil War. Donald Trump is a billionaire and will never give the money power to a people’s government. He’s an opportunist and when he talks about government, it’s HIS government he’s referring to. A people’s government, that is, a government elected directly by the people and not elite interest groups, is considered to be “socialist”.

    Ms Brown does not understand the Donald. He’s not interested in “public money creation” any more than was Adolf Hitler who made Germany “great again” by printing money. A billionaire does not hand over the money power to the people, he uses the money power to enslave the people. Under the private corporation called “The Federal Reserve”, we are currently debt slaves. The Fed handles the money power in an inept way. The Donald will do it better.

    Sovereign money (fiat money) is the most powerful tool of any government. In the hands of oligarchs it is an elite tool for domination of the masses,as it was for the Nazis. Sovereign money has to be democratic. The Treasury must administer monetary policy in the public interest, and this cannot happen if the government is not directly elected by the people in non-rigged elections. Donald Trump sure as hell is not a small d democrat. He’s actually more business-as-usual, not the bold anti-establishment reformer people believe him to be. A billionaire cannot also be a populist.

    • diogenes

      It would be more accurate to say that a rich man is rarely a genuine populist, but there have been a few. Amos Pinchot comes to mind, and Charles R. Crane and Lincoln Steffens. But there aren’t many, and Trump sure doesn’t look like one.

      • jadan

        Populist, in my view, refers to the agenda of the “People’s Party” a third party that grew out of the political activism of farmers that developed from the 1870’s through the election of 1896. Lawrence Goodwyn’s wonderful book, “Democratic Promise”, tells the story as no other historian can, or would. Populist has a specific meaning. The best translation for today would be “democratic socialist”. Monetary revolution was an important part of the populist agenda. They wanted fiat money because the people were being hung on a “cross of gold”. Their biggest mistake was to play fusion politics in the 1896 election and get behind Democratic candidate, Wm Jennings Bryan, a typical lying pol with a silver tongue. Bryan betrayed populist aspirations and thereafter the meaning of populism has become so distorted that commentators who have no knowledge of American history will refer to a Donald Trump as a populist. Populism is a native American development, so “democratic socialism” resonates with our political memory, even though capitalist ideologues have tried to erase it.

        • diogenes

          jadan, I share your admiration for Goodwyn’s superb book. I was using “populist” more loosely to include their “progressive” heirs — among whom Voorhis was perhaps the most prominent 2nd generation representative, along with Senator Robert La Follette, Jr. As you know from Goodwyn’s book, “greenbacks,” Treasury-issued money, was a key element of the populist program, which they derived from their predecessors, the Greenback Party, whose presidential candidate, James B. Weaver, was later the candidate of the People’s Party in 1892. Pinchot and Crane were key backers of the Progressives in the teens and 1920s and Steffens was an important writer and observer and activist in the same tradition. All came from “well-off” backgrounds, though not from the east coast hereditary plutocratic elite, and all devoted their money, lives, and energies to working as activists in the cause of American economic democracy. Another example, even less known, is Rudolph Spreckles, of San Francisco. Today “Populist” is a curse word applied by the hireling mouthpieces of Wall Street oligarchs to anyone who opposes their dominion — kind of like “nazi.” The trouble with all these terms is they tend to distract discussion from issues to partisan wrangling and historical dispute. You should have a look at my essay posted elsewhere on this site, The Distribution of Wealth In America, for a great deal of this history, some of which you may not be familiar with. Thank you for your thoughtful comments.

    • Guy N.O. Donald

      Donald Trump is proving to be, not just a little ignorant on the economy, but downright dangerously stupid when it comes to economic matters. He has floated the idea of creditors taking a reduction in the face value of their debt or defaulting on the national debt. As if that wasn’t bad enough, he tried to clarify the first botched idea today by suggesting a second disastrous economic plan straight out of post-WWI Germany. Trump declared himself the ‘King of Debt’ and apparently wants America to join in his debt-laden kingdom.

  • Lothar Meyer

    Nice ideas, however reality is the opposite.
    It is amazing how people can be so stupid and gullible not to realize that Donald Trump is just another shill placed by TPTB just to keep them entertained (investigate about his economic advisors and financiers, the real people pulling strings behind the scenes).

    People as uninformed and as gullible as Americans have no future. Americans are a dead people that history is about to run over.
    Dr. Paul Craig Roberts – Assistant Secretary of the Treasury for Economic Policy during the Reagan administration.

    • Carl_Herman

      Ideas can coexist with others recognizing Left and Right arms of one fascist US government.

  • slorter

    Germany and Zimbabwe are the two examples where it failed you need to understand why they failed. Sovereign governments can issue money as long as they have their own central bank so it controls monetary policy and setting of interest rates and does not sell any debt in a foreign country, with those rules you cannot run out of money. Governments who surrender their authority to print money like Greece cannot do it and they can run out of money! There are a number of myths about Germany and Zimbabwe. In Zimbabwe the president wanted to reward the soldiers that led to the break with the British but went about it in a silly way by undermining the supply capacity of the economy which destroyed 60% of their production capacity and that caused inflation. In Germany a similar thing happened in that 25% of its industrial capacity was removed and taken from them by the French, on top of that you had a devastating war which destroyed more of their industrial capacity and in addition to that they had to make payments for the war; when they expanded the money supply they did not have the capacity to sustain it. These things do not apply to the United States and remember it did not stop us bailing the banks out with QE.

    • diogenes

      All this shows why it’s necessary to abolish the Federal Reserve. See Jerry Voorhis’s proposal cited below.

  • Brockland A.T.

    Great article, however, it may be that Trump was not aware of any taboo against the public creation of money. He says, “We print the money,” the way most people assume the U.S. government prints the U.S. dollar, not issue debt to Fed banksters who then create the money as Federal Reserve Notes, at interest.

    No American president has attempted printing sovereign money since Kennedy on June 4, 1963 signed executive order 11110 to print silver-backed certificates. Or maybe not; officially Kennedy was trying to phase out silver certs in favour of Fed notes. The potential for printing sovereign money was inadvertent. Any ambiguity was resolved by the Regan administration in 1982, when E.O. 11110 was effectively annulled by E.O.12608.



    As Chairman of the Federal Reserve, Alan Greenspan could say, “We print the money.” As POTUS wannabe maybe Trump can say it loosely, but as POTUS for real there might be some problems.

    Interestingly enough, Ben Franklin made his fortune printing money.


    It was merely an extension of the practice of printing IOUs, in place since 1610.


    Until exposure to the Aboriginal system of using wampum as money, the idea that value could be stored in a universal but otherwise worthless medium, to supplement or even replace barter, was novel even as it was necessary in the New World economy.

    By 1690 paper money was the preferred New World method of paying soldiers. Ironically, in this development, money had come full circle, insofar that the minting of coins of precious metal to slips of otherwise worthless paper was primarily driven by the need to pay soldiers. And full circle again, as Trump is essentially scrambling for a way to pay for the U.S. war machine.


  • Guy N.O. Donald

    Donald Trump Will Be An Economic Disaster And ‘King Of Debt’ Proposals Are Proving ItKing Of Debt’ Trump’s Economic Plan: Bankruptcy, Default, And Hyperinflation
    First of all, businesses typically buy back debt when they are in trouble. It’s seen as a red flag. Investors agree to accept less money because they would rather get 80 cents on the dollar than nothing. The U.S. would have to be in terrible economic shape for this scenario to be an appealing idea.
    Second, it would alarm investors in the U.S. and around the world to see the trusted U.S. Treasury playing games in the bond market. It could cause huge uncertainty, and possibly raise U.S. borrowing costs for years as investors demand higher interest payments. Other nations like China might even retaliate with trade sanctions or other economic tactics.
    Third, if Trump buys back bonds at a lower price, it doesn’t just hurt the Chinese and Japanese who hold the debt. It would also harm millions of Americans who hold U.S. bonds in their retirement and savings accounts.
    Fourth, the federal government doesn’t have any money to buy debt back with. The U.S. already has $19 trillion in debt. Trump’s plan would require the U.S. Treasury to issue new debt to buy old debt.