With all talk of a deficit economy I have to wonder why we can't just print money to pay for some of the government's infrastructure projects.

Now before you jump on me and start sprouting the inflationary argument blah blah blah..take a moment.

What is the difference between printing $1billion, say for a fast rail project and borrowing the money from an overseas bank where your investment is greatly reduced by long term interest payments.

Both options involve injecting money into the economy that we don't have - so what is the advantage of being in debt to a foreign country (and paying interest) than printing our own in a measured and calculated way for these much needed projects?

Ask Robert Mugabe.
New printed dollars get their value from the dollars that already exist in the economy, so the value of the currency already in circulation goes down, not to mention the value of our dollar on the International Market.

Maybe the Government could issue some far more attractive bonds that could be taken up by the Superannuation industry and use some of those dollars?

IF we start doing that we may as well start calling the AU dollar the rupiah.

I am not talking about the rampant printing of money to match the likes of Mugabe but for special infrastructure projects which will also create jobs.

Borrowing in the form of a loan and printing money inject extra money into the economy - so what is the difference?

I read recently that the UK is going to do just that- print money. Interest rates have nowhere to go (0.5%).
The biggest danger as I see it is negative equity, and the consequent collapse of the price of everything as people simply walk away from debts they cannot repay. Inflation may ease the pressure. Inflation will not be good for those who have been clever enough to liquidate to cash though, timing to buy back in will be important.

Dear Pelican,

In the US they're printing money, "hand over fist,'
to bail out the economy. I don't see why we can't
do it here. What you're suggesting makes perfect
sense. Why pay interest to foreign banks - when
the printed money once the economy balances out
can be withdrawn from circulation by the Government.
In the meantime, the infrastructure projects and
the employment they generate, will benefit the
economy and the nation.