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Economic Brief

April 14, 2021

Richmond Fed Report Warns Against Printing Money to Fund Growing Deficits

The Richmond Fed’s latest Economic Brief traces the roots of so-called “modern monetary theory” and warns against the idea of printing money to fund burgeoning deficits.

The paper contends that low interest rates and highly expansionary monetary policy with little apparent inflation have created the “grand illusion” that a government can simply print money with few limits or repercussions. This core tenet of “modern monetary theory” ignores the fact that deficit spending is constrained by a government’s ability to satisfy creditors in the long run.

The Richmond Fed’s Economic Brief series provides essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)