there are so many holes in dr. fekete's thesis that it is tempting to say he has everything backwards. as has already been pointed out, if new currency and old currency have the same denomination then they are fungible, and they have the same value.

almost all of the money will be created electronically, and his notion that little of it will be used for anything but executive bonuses is completely wrong. the aig bonuses that caused so much furor were less then 1/10 of 1% of the aig baliout ($165 million out of $170 billion.) some of the "new" money will find its way to consumers in the form of home foreclosure forgiveness, extended unemployment benefits, and so on.

the idea that money will be in short supply and this will lead to a cascading deflationary depression is also completely wrong. that is what would happen if a laissez faire government stood by and did nothing. the continued creation of credit (and debt) has so far prevented a deflationary collapse, which would have started last september had the government not intervened to prop up the money market funds after lehman when bankrupt.

i don't know how he expects to see further interest rate cuts ahead. interest rates are already so close to zero that it is mathematically impossible to cut them much further. finally, if the government was willing to accept the painful medicine of a deflationary depression, would they have put ben bernanke in charge of the fed?