The US Federal Reserve's policy of buying debt instruments with money it's creating out of thin air - currently at the extraordinary rate of more than a trillion dollars' worth every year - is the right thing to do, because it doesn't add to the net amount of US debt outstanding, argues the famous mega-speculator George Soros. "It's about as close to a free lunch as you can get."

What's he talking about? Is he right?

He is certainly correct that the growth in public debt in the US and other major nations - contrary to the obsessive interest in the subject by conservative commentators and almost all the financial media - is of no importance in itself.

It is a free lunch for the political classes, as it provides resources for governments to continue over-spending. Supposedly, that's to stimulate economic growth. But in practice it allows them to pursue their particular concerns, such as sustaining mega-banking and vote-rich zombie businesses, promoting the global warming mania, and spreading around enough welfare to keep the lower orders politically anaesthetized.

Public debt is a straw dog. Ordinary folk instinctively realize that too much debt is bad, because personal debt is a painful burden. It encourages them to give their reluctant support to politicians who say they want to contain the growth of public debt.

This distracts almost everyone from the real scandal -- which is money creation on a mindboggling scale. As ordinary folk cannot "print" money, they don't understand the process and its consequences. It even seems vaguely OK (wouldn't it be nice if we could do that?)

Public debt isn't the danger. The bubble in money supply is.

David Fuller's view This is an interesting section which I commend to subscribers.

Note - it is nice to be mentioned in a latter section of On Target but I did not make the comment attributed to me.