Why do you so easily disregard the severe impact your theory would have on the price of imports? Your scenario assumes the US is in a 1930s style recession. Which will have more political imporance? (a) A 30% unemployment rate or (b) The shelf price of a DVD player?
Do you seriously believe that the USD will only depreciate in line with the percentage increase in the money supply? No. The impact on the USD is impossible to predict, but if your great depression scenario is accurate (and I am skeptical about this) the whole world will be hemorrhaging. I'd sooner be in $US than more vulnerable currencies like the Thai Baht or $A.
Fiscal irresponsibility on the scale you're advocating would lead to a fall in USD's value that far exceeds any increase in the money supply. It would basically become the next Peso. If the US were in a great depression, and conventional policies had failed, the rest of the world would applaud an expansion in the money supply to ignite growth. This is the same "irresponsible" policy that the rest of the world is recommending to Japan. Assuming you have some special insight which is lacking among the worlds leading economists, what is your policy recommendation for the Japanese government?
How would US businesses and consumers who are reliant on key imports and products survive in such a situation?? If the US is suffering a great depression with 30%+ unemployment rates, the cost of DVD players will be a distant concern compared to the need to reduce unemployment, if necessary, through an expansion in the money supply.
