A New High (Or Should That Be Low?) In Government Incompetence?

One of the central tasks of government in the 21st century is to arrange for a stable and secure circulation of money. This is true of every government in every country in the world - except Scotland, which curiously has no government-sanctioned paper banknotes, only notes issued by seven retail banks. If the perception arises that the government can't issue money in a competent, trustworthy fashion, people will have to take refuge in other items of value. Fortunately, such a collapse of a nation's currency only happens in countries like Zimbabwe, where hyper-inflation has completely destabilized the Zimbabwe Dollar, which is now no longer issued at all. Most other countries, especially those in the West, are still to be trusted to supply secure money.

One of the few powers explicitly handed to the American Federal Government by the Constitution is "To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures" (Article 1, section 8, paragraph 5). So what should we make of the following news?

"Because of a problem with the presses, the federal government has shut down production of its flashy new $100 bills, and has quarantined more than 1 billion of them -- more than 10 percent of all existing U.S. cash -- in a vault in Fort Worth, Texas."

This is incompetence of a degree rarely seen at this high, powerful level of government. In order to make banknotes safer, it has made them so safe that they cannot be circulated at all. And this at the grand, total cost of $120 million and with all the notes together representing a value of $110 billion.

And this ought to have consequences for the American Fed's second attempt at quantitative easing (QE2). Quantative easing involves pumping money into the economy to lower long-term interest rates, usually by buying debt, an analogue to printing money. But this failure to actually print that money should give us pause at the Fed's or the government's ability to accomplish their goal. Unless this is a deliberate mistake to undermine trust in the value of the dollar, thereby stimulating inflation and perhaps lowering interest rates. But I'm not knowledgeable of economics to know whether this would work or not. What I am sure of is that Barack Obama is not nearly clever and dastardly enough to pull of such a Nixonian deception. So it seems that this money printing debacle is just incompetence, plain and simple.