3 ms·
Agreed. The argument in the article though is that inflation is so low these days that a bit of quantative easing might not be such a bad thing after all.
by mnw21cam 9y ago
Agreed. The argument in the article though is that inflation is so low these days that a bit of quantative easing might not be such a bad thing after all.
- rapsey 9y agoInflation is low because money velocity is at record low levels. Just printing (i.e. borrowing) does not cause inflation. Giving it to the poor or spending it on large infrastructure projects causes an increase of money velocity which combined with printing causes inflation. Without velocity printing just means money is getting parked in a bank account. That has no effect as the money is just sitting there. There is a huge amount of money in the sidelines ready to be used (MZM - money with a zero maturity) as a result of years of quantitative easing. What this article is proposing is popping the cork from the quantitative easing bottle. The problem is that once you do it you cant just stop it. When it blows it blows and the built up potential is already insane.