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>> "...a global currency that was untethered from government corruption (printing)..." This is your friendly weekly reminder that the government does not print

>> "...a global currency that was untethered from government corruption (printing)..." This is your friendly weekly reminder that the government does not print money in almost all countries, with a very few interesting exceptions. Money is instead created by ordinary privately-owned commercial banks, or by consortiums of privately-owned commercial banks aka the owners of central banks [0]. The spirit of the parent's point stands, which is of course that somebody is ripping you off. But that somebody is manifestly not a government. [0] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... See the key quote in bold on the first page: "Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money."

megaman8 8y ago
Yes, but the Fed enables this behavior by loaning the banks money. The point is, it's due to the govt that the money supply is increasing hence we have inflation.
lacker 8y ago
Well, the government is controlling the money supply. The main way you get ripped off is when the monetary authority decides that inflation should be higher, and that devalues your money. Calling that process "printing money" seems like a reasonable metaphor.
- pjc50 8y ago
  Inflation is fundamentally a price level problem. I don't understand why libertarians seem to think the price level of goods and services should be fixed forever.
  - robotrout 8y ago
    Inflation can indeed be caused by supply and demand, which is what you're referring to. However, if an open market is allowed (no price controls), generally supply will rise to meet demand and price will fall back. Unfortunately, inflation can also occur when too much money floods a system. We see this in the case of college tuition. Giving college loans to anybody with a heartbeat floods the system with money, causing tuition price inflation. This does happen with countries as well. Every dollar that a government borrows and then spends, is money creation. The act of selling the treasury notes allows them to obtain money today for the promise of paying it back with interest in the future. That new money is spent into the system and much of it takes the form of bank deposits which can then be inflated 10:1.
    - NTDF9 8y ago
      > Every dollar that a government borrows and then spends, is money creation. So is every dollar repayed back to the FED money destruction?
      - simplecomplex 8y ago
        Yes.
        NTDF9 8y ago
        Wow. What a crazy system. It is so so easy to manipulate this with fiscal policy.
    - compcoffee 8y ago
      >That new money is spent into the system and much of it takes the form of bank deposits which can then be inflated 10:1. And the problem with this is? Canada has no reserve requirement. The US value of reserves in the financial system is so high that banks are no longer reserve constrained. The absolute quantity of money doesn't matter; the supply and demand for the currency does. That's why so many people got it wrong by claiming Quantitative Easing would result in massive inflation.
- compcoffee 8y ago
  >The main way you get ripped off is when the monetary authority decides that inflation should be higher, and that devalues your money. Inflation doesn't cause devaluation; it is devaluation. It's an increase in the exchange value of goods to cash. And whether or not you get "ripped off" by inflation depends on what side of the trade you're on.
richjdsmith 8y ago
>This is your friendly weekly reminder that the government does not print money in almost all countries, with a very few interesting exceptions. Yep, Canada does it for them!

megaman8 8y ago

Yes, but the Fed enables this behavior by loaning the banks money. The point is, it's due to the govt that the money supply is increasing hence we have inflation.

lacker 8y ago

Well, the government is controlling the money supply. The main way you get ripped off is when the monetary authority decides that inflation should be higher, and that devalues your money. Calling that process "printing money" seems like a reasonable metaphor.

pjc50 8y ago
Inflation is fundamentally a price level problem. I don't understand why libertarians seem to think the price level of goods and services should be fixed forever.
- robotrout 8y ago
  Inflation can indeed be caused by supply and demand, which is what you're referring to. However, if an open market is allowed (no price controls), generally supply will rise to meet demand and price will fall back. Unfortunately, inflation can also occur when too much money floods a system. We see this in the case of college tuition. Giving college loans to anybody with a heartbeat floods the system with money, causing tuition price inflation. This does happen with countries as well. Every dollar that a government borrows and then spends, is money creation. The act of selling the treasury notes allows them to obtain money today for the promise of paying it back with interest in the future. That new money is spent into the system and much of it takes the form of bank deposits which can then be inflated 10:1.
  - NTDF9 8y ago
    > Every dollar that a government borrows and then spends, is money creation. So is every dollar repayed back to the FED money destruction?
    - simplecomplex 8y ago
      Yes.
      - NTDF9 8y ago
        Wow. What a crazy system. It is so so easy to manipulate this with fiscal policy.
  - compcoffee 8y ago
    >That new money is spent into the system and much of it takes the form of bank deposits which can then be inflated 10:1. And the problem with this is? Canada has no reserve requirement. The US value of reserves in the financial system is so high that banks are no longer reserve constrained. The absolute quantity of money doesn't matter; the supply and demand for the currency does. That's why so many people got it wrong by claiming Quantitative Easing would result in massive inflation.
compcoffee 8y ago
>The main way you get ripped off is when the monetary authority decides that inflation should be higher, and that devalues your money. Inflation doesn't cause devaluation; it is devaluation. It's an increase in the exchange value of goods to cash. And whether or not you get "ripped off" by inflation depends on what side of the trade you're on.

richjdsmith 8y ago

>This is your friendly weekly reminder that the government does not print money in almost all countries, with a very few interesting exceptions. Yep, Canada does it for them!