6 ms·

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inf

by p_roz 8y ago

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because prices will adjust to the new level.

klaudius 8y ago
Yes, but you can steal by diluting the value of existing money.
- SubiculumCode 8y ago
  You do not own the value of the dollar you hold in your hand...you just own the IOU. The value of the dollar is what other people deem it to be worth, and you cannot own that. If I have a car, I own the car. If you break in and steal the car, then you have stolen from me. But if the car company that produced the car decided to overproduce so that there is an excess used car supply in the market (lowering prices), well sorry friend, but the car company didn't steal from you.
brianjcohen 8y ago
> MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. The article follows that up by saying: >> As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and later on: >> To stabilize employment, MMT would add a federally funded, locally administered job guarantee. Government would employ more people in slumps than in booms. So I think the idea is that MMT recognizes that inflation would indeed occur if you kept printing money without a demand for that money, which they say will be supplied by government-sponsored full employment. What I don't understand is: is there a situation in which full employment has already been achieved and the government just keeps printing money for new initiatives, and we're back to inflation?
- klaudius 8y ago
  Job guarantee is a stupid idea. Some people create more value by not working than by working. Imagine you're trying to make a meal and some incompetent dummies want to do some work in the kitchen. It might turn out that someone competent does better work when dummies are not interfering with his work and instead are watching TV. It's called "Too many chefs in the kitchen". Full employment and job creation are not necessarily good for the economy.
  - brianjcohen 8y ago
    It appears that MMT is meant to be a macroeconomic theory. I'm not here to defend it. But I would wager that an MMT advocate would claim to possess evidence that in the aggregate, a jobs guarantee would create more value than it would destroy because the pattern you describe does not apply to most people. Again, I am not here to defend this theory. In fact, I have witnessed your anecdote myself and agree with the premise, at least on a micro scale.
  - imtringued 8y ago
    >Some people create more value by not working than by working. Are you trying to describe unsuccessful startup founders?
- User23 8y ago
  > So I think the idea is that MMT recognizes that inflation would indeed occur if you kept printing money without a demand for that money, which they say will be supplied by government-sponsored full employment. Nope, it's when too much money chases too few goods and services. Inflation is everywhere and always a dynamic process. The federal reserve can print 100 trillion dollars and credit it to their own account and it won't affect inflation at all until they start spending it or transferring it to parties that will.
thedaveoflife 8y ago
Inflation is MV = PQ... you are commenting only on the M which is money supply. You have to factor in the other variables, notably V or the rate of spending. If V remains low, then M can increase without significant inflation.
- nostrademons 8y ago
  V would have to decrease. If V and Q remain constant, then an increase in M results in a linear increase in P.
throw0101a 8y ago
> It’s immediately obvious that increasing the money supply and spending the money will result in inflation. I think the MMT argument is that one can reduce the money supply through taxation. From the article: > In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive. So currently Left-leaning people are labeled "tax and spend": you increase revenues, which you then turn around and spend on programs/infrastructure. With MMT it's the opposite (AFAICT): "spend and tax". Run the proverbial printing presses to pay for the programs, and then use (higher?) taxes to drain the 'excess' money supply. MMT also (AFAICT) seems to make the central bank subservient to the finance/treasury people, instead of independent (which is the modern way of doing things). This control of interest rates is important for technical reasons: * https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo...
- conanbatt 8y ago
  Increase spending by printing, and then increase spending by taxes, sounds like a big-gov wet-dream.
  - rovolo 8y ago
    I think that you're correct using common terminology. The government takes in money as taxes, and creates money through printing: spending = taxes + printed money new money supply = old money supply + printed money But, I believe that MMT is saying that taxes and spending could be logically separated by assuming that all taxes go to the shredder and all spending comes from newly printed money: spending = printed money new money supply = old money supply + (spending - taxes) So it wouldn't be 'increasing spending by taxes', it would be 'reduce inflation by taxes'. The size of 'big-gov' should be measured as spending/GDP regardless of the actual tax rate. The tax rate would float depending on the current inflation target instead of on the current federal spending.
- dragonwriter 8y ago
SubiculumCode 8y ago
Actually, printing money doesn't necessarily cause inflation because there are two sides to the equation. If you have more money chasing the same amount of goods you get inflation. Yes. But if supply is currently in excess, or if production is well below production capacity, then inflation is much less likely. I'd argue that in today's international economy, there is actually a huge excess of supply capacity that is under utilized.
- thadjo 8y ago
  > I'd argue that in today's international economy, there is actually a huge excess of supply capacity that is under utilized. By "supply capacity" here do you mean idle capital? I'm interested in this, but I'm not really sure what metrics show it.
  - SubiculumCode 8y ago
    I mean the capacity to produce goods and services. I am not an economist but it seems to me that factories will often run underneath max capacity. I also think that supply chains are more flexible than they were in the past. All cases of hyper inflation I know of always had a concurrent disruption to supply capacity (e.g. war, natural disaster, political strife). It seems ramping up production to meet demand is usually not an issue over the course of a year if there isn't some big externality preventing it (i.e.war). I'd be interested hearing from people who know more if this is the case.
thadjo 8y ago
> Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because prices will adjust to the new level. I think the point is more thatn printing money and transferring it to treasury coffers effectively is a tax on anyone holding USD. More government spending -> bigger deficits -> more money printed -> higher inflation (taxes). That's my understanding anyway.
bryanlarsen 8y ago
"It’s immediately obvious that increasing the money supply and spending the money will result in inflation." The money supply has almost quadrupled in the last 10 years, yet inflation has been low. MMT says that spending new money only causes inflation when the money is spent on stuff the private sector is also bidding for. Since that's pretty much everything that the government would want to spend money on, MMT & conventional economics are not in much disagreement here. "MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction." You can always spend more money, but only if you tax enough back to tame inflation. It's a constraint, not a contradiction. "Printing more money does not change the real wealth in the economy." Exactly. MMT doesn't create goods & services out of thin air, but what it does do is unlock idle capacity in the system. If Joe Sixpack is unemployed, he's a resource that the private sector is not utilizing, but he's a drain on society because somebody is paying for his food & shelter. MMT and the jobs guarantee would utilize that resource for good, and it won't affect inflation or the private sector as long as the jobs guarantee wage is at the minimum wage mark. Caveat: beginner level understanding of MMT
- klaudius 8y ago
  What if Joe Sixpack creates more value by being unemployed that by being formally employed? You do understand that some people can destroy value by doing work?
  - mruts 8y ago
    Unless joe is making more money by not working than working, that is extremely unlikely. Making money for all intents and purposes is the definition of creating value. There are some exceptions, but they usually involve distortion by the government or theft.
  - mason55 8y ago
    You're talking about in the government employ right? Obviously no commercial enterprise will pay Joe Sixpack to do anything if he can't create value. So let's say that Joe Sixpack can't get a "real" job. Then society's choices for him are 1. Let him starve to death. Hope that if his alternative is starving then he will reform himself enough to get a job. 2. Give him money with no strings attached (currently various welfare programs, possibly UBI in the future) 3. Give him money but make him work a gov't job where he subtracts value (e.g. he is actively making things worse than if he was just not there) 4. Find some kind of gov't job where he creates less value than he is getting paid but is still creating positive value If we ignore #1 (because if you believe #1 is always the answer then the rest of the conversation is pointless) then the question is who falls into bucket 3? My guess is that you have two types of people, people who are not capable of doing productive work (which I'd argue are very, very few) and people who will choose to be unproductive because of the jobs guarantee (they know that they have a job no matter how badly they do it). So maybe the jobs guarantee should be combined with a UBI with differing levels of support. Provide a UBI which covers basic needs and a jobs guarantee which provides a little more money. There will always be people who want to work just for something to do and there will be people who want to earn the extra money to improve their lifestyle. Then you don't force people into jobs where they create negative value.
mistermann 8y ago
> Printing more money does not change the real wealth in the economy. No, but you can create wealth with that newly printed money. Of course, as soon as you print it you are diluting the value of all other money which one might argue is unfair, but on the other hand is the rather arbitrary model of redistribution we happen to have landed upon right now completely fair? And setting aside fairness, is the current economic model we've come to right now even roughly optimal? https://www.consultantsmind.com/2017/10/30/elephant-chart/ https://www.consultantsmind.com/2017/10/30/elephant-chart/ > You can’t create additional purchasing power with an increase in the money supply because prices will adjust to the new level. This isn't "wrong", but I wonder if it's too simplistic to accurately describe the current globalized & automated economy.
u10 8y ago
The quantitative evidence of a decade of QE says otherwise.
- erentz 8y ago
  Isn’t QE believed to have lead to considerable asset price inflation? Even if the price of a bottle of milk stayed the same, the price of housing, or stock, etc. have increased a lot.
ergothus 8y ago
> It’s immediately obvious that increasing the money supply and spending the money will result in inflation. I'm not criticizing your logic, but I feel like my entire adult life (I'm 42) I've been bombarded with tales of EVERY proposal will "obviously result in inflation". During this time gold has also been upheld as the only safe investment, doom is always around the corner, Europe has been on the brink of financial collapse, etc At this point, any argument, even those that might be completely correct, that something will "obviously result in inflation" is suspect. All I've learned in this time is (1) Economists and politicians speak different languages, (2) Economics has done very poorly when it comes to modeling the future - there's always SOME model that predicted some event, but no model that has been widely reliable, and (3) Doom has been falsely predicted a ton of times, but that real financial hardships absolutely CAN happen. Which leaves me to conclude that I can't trust what I hear, that someone is probably right, and that I have no practical way to know who that is.
- pytester 8y ago
  It will result in inflation, but that's not necessarily a bad thing. At its heart inflation is just a wealth transfer from creditor to debtor (god forbid, right? creditors are king). The real issues are that: * Inflation is treated as a bogeyman in the investor managed media rather than an integral and necessary part of a monetary system (you want real pain? try DEflation). * Complete misrepresentation of the risks of hyper inflation and a total misrepresentation of why it happens (e.g. idiotically pretending that all zimbabwe/weimar/venezuela did was spend just a little bit too much on social programs). I kind of wish inflation were kept in band between 7 and 12% via fiscal spending and taxation (as MMT says is possible). That would keep it below the level at which it would impact growth and above the level where wealth slowly gets hoarded by the 1%.
  - manfredo 8y ago
    Not exactly. Wealthy people will just move their assets into something other than dollars. Low and middle income people (which probably have more of their assets in dollars) will have their savings constantly devalued. Interest rates in loans will skyrocket in order to offset inflation.
mrow84 8y ago
Whilst it is obvious that increasing the money supply will cause inflation in an otherwise fixed economy, it is important to note that increasing the money supply will not cause inflation if productivity also increases. If you believe that there is untapped productivity in the economy then, by increasing money supply and spending the additional money in those areas, it is possible to increase productivity whilst avoiding inflation.
dragonwriter 8y ago
> MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. No, it's not. And that's backwards: MMT says that because you can always print more money, the only constraint on spending is inflation, not revenue, and that taxation serves the purposes of creating incentives by specific targeting and limiting inflation by it's overall level, but doesn't actually “pay for” spending in the balanced sense this applies to participants in an economy who are not the sovereign money issuer of the primary currency. The key upshot of this is that: (1) the idea that an excess of spending over revenue must be financed by debt owed to some particular party is an artifact of structures which obscure the fundamental nature of fiat currency and try to mimic commodity-based currency; and (2) the idea of long-term budget balance as a goal is bunk Ina fist money system; in fact, as base money supply is tokens created by government issuing and spending them and destroyed by government recovering them, having a money supply in such a system is synonymous with long-term surplus of spending over revenue. > Printing more money does not change the real wealth in the economy Correct. > You can’t create additional purchasing power with an increase in the money supply You can't create additional aggregate purchasing power that way, but you can create new purchasing power for the entity holding the newly-printed money (at the expense of purchasing power of those holding existing money of th same currency, and with three side effect of also tranferring purchasing power from all holders of assets denominated in the currency to all holders of liability denominated in th currency.

by p_roz 8y ago

klaudius 8y ago

Yes, but you can steal by diluting the value of existing money.

SubiculumCode 8y ago
You do not own the value of the dollar you hold in your hand...you just own the IOU. The value of the dollar is what other people deem it to be worth, and you cannot own that. If I have a car, I own the car. If you break in and steal the car, then you have stolen from me. But if the car company that produced the car decided to overproduce so that there is an excess used car supply in the market (lowering prices), well sorry friend, but the car company didn't steal from you.

brianjcohen 8y ago

> MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. The article follows that up by saying: >> As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and later on: >> To stabilize employment, MMT would add a federally funded, locally administered job guarantee. Government would employ more people in slumps than in booms. So I think the idea is that MMT recognizes that inflation would indeed occur if you kept printing money without a demand for that money, which they say will be supplied by government-sponsored full employment. What I don't understand is: is there a situation in which full employment has already been achieved and the government just keeps printing money for new initiatives, and we're back to inflation?

klaudius 8y ago
Job guarantee is a stupid idea. Some people create more value by not working than by working. Imagine you're trying to make a meal and some incompetent dummies want to do some work in the kitchen. It might turn out that someone competent does better work when dummies are not interfering with his work and instead are watching TV. It's called "Too many chefs in the kitchen". Full employment and job creation are not necessarily good for the economy.
- brianjcohen 8y ago
  It appears that MMT is meant to be a macroeconomic theory. I'm not here to defend it. But I would wager that an MMT advocate would claim to possess evidence that in the aggregate, a jobs guarantee would create more value than it would destroy because the pattern you describe does not apply to most people. Again, I am not here to defend this theory. In fact, I have witnessed your anecdote myself and agree with the premise, at least on a micro scale.
- imtringued 8y ago
  >Some people create more value by not working than by working. Are you trying to describe unsuccessful startup founders?
User23 8y ago
> So I think the idea is that MMT recognizes that inflation would indeed occur if you kept printing money without a demand for that money, which they say will be supplied by government-sponsored full employment. Nope, it's when too much money chases too few goods and services. Inflation is everywhere and always a dynamic process. The federal reserve can print 100 trillion dollars and credit it to their own account and it won't affect inflation at all until they start spending it or transferring it to parties that will.

thedaveoflife 8y ago

Inflation is MV = PQ... you are commenting only on the M which is money supply. You have to factor in the other variables, notably V or the rate of spending. If V remains low, then M can increase without significant inflation.

nostrademons 8y ago
V would have to decrease. If V and Q remain constant, then an increase in M results in a linear increase in P.

throw0101a 8y ago

> It’s immediately obvious that increasing the money supply and spending the money will result in inflation. I think the MMT argument is that one can reduce the money supply through taxation. From the article: > In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive. So currently Left-leaning people are labeled "tax and spend": you increase revenues, which you then turn around and spend on programs/infrastructure. With MMT it's the opposite (AFAICT): "spend and tax". Run the proverbial printing presses to pay for the programs, and then use (higher?) taxes to drain the 'excess' money supply. MMT also (AFAICT) seems to make the central bank subservient to the finance/treasury people, instead of independent (which is the modern way of doing things). This control of interest rates is important for technical reasons: * https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo...

conanbatt 8y ago
Increase spending by printing, and then increase spending by taxes, sounds like a big-gov wet-dream.
- rovolo 8y ago
  I think that you're correct using common terminology. The government takes in money as taxes, and creates money through printing: spending = taxes + printed money new money supply = old money supply + printed money But, I believe that MMT is saying that taxes and spending could be logically separated by assuming that all taxes go to the shredder and all spending comes from newly printed money: spending = printed money new money supply = old money supply + (spending - taxes) So it wouldn't be 'increasing spending by taxes', it would be 'reduce inflation by taxes'. The size of 'big-gov' should be measured as spending/GDP regardless of the actual tax rate. The tax rate would float depending on the current inflation target instead of on the current federal spending.
dragonwriter 8y ago

SubiculumCode 8y ago

Actually, printing money doesn't necessarily cause inflation because there are two sides to the equation. If you have more money chasing the same amount of goods you get inflation. Yes. But if supply is currently in excess, or if production is well below production capacity, then inflation is much less likely. I'd argue that in today's international economy, there is actually a huge excess of supply capacity that is under utilized.

thadjo 8y ago
> I'd argue that in today's international economy, there is actually a huge excess of supply capacity that is under utilized. By "supply capacity" here do you mean idle capital? I'm interested in this, but I'm not really sure what metrics show it.
- SubiculumCode 8y ago
  I mean the capacity to produce goods and services. I am not an economist but it seems to me that factories will often run underneath max capacity. I also think that supply chains are more flexible than they were in the past. All cases of hyper inflation I know of always had a concurrent disruption to supply capacity (e.g. war, natural disaster, political strife). It seems ramping up production to meet demand is usually not an issue over the course of a year if there isn't some big externality preventing it (i.e.war). I'd be interested hearing from people who know more if this is the case.

thadjo 8y ago

> Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because prices will adjust to the new level. I think the point is more thatn printing money and transferring it to treasury coffers effectively is a tax on anyone holding USD. More government spending -> bigger deficits -> more money printed -> higher inflation (taxes). That's my understanding anyway.

bryanlarsen 8y ago

"It’s immediately obvious that increasing the money supply and spending the money will result in inflation." The money supply has almost quadrupled in the last 10 years, yet inflation has been low. MMT says that spending new money only causes inflation when the money is spent on stuff the private sector is also bidding for. Since that's pretty much everything that the government would want to spend money on, MMT & conventional economics are not in much disagreement here. "MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction." You can always spend more money, but only if you tax enough back to tame inflation. It's a constraint, not a contradiction. "Printing more money does not change the real wealth in the economy." Exactly. MMT doesn't create goods & services out of thin air, but what it does do is unlock idle capacity in the system. If Joe Sixpack is unemployed, he's a resource that the private sector is not utilizing, but he's a drain on society because somebody is paying for his food & shelter. MMT and the jobs guarantee would utilize that resource for good, and it won't affect inflation or the private sector as long as the jobs guarantee wage is at the minimum wage mark. Caveat: beginner level understanding of MMT

klaudius 8y ago
What if Joe Sixpack creates more value by being unemployed that by being formally employed? You do understand that some people can destroy value by doing work?
- mruts 8y ago
  Unless joe is making more money by not working than working, that is extremely unlikely. Making money for all intents and purposes is the definition of creating value. There are some exceptions, but they usually involve distortion by the government or theft.
- mason55 8y ago
  You're talking about in the government employ right? Obviously no commercial enterprise will pay Joe Sixpack to do anything if he can't create value. So let's say that Joe Sixpack can't get a "real" job. Then society's choices for him are 1. Let him starve to death. Hope that if his alternative is starving then he will reform himself enough to get a job. 2. Give him money with no strings attached (currently various welfare programs, possibly UBI in the future) 3. Give him money but make him work a gov't job where he subtracts value (e.g. he is actively making things worse than if he was just not there) 4. Find some kind of gov't job where he creates less value than he is getting paid but is still creating positive value If we ignore #1 (because if you believe #1 is always the answer then the rest of the conversation is pointless) then the question is who falls into bucket 3? My guess is that you have two types of people, people who are not capable of doing productive work (which I'd argue are very, very few) and people who will choose to be unproductive because of the jobs guarantee (they know that they have a job no matter how badly they do it). So maybe the jobs guarantee should be combined with a UBI with differing levels of support. Provide a UBI which covers basic needs and a jobs guarantee which provides a little more money. There will always be people who want to work just for something to do and there will be people who want to earn the extra money to improve their lifestyle. Then you don't force people into jobs where they create negative value.

mistermann 8y ago

> Printing more money does not change the real wealth in the economy. No, but you can create wealth with that newly printed money. Of course, as soon as you print it you are diluting the value of all other money which one might argue is unfair, but on the other hand is the rather arbitrary model of redistribution we happen to have landed upon right now completely fair? And setting aside fairness, is the current economic model we've come to right now even roughly optimal? https://www.consultantsmind.com/2017/10/30/elephant-chart/ https://www.consultantsmind.com/2017/10/30/elephant-chart/ > You can’t create additional purchasing power with an increase in the money supply because prices will adjust to the new level. This isn't "wrong", but I wonder if it's too simplistic to accurately describe the current globalized & automated economy.

u10 8y ago

The quantitative evidence of a decade of QE says otherwise.

erentz 8y ago
Isn’t QE believed to have lead to considerable asset price inflation? Even if the price of a bottle of milk stayed the same, the price of housing, or stock, etc. have increased a lot.

ergothus 8y ago

> It’s immediately obvious that increasing the money supply and spending the money will result in inflation. I'm not criticizing your logic, but I feel like my entire adult life (I'm 42) I've been bombarded with tales of EVERY proposal will "obviously result in inflation". During this time gold has also been upheld as the only safe investment, doom is always around the corner, Europe has been on the brink of financial collapse, etc At this point, any argument, even those that might be completely correct, that something will "obviously result in inflation" is suspect. All I've learned in this time is (1) Economists and politicians speak different languages, (2) Economics has done very poorly when it comes to modeling the future - there's always SOME model that predicted some event, but no model that has been widely reliable, and (3) Doom has been falsely predicted a ton of times, but that real financial hardships absolutely CAN happen. Which leaves me to conclude that I can't trust what I hear, that someone is probably right, and that I have no practical way to know who that is.

pytester 8y ago
It will result in inflation, but that's not necessarily a bad thing. At its heart inflation is just a wealth transfer from creditor to debtor (god forbid, right? creditors are king). The real issues are that: * Inflation is treated as a bogeyman in the investor managed media rather than an integral and necessary part of a monetary system (you want real pain? try DEflation). * Complete misrepresentation of the risks of hyper inflation and a total misrepresentation of why it happens (e.g. idiotically pretending that all zimbabwe/weimar/venezuela did was spend just a little bit too much on social programs). I kind of wish inflation were kept in band between 7 and 12% via fiscal spending and taxation (as MMT says is possible). That would keep it below the level at which it would impact growth and above the level where wealth slowly gets hoarded by the 1%.
- manfredo 8y ago
  Not exactly. Wealthy people will just move their assets into something other than dollars. Low and middle income people (which probably have more of their assets in dollars) will have their savings constantly devalued. Interest rates in loans will skyrocket in order to offset inflation.

mrow84 8y ago

Whilst it is obvious that increasing the money supply will cause inflation in an otherwise fixed economy, it is important to note that increasing the money supply will not cause inflation if productivity also increases. If you believe that there is untapped productivity in the economy then, by increasing money supply and spending the additional money in those areas, it is possible to increase productivity whilst avoiding inflation.

dragonwriter 8y ago

> MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. No, it's not. And that's backwards: MMT says that because you can always print more money, the only constraint on spending is inflation, not revenue, and that taxation serves the purposes of creating incentives by specific targeting and limiting inflation by it's overall level, but doesn't actually “pay for” spending in the balanced sense this applies to participants in an economy who are not the sovereign money issuer of the primary currency. The key upshot of this is that: (1) the idea that an excess of spending over revenue must be financed by debt owed to some particular party is an artifact of structures which obscure the fundamental nature of fiat currency and try to mimic commodity-based currency; and (2) the idea of long-term budget balance as a goal is bunk Ina fist money system; in fact, as base money supply is tokens created by government issuing and spending them and destroyed by government recovering them, having a money supply in such a system is synonymous with long-term surplus of spending over revenue. > Printing more money does not change the real wealth in the economy Correct. > You can’t create additional purchasing power with an increase in the money supply You can't create additional aggregate purchasing power that way, but you can create new purchasing power for the entity holding the newly-printed money (at the expense of purchasing power of those holding existing money of th same currency, and with three side effect of also tranferring purchasing power from all holders of assets denominated in the currency to all holders of liability denominated in th currency.