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It's easy to confuse correlations with causes, so it's important to keep in mind that while real growth (of wealth) is correlated with money changing hands that
by stevedekorte 7y ago
It's easy to confuse correlations with causes, so it's important to keep in mind that while real growth (of wealth) is correlated with money changing hands that money changing hands is not the cause of real growth. Real growth is caused by making good investments of resources. For example, the governments of Zimbabwe and Venezuela could print and spend as much money as they liked which can make things like GDP metrics high in nominal terms of the currency being printed, but the net effect is a downward spiral of bad investments.
- deleted 7y ago[deleted]
- nabla9 7y agoZimbabwe and Venezuela didn't print and spend. They took loans in foreign currency and spend that. Money printing alters just the nominal value of the currency. You can't buy more stuff by printing more money. You can decease the real wages and real value loans denominated in that currency with monetary inflation. Because the countries you mentioned had debt denominated in foreign currency they could not change the real value of their loans. (it's common layman internet fallacy to draw back all macroeconomic discussion into money printing)