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>But inflation! No. The government can set up price controls on profiteering. But besides that, this fresh money is there to keep the economy at a steady state
by shadowprofile77 7y ago
>But inflation! No. The government can set up price controls on profiteering. But besides that, this fresh money is there to keep the economy at a steady state - specifically to avoid a black-hole depression.
This is flat wrong and deeply ignorant of historical economic reality. A government that simply prints (or digitally creates) more money instead of gaining as much as it can of it from reasonable taxes or borrowing will indeed absolutely create an inflationary spiral that can only be stopeed by stopping these activities. Price controls against "profiteering" will do nothing against this except get a large number of people in legal trouble simply for the "crime" of adjusting their prices to reflect wider economic reality (prices for every single one of their won costs and inputs going up for the same inflationary reasons). Black markets would simply explode and any such price controls would simply be ignored under heavy inflation, and especially under the fantastically destructive conditions of hyper inflation. You have no idea what you're talking about with this statement in particular.
- consz 7y agoPrinting money only leads to inflation if you are full employment/resource utilization. Otherwise the money just facilitates transactions that wanted to occur anyways but didn't have the financial capital to do so; you can always hoover the money back up through taxes afterwards without realizing hyperinflation. Why do you think Japan, Europe, China, US, etc. have been able to print such a significant amount in the last 10 years without the corresponding inflation? Why is the US pushing a 2T stimulus bill without worrying about "how will they pay for it" during a credit crisis today?
- Gabriel_Martin 7y agoYou can believe that hyperinflation spirals are a possibility or a forgone reality of magic modern monetary debt creation, and people like Ben Bernanke can believe they can fund debt from thin air which is impossible to default on (his words), and you'd both be right, in part. But just because historically there have been monetary policies which lead to hyperinflation, doesn't mean modern monetary policy for the largest economy in the world is poised to relegate said currency to that of anything less than a central fixture of global monetary significance.