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Depends, if the central bank can keep to inflate its balance sheet and absorb most of the additional debt of corporations and the public without creating inflat
by jcfrei 6y ago
Depends, if the central bank can keep to inflate its balance sheet and absorb most of the additional debt of corporations and the public without creating inflation then nobody will actually have to pay. If there is inflation then that means the purchasing power of savers (ppl with bonds as their main asset) will be reduced (ie. savers will pay).
- sunshinerag 6y ago>> Depends, if the central bank can keep to inflate its balance sheet and absorb most of the additional debt of corporations and the public without creating inflation then nobody will actually have to pay Just wondering how is it possible for them to do this without raising inflation. Simply allocating all the debt on their balance sheet means they have erased the debts of the corps/public by increasing the money circulation isn't it? Then inflation will happen?
- jcfrei 6y agoSo far it hasn't because the additional money has remained in financial markets and just lead to higher valuations (lower yields, higher share prices, startup valuations and housing prices). It hasn't really lead to increased spending via the wealth effect - which would be required for actual inflation.