5 ms·
This is the result of the central banks embracing Modern Monetary Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Mode
by jackfoxy 6y ago
This is the result of the central banks embracing Modern Monetary Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory as the policy to leave no hedge fund behind and lay the groundwork for UBI.
In plain English this is the fractional reserve banking system providing a cornucopia for all. It's really using debt to finance not capital creation, but current consumption. This cannot possibly end well.
- koboll 6y ago>to finance not capital creation, but current consumption I don't understand the distinction here. Capital creation results from meeting the needs of current consumption, no?
- large 6y agoSomething has to be produced before it can be consumed.
- bpodgursky 6y agoOr, as I like to call it, Magic Monetary Theory.
- loveistheanswer 6y ago>this is the fractional reserve banking system Seems like we may need a new technical term to replace "fractional reserve banking", because the Fed reduced reserve requirement ratios to zero percent a year ago. https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- certnlyuncertn 6y agoIMO it's more likely a result of a global pandemic disrupting labor and supply chains combined with some unlucky weather events hurting crop yields.
- jcfrei 6y agoThat's not true at all. Central banks have tried to stoke inflation for close to a decade now without success. The reason behind the current rise is just what the article mentions: "poor weather, increased demand and virus-mangled global supply chains". Or maybe you are confusing the actions by the federal government (stimulus checks) with those of the central banks (QE). The former most likely does have inflationary effects - the latter hasn't had an effect for well over 10 years by now.