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> It probably won't reach insane numbers such as 1000% but it'll certainly become worse than what it was before. Worse by what metric? You can not look only at

> It probably won't reach insane numbers such as 1000% but it'll certainly become worse than what it was before. Worse by what metric? You can not look only at inflation when establishing economic policy. An inflation of 25%/year and full employment and economic growth is certainly better than 3%/year with 10% unemployment and zero growth. Sure we'd like inflation to be as low as possible, but at the same time this should not come at the expense of everything else. > Am I not supposed to conclude that government money printing was the root cause of all this hardship? The problem is not in the "money printing" (monetary policy), but in taking whatever resources the government had and deciding to put them into building a city like Brasilia in the middle of nowhere (economic policy). It wouldn't matter if JK had the resources already and Brasil was flush with resources, or if he managed to convince people to borrow him the money at low interest rates: Brasilia was and is a bad idea. Just like Brazil's eternal dependency on commodity exports and lack of basic infrastructure investment, or its centralization around SP-Rio for economic development, or not doing reforms to get rid of the über-privileged public sector employees, or politician's constant use of the state-owned companies as a way to distribute power to those that stay aligned with them. Just like so many other million things that happen in Brazil and that leads to this mismanagement. So, to sum up: this "conclusion" you are getting to is a leap of logic. You can not conclude that all and any money printing will lead to eventual catastrophe and rampant inflation. Catastrophes happen when bad economic policies are in place.

matheusmoreira 6y ago
> Worse by what metric? The value of the dollar. > An inflation of 25%/year and full employment and economic growth is certainly better than 3%/year with 10% unemployment and zero growth. There's absolutely no reason to hold a currency that depreciates 25% every year. Governments may want people to spend it as soon as possible but the fact is there's any number of things people can do that may or may not align with government interests. This economic growth is presumably fueled by endless consumption by the masses. So what happens when people invest the money instead? Cryptocurrencies are already mainstream. Plenty of stimulus packages ended up getting injected into the cryptocurrency market. > The problem is not in the "money printing" (monetary policy), but in taking whatever resources the government had and deciding to put them into building a city like Brasilia in the middle of nowhere (economic policy). I don't see how this invalidates the idea that money printing was the cause. You're essentially saying that when a government has low amount of resources but still wants to spend money the only way it can do that is by printing money. Money printing was the means to their end: spending money they didn't have. The inflation was basically a tax on everyone who held the currency at the time. The only problem was inflation increased wildly beyond their control. > It wouldn't matter if JK had the resources already and Brasil was flush with resources, or if he managed to convince people to borrow him the money at low interest rates Why? Surely the impact would have been mitigated.
- rglullis 6y ago
  > The value of the dollar. That is a meaningless metric. The numeric value of a currency doesn't matter. What matters is how much buying power people have. What's the point of having a super overvalued currency if people don't have jobs and it makes it harder for you to export to other countries? > There's absolutely no reason to hold a currency that depreciates 25% every year First, to have one point with this high inflation does not mean that the monetary policy is meant to keep this inflation rate for an extended period of time. So the "every" qualifier from your sentence is a weasel word. Second and most important: currencies are not supposed to be held. Currencies are supposed to facilitate trading, investment and consequently economic activity. It's not a matter of "what governments want people to do", it's a matter of function. If a currency is so stable or deflationary, people won't use it to trade. If then, what's the point? (Aside: this is one of the many reasons that I am slowly selling my position in BTC and turning to Ethereum. BTC is failing as a currency and this "store of value" narrative is bogus. ETH is "digital oil": not meant to be a currency, but a required commodity to run the things on their chain, including transactions with actual currencies) > Plenty of stimulus packages ended up getting injected into the cryptocurrency market. Yeah, so? Plenty of stimulus checks also ended up putting food on people's tables, paying their rent, paying-off their debt... you know, things to avoid economic collapse. > Money printing was the means to their end: spending money they didn't have. > You're essentially saying that when a government has low amount of resources but still wants to spend money the only way it can do that is by printing money. No. you are going at this backwards. "Money" is just an instrument to facilitate economic activity. What Governments are supposed to do (and then we can have a separate debate on how much) is to manage the economy. The fact that terrible decisions were made (like building a city in the middle of nowhere) and wasting resources on things that were never needed leads to the consequence of the government having to print money. > Surely the impact would have been mitigated. Say you have a rich uncle that likes to gamble. One day he tells you he lost $100k one night at the Casino. Another day he is happy, because he made the money back. Some weeks later he goes on to make $200k. Another week, he loses $300k. Later he makes $200k back. Do you measure the "impact" based on the amount of money that he lost (or gained) relative to his wealth or do you just think that he is too stupid to be gambling like that and might risk losing it all one day?

matheusmoreira 6y ago

> Worse by what metric? The value of the dollar. > An inflation of 25%/year and full employment and economic growth is certainly better than 3%/year with 10% unemployment and zero growth. There's absolutely no reason to hold a currency that depreciates 25% every year. Governments may want people to spend it as soon as possible but the fact is there's any number of things people can do that may or may not align with government interests. This economic growth is presumably fueled by endless consumption by the masses. So what happens when people invest the money instead? Cryptocurrencies are already mainstream. Plenty of stimulus packages ended up getting injected into the cryptocurrency market. > The problem is not in the "money printing" (monetary policy), but in taking whatever resources the government had and deciding to put them into building a city like Brasilia in the middle of nowhere (economic policy). I don't see how this invalidates the idea that money printing was the cause. You're essentially saying that when a government has low amount of resources but still wants to spend money the only way it can do that is by printing money. Money printing was the means to their end: spending money they didn't have. The inflation was basically a tax on everyone who held the currency at the time. The only problem was inflation increased wildly beyond their control. > It wouldn't matter if JK had the resources already and Brasil was flush with resources, or if he managed to convince people to borrow him the money at low interest rates Why? Surely the impact would have been mitigated.

rglullis 6y ago
> The value of the dollar. That is a meaningless metric. The numeric value of a currency doesn't matter. What matters is how much buying power people have. What's the point of having a super overvalued currency if people don't have jobs and it makes it harder for you to export to other countries? > There's absolutely no reason to hold a currency that depreciates 25% every year First, to have one point with this high inflation does not mean that the monetary policy is meant to keep this inflation rate for an extended period of time. So the "every" qualifier from your sentence is a weasel word. Second and most important: currencies are not supposed to be held. Currencies are supposed to facilitate trading, investment and consequently economic activity. It's not a matter of "what governments want people to do", it's a matter of function. If a currency is so stable or deflationary, people won't use it to trade. If then, what's the point? (Aside: this is one of the many reasons that I am slowly selling my position in BTC and turning to Ethereum. BTC is failing as a currency and this "store of value" narrative is bogus. ETH is "digital oil": not meant to be a currency, but a required commodity to run the things on their chain, including transactions with actual currencies) > Plenty of stimulus packages ended up getting injected into the cryptocurrency market. Yeah, so? Plenty of stimulus checks also ended up putting food on people's tables, paying their rent, paying-off their debt... you know, things to avoid economic collapse. > Money printing was the means to their end: spending money they didn't have. > You're essentially saying that when a government has low amount of resources but still wants to spend money the only way it can do that is by printing money. No. you are going at this backwards. "Money" is just an instrument to facilitate economic activity. What Governments are supposed to do (and then we can have a separate debate on how much) is to manage the economy. The fact that terrible decisions were made (like building a city in the middle of nowhere) and wasting resources on things that were never needed leads to the consequence of the government having to print money. > Surely the impact would have been mitigated. Say you have a rich uncle that likes to gamble. One day he tells you he lost $100k one night at the Casino. Another day he is happy, because he made the money back. Some weeks later he goes on to make $200k. Another week, he loses $300k. Later he makes $200k back. Do you measure the "impact" based on the amount of money that he lost (or gained) relative to his wealth or do you just think that he is too stupid to be gambling like that and might risk losing it all one day?