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If money is printed, can it ever be destroyed?
by 1-6 5y ago
If money is printed, can it ever be destroyed?
- nverno 5y agoyes, taxes for example. The Fed has power to print and destroy
- doggosphere 5y agoNot technically a fed responsibility. Taxation and spending is fiscal policy. The fed can affect money supply by raising interest rates.
- deleted 5y ago[deleted]
- imtringued 5y agoI've seen a proposal to replace interest rates with a credit tax. It would grant the us government the ability to borrow money at 0% regardless of the interest rates for the private market. This would completely destroy the belief that money is a risk free asset as governments can borrow money at any time and there is no need for government bonds anymore. When inflation happens you raise the credit tax so that money creation actually causes net deflation once the loans are being paid back.
- spiralx 5y agoJust as bank lending creates money, paying back bank loans destroys money. Money is also created or destroyed by banks purchasing or selling debt assets such as government bonds. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...