4 ms·

Somehow Keynes is very popular during the bust and somehow falls out of favor in the subsequent boom.

• AnthonyMouse 5y ago
  Since then we've learned two things. The first is that inflation isn't the demon it was historically made out to be. Hyperinflation is bad, but some stable and predictable <10% annual rate of inflation mainly hurts people hoarding cash, which is a dumb thing to do in general. But if you have a moderate rate of inflation and just stop accumulating new debt during a boom, the old debt gets devalued over time, and then it's always "better" to only pay the interest now and pay the principal tomorrow (i.e. never). The second, specific to the US at this particular point in history, is that the dollar is such a strong reserve currency that the government can create trillions of dollars out of nothing and still not get hyperinflation. The risk of this is that you go too far and people stop using it as the reserve currency, but apparently that risk isn't worth the trillions of dollars in "free money" you get by discounting it.
  • rrrrrrrrrrrryan 5y ago
    > the government can create trillions of dollars out of nothing and still not get hyperinflation. The risk of this is that you go too far and people stop using it as the reserve currency If the other big central banks around the world print money at similar rates, the US dollar will remain the reserve currency. The pandemic was global. If the US were to enter a recession alone (which would be strange), and then chose to print lots of money, that's when its reserve currency status might be threatened.