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At least a CBDC would allow central banks to print money without also creating debt – because really the debt driven economy is the reason we keep ending up in
by Puts 3y ago
At least a CBDC would allow central banks to print money without also creating debt – because really the debt driven economy is the reason we keep ending up in these crises.
- jarym 3y agoYes and no, CBDCs can still lead to debt driven economies. If they 'print'/'mint'/'whatever' only X 'coins' they never give them away. They 'lend' them and the chain of lending means that, in aggregate, X+Y coins are due to be repaid (Y being total debt obligations). If gov/fed then don't print Y additional coins it leads to a crunch. Not only has the borrower to pay back the capital with interest (obviously) but that additional money has to exist for them to be able to do so. When money supply is tightened, there's just less money in existence. In theory the value of the money should go up (I guess that's why people expect inflation to then go down). But it doesn't change the fact that if you're on the hook to pay back money when the 'physical' or 'virtual' supply doesn't exist you are pretty screwed.