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He also pledged to end a long-running practice of the bank issuing more money to finance government spending. Is there any country in the world with a

He also pledged to end a long-running practice of the bank issuing more money to finance government spending. Is there any country in the world with a government which manages to withstand the temptation to print money? Do people in Zimbabwe have smartphones? Could they use a cryptocurrency?

MichaelZuo 3y ago
The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971.
- cj 3y ago
  > In 1971, President Nixon terminated the convertibility of the U.S. dollar to gold. Gold-backed currency seems suboptimal for a country unless you have enough trust in the government to honor the "backed by gold" guarantee.
  - huytersd 3y ago
    Well there isn’t enough gold in the world. Sure that would just lead to an increase in gold prices but it would be ridiculous, astronomical numbers.
  - seventyone 3y ago
    France knew this was coming and converted a sizable amount of dollars to gold. The world lost trust we wouldn't abuse the dollar. We did anyway and then held a gun to their heads by making Saudis push OPEC to only sell oil for dollars. Problem solved for America.
- throw0101d 3y ago
  > The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971. They were quite disciplined in the early 1930s as well, which greatly helped the Great Depression to arrive: * http://www.nber.org/chapters/c11482 http://www.nber.org/chapters/c11482 And it's not like the gold standard helps with financial/currency stability either: * https://archive.today/FWKcL https://archive.today/FWKcL / https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... Further, 1971 isn't some magic year, as inflation was already rising in the mid-1960s: * https://www.federalreservehistory.org/essays/great-inflation https://www.federalreservehistory.org/essays/great-inflation And if you're trying to make a link to inflation, the spikes that the US (and others) saw in the 1970s had little to do with monetary/fiscal discipline, but with commodity prices: * https://en.wikipedia.org/wiki/1970s_energy_crisis https://en.wikipedia.org/wiki/1970s_energy_crisis * https://en.wikipedia.org/wiki/Cost-push_inflation https://en.wikipedia.org/wiki/Cost-push_inflation
Izikiel43 3y ago
Zimbabwe is kind of like Argentina. New government is attacking fiscal deficit and they have turned off the printers since they took over in December. For context, Argentina was printing so much money that they had to pay other countries to print money for them.
Workaccount2 3y ago
The problem is that printing money isn't even necessarily a bad thing. It can be used like a carrot on a stick, except you can just pull that stick carrot out of thin air. When used wisely this leads to a multiplicative effect, where you use one carrot to coax a farmer into growing 10 carrots. This is what most functional economies do, and why the US has been able to continually print money since forever. The problem is when you forget that those "stick carrots" aren't real carrots until you harvest the real ones from the ground, and treat them as if they are the same. They are not. Stick carrots are regular carrots borrowed from the future, and must be paid back.
throw0101d 3y ago
> Is there any country in the world with a government which manages to withstand the temptation to print money? In modern economic systems money is created via private/non-government banks through credit creation, and not through government actions: * https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... * https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 I've observed that folks often mention "money printing" and inflation (cause of), but rarely ask what caused the money printing, or a collapsed economy, in the first place: > 2003 Zimbabwe’s economy has collapsed. Up to a quarter of Zimbabwe’s 11 million people have fled the country. 3/4 of the remaining Zimbabweans are living on less than 1 US dollar a day. (Source) > 2005 An estimated 80% of Zimbabwe’s population is unemployed. > …by 2008 Only 20% of children in Zimbabwe are in schooling. Cholera outbreak after water supplies and sewage systems have continued to breakdown; by 2009, over 98,000 cholera cases. HIV/AIDS rate for individuals aged between 15 and 49 is 15.3%. * https://clintballinger.com/2020/04/30/airplane-crashes-arent-hyperlandings-notes-on-zimbabwe/ https://clintballinger.com/2020/04/30/airplane-crashes-arent... See also * https://www.pragcap.com/understanding-hyperinflation/ https://www.pragcap.com/understanding-hyperinflation/ * https://www.pragcap.com/inflation-is-not-necessarily-a-different-form-of-default/ https://www.pragcap.com/inflation-is-not-necessarily-a-diffe...
- genman 3y ago
  Hyper-inflation is caused by collapse of the economy - if you can't produce enough for basic needs then there is always deficit - you can only get the product when you pay more than others. Soon prices will rise to the level where nobody can satisfy basic needs and this demands rise of the salary. This cycle will continue until basic needs can be satisfied.

MichaelZuo 3y ago

The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971.

cj 3y ago
> In 1971, President Nixon terminated the convertibility of the U.S. dollar to gold. Gold-backed currency seems suboptimal for a country unless you have enough trust in the government to honor the "backed by gold" guarantee.
- huytersd 3y ago
  Well there isn’t enough gold in the world. Sure that would just lead to an increase in gold prices but it would be ridiculous, astronomical numbers.
- seventyone 3y ago
  France knew this was coming and converted a sizable amount of dollars to gold. The world lost trust we wouldn't abuse the dollar. We did anyway and then held a gun to their heads by making Saudis push OPEC to only sell oil for dollars. Problem solved for America.
throw0101d 3y ago
> The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971. They were quite disciplined in the early 1930s as well, which greatly helped the Great Depression to arrive: * http://www.nber.org/chapters/c11482 http://www.nber.org/chapters/c11482 And it's not like the gold standard helps with financial/currency stability either: * https://archive.today/FWKcL https://archive.today/FWKcL / https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... Further, 1971 isn't some magic year, as inflation was already rising in the mid-1960s: * https://www.federalreservehistory.org/essays/great-inflation https://www.federalreservehistory.org/essays/great-inflation And if you're trying to make a link to inflation, the spikes that the US (and others) saw in the 1970s had little to do with monetary/fiscal discipline, but with commodity prices: * https://en.wikipedia.org/wiki/1970s_energy_crisis https://en.wikipedia.org/wiki/1970s_energy_crisis * https://en.wikipedia.org/wiki/Cost-push_inflation https://en.wikipedia.org/wiki/Cost-push_inflation

Izikiel43 3y ago

Zimbabwe is kind of like Argentina. New government is attacking fiscal deficit and they have turned off the printers since they took over in December. For context, Argentina was printing so much money that they had to pay other countries to print money for them.

Workaccount2 3y ago

The problem is that printing money isn't even necessarily a bad thing. It can be used like a carrot on a stick, except you can just pull that stick carrot out of thin air. When used wisely this leads to a multiplicative effect, where you use one carrot to coax a farmer into growing 10 carrots. This is what most functional economies do, and why the US has been able to continually print money since forever. The problem is when you forget that those "stick carrots" aren't real carrots until you harvest the real ones from the ground, and treat them as if they are the same. They are not. Stick carrots are regular carrots borrowed from the future, and must be paid back.

throw0101d 3y ago

> Is there any country in the world with a government which manages to withstand the temptation to print money? In modern economic systems money is created via private/non-government banks through credit creation, and not through government actions: * https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... * https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 I've observed that folks often mention "money printing" and inflation (cause of), but rarely ask what caused the money printing, or a collapsed economy, in the first place: > 2003 Zimbabwe’s economy has collapsed. Up to a quarter of Zimbabwe’s 11 million people have fled the country. 3/4 of the remaining Zimbabweans are living on less than 1 US dollar a day. (Source) > 2005 An estimated 80% of Zimbabwe’s population is unemployed. > …by 2008 Only 20% of children in Zimbabwe are in schooling. Cholera outbreak after water supplies and sewage systems have continued to breakdown; by 2009, over 98,000 cholera cases. HIV/AIDS rate for individuals aged between 15 and 49 is 15.3%. * https://clintballinger.com/2020/04/30/airplane-crashes-arent-hyperlandings-notes-on-zimbabwe/ https://clintballinger.com/2020/04/30/airplane-crashes-arent... See also * https://www.pragcap.com/understanding-hyperinflation/ https://www.pragcap.com/understanding-hyperinflation/ * https://www.pragcap.com/inflation-is-not-necessarily-a-different-form-of-default/ https://www.pragcap.com/inflation-is-not-necessarily-a-diffe...

genman 3y ago
Hyper-inflation is caused by collapse of the economy - if you can't produce enough for basic needs then there is always deficit - you can only get the product when you pay more than others. Soon prices will rise to the level where nobody can satisfy basic needs and this demands rise of the salary. This cycle will continue until basic needs can be satisfied.