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You can only really hold the "printing more money" analogy in your head, if you are prepared to balance your thinking and accept that taxation and loan repaymen
by neilwilson 2y ago
You can only really hold the "printing more money" analogy in your head, if you are prepared to balance your thinking and accept that taxation and loan repayment "shred money" and that financial savings is "putting money in a drawer".
At which point you will realise there can be no devaluation since money is destroyed as it moves around, and money in drawers may as well not be there.
- floating-io 2y agoI do not personally see money in those terms. I see money as units of resource allocation. There are only so many available resources at any given moment. More units of allocation means less resources allocated per unit. I'm also not an economist. :)
- hgomersall 2y agoClearly that's not true as the bank note analogy shows. If you print trillions of £50 pound notes and stuff them into an empty coal mine guarded by many competent people with guns, that's not going to have any impact on prices whatsoever.
- neilwilson 2y agoMoney is the oil in the engine not the petrol. There isn't and never has been a one-to-one relationship between money and stuff. At best it is inductive. Just as with electrical engineering, the real world requires a reactive supply, which is what allows electrical innovation beyond direct resistive loads. Electrical supply engineers hate reactive power, but without it we don't get iPhones. The power triangle gives the best engineering analogy to the way the monetary system works.
- eru 2y agoThat sounds like 'modern monetary theory', which is neither modern nor monetary. But it is both novel and correct. As in it has both novel and correct parts.