3 ms·
Most money is created when making a loan, and is destroyed when the loan is reimbursed. Loan defaults add more money in the system that the Fed print almost eve
by orwin 1y ago
Most money is created when making a loan, and is destroyed when the loan is reimbursed. Loan defaults add more money in the system that the Fed print almost every year (except during COVID, but letting companies dies and default would have had a similar inflationary effect anyway). I guarantee that if the US stop printing money, it will change nothing, because it will borrow instead. The only way for the US government to stop adding to inflation is to balance its budget, by cutting spending or increasing taxes, or likely both.
(Inflation is not only money creation, it's actually a small part, it also depends on production and consumption btw. Decreasing consumption by raising taxes and lowering social spending would also be inherently deflationary)