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483 sats \ 7 replies \ @kingzing131 26 Feb \ on: Argentina Cut Spending and Posted a Budget Surplus. Why Can’t America? econ
Not all money printing will lead to a complete collapse. Too many bitcoiners are way over concerned about it.
Japan has been running decades long money printers and still in deflation until recently. This should be enough to say this isn’t so simplistic and can be outright incorrect.
In the case of Japan, most of the liquidity just got stuck in banking sector and never flow into the economy for any money creation process like spending/investment.
For nations like Zimbabwe, it’s over supplying crap that no one actually wants.
budget balance is more important in these nations where their currency just don’t have much reason for existence, most of the time though, economic growth is even more important.
Also while money is important, power is the most important of almost all resources. Kim runs North Korea because of his power, not because people know he can pay back any debt.
US is the same, just at a global stage. The immeasurable power and influence it has is very strong
Saying that printing money doesn't cause inflation because is stuck inside the banks is like saying that someone who jumped from the top of a building is "flying".
I think you are Jerry-mandering your time frame in order to support your point
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Japan ran the longest and largest scale QE ever, it's probably the most relevant one.
And it really isn't "printing money" as in sense that they are literally printing yen.
Whether they translate to more money supply depends on whether the liquidity injection is what was needed to encourage actual money creation process.
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can you elaborate a bit more on this please?
if the money is not injected in the economy, then how can that had any effect? isn't it the same as not being created at all?
and if the money did end up in the economy and distributed unevenly, how could that not end up in a wealth redistribution via Cantillion effect?
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Essentially money is created through borrowing and lending.
Central banks encourage banks to do more of it by injecting liquidity, most often through bank reserves.
Bank reserves can't be used in the economy, so it is more of a monopoly money within the banking system. That means this won’t have direct impact on inflation.
whether inflation can be caused by liquidity injection, is entirely dependent on whether banks do more lending and burrowing.
If the real reason why there's such a low lending and burrowing isn't related to liquidity issue, eg the risk/reward just isn’t there, then it doesn’t matter how much bank reserves they get.
This is also known as liquidity trap, where QE pretty much has no influence on Money supply at all and is extremely challenging for central banks.
What would cause inflation, is a direct stimulus cheques to the public, that is a direct increase in money supply.
I haven’t done econ in a few years, but you can read up velocity of money, Lyn Alden would definitely be a good economist to listen to as well