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
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whether inflation can be caused by liquidity injection, is entirely dependent on whether banks do more lending and burrowing.
I understand this is caused because banks are allowed to do fractional reserve, as Jesus Huerta de Soto explains and many other austrians ec.
But my point is if money is not entering the economy then it is like it doesn't exist. If banks has it but don't lend it, it does not count as "printing money"
If I got you right, is like if under gold standard I find a way to turn dirt into gold and do a x2 in the monetary base but just hodl it in my vault and never spend it, it is there but is like it isn't from the POV of the economy
Man, what a crappy world we live in where academia and "common sense" call deflation as something adverse. We're so brainwashed by state education that is hard to believe.
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But under most articles you would read about money printing, including most bitcoin articles, they would call it money printing and refer to the ever expanding balance sheet for FED and banks as a sign.
Deflation is a risk, because there’s two types of deflation. (Or even more) one caused by bad economy, thus low velocity of money. Another is deflation thanks to technology improving living standard everywhere, which is ideal.
I was lucky enough to be taught by an Austrian economist during my high school years, even he would put out deflation is a risk. Eg japan had an extremely low to negative GDP for decades. And UK is becoming similar, shrinking population, low GDP growth despite high liquidity.
Bank reserve in your example wouldn’t become gold. Money itself is an incredibly complex tool, and I would be confident enough to say no one knows what exactly is money.
That’s why we have m0, m1 etc etc to measure money supply. Gift card is not money money, but is a form of money as an example.
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The market and money in particular are complex systems, and as a general rule I would never try to mess, tweak such systems because there are way more changes that brake them than beneficial changes. So I can understand a general feeling against any weird ideas of messing with money or money supply and apply that to the general society. (John Gal make an excellent case for this line of thought in Systemantics)
As I understand it so far, money works both as an abstraction of the goods and services in the economy (decentralized mechanism to distribute right to consumtion of the stock of goods and services) and a communication layer for decentralized knowledge. Messing with it will mess both of that functions but the most stable "fideling" will be the one that hide better under the rug the casual relationship between cause and bad effects.
Is interesting the example of gift cards, is something you can "print" out of thin air but I believe it works as fractional reserve, the moment you have a sort of bunk run it will be obvious that you gave more gift cards than what you actually have available in goods and services. Isn't exactly that what the FED does with its balance sheet? and even worst, they fiddle with the interest rate which is the same as fixing a price and will cause underproduction or overproduction of the good, in this case society real savings
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