but they werent trying to curb deflation, they printed more money to pay debts to other countries. i imagine if we are trying to curb deflation then we'd increase the monetary supply by a calculated amount to not increase inflation too much
This concept is called quantitative easing (QE) and it doesn't always work. Though notably, it did work in '08 after the Great Recession.
Deflation cause people to be afraid of spending money because aggregate demand is much lower. It's certainly possible that QE doesn't fix consumer spending habits. Money is typically not given to people directly because that may cause separate issues. For example, some of the COVID era inflation was due to people receiving money directly from the government, which signaled to businesses that excess capital could get soaked up with price increases.
We print money and inject it into the economy all the time. But wealthy people have made sure that they're the ones who get the injections. If the money we printed was, say, given to schools and used to build roads, we would have a more just society.
You need the other nations that you trade with to not freak out when you magically just generate a whole bunch of new value.
It’s a lot easier to do when you have a gun to the world’s head. So it does and will happen in convoluted ways. But why it doesn’t happen anywhere else like Japan.
Well put, the world bares the pressure of the US Federal Reserve printing money. The US 40T debt it carried by the world.
This is because the US Dollar has been the reserve currency of the world.
People are so unaware of how good the USA had it before Orange started ruined all our socioeconomic ties around the world. He's vastly accelerated USD not being the world reserve currency anymore. US Citizen have no clue how much that will hurt us, it's unrecoverable too. Once USD loses that status, it will never get back.
Covid really underlined this for me. When things just kept ticking after everything went down cause they printed a bunch of money. The entire game is rigged in favour of keeping that established power structure in place.
If it ever stops being the reserve currency that’s it for the US empire. It’s a wonder everyone let the US have its way for so long, at the same time insane that the US is just ignorantly throwing it away now.
He's vastly accelerated USD not being the world reserve currency anymore.
This is the intent. Crash our economy, buy up big swatches of wreckage for dirt cheap, and finally push your own crypto for further grift on the desperate.
Nonsense. When the fed does quantitative easing without a sufficient amount of tightening a shit ton of money is put into circulation that is created out of thin air. This absolutely happened over the last decade.
It is put on a balance sheet as debt. The debt is purchased. At no point is money being created freely. The "reserves" created for banks to stabilize aren't circulated.
Because printing new money normally goes with economic growth. If you print new money during economic contraction instead, you're making things worse in a different way.
You printed more money. More money in circulation. People know that the $1 you have today is worth less than the $1 printed tomorrow.
So bread prices increase based on that expectation. You buy bread, but it’s $1 more. How would the people buy more bread - by printing money. Cycle repeats. Hyperinflation.
Also its self reinforcing. Inflation erodes the real value of tax revenue. This worsens the government’s budget deficit. The government then often finances that deficit by printing more money. That fuels more inflation, which erodes real tax revenue further, and so on
This isn't true. Weimar's economy was on the upswing for the better part of a decade when the Nazis took over. In fact, their economic recovery was largely hampered by the US stock crisis which halted loans
Thats not really what happened. Hyperinflation was only an issue early into Weimar Germany, certainly not what lead the whole Republic to fall. Hyperinflation was resolved years before the Nazis began to rise
Plus the hyperinflation was moreso an intentional tactic used to devalue their currency to such a point that they could effectively get out of paying reperations and the significant loans they took out from WWI, and then they made it worse by printing tons of money to support striking workers in the French occupied Ruhrland. The whole thing then spiraled out of control
Weimar like conditions are the result of deliberately destructive policies and a series of terrible circumstances. It shouldnt be considered anywhere close to the average or expected result of 'printing more money' because its far more complex than that
This is factually wrong. You’re confusing the hyperinflation crisis of 1923, which was a response to foreign policy, with the deflationary crisis of the Great Depression in Germany starting 1929.
We did that in 2009-2011 with a high degree of success. I'd argue interest rates were kept too low for the time after and that is a reason we're having trouble fighting inflation now.
Yes, but it wasn't only that. The Weimar Republic was a very functional democracy (by our standards - proportional representation is used in the Netherlands for example) that was unfortunately established in a country which had very recently been a monarchy. The Kaiser strategically abdicated to avoid blame for losing WWI.
There were coups, terror attacks, assassinations, and street fights between the socialists, communists, monarchists, and Republicans. The republicans were outnumbered and unpopular because the Republic took the blame for the treaty of Versailles.
I also remember one time I think zambia or SMTH(if I remember correctly) printed am insane amount of money for some reason I don't why like have some brain cells
Money printing through QE addresses the currency becoming too valuable it doesn't actually address what's causing the deflation of the economy which is consumer demand decreasing.
And by design QE does not go into the hands of the average consumer it goes into financial institutions, increases assets prices (houses stocks bonds etc.)which because asset prices explode eventually they become divorced from reality in a speculative bubble. Over valuation of assets eventually leads to money becoming a safer bet than investing in overvalued assets. Which eventually leads right back to deflation.
So basically
People spend less(for whatever reason)>people are fired because no one is buying>
less taxes>less effective money printing>austerity is enacted>people spend less
Cycle continues. Unless something interrupts it like massive taxation of assets to redistribute wealth or it eventually craters out
And once it craters out well:
You need a tax base to print money off of, other than like the dollar for other reasons most other countries rely on solely on taxation to give value to fiat currency, in deflation people lose jobs which affects taxation disproportionately because workers are taxed more proportionally than capital is.
That just makes it cheaper to use the money as fuel and wallpaper instead of buying either of those, usually you buy things based on weight of the cash instead of counting it manually.
That's exactly what they do. And it works and it's good, as long as they don't overshoot. The only thing the Fed can really do is set rates and give people money. With those two things they have the job of keeping the value of money more or less stable and with an inflation rate of ~3%.
If the value of money goes up (deflation), they just print more.
If the value of money goes down (inflation), they just print less.
"printing money" is really just setting the rate of how cheap it is to borrow money. If the rate is low, people can go borrow a billion dollars (that comes from no-where, the banks just make it up) and now there's a billion extra dollars in the market. Nobody every really pays this loan back. The plan is to use the money to make more money faster than the rate of the loan. This is how ALL our money has come into existence and why the world is however many trillions of dollars in debt.
"But there's a limit! They can't set the rate less than ZERO percent!" wellll, the Fed rate is just what they charge the 12 regional reserve banks, which then charge whatever rate they want to actual banks, which then charge whatever rate they want to actual businesses, which then charge whatever for the actual goods or services to actual people. The fed could go negative to poke the layers under them to get off their ass and do business. And, also, this is where we got "QE" from. Quantitative Easing, which is big'ol fancy term for "we're just going to give money to our friends". More money in the system, value of the dollar goes down, and deflation isn't a worry.
Really, deflation is super-easy to fix. The things that CAUSE deflation are generally kinda terrifying though.
... That's what we're doing now. That's why our currency is inflating and slowly becoming worthless.
Damned either way basically. Someone with a brain correct me if I'm wrong, but either everyone winds up broke or winds up with a ton of money that isn't worth anything.
Inflation is not just the amount of money, it's the velocity of money too. If you print money and everyone just keeps it under their mattress, you still have deflation.
That said, deflation isn't much of a worry anymore because we have fiat currency. When you have hard currency like gold, you get deflation if you can't add to gold reserves. This was an issue during the Populist era in America.
inflation is not just a number that may go up or down, it's a reflection of real, more fundamental economic problems. Printing money solves exatly one problem: lack of money availability, which is almost never the root issue. If you are in a deflationary spiral because people can't afford stuff, printing money and spending it might make some people a bit more able to afford stuff (those who get their income from government spending), but everyone else will be worse off, and in the end you'll just tank the value of your currency against every other... and having a combination of deflation and a rapidly devaluation currency on the global market is a monetary fate worse than death.
countries do that, when their money is worth so much, they print more of their money and buy foreign currency with that money so foreign currency increases its value and their own currency lose value.
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u/PuzzleheadedFee6943 7h ago
why not just start printing money then?!