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Try to understand what I said about German hyperinflation during 192X !
Quote:
Originally Posted by amaroW
But the big differences between Germany during WW2 and today are the following:
- Germany printed 1 million times its GDP, I just say we need to print 0,2 Times.. 20% of European GDP, .it is equal to 3000 billion euros. 20% of GDP does not create inflation.
- During WW2, there was not globalisation. Economies were not open to the world so when a country use printing money it creates more inflation.
- inflation was high during WW2, we are now in deflation
Also inflation depend on monetary aggregates repartition all around the world. Euros and dollars are all around the world therefore there will be low inflation. !
Ofcourse for BOE it won't work well because the pound will fall and Pounds are only in Great Britain but printing money will work with EUROS or DOLLARS. 40% of dollars are outside USA. And commodities are in dollars, so THE WORLD pay your inflation, not YOU!
We cant compare what happened in the past (Germany during WW2 and Zimbabwe for instance) with printing 3000 billion euros (= 0,2times European GDP)
"If it were so easy as to just create new money to fix this situation, it would have been done already."
Now we can use it for euroland and dollarland.
In the past it created hyperinflation and a fall of your currency because inflation was already high and economies was not open to the world.
Germany printed 1 million times its GDP during WW2, obviously it creates inflation
Zimbabwe printed 3000 billion Times its GDP = 5 billion Times European GDP
I only ask for 0,2 Times thus 3000 billion euros.
Can you see the difference?
Also, it is wrong to think that printing money creates inflation today because when you print only 0,2 Times your GDP you facilitate production. Companies produce more and the supply is increasing so prices go down
It is what happened with QE in USA , it helped oil companies to produce more and the price of oil goes down.
If debt is reduced thanks to printing money, you also have more money to Invest and then it is good for growth, if it is good for growth, the currency goes up.
To conclude if technically, printing money creates a drop of the value of your currency and more inflation, in reality it is wrong if you print less than 10 Times you GDP.
printing trillions is what everyone is referring to .
Printing 15 trillon is little ! it is European GDP !
Central banks with QE already printed 8 trillon but it has to come back to the central bank at maturity date. QE have not produced inflation. it was sure. 5 year ago, when I said QE won't create inflation, 100% people said "AHAH, it will create Hyperinflation". All Germans said "It will create hyperinflation" (Weidmann, etc ...it is laughable)
8,15 or 50 trillon euros don't create inflation today for many reasons explained above.
To produce inflation, you have to print more than 10 times your GDP for Europe or the USA... (Germany or Zimbabwe printed 1 million times its GDP and it was not the same situation.
If Russia print money today, it will be very dangerous and will create inflation. But it is the opposite for Europe and the USA.
TRY TO UNDERSTAND PLZ! I know it is difficult for you but make some efforts, please !
Printing money creates value. it depends on your own situation.
I am specializing in monetary policy, unemployment rate, inflation. I am probably the only one able to speak about the real consequences of monetary policy, and especially printing money in euroland or dollarland.
Here we go again, another one who thinks we can cheat our way out of debt and this mess that we have created for ourselves. We have bad debts that need to be destroyed; like a hidden wound, these debts need to be exposed to the air, cleaned and treated. Some limbs have to be removed. There is no easy, painless way to do all this; but it must be done.
Destruction of our debts through bankruptcy and default -- using the mechanism that was designed for this action, higher interest rates, and more expensive money -- is the ONLY answer to our current problems.
We enjoyed the party; now we have to pay for the party. We need to man up and go thru deflation and depression like our parents and grandparents did.
What have we become.......bunch of spoiled cowards and cheats afraid to face the reality, living in denial and afraid to do the right thing.
All completely wrong. We must suffer! Don't bother asking why, obviously suffering is virtuous and good!
Reminds me of the economist who ignored the $100 bill on the sidewalk because "if there were $100 on the ground, somebody would've picked it up already". Sometimes there really is a free lunch.
It is conventional wisdom that printing more money causes inflation. This is why we are seeing so many warnings today of how Quantitative Easing I and II and the federal government’s deficit are about to lead to skyrocketing prices. The only problem is, it’s not true. That’s not how inflation works. Hence, this is yet another of the false alarms being raised (along with the need to balance the budget) that is preventing us from doing what we need to do to recover from the worse recession since the Great Depression.
Explaining inflation would be much simpler if not for the need to first spend so much time debunking the popular view. But, that’s the way it is. And so, let me start with the “money growth ==> inflation” view. This is based on the equation of exchange:
Yeah, sure, and you can have people pushing a wheelbarrow full of money to buy a loaf of bread...AGAIN.
Why would the guy selling the loaf of bread need a wheelbarrow of money for it? And what does he do with the bread when no one can buy it? Or rather, what does he do when someone just steals it.
Printing money is counterfeiting. The government doesn't make money, it gets it from its Federal Reserve System. If the government tries to print its own money and give it to their Federal Reserve bank, the bank won't accept it.
In the US, the government can create coinage, because the amounts are so small that nobody cares, and they lose money in actually creating the coins so there's little incentive to make more than what is needed.
So then we flip back to the $1T coin debated a few years back. You make a shiny $1T coin and show it to the banks. They will remark that it's pretty, but that they don't want it, come back with Federal Reserve notes.
The whole reason for having a Federal Reserve Bank is because then the government wouldn't be able to print it's way out of a bind, giving some assurance that the currency will be worth something the next day. "Money printing" now is taken out of context, there's still an IOU attached to each note. That's why we haven't seen massive inflation, because the system is still holding it together.
For your system to work, the banking system of a country would essentially have to agree to bankrupt itself, and lose a tremendous amount of capital at all of the member banks enough to put them at risk of default. So now anyone with money in a bank, savings account, cash fund etc is going to get wiped out.
It's a not a...make it go away thing. It's a...do you want to reset the entire world economy to 0?
Why would anyone want to do that? But just in case people do...remember the bank has secured assets on all of its loans. So money goes to zero and in short working order the bankrupt banks now foreclose on everyone because anyone with money no longer has any.
How much money...trillions of USD.
With interest rates that would pay you a penny for $100...How much money can one make on 0% interest?
According to Wikipedia:
The U.S. Government receives all the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2015, the Federal Reserve made a profit of $100.2 billion and transferred $97.7 billion to the U.S. Treasury.[23]
Your plan is simply a snake eating its own tail. That's why they don't do it.
No, creating currency does not create value, because currency does not have intrinsic value.
Sure it can, if it is created at the right time and used in the right way. Especially the latter. If I borrow money, new money is created for me to create my business, expand and profit. Hire more people, and they have more prosperity.
If the Federal Gov't creates new money to rebuild our infrastructure, that might create many new jobs and business opportunities throughout the country. And depending on the project may improve and/or increase the flow of business and travel so that the whole economy prospers. And then more jobs and prosperity for more people.
Massive amounts of newly created money were necessary to prosecute WW2. Much of it went into war machinery, of course not the best investment. But the whole process took us out of depression by creating more jobs and increasing our national output/prosperity.
If I borrow money, new money is created for me to create my business, expand and profit. Hire more people, and they have more prosperity.
Currency can be used to create value, as you explained, but value is not inherent in currency.
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