Does printing new money to pay for things cause inflation?

[Stormy Daniels]

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits have often brought the conversation to whether we're simply making money out of thin air.

So let's talk about it. Do you believe that printing money will will cause inflation? Why, why not?

 

[Toro]

Yes. Because more money chasing the same number of goods bids up demand for such goods and prices go up.

 

[TNHarley]

I learned this in daycare before i started school.
When money increases and goods stay the same, inflation occurs.

 

[Mr Natural]

So then pulling money out of the economy would have the opposite effect?

 

[TeeDub]

So then pulling money out of the economy would have the opposite effect?

If nobody is buying, the prices go DOWN.

 

[TNHarley]

So then pulling money out of the economy would have the opposite effect?

If banks quit loaning out money for cars, whats going to happen to the price of cars?

 

[22lcidw]

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits have often brought the conversation to whether we're simply making money out of thin air.

So let's talk about it. Do you believe that printing money will will cause inflation? Why, why not?

If we disbanded the privately owned Federal Reserve and then enacted a National Treasury Currency owned by the government/people we may be able to get rid of some of that debt. Both currencies are Fiat. However the privately owned Federal Reserve has a lot of power over us now and they can be spiteful and put the world into the worse tailspin in history if we tried that.

 

[Toddsterpatriot]

So then pulling money out of the economy would have the opposite effect?

Yes, if the Fed reduced their balance sheet (and raised rates) inflation would decrease.

 

[Donald H]

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits have often brought the conversation to whether we're simply making money out of thin air.

So let's talk about it. Do you believe that printing money will will cause inflation? Why, why not?

Inflation can be at least partially offset by maintaining the USD as the world's reserve currency.

The Obama example would be too extreme but the reason why is worth pursuing. I won't for now but maybe somebody else will?

Economics 101 is always a useful discussion.

 

[Toddsterpatriot]

If we disbanded the privately owned Federal Reserve and then enacted a National Treasury Currency owned by the government/people we may be able to get rid of some of that debt. Both currencies are Fiat. However the privately owned Federal Reserve has a lot of power over us now and they can be spiteful and put the world into the worse tailspin in history if we tried that.

If we disbanded the privately owned Federal Reserve

It's part of the government.

and then enacted a National Treasury Currency owned by the government/people we may be able to get rid of some of that debt.

How would that "get rid of some debt"?

 

[Auld Phart]

When Money Buys Little – the Hyperinflation of the Weimar Republic | SciHi Blog

scihi.org

if you were to leave a basket full of money on your doorstep, they would take the basket, and leave the money, according to a German friend of mine.

 

[Captain Caveman]

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits have often brought the conversation to whether we're simply making money out of thin air.

So let's talk about it. Do you believe that printing money will will cause inflation? Why, why not?

Quantative Easing reduces the value of your currency.

 

[iamwhatiseem]

So then pulling money out of the economy would have the opposite effect?

You need to ask that question?
Maybe you should rethink before you hit Post Reply

 

[LordBrownTrout]

Here's inflation.............about to go hyper. More than likely, we're at around 20-30 percent, not 9.7.

 

[Damaged Eagle]

I'll let you know after the next few million on my clothes line dry.

*****CHUCKLE*****

 

[Woodznutz]

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits have often brought the conversation to whether we're simply making money out of thin air.

So let's talk about it. Do you believe that printing money will will cause inflation? Why, why not?

That depends. If more money is needed for a growing economy due to a growing population then inflation need not occur.

There is a way to print huge amounts of money and actually reduce inflation, by bypassing the Fed and paying government bills directly from the Treasury. Of course this won't happen.

 

[Stormy Daniels]

That depends. If more money is needed for a growing economy due to a growing population then inflation need not occur.

Please elaborate, because that doesn't really seem to make sense. Let's imagine for a moment that a society of 1,000 people has a GDP of $1,000. They want various goods and services, and they spend whatever money they have for the things they want, at whatever prices supply and demand yields. Now, let's say that all of a the society increases to 2,000 people, who also have their own wants and needs. Assuming those wants and needs are equal to the first 1,000 people, then the increased demand should drive prices up.

So why should increasing the money supply somehow cease to have an inflationary effect in this scenario?

 

[Stormy Daniels]

I learned this in daycare before i started school.
When money increases and goods stay the same, inflation occurs.

I'm going to refer back to this later....

 

[g5000]

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits have often brought the conversation to whether we're simply making money out of thin air.

So let's talk about it. Do you believe that printing money will will cause inflation? Why, why not?

It's a little more complicated than that.

Also, the only talk about minting coins was the idea of printing a $1 trillion coin, not two $10 trillion coins.

The $1 trillion coin was intended to keep the government running while Congress was deadlocked on raising the debt ceiling.

As I have explained many times, inflation is dependent on the velocity of money, not necessarily the quantity of money.

If the Treasury printed eleventy-trillion dollars and then buried it in the backyard, that money would have no impact on inflation.

There has been a shit ton of money printing since the 2008 crash. And there has been mind boggling deficit spending since then.

But the velocity of all that cash was sluggish.

The velocity of money didn't start picking up until after the pandemic. Suddenly, demand for goods skyrocketed to record levels, and that is why inflation began picking up. All that loose cash began moving around faster and faster.

Blaming Biden for all that cash which has been printed for over a decade and is now moving around rapidly is sheer ignorance.

Anyway, the Fed is attempting to slow down the velocity of money by increasing the cost of borrowing money. If you make it more expensive to borrow money, less money gets borrowed, and the velocity of money slows down (inflation decreases).

 

[g5000]

So then pulling money out of the economy would have the opposite effect?

One way money is pulled out of the economy is that the Federal Reserve does not rollover their portfolio of Treasury and mortgage bonds.

They "burn" the cash instead. They created the cash out of thin air when they bought the securities, and they destroy the cash when the securities mature.

The Fed has been increasing the size of their portfolio (QE1, QE2, QE3, QE4ever) for a long time. Now they are shrinking it.