Why printing money makes sense

guardian.co.uk/commentisfree … employment

Damn fucking right man!

Lets print those jobs into existance.

It sure solved Zimbabwe’s* unemployment problem.

*Delete Zimbabwe and insert any of these countries to suit your taste en.wikipedia.org/wiki/Hyperinfla … rinflation

Where is this hyperinflation you speak of?

Some two years on from the start of the hyperinflation thread about Britain Im still waiting. And in the US, well it starting to smell alot like deflation…

I suppose you could argue that Schiff and co will be right one of these days. I wonder what the unemployment rate will be then? :angry:

Wealth is created by private individuals who produce goods and exchange them for other goods, their value determined by their market demand, the medium for exchange for these goods is currently FIAT currency. If one of these private individuals decides they do not want to produce anything and just creates fake money without backing it up with real goods (like banks) then you get currency in the system that is backed up by nothing, the value of that money therefore needs to readjust to the value of the goods in the market, hence, currency inflation. I find it amazing that so many people cannot grasp this despite all of the evidence to the contrary. All you have to do is look at the value of FIAT currency for the last few decades, houses in the 60’s priced at 3,000 euro etc, were houses really that cheap, of course not, FIAT currency has depreciated significantly and why, because of fractional reserve lending and government money printing. Our wealth has genuinely increased since then but mainly because we have become more efficient at producing goods, or to put it another way, raping the Earth, but it’s defintitely not because governments/banks create more FIAT currency.

QE (printing) does not stimulate demand anywhere except on the speculative markets… so that is where your inflation resides.
Corn up 70% in four months.

Oats up 100%:

How on earth does that help anybody other than long speculators? It certainly isn’t much fun for the unemployed.
Printing money will not work.

Actually you mean secondary markets don’t work!


I think markets have the expertise to price in / adjust for the recent US and UK QE. To an extent, they got away with it. It’s a lot easier to tell a country like Zimbabwe to feck off.

QE is dodgy. If the US keep printing money, there will come a point where the ‘magic’ is viewed as a ‘swindle’.

Doesn’t printing money also punish those who have been prudent enough to save?

If it causes inflation and/or weaker currency, it does.

I suppose the question is, “when does the printed money fill the black holes and start flooding the real economy?”

Whats a black hole in economics? For every dollar lost someone else made a dollar.

Printing money devalues the currency and damages savings.

So if I bought Anglo shares at €16 and they went to 0.
Who made the 16 bucks?

Not all investment, nor economics, is a zero sum game.

But I strongly agree with your final point.

The person who sold you the shares @€16 made the money.

No they didn’t; if they bought them at €11 then they made €5, not €16.

Equities are not zero sum.

The “black hole” is interest payments that seem to dissapear into the system.

Stephen Roach on why QE won’t work:
ritholtz.com/blog/2010/10/ma … t-the-fed/
(second clip).

In the example you have highlighted, €5 of the €16 you paid is with the seller, the remaining €11 is with the previous owner of the shares.

In a transaction involving 2 parties for one party to lose money the other must gain money.

Money doesn’t disappear, it is paid to the bank.

The very same bank that created it in the first place, if more people pay down debt than borrow then money “dissapears” from the system.

Eh, haven’t you heard of NAMA, Irish developers, cross collateralisation, hedge funds, derivatives, etc.?

Money might never sleep but it certainly can disappear hence the process of restructuring and writing down…