Soldato
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I'll never play Monopoly with the OP..
Why don't governments print more money to solve specific problems?
- Thread starter I kill Bunnies
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As regards QE this is quire interesting Since QE was introduced in 2009, it has saved the government over £110bn in interest payments. the auricle is from sept 21
All reversing now as the government suffers huge losses on bonds owned by the BoE.
But to answer the OP, there is a time and viable argument for borrowing to invest. When debt was cheap was a good time but we chose austerity instead and it was really detrimental.
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Associate
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When a sheet of toilet paper is worth more than 100 trillion dollars - maybe the bank notes are more absorbent
Soldato
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Printing money is just ignoring reality. Government money should be coming from taxation of productive labour done in the economy. Money can be regarded as a way to value the time people spend doing something useful to society, via economic activity. If you as a government have to create money out of thin air, it is evidence of a failing economy, because you aren't able to tax enough productive labour. It also diminishes the real value, or "time of productive effort represented" value of the currency, i.e. another failure is that people find they are underpaid in real terms because the time they put in making an effort to contribute to society does not pay them enough to survive.
As I have been saying for a long time, printing money is fundamentally a sham, and it should be heavily questioned by citizens and rejected by them as a government policy. It all comes back to the fact that money itself should be tied to real economic value, and this can only be achieved by holding the unit of money to some sort of verifiable standard, e.g. a gold standard where currency is worth a set weight of gold. This is the fundamental tie that should be called for by citizens in order to ensure discipline upon the economy. In my view, it would also lead to a much stronger economy that benefitted more of society, i.e. much higher equality.
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In a time of low growth, as the UK has suffered for 15 years, printing money and spending on infrastructure will kick-start domestic performance without significant currency devaluation.
The inflationary effect, which lags the spending, can be kept in control by taxation levers, which takes the money back out of a now-growing economy.
It's a crazy situation we find ourselves in, a decade and a half since being sold by all main parties that austerity was essential, and having to swallow the impact of that, that we are now back in consensus that austerity is the solution again.
It's why I have so little hope for the incoming Labour government: they're utterly wedded to their 'fiscal responsibility' rules, which are austerity under a different name.
Soldato
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They kinda do magic money out of their sofa when it suits them - by borrowing, see ridic national debt.
Printing money is meant to be really bad for the economy
But surely loads of everyone money going to places like amazon can't be good for the economy either, Like how many UK businesses have closed down due to amazon
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Soldato
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It's not good when a Goliath comes in and can out compete everyone online, but it's the way it is. The UK went from a nation of shopkeepers to being dominated by Amazon. There is only one top dog online. Where the UK perhaps fails is not providing the environment for UK tech to mount a serious challenge to Amazon. Amazon does provide UK jobs, but most of them are low paid, so it is a destruction of old jobs that used to provide comfortable incomes to something way more competitive.
It's also not just because of Amazon, it's because of the internet.
Whether it's good or bad depends on the state of your economy and what you're trying to achieve. It boils down to basic supply and demand, and how changes in either of those alters the value or a particular resource, in this case the value of the money in your pocket.
E.g. A ten pound note from a decade ago doesn't have the same value as a ten pound note in today's world. A ten pound note from a decade ago is actually worth £13.35, or to put it another way the ten pound note in today's world buys you roughly £3.35 less than it did back then, in that decade the amount of money (the supply) and how much people want/need that money (the demand) has changed. There been some combination of increased supply and lower demand for that particular resource (money).
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Soldato
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Argentina pre Dec-23 says hello.
Conversely 1930's America says hello.
Getting money supply badly wrong in either direction can have devastating consequences, it's why central banks across the world scrambled to increase the supply with QE after the 08 global crash.
Well that's how it works. Government spends with borrowed money and then cancels that money out with taxes.
Soldato
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They weren't "getting it wrong" up to the 08 crash, it was just rampant greed making money by pumping asset prices, mostly the property market. This of course was not based on any semblance of economic reality, and the general public were then tapped to pay for it all, which in turn has lead to where we are today, with very high inflation, and rapidly rising inequality.
Remember the inflation we've had for the past couple of years? That was in large part caused by printing money to pay for Covid.
For Covid they did.
Soldato
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Not really no
Higher food and fuel due to Russia Ukraine situation
UK also had worker shortages due to Brexit and COVID
They really didn't print money, they just borrowed shed loads hence the soaring national debt.
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