06-20-2022, 01:37 PM
(06-20-2022, 12:22 PM)danbrotherston Wrote:(06-20-2022, 11:06 AM)timc Wrote: Money kind of does come from nowhere. It is created when banks lend money.
The suggestion could be that people will just borrow more money to pay for the things they want as well as gas. Which is probably true for a lot of folks. But that's going to hurt even more the higher interest rates go.
*sigh*...
We can make this an economic philosophy debate if you want.
Money is nothing more than a representation of resources and human capital (as represented VERY imperfectly by GDP). Banks printing more money might make the system more liquid, but it does not by itself increase the GDP (supply of resources of human capital). Printing money while what money represents doesn't increase is fundamentally inflation.
Yes. Also, “banks” do not “print” money; only the Bank of Canada (in Canada) does. Regular banks can only lend out deposits. The Bank of Canada can buy assets (usually government bonds, but in principle could be anything) and loan money; and to do so, it can use “new” money that it didn’t get from anywhere but rather it just created.
Of course, nowadays “printing” money doesn’t mean firing up the printing presses; instead it just means telling the computer that there is more money.