U.S. Bureau Of Engraving And Printing - BEP: A U.S. government agency responsible for printing the paper currency, Treasury securities and specialty … If your bank account only has 10 dollars in it, then you only have 10 dollars. You are not nuts are you?". Question: Why does The U.S. government borrow money and thereby create debt when it has the sovereign and Constitutional right to create whatever money … The economy is far more complex than one can discuss here, but the fractional reserve system is the next creator of money, although it's not unlimited, the reserve requirement throttles it back. For deflation to actually occur, the volume of production should increase faster than the volume of money (per definition). The Federal Reserve is often said to be a government entity. While we currently run a deficit, there is a large lobby within the US who are incredibly anti-deficit, and are fighting against this for no good reason. When the economy slowed, monetary policy would loosen, making it cheaper to borrow… Firstly, printing money just collapses economies generally. What do you think happens when the federal reserve buys $XX billion in treasury bonds? To get richer, a country has to make and sell more things – whether goods or services. Dec 01 In reality, this is not what actually happens in every sense of the term. From us. This country with the world’s largest oil reserves decided nationalising their golden goose would finance their governments wild excess. Why do governments want some inflation? They state on their website that they are an "independent entity within government." Why does a loan need so many parameters? ah yes... the question... :) Well, I don't think governments loan much money. (When printing money, one doesn't need to pay interest). it will also cause inflation which mean that no one will want to work for production again. How to avoid boats on a mainly oceanic world? US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go The Federal Reserve is creating dollars from scratch at … Because private banks rule the monetary system the rest of us, including the govt, are rendered as users of the private deposit system. The problem with making that target 0% is that then whenever you undershoot you'll have deflation which has its own problems. Creating debt is simply dumb — it creates no more inflation than creating money. (When printing money, one doesn't need to pay interest).” Good question. Fed funds are what banks are required to hold in reserve each night. Take 2011 for example. They have mortgages that run for a third of their lifetimes, credit card debts, loans... do the balance. Manage it over time to keep the money supply on par with production. On the other hand, the Fed can simply bypass the politicians, and control the money supply directly by issuing bonds. The US, for instance, owes around $5.6 trillion to a number of its own federal agencies, which accounts for nearly 30% of the total federal debt. Which of the four inner planets has the strongest magnetic field, Mars, Mercury, Venus, or Earth? Do PhD students sometimes abandon their original research idea? PS: about deflation. People lost sight of good lending practices. The housing bubble had multiple causes. Admittedly, 90% of the world's wealth is concentrated in the hands of the most wealthy 10%. Now who purchases the majority of treasuries? In a sense Tucson is right. In essence, the several trillion has been deposited in U.S. banks, which have REdeposited the new money back with the Fed. If the government actually pays people for the money they borrow, they don't have this problem - and as it turns out, the US government can get pretty good rates on borrowing in general, in part because they're extraordinarily good about paying them back. Why does a government borrow money? What you should be asking yourself is more along the lines of "Why is it broken? If government can borrow money at 2-3% (as it can right now) and the private sector can produce economic growth of say 4%, the government is better off than if it taxed that money away from the private sector. So, what should money creation be based on? Interesting. Economics, as a subject, is the proper management of resources and production. When banks "borrow" money (i.e. after US recession of 2008. To subscribe to this RSS feed, copy and paste this URL into your RSS reader. ...The basis of monetary creation in our current society is debt. ow, as to borrow money, there is a basic fundamental lack of understanding of borrowing. Trump files lawsuit challenging Wisconsin election results, By Michael Liedtke, Matt O'Brien, Associated Press, By Jamey Keaten, Edith M. Lederer, Associated Press. This makes it safe to print more money, so that people can buy those extra things. What prevents a large company with deep pockets from rebranding my MIT project and killing me off? So when finding out that you are being ripped off every day of your life, your reaction is "There must be a logical reason that perfectly explain why this is. Most people, even in rich countries, have a negative net value. Continue Reading. However, according to this movie, money is created not only by printing it but rather more so by borrowing it (watch the movie for the details). However, this assumes that inflation will remain low. But right now, if the Treasury borrows the money for one year by selling a one-year “Treasury note,” it pays a measly .25 percent. I am not sure... Not loan, borrow. (deflation = lower prices/salaries => lower tax brackets => higher purchasing power) Unless you are living on borrowed money, deflation is something you should welcome... but it's not gonna happen if we keep printing money like mad. Bonds are a form of saving. But wait just a cotton-pickin’ second. Money left in private hands is invested in economic activities that will produce greater future tax revenues for government. Think about it logically. After all, the world is fair, governments are working in our best interest and if they do it this way, they must have a very good reason for it.". So now put two and two together. And what would I do the next minute? The Government doesn't borrow money. From Dec. 2008 to March 2010, the Fed bought $1.75 trillion in bonds. When it borrows for ten years, for example — “10-year Treasury notes” — it’s paying more than 2.5 percent. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people. you paid US$10,000, but now have US$5000) would you ever trust them again? First, Milton Freidman set out a monetary system in a paper in the American Economic Review which involved no government borrowing, and govt just printed money (in a responsible fashion of course) as and when needed. You can argue with this strategy: it may be keeping the banks from lending and fueling a recovery. The government budget deficit was $984.4 billion in fiscal 2019. That’s an interesting question. It might have to hike the interest rate it’s paying, just to be safe. Where do banks get their money? There are many different reasons for government borrowing. But that’s exactly the same amount it’s paying the banks to redeposit money with the Fed! So even if everyone g… Why do governments borrow money? See: http://www.jstor.org/pss/1810624. ELI5: Why does the government borrow money from the Fed at interest when they have the authority to print it themselves? The general consensus is that just printing the money is politically less palatable than issuing the bond and having the central bank buy the bond to retire it. If the government prints money recklessly and causes inflation, people will come to expect inflation, and the value of the currency will plummet, and you'll end up like Zimbabwe where a trillion dollars won't buy a loaf of bread. It didn't just happen. site design / logo © 2020 Stack Exchange Inc; user contributions licensed under cc by-sa. Debt? The reason it can do this — and this is the brain-melting part of MMT — is that taxes do not pay for government spending but are just a way of managing inflation. This is real money that get's credited in to people's bank accounts to purchase real goods and services. So retiring the debt by issuing more dollars — in today’s environment — wouldn’t save any interest payments at all! Subscribe to ‘Here's the Deal,’ our politics newsletter. Directly indexing money on production would be circular, because money is also needed to determine the relative value of different goods and thus the value of the production as a whole - i.e. They have to have a reason. Consider the case of the United States. Create a basket of key products (not unlike the basket of products used to calculate inflation). They are banks. What would people do with that money? When you look at a system as broken as the one we have, you shouldn't be asking yourself "what makes this system right?" https://www.pbs.org/newshour/economy/why-does-the-us-government-bor. $1,000 of debt and $1,000 of created money are both the same claim on our wealth — but the debt adds interest and is thus more costly to us. And if they do, I don't believe that creates new money. Perhaps I will visit a library, they often have JSTOR access. In general, you can count on the the principle that if you, as the government, try to play too many games with people's money... well, people aren't stupid; they will eventually catch on, and adjust their behavior to compensate, and then you're right back where you started, but with less trust. A second Nobel Laureate with similar views was William Vickrey. Now, you can dream up reasons why the system should be the way it is and why it is an acceptable system. All Rights Reserved. Keynes said of Lerner, “Lerner's argument is impeccable, but heaven help anyone who tries to put it across to the plain man at this stage of the evolution of our ideas”. In that case, it SHOULD borrow, right? How about foreign debt? In that case, the Fed could simply refrain from borrowing the new amount it needs every year to cover the annual deficit between spending and revenues, and also refrain from borrowing to pay for any debt that has to be redeemed as it comes due. So holders of government debt don't have money they can spend (they can turn it into money they can spend but only by finding someone else to buy it). A Chinese engineer earns a fraction of what a similarly qualified engineer earns in the States. Answer: The way I describe it is that the monetary system in the USA is bank centric. Yeah; if you do enough inflation - a lot like stealing money from people who have it already - people will wise up to it, and start anticipating inflation, and not want to take your money. Question: If the federal government (and/or Treasury) can just create money, why does it have to borrow it from other countries? © 1996 - 2020 NewsHour Productions LLC. But since no bonds are of longer than 30 years duration (“maturity”), let’s imagine a gradual, 30-year process. So: Under the Carbone scheme, as modified by me, the Fed creates $2 trillion new dollars, almost doubling the money supply, while of course keeping paying banks to hold onto the new money to prevent inflation. The problem is that borrowing money also triggers monetary creation and thus inflation. Paul Solman: Interesting question (or “comment”). Governments regularly run a deficit when the money they take from their citizen in the form of tax is less than the money they spend. You hear about it, but don't expect to see it any time soon. The total amount the government has borrowed is known as the national debt or public sector debt. No. Subscribe to Here’s the Deal, our politics newsletter for analysis you won’t find anywhere else. The Fed is paying a small — .25 percent — interest rate to induce the banks to keep the money out of circulation, as we’ve tried to explain both on the air and on this page. Back to basics. When a suit typing a few numbers in a computer can make more money in 5 minutes than an average Joe can make in 100 lifetimes of honest, productive work, you don't have a fair economic system, you have a scam machine. And they do it by the trillion. The government borrows because it spends more than it receives in revenue, which comes mainly from taxes. In other words, inflation: everything suddenly quadrupled in price. It's easier for them, they don't have to explain it to voters (only to economists), and it gives them more direct control without any messy political considerations like which programs to expand or cut. They have the entire literate and qualified person advising them to keep printing money i.e. When governments need money to fund their operations, they may issue debt in their own currencies, but if they struggle to pay off the bonds, they can print more money. Money is supposed to represent production. The government could actually do either one to expand the money supply as necessary to keep up with rising productivity / an increased labor supply. The Fed can’t actually quadruple the money supply by eliminating (“retiring”) the debt right away. (I admit that many Eurozone countries also not allowed to borrow as much as they do now, but somehow that's considered a far lesser sin). How can a hard drive provide a host device with file/directory listings when the drive isn't spinning? Because the goverment has a national wealth. On our planet, most people earn $2,000 per year. Suppose we could do as you suggest, and simply take the $8 to $9 trillion that the US owes to anyone besides its own trust funds and pay back all the bondholders, here at home and abroad. Can I use deflect missile if I get an ally to shoot me? People buy government because they assume a government bond is a safe investment. That doesn't happen when money is created by the bucketload, and when it is contrary to the best interests of the powers that be. When transferring money between two parties, under what circumstances is it considered taxable income? When the Fed wants to "print money," it lowers the target for the federal funds rate. In 2010, my wild guesstimate of those two numbers, totaled, is about $2 trillion. The Treasury isn’t borrowing only in short-term increments. If needed, a bank will borrow fed funds from another bank to meet the requirement. I'll expand a little by mentioning "Quantative Easing" which is the. Look at the facts already in your possession. In economic discussion, you may often hear that a government is "printing money" and then picture sheets of hundred dollar bills coming off a printing press. “Why do governments borrow money instead of printing it? One last objection to be dispensed with. The Govt spent $1.7 trillion more than it took in. If you heard that I — and millions like me — were about to do this, Mr. Carbone, would you not be tempted to do the same? there'll always be some lag in determining what the money supply should be based on production. My answer is that when confronted with the obvious, the most common human reaction is to seek reasons for it, because things have to be right. The dominant theory is "It just happened, it's nobody's fault and nobody designed it that way and to think otherwise is very bad because it makes you a conspiracy theorist, and conspiracy theorists are nuts. Does a regular (outlet) fan work for drying the bathroom? Is there any way to know how much new money the US is printing? Money is supposed to represent production. The federal government in a sense does print its own money when it spends money and doesn't collect it in taxes, so in a sense the national deficit is just a measurement of total government printing. So printing money is not a solution for anything. Question: Why does the federal government borrow money through issuing bonds when they can simply create it via the “printing press”? Does this look like a random happenstance? One important answer is still missing: governments may not be able to do print money because of international agreements. Governments borrowing money doesn't create new money. But of course that’s the equivalent of taking out a super low-cost mortgage these days. And that’s your point. (Note - I am asking an objective question, regardless of how objective the movie might or might not be). Mostly by issuing treasury bonds. If so, how do they cope with it? Why do you think that is? A country can borrow money from its own governmental institutions and subsidiaries. Most of the debt doesn’t come due for years. In that case, borrowing money from banks also creates money - can't this this cause inflation as well? You really haven't looked where your stuff come from, have you? How do I place the Clock arrows inside this clock face? My own simple answer is that it will affect and reduce productivity (e.g. That's your basis for the money supply. Debt is NOT correlated to production, and interest ensure that there can never be enough money on the market to cover the total debts. Building algebraic geometry without prime ideals. This question is raised in the movie Money as Debt (at time index 29:00). Clean water is not available for a very sizable percent of the world's population. Most people are broke. New money is wealth created from scratch. 开一个生日会 explanation as to why 开 is used here? This is in fact a very important reason: it applies to the entire Eurozone. As people rush to get rid of the old money before it loses too much value, those words can fuse into WORTHLESS. Is there a word for "science/study of art"? I guess there IS a twist on your idea. The bond market is used for an advanced way of controlling the demand for this printed money. Moreover, as the government borrows more from the market, it pushes up the interest rate. Would it be possible for a self healing castle to work/function with the "healing" bacteria used in concrete roads? To see why, we’ll suppose this isn’t true, and that prices will not increase much when we drastically increase the money supply. For one thing, if bank deposits stay flat then no new money is being created. Once-fringe ideas in economic theory are now nearly official policy as government borrowing surges and the Federal Reserve signals it could buy unlimited debt. Instead under government control their output has slumped from a fairly poor 2.5 million barrels a day five years ago to a bare 400,000 barrels a day now. Unfortunately, for every actual dollar currently out in the world at the moment, there would suddenly be about four. Numerous leading economists, including a couple of economics Nobel Laureates have asked the same question and concluded that borrowing can be dispensed with. Foreign investors, too, have been pulling out and rushing to “safer” economies like the US, and are unwilling to lend in times of such uncertainty. Zimbabwe). It might be what is advertised, but it does not match the realities which we have to live with. In contrast when governments borrow money, the loan isn't repayable on demand, it has a fixed maturity and the money is only repaid at the end of that period (plus interest at defined points during the period). (Also, inflation expectations are low, so people will accept 1-2% interest rates. Here’s how it feels when COVID-19 symptoms last for months, Read Yes - Simply put, printing money is called "monetizing the debt" and would result in some nasty inflation. Governments borrow by selling government bonds/gilts to the private sector. But don’t you see the difference? The answer that immediately pops to my head is "because printing money causes inflation". Why the pandemic is forcing millennials to move back home with their parents, Read Paying interest on debt reduces tax burden. The government can borrow huge amounts of money because it has a big capacity to pay it back — because it's got millions of taxpayers giving it money every day. States and localities borrow to pay for infrastructure, rather than use annual tax collections and other revenues, for sound reasons. Printing money, or money creation, most often involves creating money that is not physical. Printing money and national debt. In the case of the US, printing money involves convincing politicians to spend it. By using our site, you acknowledge that you have read and understand our Cookie Policy, Privacy Policy, and our Terms of Service. In this case, my question is the question the movie raises: Why do governments borrow money instead of printing it? Why does Taproot require a new address format? SO the answer to the question is the government wants to control the rate and perception of inflation that is why they borrow instead of print money!! A third economist with similar views (of Keynes’ era) was Abba Lerner. Originally Answered: Why do monetarily sovereign governments who can print their own money borrow it instead? Its like a bank. The new orthodoxy was that governments should instead rely on monetary policy. Will grooves on seatpost cause rusting inside frame? What are the Primary Dealers? I believe there are two ways new money is created: My favorite description of this (money creation) comes from Chris Martenson: the video is here on Youtube. Why did congress turn its monetary policy over to the Federal reserve (a group of unelected and unaccountable individuals with strong ties in the banking industry) and does not even bother to conduct audits to know how your money is actually managed? The obvious reason why government wouldn't massively print money is not only because of inflation, but currency value. Why isn't it done that way? New money makes old money worth less. Many entrepreneurs aren’t aware of this surprise benefit … Index money on production and you have a sound system. The system is rigged. The Federal Government has splashed more than $200 billion in support packages to keep the economy ticking over as the coronavirus halts trading for nearly all industries. So there isn’t enough money in the market for the government to borrow. @Ganesh: very interesting, so can we say that the bank system is basically generating always inflation? Double your gift to PBS NewsHour by midnight! take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. No one is making any more of these models. Best case it is theft of other people’s property. Who first called natural satellites "moons"? If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people. In fact this is what happened in the US between 2004 and 2007: increasing loans to households to buy houses created an inflation of home prices. ‘All my love, Elliot’: ‘Umbrella Academy’ actor comes out as transgender, Read It's a no-no as it quickly devalues the currency and makes it far more difficult to borrow in the future, an entire generation will remember getting burned by it. If everyone did actually ask for their money back at once, the illusion of the extra money created by this process would collapse, and the bank would go bust. Printing money – Why does the government print money? Now, inflation can come into play afterward, if the Fed decides it needs to maintain "easy money" policies to stimulate the economy (because taxes are too high because we're paying off the debt, or because we've crowded out smaller borrowers, or something). Let’s say, however, that it can get away with keeping the rate it pays at .25 percent. You are just not looking at them. Because monetary policy, and fiscal policy, are each complex enough on their own, when analyzed separately. We had to physically give China 1 trillion dollars for them to be able to purchase 1 trillion dollars in securities. Anything we do to make houses more affordable can cause house price inflation. Why do governments borrow money instead of printing it? Why is a third body needed in the recombination of two hydrogen atoms? Simple example: Do you think the US produces 3 times as much as China? It's in every basic textbook on the subject of economics. You did not directly answer my primary question (in the title). When the Govt spends $1.7 trillion and credits our bank accounts, the banking system has $1.7 trillion more. First of all, the federal government doesn't create money; that's one of the jobs of the Federal Reserve, the nation's central bank. How do I respond as Black to 1. e4 e6 2.e5? Can the automatic damage from the Witch Bolt spell be repeatedly activated using an Order of Scribes wizard's Manifest Mind feature? If you have a thing for fancy words, you could say that 30% of the US national debt is locked in intra-governmental holdings. Who would lend money to / invest in a small business, if the government is paying good money and there's almost no risk at all?). It only takes a minute to sign up. The U.S. government and its counterparts all over the world are spending trillions of dollars in response to the COVID-19 crisis, borrowing trillions of dollars to do so. So government debt doesn't create inflation in itself. Is it considered offensive to address one's seniors by name in the US? You have the facts. If, say, Canada's currency were suddenly worth half as much and you received half your investment back in US dollars (e.g. Does this strike you as the logical result of a fair and balanced economic system? That’s because of the several trillion dollars that have been created by the Fed during and after the Crash of ’08. Please check your inbox to confirm. (This is how they used to talk in the cowboy TV shows of my formative youth.) The Fed tries to influence the supply of money in the economy to promote noninflationary growth. So it makes sense if you think about how the math works in the real world. Who benefits? And yes, I believe both can create inflation. Then the natural question now is why government prints more money when it is not creating any value for the economy. Is inflation a good or bad thing? Why “N-year” loans (and other complications)? en.wikipedia.org/wiki/Quantitative_easing, MAINTENANCE WARNING: Possible downtime early morning Dec 2, 4, and 9 UTC…, “Question closed” notifications experiment results and graduation. No. The thing is that some governmental agencies, such as the Soci… You want to stop the Treasury from BORROWING. Can you use the Eldritch Blast cantrip on the same turn as the UA Lurker in the Deep warlock's Grasp of the Deep feature? Look up "money supply" on wikipedia for example. The annual amount the government borrows is known as the budget deficit. Central bank (the "Fed" in the US) "printing" new money (they press a button, literally get new money, and buy US Government Treasuries from banks), Commercial Banks making new loans (because of the. Dec 01 The reason why the federal government doesn't print its own currency is also because it is simply set up incorrectly. Most countries operate an inflation target which does seek to close this feedback loop and keep money in line with production, albeit with a built-in offset rate. The option rate interest only ARMs were financial time bombs. This brilliant movie, Money as debt, points to a number of outrageous bugs in our economic system. Thank you. Dec 01 When 50% of treasury bonds are bought by the federal reserve, what do you think happens next? The danger is in failure to properly con. @Ganesh: Indexing money on production is not necessarily circular. If inflation DOES rise and exceeds 2.5 percent, the Treasury will actually be MAKING money on its debt, since it’ll be paying back with dollars decreasing in value by more than the interest rate. @Ganesh: What does the US produce, these days? ), (The downside of too much of this sort of borrowing is that it "crowds out" other borrowing, which may harm the economy. Unless there is an increase in economic activity commensurate with the amount of money that is created, printing money to pay off the debt would make inflation worse. We don't like it when things suck. Stack Exchange network consists of 176 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers. If a country prints more money without making more things, then prices just go up. "Most countries operate an inflation target which does seek to close this feedback loop and keep money in line with production" is incorrect. It can be done. Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. In. The Primary Dealers. It does increase domestic money supply, doesn't it? Sorry, but that not the case. No (although this could actually be better than the 2 previous suggestions). Paul Solman: Great question. If you expected inflation of 10%, you'd see people demanding something more like 12% interest rates. Randomly printed by the government when they feel like it? If you did, you would be part of the “run on the dollar” that people ALREADY fear today. rev 2020.12.2.38095, The best answers are voted up and rise to the top, Personal Finance & Money Stack Exchange works best with JavaScript enabled, Start here for a quick overview of the site, Detailed answers to any questions you might have, Discuss the workings and policies of this site, Learn more about Stack Overflow the company, Learn more about hiring developers or posting ads with us, I like this answer. Figure out how to cash in any dollars I had in exchange for other currencies or assets (houses, cars, foreign stocks) that weren’t poised to plummet in value because the supply of them had suddenly soared, as with U.S. dollars. @Marco: not really, it's much more complicated than that. Now, forget the fancy theories, the elaborate nonsense about stocks and bonds and currencies and pay attention to the actual situation. @Ganesh: And where exactly does the money that the government borrows come from? Sounds good, right? Why is it so hard to get a quality loan as an individual? Gold? Nov 27 Thus far, those several trillion have NOT caused runaway inflation and a run on the dollar, because – and this is a crucial point that most people simply don’t realize – the newly created money has stayed inside the U.S. banking system. The question is merely political. PS the government prints money all the time one branch gets the fed reserve notes and one branch gets the bond. Biden’s economic team faces unprecedented crises in shift from Trump, Why the pandemic is forcing millennials to move back home with their parents, Here’s how it feels when COVID-19 symptoms last for months, ‘All my love, Elliot’: ‘Umbrella Academy’ actor comes out as transgender, Trump files lawsuit challenging Wisconsin election results, Georgia elections official urges Trump to rein in supporters, CDC to shorten COVID-19 quarantine to 10 days or 7 with test, No breakthrough in India’s talks with protesting farmers, Salesforce to buy work chat service Slack for $27.7 billion, U.N. says pandemic will likely cause surge in humanitarian needs in 2021. Where does. Let’s suppose the United States decides to increase the money supply by mailing every man, woman, and child an envelope full of money. Question: Why does The U.S. government borrow money and thereby create debt when it has the sovereign and Constitutional right to create whatever money we NEED? Why is the pitot tube located near the nose? Essentially, the government borrows so that it can enable higher spending without having to increase taxes. Or you can look at the fact and realize that there is NO JUSTIFICATION for an economic system that perform as badly as it does. Yes, you read right: .25 percent! It in fact simply prints it. State and local investments in schools, roads, hospitals, and other infrastructure provide the foundation for a vibrant economy and high quality of life. Now I don’t know about you, but here’s my fear the minute I hear that’s going to happen: that any given dollar would be worth 1/4 of what it had been before the debt-to-currency transformation. Debt is a transfer of accumulated wealth from someone to someone else. In that case they have three options: increase taxes (which has the risk of scaring off multinationals, putting small companies out of business and driving the economy into a recession) Borrowing and printing money. Incremental Money Supply But if the purpose is to keep a lid on inflation, well, that sure seems to be working. Too bad I can't access the full paper. And then you end up like Zimbabwe, with 10-trillion dollar notes that are worth $5 today and a nickel next week. The demand for loans is impacted both by the rate itself and the bank's willingness to lend. Our current money supply is utterly disconnected from production fundamentals. Dec 01 Using production trends, determine projected production for the period and assign a $ value. But - the over the top underwriting had more impact in my opinion. For example, think of those special vintage Star Wars toys from the 1970s, which can be worth a lot of money. Watch You could look it up. Then that money flows in to pension funds, gets spent in to corporation who then send that money to China for cheap products... and eventually the money spent purchases up Govt securities for investments. Hey, we save the interest payments, which amounted to nearly $400 billion last year! Biden’s economic team faces unprecedented crises in shift from Trump, Watch Because it’s so cheap to do … Learn more about Friends of the NewsHour. No. If the money supply were left in their hands, we would end up with a shrinking money supply and rapid deflation.
2020 why do governments borrow money instead of printing it?