Money and Banking

So the government is concerned about rough debt-collection tactics? Try skipping out on your taxes this year and see how rough the tactics can become. 

Governments always justify printing more money with the excuse that there is no inflation. When inflation rises, they say it is transitory. And when inflation soars, governments blame businesses and shop owners, presenting themselves as the solution with “price controls.”

Seemingly endless amounts of fiscal and monetary stimulus will keep prices rising in the near term. But if the banking sector and other bubble industries weaken, we will eventually see deflation as new loan activity lessens. 

Governments always justify printing more money with the excuse that there is no inflation. When inflation rises, they say it is transitory. And when inflation soars, governments blame businesses and shop owners, presenting themselves as the solution with “price controls.”

There is nothing new in a fiat-money central bank imposing an effective tax on the public’s holdings of government debt by manipulating interest rates. But few thought it could go on this long. 

Seemingly endless amounts of fiscal and monetary stimulus will keep prices rising in the near term. But if the banking sector and other bubble industries weaken, we will eventually see deflation as new loan activity lessens. 

A loose monetary policy that is aimed at boosting use of idle resources won't work. Idle resources only become profitable and efficient when we have enough real savings. Unfortunately, easy money policies destroy real savings. 

Medium of exchange and store of value are very different products.

The interest control policy is ultimately an admission of “fiscal dominance.” That is, it is increasingly difficult to deny that the state's budget situation is what dictates monetary policy. Now, monetary policy must first serve the interests of the regime itself. 

What matters for real economics is real savings, not increases in consumer spending driven by money printing. The best way to get an increase in savings is to decrease both money pumping and government spending.