Re:Global real interest rates and the ‘suprasecular’ decline...
by vkou on Friday January 29, 2021 @02:46AM
(#25955051)
> We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be paid.
The majority of dollars in existence do not come from the printing presses of the Fed.
The majority of dollars in existence appear from thin air on the balance sheets of fractional reserve banks, when they lend money, for business loans, personal loans, and mortgages.
During a recession, people borrow less money, and businesses tighten their belts. In order to prevent the monetary supply from shrinking (thus causing deflation[1]), the fed generally needs to start printing money.
Now, we may say that they printed too much money, or that the money did not go to the best possible places for it, but from 30,000 feet, turning on the printing presses was a sound move.
[1] Deflation is utterly horrible, and should be avoided at all costs.
The majority of dollars in existence do not come from the printing presses of the Fed.
The majority of dollars in existence appear from thin air on the balance sheets of fractional reserve banks, when they lend money, for business loans, personal loans, and mortgages.
During a recession, people borrow less money, and businesses tighten their belts. In order to prevent the monetary supply from shrinking (thus causing deflation[1]), the fed generally needs to start printing money.
Now, we may say that they printed too much money, or that the money did not go to the best possible places for it, but from 30,000 feet, turning on the printing presses was a sound move.
[1] Deflation is utterly horrible, and should be avoided at all costs.