Accepting that something can be created from nothing requires religious conviction. Money is simply a measure of productivity. Any rise in the total value of money faster than the total productive capacity of the economy can only be inflation.
The money supply has an impact on the productive capacity of an economy. An economy constrained by liquidity will have a diminished output, this is what happened in 2008. A bunch of banks that supply liquidity to the financial system got caught making bad bets and didn't have the capital to cover their losses.
Fractional banking allows lenders to lend out more money than they hold in deposits. This credit system allows additional business to obtain capital and grow, thereby growing the value of the economy. There is nothing religious about it.
This ignores the affect of consumption and demographics, supply and demand dictate the value of money, if the money supply rises but demand falls due to an aging population or deflationary effects introduced by technology, this concern becomes irrelevant.
If Apple stock trades at $1,000 and splits 2:1, the twofold increase in the number of shares would individually be worth $500. The aggregate value remains the same. Productivity is the only true value in the economy. Increasing the number of dollars in excess of the real increase in total productivity can only be inflation. That is an absolute truth and I stand by the fact that something cannot be created from nothing.
In your example, a rise in the money supply simply papers over the fall in demand. Prices might still rise or even remain relatively constant, in spite of falling demand, but the amount of productivity required (ex. wages) to pay the price would rise by at least as much. "There ain't no such thing as a free lunch" (TANSTAAFL) is a universal truth.
The economy isn't just valued at the value of it's productivity today, it's also valued at the estimated future value that investors are willing to value their investments.
If you look at the value of Apple stock, it fluctates every minute. Does this represent a minute by minute analysis of the companies productivity? No. It represents a forward looking estimate.
Mr. Burry is a hedge fund manager and not an economist. The SEC is obligated to look into this because his pronouncements about inflation could in fact be part of a strategy to boost the value of his hedge fund. If he were making this prediction in capacity of an economist and had no significant stake in the financial markets the SEC would not be looking into this. Suggesting that this is even more of an indicator that people should be paying attention to this issue is misleading.
The United States Federal Reserve and the Bank of Canada have developped many tools to fight inflation since the 1970’s which do not rely on MMT. Comparing these institutions to the situation in Venezuala, and to the Venezualan Central bank, which is not independent from the executive branch, unlike it’s American and Canadian counterparts. There are serious economists who are warning of a spike in inflation, but no serious economist is suggesting that there will be Venezualan style hyperinflation in either country. This situation in Venezuala was caused by the gross mismangement of the country and the economy by a tyranical dictator.
1) Monetary stimulus is in effect unelected and unaccoutable central banks engaging in public policy. Most central banks have the non-political mandate of controlling inflation. The US Fed has the second, problematic mandate of driving full employment, which draws it into public policy. Given the US economy's size, this forces other central banks to implicitly adopt the same dual mandate, or risk significant currency appreciation. The US Fed continues to creep its scope as it has entered debates on inequality, for example.
2) Central banks holding bonds issued by their own governments creates a too big to fail conflict of interest. The more domestic government debt held by the central bank, the greater the pressure on that central bank to print more money to keep government debt servicing costs in check, which only encourages more government borrowing.
Central bank independence is a well-established concept and generally very uncontroversial. Central banks generally remain accountable through various mechanisms including the ability of the executive branch to recall a central bank appointment and clear guidelines and targets in which the bank is to operate, as you noted. Inevitably decisions by the central bank have decisions with political consequences and that can be politicized.
Due to dollar hegemony and the fact that over 50% of global transactions occur in USD the rates set by the US have global impacts, however, this does not impact the mandate of other Central banks. Appreciation (or depreciation) vs the USD occurs by many possible methods.
Countries such as the United States and Canada and their banks absolutely are too big to fail, as are their central banks. I don’t understand any contention otherwise. Nor is there, so far, evidence of an inflationary debt trap from holding too much sovereign debt. That however is something that is debated by economists and people far more qualified than me, and I’m not professing an opinion on it. Maybe Trevor Tombe is available.
I'm questioning central bank conflict of interest moreso than independence. A central bank should never feel obligated to facilitate government borrowing, or consider the impacts of a government default. It's only role is to protect the value of the currency.
I disagree about other central banks operating in isolation from the Fed. More or less every central bank is printing larges sums of money right now to resist appreciatin of their currencies relative to USD.
Seems others beat me to the comment that comparing ourselves to Venezuela is entirely invalid. Venezuelan was (and is) in political turmoil Even if they weren't, the previous total reliance on oil, with its ups and downs, would have caused & did cause immense problems. Even here in SK, we don't have our provincial economy entirely resting on oil production. AB...well, that's a different story but even they aren't in the mess Venezuela is in.
There are no examples that I'm aware of where modern, advanced economies which issue their own currency, incur debt in their own currencies, rely on their own central banks to 'buy' their debt ever suffered hyper-inflation due to government spending as mentioned in this article.
The massive government spending by countries like the US, Canada, United Kingdom, and Australia during the Great Depression and WWII for example did not result in extreme inflation. Currently, Japan has a Debt/GDP ratio of about 266% and has been running such deficits since 2000 and has had none of the inflation mentioned in this article.
The inflation we saw in the '70s was not caused by too much government spending or borrowing. It was caused by a massive influx of 'Baby Boomers' into the workforce and an economy that was unable to respond to their demands, i.e. too much money, chasing too few goods.
Concern about inflation is good, but it needs to be based, in my view, on evidence rather than fears stoked by examples of past inflation that aren't analogous to the Canadian economy.
This strikes me as a strange criticism. Hyperinflation is just not something that happens instantly. There is generally a spike in inflation that acts as a warning. Provided that we are confident in the ability of the government to rein in spending or engage in deflationary taxation, there is no concern here.
The difficulty of the current situation comes when the government backs itself into a corner. If interest rates do rise, then the debt starts to swallow up the whole budget. The government is then forced to (a) either print more money or keep interest rates low, (b) impose austerity by cutting programs and raising taxes. The government would need to choose option b, otherwise the inflation spiral would continue upwards. But would a Canadian government ever have the will to choose option b? Because if not, then inflation is inevitable.
Now, it may be true that inflation doesn't even start in the first place due to the semi-religious faith in the stability of the currency. There is also an ingrained resistance to inflation in the population, as the dollar has been stable for so long. Finally, the real resistance to inflation is the ability to buy massive amounts of cheap goods from low-income countries. Notice that goods made in Canada tend to inflation - housing and cars, but goods from overseas stay cheap.
But if the government keeps printing money, and the asset bubbles continue to grow - then the public's confidence in the paper currency will erode. Eventually, the erosion of trust creates a tinder box, where the slightest spark sets off an inflationary spiral, as everybody starts raising prices and wages in tandem.
The higher the government debt, the less breathing room the government will have in dealing with this spiral. At the very least, we have to admit that this makes debt undesirable.
There are no examples that I'm aware of where modern, advanced economies which issue their own currency, incur debt in their own currencies, rely on their own central banks to 'buy' their debt ever suffered hyper-inflation due to government spending as mentioned in this article.
The massive government spending by countries like the US, Canada, United Kingdom, and Australia during the Great Depression and WWII for example did not result in extreme inflation. Currently, Japan has a Debt/GDP ratio of about 266% and has been running such deficits since 2000 and has had none of the inflation mentioned in this article.
The inflation we saw in the '70s was not caused by too much government spending or borrowing. It was caused by a massive influx of 'Baby Boomers' into the workforce and an economy that was unable to respond to their demands, i.e. too much money, chasing too few goods.
Concern about inflation is good, but it needs to be based, in my view, on evidence rather than fears stoked by examples of past inflation that aren't analogous to the Canadian economy.
During the Depression and after the war, government had lots of things to spend money on that would deliver almost certain economic growth: dams, electricity grids, roads, ports, irrigation, water systems. That hasn't been the case in a number of decades due to a number of factors:
1) the low hanging fruit has already been picked, meaning that government investment is chasing ever diminishing returns. Spending x on a national child care policy, for example, stands no chance of delivering the same returns as spending an inflation adjusted x back in the 1950's on building highways
2) proliferation of regulation has significantly increased the cost of government doing anything, dulling the long term benefit of that spending. Paying lawyers and consultants to, for example, gain approval for a port expansion only delivers ephemeral economic impact. Think of how many billions would be wasted on community consultations, environmental reviews etc. to build something akin to the Interstate Highway System nowadays. Most of that network was built in 15 years. Canada struggles to build a short extension of the 401 and new bridge to Detroit in 15 years
3) government used to have an execution advantage over the private sector that no longer exists. It could risk the lives of military personal, for example, in pursuing the space programs of the 1950's and 60's
I would argue that even with 1% interest rates, government will struggle to find spending that will deliver positive returns over the long term. Instead all that stimulus money will simply drive up costs.
There are no examples, I'm aware of, where government spending on programs that directly benefit people drive up costs as long as the 'stimulated' economy is able to meet the increased demand. Are you aware of some examples that would illustrate your concerns?
The degree to which certain programs directly benefit people is a matter of debate, but that is for another topic. Government spending is not allows a net gain.
The two best inflation examples are right in your face: housing costs and equity valuations. For decades, housing prices ran in the range of 3-4X household earnings. Now they are more like 7-10X. Is the utility of a house really that much greater than 20 years ago? Similarily, the average multiple on a large cap stock was ~15X. It is now ~40X. Is the value of a dollar of corporate earnings really 2.5 times greater than a generation ago? Asset price inflation creates an imaginary wealth effect where people borrow and spend more based on the assumption that their asset portfolio can cover it. Central banks are terrified of the massive deflationary wave that could happen if the bubbles in equities and housing burst.
I think your examples of inflation or rather rising prices in certain sectors support the notion that government borrowing and spending does not necessarily cause inflation, which is the claim in the article.
The cause of housing inflation is lack of supply, not government spending. The cause of rising equity evaluations, as well, is caused neither by government spending nor monetary policy. It's speculation, i.e. gambling.
What's being argued in the article is not that demand exceeding supply results in higher prices or that speculation will drive up prices like that of tulips and crypto-currency, but rather government borrowing and spending does, and that does not seem to be true. It's a claim for which there is little or no evidence unless inflation in nations and situations that are not analogous to Canada is considered evidence.
I'm making the assumption that excessive government borrowing backs central banks into the corner, forcing them to keep interest rates lower than what would be required to quell the real estate and equity bubbles. It becomes a viscous cycle as low interest rates encourage more government borrowing which places even more pressure on central banks to print money.
Housing prices would be much lower if a 5 year closed mortagage where say 5%, regardless of supply.
I suggest you're conflating things that are not related. Low interest rates allow more people to buy houses, to be sure. But the issue is still supply. If there was much more supply, prices would not rise as they are now. The cost of borrowing money is not, I suggest, as important as you imply. Yes, if mortgages were 19% as they were in for a very short period in the early 1980z The demand would decline.
For a country like Canada which is, in effect, borrowing money from its own bank, there really is no such thing as excessive government borrowing if--and it's a critical 'if'--the economy can absorb the borrowing. The Canadian economy is still a very long way from where all the slack is taken up and there's full employment.
My main worry is that governments will do the first half of MMT without the all important second half. If they want to spend a bunch, they need to ensure taxes and policies increase to remove the oversupply of cash from the economy. Probably the biggest weakness of MMT is that it relies on elected officials to help control inflation through tax policy.
MMT is extrememly undemocratic. It gives government a pass on making priority calls. Eventually either inflation and/or interest rates rise to the point where government must raise taxes. In the absence of free money, government would have to present priotities to the electorate. Proponents of MMT are essentially bullies.
This strikes me as a bizarre assertion, priorities are dictated either way through spending. This notion that just because your constraint is different, you're not prioritizing isn't sensible.
I’ve been following this debate for a while on Twitter And there are excellent arguments as to where approaching deflation not inflation.
I tend to in Canada at least for see inflation coming. In the US you have to remember much of the deficit has come from tax cuts and giveaways to the 1%.
It wouldn’t be too difficult to rein in the deficit by reversing tax cuts and cutting spending on defense spending.
In Germany where I live it’s hard to say we have very very little inflation.
One point I strongly disagree with the idea that this is going to lead to hyper massive inflation. First of all economist don’t know how much is too much. Japan 300% of GDP and you’re still stuck in deflation.
Arguing that point takes away from the credibility of the article and the author.
Secondly hyper inflation tends to go hand-in-hand with a collapse in government and the economy highly unlikely to happen here
Japan had a massive asset price bubble in the late 80's from which it is still recovering. It still faces deflationary pressure as government and central bank policy impede over-inflated assets from being marked to market. The consequence has been 3 decades of extremely low economic growth. A better approach would have been to in effect "rip off the bandaid" and allow zombie companies and real estate valuations to fall, reinvest the capital in something more productive and move on.
Central banks use the excuse that inflating asset values don't matter as low interest rates enable carry at around the same periodic costs as if asset prices were lower, but interest rates higher. Yet they fear the deflationary impacts of falling asset prices. The lack of reciprocal thinking has fed serial asset bubbles (tech stocks in late 90's, housing prices in the mid 2000's, government bonds and tech stocks and housing prices now) that will inflict much more pain when they do burst.
Accepting that something can be created from nothing requires religious conviction. Money is simply a measure of productivity. Any rise in the total value of money faster than the total productive capacity of the economy can only be inflation.
The money supply has an impact on the productive capacity of an economy. An economy constrained by liquidity will have a diminished output, this is what happened in 2008. A bunch of banks that supply liquidity to the financial system got caught making bad bets and didn't have the capital to cover their losses.
Fractional banking allows lenders to lend out more money than they hold in deposits. This credit system allows additional business to obtain capital and grow, thereby growing the value of the economy. There is nothing religious about it.
This ignores the affect of consumption and demographics, supply and demand dictate the value of money, if the money supply rises but demand falls due to an aging population or deflationary effects introduced by technology, this concern becomes irrelevant.
If Apple stock trades at $1,000 and splits 2:1, the twofold increase in the number of shares would individually be worth $500. The aggregate value remains the same. Productivity is the only true value in the economy. Increasing the number of dollars in excess of the real increase in total productivity can only be inflation. That is an absolute truth and I stand by the fact that something cannot be created from nothing.
In your example, a rise in the money supply simply papers over the fall in demand. Prices might still rise or even remain relatively constant, in spite of falling demand, but the amount of productivity required (ex. wages) to pay the price would rise by at least as much. "There ain't no such thing as a free lunch" (TANSTAAFL) is a universal truth.
The economy isn't just valued at the value of it's productivity today, it's also valued at the estimated future value that investors are willing to value their investments.
If you look at the value of Apple stock, it fluctates every minute. Does this represent a minute by minute analysis of the companies productivity? No. It represents a forward looking estimate.
Mr. Burry is a hedge fund manager and not an economist. The SEC is obligated to look into this because his pronouncements about inflation could in fact be part of a strategy to boost the value of his hedge fund. If he were making this prediction in capacity of an economist and had no significant stake in the financial markets the SEC would not be looking into this. Suggesting that this is even more of an indicator that people should be paying attention to this issue is misleading.
The United States Federal Reserve and the Bank of Canada have developped many tools to fight inflation since the 1970’s which do not rely on MMT. Comparing these institutions to the situation in Venezuala, and to the Venezualan Central bank, which is not independent from the executive branch, unlike it’s American and Canadian counterparts. There are serious economists who are warning of a spike in inflation, but no serious economist is suggesting that there will be Venezualan style hyperinflation in either country. This situation in Venezuala was caused by the gross mismangement of the country and the economy by a tyranical dictator.
1) Monetary stimulus is in effect unelected and unaccoutable central banks engaging in public policy. Most central banks have the non-political mandate of controlling inflation. The US Fed has the second, problematic mandate of driving full employment, which draws it into public policy. Given the US economy's size, this forces other central banks to implicitly adopt the same dual mandate, or risk significant currency appreciation. The US Fed continues to creep its scope as it has entered debates on inequality, for example.
2) Central banks holding bonds issued by their own governments creates a too big to fail conflict of interest. The more domestic government debt held by the central bank, the greater the pressure on that central bank to print more money to keep government debt servicing costs in check, which only encourages more government borrowing.
Central bank independence is a well-established concept and generally very uncontroversial. Central banks generally remain accountable through various mechanisms including the ability of the executive branch to recall a central bank appointment and clear guidelines and targets in which the bank is to operate, as you noted. Inevitably decisions by the central bank have decisions with political consequences and that can be politicized.
Due to dollar hegemony and the fact that over 50% of global transactions occur in USD the rates set by the US have global impacts, however, this does not impact the mandate of other Central banks. Appreciation (or depreciation) vs the USD occurs by many possible methods.
Countries such as the United States and Canada and their banks absolutely are too big to fail, as are their central banks. I don’t understand any contention otherwise. Nor is there, so far, evidence of an inflationary debt trap from holding too much sovereign debt. That however is something that is debated by economists and people far more qualified than me, and I’m not professing an opinion on it. Maybe Trevor Tombe is available.
I'm questioning central bank conflict of interest moreso than independence. A central bank should never feel obligated to facilitate government borrowing, or consider the impacts of a government default. It's only role is to protect the value of the currency.
I disagree about other central banks operating in isolation from the Fed. More or less every central bank is printing larges sums of money right now to resist appreciatin of their currencies relative to USD.
Seems others beat me to the comment that comparing ourselves to Venezuela is entirely invalid. Venezuelan was (and is) in political turmoil Even if they weren't, the previous total reliance on oil, with its ups and downs, would have caused & did cause immense problems. Even here in SK, we don't have our provincial economy entirely resting on oil production. AB...well, that's a different story but even they aren't in the mess Venezuela is in.
There are no examples that I'm aware of where modern, advanced economies which issue their own currency, incur debt in their own currencies, rely on their own central banks to 'buy' their debt ever suffered hyper-inflation due to government spending as mentioned in this article.
The massive government spending by countries like the US, Canada, United Kingdom, and Australia during the Great Depression and WWII for example did not result in extreme inflation. Currently, Japan has a Debt/GDP ratio of about 266% and has been running such deficits since 2000 and has had none of the inflation mentioned in this article.
The inflation we saw in the '70s was not caused by too much government spending or borrowing. It was caused by a massive influx of 'Baby Boomers' into the workforce and an economy that was unable to respond to their demands, i.e. too much money, chasing too few goods.
Concern about inflation is good, but it needs to be based, in my view, on evidence rather than fears stoked by examples of past inflation that aren't analogous to the Canadian economy.
This strikes me as a strange criticism. Hyperinflation is just not something that happens instantly. There is generally a spike in inflation that acts as a warning. Provided that we are confident in the ability of the government to rein in spending or engage in deflationary taxation, there is no concern here.
The difficulty of the current situation comes when the government backs itself into a corner. If interest rates do rise, then the debt starts to swallow up the whole budget. The government is then forced to (a) either print more money or keep interest rates low, (b) impose austerity by cutting programs and raising taxes. The government would need to choose option b, otherwise the inflation spiral would continue upwards. But would a Canadian government ever have the will to choose option b? Because if not, then inflation is inevitable.
Now, it may be true that inflation doesn't even start in the first place due to the semi-religious faith in the stability of the currency. There is also an ingrained resistance to inflation in the population, as the dollar has been stable for so long. Finally, the real resistance to inflation is the ability to buy massive amounts of cheap goods from low-income countries. Notice that goods made in Canada tend to inflation - housing and cars, but goods from overseas stay cheap.
But if the government keeps printing money, and the asset bubbles continue to grow - then the public's confidence in the paper currency will erode. Eventually, the erosion of trust creates a tinder box, where the slightest spark sets off an inflationary spiral, as everybody starts raising prices and wages in tandem.
The higher the government debt, the less breathing room the government will have in dealing with this spiral. At the very least, we have to admit that this makes debt undesirable.
There are no examples that I'm aware of where modern, advanced economies which issue their own currency, incur debt in their own currencies, rely on their own central banks to 'buy' their debt ever suffered hyper-inflation due to government spending as mentioned in this article.
The massive government spending by countries like the US, Canada, United Kingdom, and Australia during the Great Depression and WWII for example did not result in extreme inflation. Currently, Japan has a Debt/GDP ratio of about 266% and has been running such deficits since 2000 and has had none of the inflation mentioned in this article.
The inflation we saw in the '70s was not caused by too much government spending or borrowing. It was caused by a massive influx of 'Baby Boomers' into the workforce and an economy that was unable to respond to their demands, i.e. too much money, chasing too few goods.
Concern about inflation is good, but it needs to be based, in my view, on evidence rather than fears stoked by examples of past inflation that aren't analogous to the Canadian economy.
During the Depression and after the war, government had lots of things to spend money on that would deliver almost certain economic growth: dams, electricity grids, roads, ports, irrigation, water systems. That hasn't been the case in a number of decades due to a number of factors:
1) the low hanging fruit has already been picked, meaning that government investment is chasing ever diminishing returns. Spending x on a national child care policy, for example, stands no chance of delivering the same returns as spending an inflation adjusted x back in the 1950's on building highways
2) proliferation of regulation has significantly increased the cost of government doing anything, dulling the long term benefit of that spending. Paying lawyers and consultants to, for example, gain approval for a port expansion only delivers ephemeral economic impact. Think of how many billions would be wasted on community consultations, environmental reviews etc. to build something akin to the Interstate Highway System nowadays. Most of that network was built in 15 years. Canada struggles to build a short extension of the 401 and new bridge to Detroit in 15 years
3) government used to have an execution advantage over the private sector that no longer exists. It could risk the lives of military personal, for example, in pursuing the space programs of the 1950's and 60's
I would argue that even with 1% interest rates, government will struggle to find spending that will deliver positive returns over the long term. Instead all that stimulus money will simply drive up costs.
There are no examples, I'm aware of, where government spending on programs that directly benefit people drive up costs as long as the 'stimulated' economy is able to meet the increased demand. Are you aware of some examples that would illustrate your concerns?
The degree to which certain programs directly benefit people is a matter of debate, but that is for another topic. Government spending is not allows a net gain.
The two best inflation examples are right in your face: housing costs and equity valuations. For decades, housing prices ran in the range of 3-4X household earnings. Now they are more like 7-10X. Is the utility of a house really that much greater than 20 years ago? Similarily, the average multiple on a large cap stock was ~15X. It is now ~40X. Is the value of a dollar of corporate earnings really 2.5 times greater than a generation ago? Asset price inflation creates an imaginary wealth effect where people borrow and spend more based on the assumption that their asset portfolio can cover it. Central banks are terrified of the massive deflationary wave that could happen if the bubbles in equities and housing burst.
I think your examples of inflation or rather rising prices in certain sectors support the notion that government borrowing and spending does not necessarily cause inflation, which is the claim in the article.
The cause of housing inflation is lack of supply, not government spending. The cause of rising equity evaluations, as well, is caused neither by government spending nor monetary policy. It's speculation, i.e. gambling.
What's being argued in the article is not that demand exceeding supply results in higher prices or that speculation will drive up prices like that of tulips and crypto-currency, but rather government borrowing and spending does, and that does not seem to be true. It's a claim for which there is little or no evidence unless inflation in nations and situations that are not analogous to Canada is considered evidence.
I'm making the assumption that excessive government borrowing backs central banks into the corner, forcing them to keep interest rates lower than what would be required to quell the real estate and equity bubbles. It becomes a viscous cycle as low interest rates encourage more government borrowing which places even more pressure on central banks to print money.
Housing prices would be much lower if a 5 year closed mortagage where say 5%, regardless of supply.
I suggest you're conflating things that are not related. Low interest rates allow more people to buy houses, to be sure. But the issue is still supply. If there was much more supply, prices would not rise as they are now. The cost of borrowing money is not, I suggest, as important as you imply. Yes, if mortgages were 19% as they were in for a very short period in the early 1980z The demand would decline.
For a country like Canada which is, in effect, borrowing money from its own bank, there really is no such thing as excessive government borrowing if--and it's a critical 'if'--the economy can absorb the borrowing. The Canadian economy is still a very long way from where all the slack is taken up and there's full employment.
My main worry is that governments will do the first half of MMT without the all important second half. If they want to spend a bunch, they need to ensure taxes and policies increase to remove the oversupply of cash from the economy. Probably the biggest weakness of MMT is that it relies on elected officials to help control inflation through tax policy.
MMT is extrememly undemocratic. It gives government a pass on making priority calls. Eventually either inflation and/or interest rates rise to the point where government must raise taxes. In the absence of free money, government would have to present priotities to the electorate. Proponents of MMT are essentially bullies.
This strikes me as a bizarre assertion, priorities are dictated either way through spending. This notion that just because your constraint is different, you're not prioritizing isn't sensible.
A $100 shopping list woud require considerable more deliberation than a $200 shopping list
I’ve been following this debate for a while on Twitter And there are excellent arguments as to where approaching deflation not inflation.
I tend to in Canada at least for see inflation coming. In the US you have to remember much of the deficit has come from tax cuts and giveaways to the 1%.
It wouldn’t be too difficult to rein in the deficit by reversing tax cuts and cutting spending on defense spending.
In Germany where I live it’s hard to say we have very very little inflation.
One point I strongly disagree with the idea that this is going to lead to hyper massive inflation. First of all economist don’t know how much is too much. Japan 300% of GDP and you’re still stuck in deflation.
Arguing that point takes away from the credibility of the article and the author.
Secondly hyper inflation tends to go hand-in-hand with a collapse in government and the economy highly unlikely to happen here
Japan had a massive asset price bubble in the late 80's from which it is still recovering. It still faces deflationary pressure as government and central bank policy impede over-inflated assets from being marked to market. The consequence has been 3 decades of extremely low economic growth. A better approach would have been to in effect "rip off the bandaid" and allow zombie companies and real estate valuations to fall, reinvest the capital in something more productive and move on.
Central banks use the excuse that inflating asset values don't matter as low interest rates enable carry at around the same periodic costs as if asset prices were lower, but interest rates higher. Yet they fear the deflationary impacts of falling asset prices. The lack of reciprocal thinking has fed serial asset bubbles (tech stocks in late 90's, housing prices in the mid 2000's, government bonds and tech stocks and housing prices now) that will inflict much more pain when they do burst.