There are a lot of people that think we can print spend endless amounts of money without consequences.
Heck an alarming amount of people don’t understand that bonds need to be paid back.
Heck an alarming amount of people don’t understand that bonds need to be paid back.
“How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually, then suddenly.”
The government prints money, not to have more, but to force economic movement from below. More money handed through social welfare means more money in lower classes hands, and that means more people buying new things and local market activity.
The government does that because most companies with the financial power to invest are be very reluctant to invest in a such unstable economy. Also, most individuals with more money will quickly move the cash somewhere abroad.
So, companies don't invest and richer people are quick ot move their money elsewhere. If the government doesn't act, the economy stalls. But now because the government printed more money, the peso is now less valuable and the economy is now more unstable, feeding this feedback loop.
I’ve seen this said more than I’ve seen people who actually think that. Most people have heard horror stories of hyperinflation and, if anything, are overly weary of inflation than not.
The comment above makes a good point. These types of hyperinflation situations are the result of serious mismanagement and deeper issues. When considering inflation, it’s important to study real resource constraints and any debts that need to be paid back in foreign currencies. All the famous examples of hyperinflation involve issues with these factors.