What is the point of printing money? One can speculate about how much of the money will be spent and the impact that all the extra money will have on the economy. But most economists would agree that the main goal of printing money is to spur economic activity by creating demand for the money.
What about “currency debasement”? Currency debasement, in an inflationary system, is an attempt to take away from the currency of those who use money not in their own currency but in foreign (typically “unvalued” and “counterfeit”) one of the currencies that is backed by something else. That, in itself, is deflation.
We know what happens when you devalue something. You get more of the old currency, which is not valuable. You go faster with everything else you buy, which is not valuable because it’s not the same stuff. The money doesn’t change value, but the value of the things you buy changes, and the goods you make cost less, but in some sense are less valuable. This has to do with money’s relationship to goods.
Inflation in a deflationary system is like having a little more in your pocket each day because you can buy more of the stuff you really want. When the money that you use doesn’t exchange for everything that will replace it with its value does, you don’t feel much of a change in your standard of living. There are very few things that will buy you more every day (unless you are making lots of other purchases), or things you really want. You go to the supermarket more often, because those are the kinds of things that cost a lot. You eat out less often, because it costs a lot to come up with something new to eat each time, and the things you like, in general, have to pay more.
The idea is that you do more things with your money because you are living a greater number of days. You are buying more food, more clothing, more gadgets, and it makes sense to do that with your money.
The problem is that a deflationary system causes you to save less each day. And the idea is that you do more with less, and spending less, and that if you spend less you will eventually have more. There is no reason why there must be more than one way to spend your money and therefore more than one way of generating a net positive effect on the economy.
BEST PICKINGS OF THE WEEK (7/5/2018):
cover photo make money online, make money watching videos earn paypal money, how to earn money by posting videos online, how to make money watching videos online inboxdollars, can you make money off youtube lyric videos