CENTRAL BANKS prints money like THERE IS NO TOMORROW! Is there any other option other than to join that madness?

7개월 전

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INTRODUCTION

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It seem to be a fair claim to say that anyone with basic financial knowledge may see end of FIAT currencies coming in rapid way. Amount of newly printed money in 2020 has been extraordinary and it would be naive not to expect severe consequences in the upcoming future.

And today I would like to talk about this topic, hoping to start up another interesting and valuable discussion. So if topics related to financial markets are your thing, then continue reading. Otherwise just simply scroll down, drop and upvote and consider resteeming this post.

EVERYONE'S PRINTING

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Pretty much all central banks across the globe are printing new "funny money" and pumping liquid FIAT it into markets like there is no tomorrow. Just few days US Authorities signed 900$ billion relief bill. I still cannot get over that news.

It's important to mention, that not only amount of newly printed money matters. Way of distributing those funds is as important and it seem to me, that very small fraction of all those relief bills is entering "real economy".

Regardless on how all those money are distributed - bottom line is that all central banks around the world follow same narrative: pumping more liquid FIAT into global monetary system.

And that make me wonder ....

TO PRINT OR NOT TO PRINT - this is the question

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What should countries with smaller economies do? Follow this trend or control their monetary policies and limit that madness?

That question is valid especially for those countries which depend heavily on export of their goods and services. Simply because such a countries require weak local currency.

What if authorities of some countries (like my own one, Poland) would decide to avoid printing more money. What if political pressure would be so high, that our authorities would avoid this path. Let's say that those in charge would understand, that creating more debt in times of recession may fire-back. Let's say that they are aware of future consequences of local FIAT currency losing it's value, which would result in high inflation. Which usually result with high social unrest, which no politicians want.

Let's imagine for a moment, that some countries would say "NO" and would decide to avoid drowning in debt just to "save the day". What would happen?

MY PERSONAL VIEW

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Im afraid, that entire export in those countries would collapse. If value of all major FIAT currencies will continue declinging because of increased money supply on the market, then our own local currency would be relatively growing in strength. And that would wipe out all local businesses which are exporting their goods and services. Am I right? Or perhaps my line of thinking is corrupted?

I came to conclusion, that the only way to maintain some sort of "balance" between FIAT currencies is to follow this new monetary trend. Meaning: to print more new "funny money". Just as all major central banks around us do.

SHARE YOUR VIEW AND RESTEEM

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I would love to hear your opinion on that topic. I read all comments. I would also appreciate every single Resteem (which would naturally help me to bring more traffic).

Remember to visit my recent post:

obraz.pngONE OF THOSE MOMENTS I WILL TREASURE FOR YEARS TO COME
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Publication date: 09/01/2021

Yours, Piotr
@project.hope founder

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I used to be a Field Economist for the United States Department of Labor and I researched inflation which is the devaluation of money. The United States government controls the value of money in two ways.

The first is through monetary policy and that one is controlled by the Federal Reserve Bank.

The second is fiscal policy and that one is controlled by congress. The 900bn relief package that you are writing about is through congress and I expect there will be another one in excess of 1 trillion in a couple of months.

I separate monetary and fiscal because the net effect is slightly different. The Federal reserve monetary policy has led to inflation of investment assets. That is why stocks, bonds, gold, crypto, real estate, oil, and other commodities are all rising.

At the same time the job market in the United States has not recovered and the consumer price index is still low, so consumer inflation is low. Now enters fiscal policy.

The relief package (fiscal policy) can cause consumer prices to go up slightly as more of that money will go into the hands of people who will spend it through unemployment benefits. Some of it will be saved though. There is some data that suggest that some of this money will be saved and some of this stimulus will go towards more equity purchases.

In this case there will not be a large effect on inflation for consumer prices, but you will see some uptick in asset prices. This is just the demand side--spending.

On the supply side you do see commodity prices rising which implies that there will be an uptick of manufacturing. As long as you are creating goods faster than people are spending money then that would also limit inflation.

As for the effects of inflation on people. Inflation is the devaluation of money. If the Dollar or the Euro is lowing value then you are harmed if you hold Dollars or Euros. The more you hold the more it hurts. However, the opposite is true if you are poor and you are in debt.

If you hold no money or you are in debt inflation is helpful because you get to pay back your loans with money that is less valuable then when you borrowed it. Also, as a side effect the inflation that is driven by extra dollars being in the market also creates jobs. There is an inverse relationship between liquidity and unemployment in most of the data.

As for your question on what non US central banks should do? That is going to be dependent on the current state of each of those countries. The United States can print money almost indefinitely because it is currently the reserve currency of the world, but everybody else is limited in how much money they can print. I won't go too much further into this as my comment is already too long. If anybody wants to know more about this they can reach out to me.

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Thanks for this comment... I believe that printing money today does not raise inflation as much as it did 50 years ago.

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Yes, the data in Europe and Japan seems to suggest deflation and that is why interest have stayed near zero for a long time and in some places are at negative interest rates. I am not saying that inflation is impossible, but the trends seems to be that the forces that create deflation are winning against the forces that create inflation.

I have not done research on this, but my intuition tells me that wealth inequality will be a big driver of deflation. The ultra wealthy aren't living paycheck to paycheck so a large percentage of the money that the wealthy receive go straight into investments. This drives the price up in the different asset classes, but it does not drive consumer inflation. At least we aren't seeing evidence of consumer inflation in any of the large economies yet.

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Thanks for reply

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Wow. Amazing feedback @therecantonlybe1

I trully appreciate your comment and your time you took to share your thoughts with me. Big THX.

I separate monetary and fiscal because the net effect is slightly different.

As "net effect" you mean ... way that new currency is being distributed?

If anybody wants to know more about this they can reach out to me.

I would like to reach out to you. Do you use Discord ? I would like to invite you to our community server: https://discord.gg/uWMJTaW

Hope to see you posting more often within our PH community :)

Stay safe buddy,
Yours, Piotr

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"As "net effect" you mean ... way that new currency is being distributed?"

Correct, the distribution as to who gets the money and how the money is spent. Monetary policy is really a supply side solution while fiscal policy sometimes shows up as a demand side solution.
Biden will push for an infrastructure and climate change bill sometime around March and this bill will probably be branded as another "stimulus package". I suspect a lot more of this money will go directly to local, state, and government agencies rather than the private sector for this particular package. When that money goes to the local, state, and government agencies then that money will be spent for sure.

In monetary policy, the money supply expansion tends to put banks and investors in control of the money and if banks are afraid to lend then there is little to no liquidity effect. You saw this in 2008.

The other issue is that the Fed and the private banks tend to drive asset prices up. Most of the money gets "invested" in stocks, bonds, and bitcoins. That is different than money being "spent" on every day things like construction, food, and rent.

The Fed has been putting a lot of pressure on congress to pass fiscal stimulus because they know that monetary stimulus only has a limited effect on the economy. Its very top down. While fiscal if done correctly, could be a little more bottom up or "decentralized". It really depends on exactly what the fiscal package looks like.

Biden has picked Janet Yellen to be the new Secretary of Treasury. Janet Yellen was the former Fed president, so now you will have two Fed people. Powell leading the Fed, and Janet leading the treasury. I suspect more fiscal and less monetary in the future.

We will see how things turn out.

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Wow. Thank you for taking the time to reply @therecantonlybe1

Amazing comment.

ps. I'm not sure if I ever invited you to our Project.hope community discord? Consider joining: https://discord.gg/uWMJTaW

Cheers, Piotr

i agree that fiat will stop existing eventually but i don't know when or what will lead to that. For example, in many countries due to corruption the only way the economy is working and many people are actually live is through "black money"

If for example tomorrow we say: fiat money is prohibited use only cards the economy will be destroyed. With that being said I don't know we will go to that phase

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Thanks for dropping by and sharing your thoughts with me @filotasriza3

I also appreciate you resteeming my post. Hope to see you posting more often within our PH community :)

Stay safe and enjoy your weekend,
Piotr

Greetings my friend @crypto.piotr

I will start my contribution by making it clear that I am not, nor do I pretend to be, a specialist in financial economics. However, as a citizen of one of the nations with a declining economy, I would like to express that the abrupt impression of money, is nothing more than the economic fall of a nation, where the high governments only seek to gain time that allows them to take a step not so hasty to face the current economic and sanitary collapse that we are living and where we the citizens will be the most hit by such hasty decisions.

In the case of the United States, we all know that it is a power from different perspectives and it has been that way since I have been able to find out. Now, the economy of this country is based on what? where does the sustained value of the dollar come from? if apparently from my opinion it is only paper since I do not see a support from it.

I establish these questions since in my country Venezuela our economy is supported by the nation's wealth (oil, gold, gas, that is, natural resources) and even so we live in prehistoric times. Without a doubt it is an abstract subject and I will be reading each contribution with the purpose of expanding my perception of it. Thank you for your contribution
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I read this post with a lot of interest. I am sorry that there is this situation in Venezuela. Thanks for your testimony, thanks for sharing your experience. Now I know something about Venezuela that I didn't know before.

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Dear @madridbg

Thank you for your amazing comment.

Now, the economy of this country is based on what? where does the sustained value of the dollar come from? if apparently from my opinion it is only paper since I do not see a support from it.

Well. US controls oil trade and is enforcing all countries to use USD to trade oil. Which is forcing countries to consider USD to be a world reserve currency.

That surely will come to an end one day

Buy bitcoin and hold no matter the outcome!

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This is a good strategy, and it is also a simple and clear strategy.

@crypto.piotr I think physical currency will dominate the world, whatever quantity we print it will be their as small people only have this means of trade with them they don't know crypto currency or any other currency. As we know more then 50% of the world population is low average in terms of money.

So printing more money will decrease it value but cannot be neglated by the world.

Hi @crypto.piotr Thanks for the post.

Printing so much money causes inflation in economy. That's what has started to happen in USA recently. There is a fact in the world that there are countries; developed, developing and undeveloped. Thus, the rate among FIATs will be remain somehow similar. I don't think that export in the world would collapse entirely.

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Hi @videoaddiction

I trully appreciate your comment and your time you took to share your thoughts with me. Big THX.

Stay safe buddy,
Yours, Piotr

There are a few related problems - and only one solution :-)

You can see exactly what is happening in those countries that still publish their M3 money supply figures, eg see UK here and click the 5-year chart.

All that "funny money" is NOT going into the actual economy, to actual businesses that help feed real people. That money is used to inflate bankster earnings, prop up the stockmarkets and to drain each nation of its wealth by sucking in the taxes needed to then pay the interest on these loans.

The US Fed stopped measuring M3 in 2006. Why? Good question!

You can see that all this money is merely propping up the current system by looking at something like the debt-to-GDP ratio - here for UK.

So governments, and their people, are being bled dry by their banksters. They were sold a con that central banks should be "independent", without specifying "independent of what?" They are now nearly all privately-owned cartels that are laughing at the stupidity of people.

The solution is to re-nationalise the central banks and bring back control of one's own money supply. Oh, yes, you don't trust politicians... so you trust private leeches instead?

The national debts are being inflated in preparation for the so-called great reset scam. Just as they have done with third world nations, they will write off the debt they themselves have created in exchange for total control, probably with a huge land claim. Then you will all be indentured serfs. Good luck.

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Hi @accelerator

I trully appreciate your comment and your time you took to share your thoughts with me. Big THX.

Stay safe buddy,
Yours, Piotr

Hi Piotr, this is not an easy question and there is no general solution. There are some major differences between countries. Let's take a look at USA first. US dollar is an export asset for USA. Selling printed US dollars is a big business for USA. As the main reserve currency USA have this luxury to print these fancy green bills and sell them as money. Inflation is then shared with emerging counties (especially oil exporters) and US doesn't suffer from it.

Other countries have to consider consequences for money printing. Weakening your local currency may seem good for exporters yet it hurts the poorest part of population. As at least half of goods is produced somewhere abroad, things like phones, TVs, clothes, foreign food become more and more expensive. People don't like it and they don't feel they need to vote for politicians playing with money printing. So the government will think twice before starting printing money.

So going back to your original question - what should countries do? The answer is - it depends on particular country. If it is a rich country with a strong economy, then they can afford printing some more money. If not, then they should consider this really carefully.

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this is quite a good answer. there are nuances to this.

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Thanks for dropping by and sharing your thoughts with me @cryptohumster

I'm not sure if I asked you already or if I didn not. Do you use Discord?
Consider joining our PH community discord server: https://discord.gg/uWMJTaW

Stay safe and enjoy your weekend,
Piotr

Hi friend @crypto.piotr
This is an important issue. Many may not care much, or may not understand anything about it, but like it or not, care or not, the medium-term future could hit you hard with a harsh reality.
We have a hard blow to the currencies of each country, and we are clear that the fact that the Dollar and the Euro (especially the former) are devalued by a massive printing of fiat money affects the global economy. Regardless of whether, for example, Poland prints en masse or not.
I think that's the big problem when we see economic power centralized in one currency, like the dollar in this case.
I particularly think that this year, economically speaking, it could be much worse than last year, and in general terms there is not much we can do. But we must personally prepare for what is to come.

Yes.... fiat is dropping. Everyone is moving to Blurt. Https://blurt.buzz

Hi dear buddy @crypto.piotr

some countries (like my own one, Poland)

That's cool buddy , I thought you were from USA. I think USA printed that abysmal amount of money because amazon, facebook, apple and tesla made too much money this year, so to generate the balance of that profit they did that, anyway USA also wins with other companies like nike, coca cola, wallmart, microsoft , etc and is money that comes to USA from all parts of the world, the way that other countries have to counteract that is to produce goods and services, in my country Venezuela the government printed without having support, neither gold neither production and that caused the economic collapse we are experiencing

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hehehe :)

no, I'm not american @ramsesuchiha :)

hahahah ''TO PRINT OR NOT TO PRINT - this is the question'' that should be the new quote of some governments.

Great post! I personally think FIAT currencies aren't going anywhere anytime soon. These transitions take a lot of time.

I do however think there will be a day where FIAT currencies will become way less common and cryptos like BTC and Ethereum will become the norm.

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Thanks for dropping by and sharing your thoughts with me @royw

Hope to see you posting more often within our PH community :)
Check out our community link: https://steemit.com/trending/hive-175254

Stay safe and enjoy your weekend,
Piotr

Hi @crypto.piotr

Every time that a government, any government in the world, begins to blatantly print more money, I think that it is counterproductive for the same country to somehow increase public spending and that money will probably go to the coffers of high ranking officials or contractors by 75%. the same government,

Each country has its own reality, one is stronger economically than others, however in this case you are mentioning the United States as a power, which I personally believe that the roads they lead are going to sink due to the application of bad economic policies . and because of the way a new government announces what its new policies will be.

That news that I mention, i as a professor of the accounting area of state accounting, I see that it is not, nor will it be a good idea to print such an amount of money. that will be a great generator of poverty

I wonder that news is related to the possible decline in BTC

Hello @crypto.piotr,

A few years ago, here in Venezuela, local economists began to criticize the emission of "inorganic" money by the Central Bank of Venezuela, inorganic money is money without support on national reserves, at present it can be seen as Vzla, it does not count with "solid" or "credible" reserves of any nature, which is why the concept of "inorganic money" is still being used in circulation. This antecedent is currently taken as part of the causes of the hyperinflation that we are experiencing. The common pattern is that "we must place more bills" for a product.

As part of this "economic parody" that my country is experiencing, in the last 20 years eight zeros ("0") have been removed from the Venezuelan currency.

In my opinion, the printing of "well-backed" money (or organic money), would bring less risk to the local economy, but there are other variables in the movement of the market that can "shake" this premise.

I am not an economist, my point of view is that of "a simple engineer".

See you soon.

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Wow. Amazing feedback @tocho2

I trully appreciate your comment and your time you took to share your thoughts with me. Big THX.

Hope to see you posting more often within our PH community :)

Stay safe,
Yours, Piotr

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Yes, I will do it.

See you soon

Hello @crypto.piotr a reality in many countries that follow the money printing policy to the inorganic end. Here in Venezuela inflation eats us, the dollar rises and rises without seeing a ceiling.

Dear @crypto.piotr, you really present an interesting and complex topic. The injection of more fiat money (actually not so fiat), in some countries, I see it as a mechanism to follow routines that do not seem to agree with the new world situation; in which, fiat money has been converted (in a very high percentage) into virtual money.

Large and small transactions are carried out online, they are paid and collected online and the money rarely passes through the hands or pockets of those who carry out the mobilizations.

On the other hand, the issuance of new amounts of currencies in progress, without the corresponding deposit in gold (which has been seen in some countries and speaks of corruption in the area), is another facet that adds to the virtuality of great amount of so-called fiat money. It is trying to substitute real money for a quantity of money of lesser value

This has to affect the import and export markets, but remember that these are also plagued with corruption. I think that not even NGOs are saved from them.

In short, it is a very complex issue and there would be tons of points to consider.
Thanks for sharing your point of view.


[Estimado @crypto.piotr, realmente presentas un tema interesante y complejo. La inyección de más dinero fiat (en realidad no tan fiat), en algunos países, lo veo como un mecanismo para seguir rutinas que no parecen concordar con la nueva situación mundial; en la cual, el dinero fiat se ha convertido (en altísimo porcentaje) en dinero virtual.

Grandes y pequeñas transaciones se realizan on line, se paga y cobra on line y pocas veces el dinero pasa por las manos o bolsillos de quienes realizan las movilizaciones.

Por otra parte, la emisión de nuevas cantidades de las monedas en curso, sin el depósito en oro correspondiente (que se ha visto en algunos países y habla de la corrupción en el área), es otra faceta que se suma a la virtualidad de gran cantidad del llamado dinero fiat. Es tratar de sustituir dinero de verdad por cantidad de dinero de menor valor

Esto tiene que afectar los mercados de importación y exportación, pero recordemos que éstos también están plagados de corruptelas. Pienso que ni las ong se salvan de ellas.

En síntesis es un tema, muy muy complejo y habría toneladas de puntos para considerar.
Gracias por compartir tu punto de vista.]

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Wow. Amazing feedback @mllg

I trully appreciate your comment and your time you took to share your thoughts with me. Big THX.

Stay safe,
Yours, Piotr

Hello @crypto.piotr,
All the countries, and in particular the large developed countries, are in the process of coming to a complete stop and all will a priori distribute helicopter money to allow companies to restart (knowing that some part will still be left behind)
In this context, it seems that an idea is starting to gain ground at the level of the large central banks for a reciprocal abandonment of debts between states: which seems to me coherent from the moment when the rules of the game are the same to define well the debts to be reciprocally waived.
In this context, there would then be no depreciation of a currency against one or another.
On the other hand, indeed, all the major countries must play the game and the temptation will be great for some (such as China or the USSR) to refuse the deal in the hope that this situation will bring down some of their competitors.

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Thanks for dropping by and sharing your thoughts with me @kouba01

Hope to see you posting more often within our PH community :)

Stay safe and enjoy your weekend,
Piotr

Dear @crypto.piotr ,
"CENTRAL BANKS prints money like THERE IS NO TOMORROW! " , I think it's the only option they got when economy is going down. Central bank of a country handles the monetary policy which controls the fiat money demand and supply. Lowering the rates of interest is one of the options which a government has to make economy strong again. This will make them to print more money but inflation must be expected !

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Thanks for dropping by and sharing your thoughts with me @besticofinder

I also appreciate you resteeming my post. Hope to see you posting more often within our PH community :)

Stay safe and enjoy your weekend,
Piotr

then our own local currency would be relatively growing in strength. And that would wipe out all local businesses which are exporting their goods and services. Am I right?

There's a consequence for every action but I can't say for sure that things are black and white. Assuming you make your currency stronger, that is still only in relative terms. If you consider the Naira that is bottom barrel, you will find that a focus in local products and reduction in imports would bode well in every respect. This is because we're neck-deep in crap already, and the "fix" only just brings us closer to the economical equilibrium.

On the other hand, the Chinese Yuan and local Chinese markets would suffer if a similar approach to Nigeria is taken. Which is why China are always willing to devalue their currency at every turn.

The E.U is very complicated. I think Poland should do what's needed to maintain and even gain market share as I'm sure others are doing.

There are many countries that simply don't have that option. The Zloty may be strong enough.

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Thanks for dropping by and sharing your thoughts with me @mark.heard

Hello @cryto.piotr
In particular, it would not print, being a small economy, dependent on the export of goods and services, or an emerging country.

However, the political and economic interests existing in the governments of these countries cannot be ignored, whose reality is different.
Best regards.

From my basic economic knowledge, I understand that excess money in circulation leads to inflation which increases the cost of living which in turns leads to less spending which inturns affect a lot of business who then have to close shop for failure to break even. This increases unemployment.

The government solution to this: pump more money, spend more. The real solution is getting those monies in the rich hands, I think.

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Thanks for dropping by and sharing your thoughts with me @nonsowrites

I also appreciate you resteeming my post.

Stay safe and enjoy your weekend,
Piotr

Good morning friends!

Very interesting the theme proposed by our friend @crypto.piotr. For those of us who live in countries like Argentina, we have been suffering for years from the uncontrolled issue of the Central Bank, which causes uncontrolled inflation that erodes people's salaries day by day.

In 2019 the inflation rate reached 54% and in 2020 it was close to 38% and with this many people feel satisfied. These exaggerated rates of inflation are not free, since their consequences are very hard on the country's economy and especially on the poorest sectors of the country who see how difficult it is to cover their basic needs.

The uncontrolled emission of money means that every bill we have in our posse ssion loses value immediately and that we can therefore buy less and less things with the same amount of money.

States have become real monsters that devour resources they get from the private sector through taxes, and what they collect is never enough.
With respect to other complications brought about by the uncontrolled issuance of FIAT money, it is the devaluation of the local currency, which stimulates exports but makes the acquisition of imported products more complicated. Likewise, beyond any benefit or damage to exports or imports, uncontrolled issuance brings with it high inflation, which translates into difficulties in taking out loans, restrictions on the acquisition of foreign currency and above all, a factory for the new poor.

Socialist and capitalist governments resort to issuance because it is a way of solving problems in the very short term and it is a way of perpetuating themselves in power.

The liberation of international finance is getting closer and closer with the adoption of cryptomonies like the BTC or the ETH where there is no unlimited discretion to create them.

I leave a big hug to all of you

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Thanks for dropping by and sharing your thoughts with me @pablo1601

I also appreciate you resteeming my post. Hope to see you posting more often within our PH community :)

Stay safe and enjoy your weekend,
Piotr

Dear @crypto.piotr ,
You have just shared a very important topic. I personally believe that so many things have been going wrong. When a certain country is facing any major financial problem, instead of critically examining the problem, and draw measures, they instead look for the means to by-cut the problem, so that they can move on (Genesis of escalated problems). More prints won't solve the problems, but it is becoming something trending. It might surely hold consequences in the nearest future, but we all believe that when the future comes, we will live it. Thanks

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Thanks for dropping by and sharing your thoughts with me @benie111

Stay safe and enjoy your weekend,
Piotr

Hello @crypto.piotr. It's really a complicated issue, but it certainly has many implications on the economy, so it's a reality that hits us all.

I am not a specialist in economics, but I know that the more money there is in circulation the less value it has, that there has to be a balance with the amount of goods and services that a nation can produce. This is the problem we have in Venezuela, the government has to get more money out on the street, which is basically virtual money, and since the productive apparatus is destroyed, we have an excessive inflation.

IIn my opinion, without being an expert in the area, it is that this is a path that the United States government should not follow, but each country has its own reality and it is difficult to say which country should enter into this game.

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Dear @emiliomoron

Appreciate your valuable comment and for sharing it with me.

Have a great weekend,
Cheers, Piotr

I was just listening to a news report and they talked about the fact that since 2010 the amount of USD Fiat has quadrupled just from printing. I agree printing is the way that governments are managing money just now. As long as the USD remains one of the world's reserve currencies, I don't see a collapse. But individuals like us most secure our own savings, investments and future. I would say one should not rely on the government for financial security.

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Thanks for dropping by and sharing your thoughts with me @rasbas

I also appreciate you resteeming my post. Hope to see you posting more often within our PH community :)

Stay safe and enjoy your weekend,
Piotr

greeting . I have been idle in steemit for 2 years and just come back here again after got some free time in this pandemic. It seem there is huge changes here , can i anyhow contact you to get some direct information from you about what happening in crypto world especially in steem.

Thank you

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Wow. Great to see you again @tommyl33

I've noticed your absence since I didn't hear from you in quite a while.

can i anyhow contact you to get some direct information from you about what happening in crypto world especially in stem.

Do you use Discord ? I would like to invite you to our community server: https://discord.gg/uWMJTaW

Hope you're safe and healthy. Thx for your dropping by sharing your comment :)
Cheers, Piotr

Central banks have been printing since 2008 and we all know how asset prices have increased - equities, housing, any other asset class. I think if some country decides not to print then they won't necessarily suffer. Maybe they are net importers and benefit from a stronger currency. It helps manage their current account deficit and that may actually draw investors.

India is a developing country such as Poland. We can't afford to print too much like developed countries because that would drive investors away. A stable currency is far better than a depreciating currency. A weak currency increases import bill that in turn drives investors away and then further weakens the currency. So its a suicidal loop that a country like India would like to avoid.

US is different. It needs a weaker currency or well since it is world reserve currency, it needs to be printed so that demand for dollars can be met. Check this

Why is western europe printing money, I do not know. They definitely cannot afford a strong currency. because that means deflation and negative growth rates and they need inflation to erode some of the massive govt debt.

Also, all this money printing helps inflate asset prices and those in politics right now and and in any influential positions are the ones that hold all assets. therefore the incentive is to inflate asset prices even though everyone kind of knows that this money printing is not solving any of the growth problems that we face.

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Dear @karamyog

Appreciate your valuable comment and for sharing it with me.

Have a great weekend,
Cheers, Piotr

Although I am aware that these money printing exercise is going to create a lot of damage to the economy, my country is even worse as the money pumped is not used to support the economy in any way it is rather kept in the pockets of some of our wicked leaders, I cannot even imagine how we got to that level of wickedness and lack of concern for humanity.

Economically, printing money is the only way to keep the country afloat since there was a halt in economic activities for a long period of time and the economy needs to revive very fast. The truth is this, the government knows that the future is bad and we still have to pay for this excessive money being printed but first they need to keep the economy stable until things starts to look normal.

Just few days US Authorities signed 900$ billion relief bill. I still cannot get over that news

If china wasn't printing our too many Yuan to fund their economy and loan other countries money, I would have said that with the way the US government is printing money, the dollar would soon become irrelevant but the Dollar isn't going anywhere anytime soon.

Although, printing isn't the bestoption we have now but it is the only thing that would keep us afloat and not have a country with hungry people in debt. When the issue looks a little settled, we will then come to the reality that we need to pay back all Bonds as a government.

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Dear @ben-edom

Appreciate your valuable comment and for sharing it with me.

Have a great weekend,
Cheers, Piotr

Greetings my friend, it is a dangerous path that the U.S. government is traveling, inorganic money can cause an economic collapse in the nation, to show a button the levels of inflation in my country Venezuela, for the uncontrolled printing of money.

See you later my friend, have an excellent week !

then our own local currency would be relatively growing in strength. And that would wipe out all local businesses which are exporting their goods and services. Am I right?

There's a consequence for every action but I can't say for sure that things are black and white. Assuming you make your currency stronger, that is still only in relative terms. If you consider the Naira that is bottom barrel, you will find that a focus in local products and reduction in imports would bode well in every respect. This is because we're neck-deep in crap already, and the "fix" only just brings us closer to the economical equilibrium.

On the other hand, the Chinese Yuan and local Chinese markets would suffer if a similar approach to Nigeria is taken. Which is why China are always willing to devalue their currency at every turn.

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Hi @belemo

I trully appreciate your comment and your time you took to share your thoughts with me. Big THX.

Stay safe buddy,
Yours, Piotr

Dear @crypto.piotr
My first thoughts though a bit off topic?
Free money from Govt? what is that never got it so do not know what getting a stimulus cheque feels like.
As far as printing more money to hurt local economy ?
I feel it does devalue the local currency.
Having said that does it hurt local businesses?
Before I can answer that a memory plashes before me of Japan deliberately making its currency week so does china sometimes so that its exports get cheaper and more competetive.
As these exonomomies thrive on an exporting economy.
They aim and achive more exports then imports.
So their industries benefit So I guess it boils down to if you are a net importer or exporter and are you local businesses just local or feeding to the international markets as well.
This is more complex then we think :)

As long as all countries print more money, there is no issue. The issue comes when there is so big surge of money use that there just isn't enough products or services to sell... At that point there is very little central banks can do to avoid hyperinflation. Basically salaries must follow the price level and if that fails, people don't have enough money to buy the products and services and that will require yet another relief.

We are already seeing prices of new computer parts go up so high that people are not buying new computers as often as in previous decades. When computers fail, normal people buy second-hand computers left over by companies that still have enough money to buy new ones on regular intervals.

In the past when unused computer parts were old enough that there was better ones already on the market, the prices of older parts were dropped to induce buying, but now they just run out of stock because new better parts are designed so fast that there is no factory lines left to manufacture enough older parts.

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Dear @mtl1979

Appreciate your valuable comment and for sharing it with me.

Have a great weekend,
Cheers, Piotr

that anyone with basic financial knowledge may see end of FIAT currencies coming in rapid way

I agree inflation may jump in the next years. But if economic growth returns, central banks will readjust policies, retire money from circulation.

I think if countries don't print money, the crisis may be much longer, or deeper.

There is an old dilemma: Inflation, or unemployment. I'm sure if you have to feed your family, you would choose inflation.

Good morning Piotr,

This is a delicate issue, mainly due to the fact that in my country (Venezuela) the creation of more and more banknotes is carried out due to a super inflation issue. There is no brake or economic plan that allows establishing a maximum point and one in which the nation works together to avoid high inflation. Quite the opposite, new banknotes are created and are thrown into the streets overnight. Currently our highest denomination ticket is used to pay for an urban transport ticket.

What I mean by this is that in my local sphere, it is extremely impossible for the local government to avoid creating more and more banknotes.All this due to the circumstances already mentioned above.

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Dear @jacorv

Appreciate your valuable comment and for sharing it with me.

Have a great weekend,
Cheers, Piotr

to give a fully rounded opinion i will have to look into how the printed surplus is being "distributed".
Have we ever seen excess printing bring in any good through inflation? Look at Sudan or Venezuela, who have become major examples of what happens when money is not only printed, but isn't managed properly.
In general, as much as I know, the fed printing in the US was to bail out the big boys out of a tough situation. It did not, realistically, help the people.
So is there an alternative motive behind the printing?
Obviously, this excess money is only going to further the debt and put a downward pressure on the economy and the recovery will be tough.
why? Because inflation is generally battled with increasing interest rates (on bonds and more), banks are forced to set higher interest rates since the fedbank will increase the interest, less money will be supplied to the people, and debt collection and more of the sort is strictly enforced. Price control and so on is also rarely implied, since it results in job loss and more. But the general theme is that, the price of inflation is paid by the people, where the big boys are generally immune.

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Thanks for dropping by and sharing your thoughts with me @blind-spot

I also appreciate you resteeming my post. Hope to see you posting more often within our PH community :)

Stay safe and enjoy your weekend,
Piotr

There must be at least a backup of the values that they're printing, because it's supposed there's a valuable support for the assets in the economy of any country.

I invite everybody to take a look of the Petro coin that venezuelan country has released a pair of years ago. I don't think there's something that worths enough to bear that "price" of the Petro coin, I just believe that's a mean strategy to deceive citizens in order to keep them blind and tell in news that everything is ok, there's no crisis.

So, overprinting inexistent fiat, for me, is like ghost money. And that scenario could be dangerous if the most people are not aware of this situation, creating more debts and poverty for themselves if it's presented the case of a forced vanishing of this fake money. It's like magic: it's doesn't exist indeed.

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Thanks for dropping by and sharing your thoughts with me @alegnita

Stay safe and enjoy your weekend,
Piotr

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Welcome Mr. Piotr. Same wishes to your person in this weekend 🙂 Regards. #venezuela #affable

This post is really very nice. I do not have clear ideas on what will happen, I do not know how much money will be printed. But I think inflation will not increase that much in the next few years. compared to 50 years ago we are in a period of deflation that is difficult to change

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Thanks for dropping by @stefano.massari

Do you use Discord ? I would like to invite you to our community server: https://discord.gg/uWMJTaW

Cheers, Piotr

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Thanks for invite... I will join

The excessive printing of money may lead to the devalue and inflation of fiat. Naturally, more people would turn to alternatives like gold, silver and cryptocurrency to keep their assets valuable.

Printing more money is just a way to rob the people, so in my mind, it is ALWAYS bad to keep printing money.

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There is a lot of nuance to this. The United States is always fighting with China because China is devaluing their currency. Inflation also serves to devalue the currency. Why does the US try to prevent China from doing this? If devaluing your currency is bad then we should let them do it. The answer to this is that devaluing your currency improves the competitiveness of your exports, but you are harmed in your imports. China has positive trade balance against the United States because they favor their exports to the US over importing. Inflation and devaluing your currency isn't always bad. The devil is in the details

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That's true, so stop trading and become self-sufficient!
That kind of competition is a sure way to rush to the lowest common denominator.

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There has been a trend toward anti-trade. The U.S. creating tariffs harms trade. The UK with Brexit reduces free trade. In the 2016 election, Hilary Clinton started as a Pro TPP candidate, but then flip on the position because both Trump and Bernie Sanders were anti TPP which is anti-trade.

As an economist we push for more trade not less lol. Economics has a lot of situations where there are hidden cost and benefits. Self sufficiency and trading both have some pros and cons. For me its not a matter of trade or no trade. Its matter of what you should be self sufficient in and what should you trade for?

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Its matter of what you should be self sufficient in and what should you trade for?

To me it is pretty clear that you trade for things that you can't otherwise make/extract/harvest on your own.

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If a country were going to try to plan their economy and decide what to make or what the trade for they would make this decision in a way that is similar to how businesses make the in house vs outsource decision. You make what you have a comparative advantage in and you outsource everything else. The reason for this is that as long as transaction cost are low the gains from trade will make you wealthier.

Of course there are security concerns as well. Not just wealth. For example, food might be cheaper to outsource, but you do want to be self sufficient in food because you don't want other countries manipulating food prices in your country.

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What about situation described above @happyme?

What would you do if you were in charge of money printer in your country, knowing that your economy is quite small and relies strongly on export goods and services?

Yours, Piotr

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Having a dependency on export might seem like a good reason to keep the value of your country's money low, however, if what you are exporting has a great demand and is not available from anywhere else at a better bargain, then printing money is actually counter-productive. By keeping the value of your currency high, you get a better value for your exports.

I guess the bigger question would be: Can your country support itself with just the products it produces? I'm not speaking of luxury items; I'm asking if the people can survive without importing much? If yes, then there really is no need to export things, is there? That country can be self-sufficient and shouldn't care what happens in other countries. It seems we have become so used to doing trade that we don't think we can survive without it. Personally, I would feel more secure relying on no outsiders at all. If the outsiders want to trade; fine. If they don't; that's fine too.

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Usually country that relies on imports would want to keep the value of their currency low as that would mean they can source raw materials easier and cheaper. One would think that for example China relies solely on exports, but it does also import raw material from all across the world, including scrap metal and electronics.

Mining metals is usually several magnitudes more expensive than purifying scrap metal.

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Ummm... isn't that backwards?

If your currency has no value, you need more of it to buy raw materials, so it costs you more.

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Kind of, it is backwards... But for exports to work, there must be enough buyers...

Essentially ratio of the absolute values of the currencies must be favorable for both imports and exports to work... This is how for example China has become big player in import-export business.

Thank you for the invite. Great post!

Greetings friend @crypto.piotr I am not an expert in economic matters, but I am aware of the damage caused to my country by the printing of inorganic money. I do not believe that this is a path that other nations should follow.

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Very true. Venezuela did suffer (and still does).
Thanks for dropping by and sharing your thoughts @yusvelasquez

Why not print coins with higher denomination since metal has more value than paper money?

While we all know the negative effect of printing more fiat in a threatened economy, but who really cares? Afterall, some people would handle some more coins and spend them quick not minding how much they're devalued.