... an error made by then Canadian Prime Minister Pierre E. Trudeau back in 1974? I plead guilty..... I am merely a red neck from the back woods of Nova Scotia....... .. so what in the world could somebody like me really know about macro-economics????????? Surely my thesis is incorrect..... isn't it?????? My plan to pay off the deficit at the rate of twenty billion dollars per month?
When a country's National Bank prints new money to be able to lend it to the government, it creates inflation. The government may not have to pay interest payments, but there is an inflationary cost, both on the government (in the form of reduced purchasing power in their budget) and on the people. There are a few economists who believe a National Bank can, in certain situations, get away with making a loan (by creating new money) that will not lead to inflation. But such claims are rather dubious, in my opinion.
From a theoretical standpoint, I can explain the exact mathematical reason why this happens. Expanding the money supply by pushes up asset prices, while removing the money supply (when those loans are paid off) brings asset prices back to their previous level. This means that when the Central Bank prints new money, they have to pay a premium to buy assets, and in turn when the loan is being paid back, the selling price of those assets goes back down, so the Central Bank can never fully recuperate back the additional money that they printed. Assuming for the sake of simplicity that it is a zero percent interest loan, the inflationary cost will tend to equal the going natural market rate of return on investment assets. That is, while the person borrowing the free money could use it to temporarily buy an investment asset and get a free rate of return, that "free" money has to paid for coming from elsewhere in the economy.
Very true..... UNLESS.... THE INCREASE IN THE MONEY SUPPLY going into the economy is done in such a way that Productivity is INCREASED at a rate that is greater than the sum total of the amount of money that has been put into the economy! If you put seventeen trillion dollars into the economy....... but increased THE PRODUCTIVITY AND OVERALL well being of the people in that nation by twenty two trillion dollars in real value..... then...... you have NOT necessarily created Net Inflation???!!!! So I think that the whole questions is more complex....... we learned a lot from the situation faced at the time of the Weimar Republic of Germany. http://www.politicalforum.com/index...is-a-good-thing.499686/page-9#post-1067298520 @Econ4Every1 Am I being paranoid to be made very suspicious by these two graphs? My plan to pay off the deficit at the rate of twenty billion dollars per month? My strong suspicious is that...... IF Prime Minister Pierre E. Trudeau HAD NOT messed up the rather brilliant 1938 to 1974 Bank of Canada policy THEN...... if the USA national debt had been spiralled out of control...... at the same time that the national debt of Canada increased at a much slower rate THEN..... at least some U.S.A. economists would have been asking questions that elected officials would not like to be hearing!!!!!
Yes, but this is very debatable, whether productivity can actually be increased. And even if it could, arguments could be made that this productivity increase could just as easily be done by borrowing money and spending it, rather than issuing new money.
Good points..... in my opinion an Unconditional but Taxable Basic Minimum Income to all Canadians and to all Americans will result in a significant surge in the price of rural real estate within a hundred miles of major cities! In a way I am partly rewording this other discussion: Could a real estate boom plus better Fed policy pay off USA national debt?
Good points again...... but I am living in Canada and thus we forty one million Canadians tend to be comparing the idea of getting the government to give money to us to spend...... as opposed to Prime Minister Justin Trudeau and his buddies...... SPENDING VIRTUALLY ALL OF IT FOR US......... ON OUR BEHALF.... and then of course hitting us with higher and higher and higher levels of taxation!???????!!!!! As you can guess.. many of us were not thrilled by how Prime Minister Justin Trudeau handled the Covid 19 Pandemic PLUS OPPORTUNITY TO INCREASE GOVERNMENTAL CONTROL OVER OUR LIVES!!!!!!? Are many of Joe Biden's troubles P. M. Justin Trudeau's fault? Covid 19 was not merely a Pandemic...... it was an opportunity to divert billions and even trillions of dollars of taxpayer money worldwide over to BigPharma..... and.... increase the level of government bureaucratic control over our lives?!
Would you say that these three Canadian economists have presented a powerful case that what we have seen in Canada and the USA since 1974 is less than brilliant........... ... and that we should still be asking good questions and attempting to explain how this could all be done much better? The word "ludicrous" is a pretty strong word of rebuke that has been directed at the elected officials here in Canada.
What about the idea that perhaps the world economy is being deliberately slowed down..... perhaps to save the environment? 'I got a really cool word for you that tends to back up the idea that indeed..... back in 1974 P. M. Pierre E. Trudeau may well have deliberately set in motion a dampening of the economy of Canada..... which set the stage for a similar dampening of the economy of the USA.... which of course would have tended to slow down the entire world economy and the key word is Neo - Malthusianism.' .... " Modern neo-Malthusians are generally more concerned than Malthus with environmental degradation and catastrophic famine than with poverty." [Malthusianism, wikipedia] Did P. M. Pierre E. Trudeau save the world environment?
