I wish I had a dollar for every time I have seen “printing press” referred to in the last few years.
But I’m a bit confused. In the private sector money is created when people take on debt, how is that any different to the Government creating money by taking on debt?
I see sovereigns stepping into the breach to ease the economic impact of private deleveraging. But so far they are doing so by taking on debt obligations. I have not seen any money created without a corresponding obligation – so why all the talk about running the printing press when in reality no one (excluding Zimbabwe) has been near the big red button yet?
So long as there is an obligation to repay and a mechanism to control interest rates, runaway inflation can be controlled and the ultimate weapon against deflation is ‘true’ printing (without obligation)
The issue with monetary policy is not that it is setting us up for disastrous extremes which cannot be controlled but that it has a limit in being able to generate real growth. In a finite world perhaps that’s not such a bad thing – once everything is repriced to recognise that reality.
An adjustment to the growth paradigm is probably going to take a while with quite a few rotations between “Growth is back” and the “sky is falling” still to come.
That’s the big picture delusion I work under - I prefer it to the doomsday versions