You mostly seem to be noticing that there is a difference between the nominal economy (the numbers on the prices), and the real economy (what resources you can buy with currency). That’s certainly true—but actually beside the point. Because the point is that inflation (actually, NGDP) below trend, causes “business-cycle” recessions. The reason is that many contracts (wages, debts) are written in nominal terms, and so when the value of the Unit of Account (function of money) changes in an unexpected way, these fixed nominal contracts don’t adjust quickly enough. The result is disequilibrium, rising unemployment and bankruptcies, etc. The fix is to keep nominal prices rising on trend.
Having exchange rates fall, or gold or asset prices rise, is an independent thing. It only matters if the currency begins to be abandoned (as you suggest with dollar prices in Russia), and especially if wage and debt contracts begin to be written in a different Unit of Account. It is stability in the value of the Unit of Account which affects macroeconomic stability.
Summary: “printing money could increase prices” is the whole point, and it doesn’t matter if “prices fall in a harder currency” or there is “deflation in gold and bitcoin prices”. As long as the local currency is the Unit of Account, then changes in the value of the local currency (aka local currency aggregate demand) are what matter.
As soon as agents start to realise that you started to print money, they begin to change their contracts into a harder currency. It has happened in Russia in 1990s, as all contracts were in dollars, because everybody was afraid that the governemnt will print more money. Government fought back, by banning use of foreign currency names in contrats. People created “artifical units”, and everybody knows that any “artificial unit” in a contract = 1 USD. So one could increase price by printing money obly in small extent, as it undermines the believe of agents in your currency, and they will stop to use it.
You mostly seem to be noticing that there is a difference between the nominal economy (the numbers on the prices), and the real economy (what resources you can buy with currency). That’s certainly true—but actually beside the point. Because the point is that inflation (actually, NGDP) below trend, causes “business-cycle” recessions. The reason is that many contracts (wages, debts) are written in nominal terms, and so when the value of the Unit of Account (function of money) changes in an unexpected way, these fixed nominal contracts don’t adjust quickly enough. The result is disequilibrium, rising unemployment and bankruptcies, etc. The fix is to keep nominal prices rising on trend.
Having exchange rates fall, or gold or asset prices rise, is an independent thing. It only matters if the currency begins to be abandoned (as you suggest with dollar prices in Russia), and especially if wage and debt contracts begin to be written in a different Unit of Account. It is stability in the value of the Unit of Account which affects macroeconomic stability.
Summary: “printing money could increase prices” is the whole point, and it doesn’t matter if “prices fall in a harder currency” or there is “deflation in gold and bitcoin prices”. As long as the local currency is the Unit of Account, then changes in the value of the local currency (aka local currency aggregate demand) are what matter.
As soon as agents start to realise that you started to print money, they begin to change their contracts into a harder currency. It has happened in Russia in 1990s, as all contracts were in dollars, because everybody was afraid that the governemnt will print more money. Government fought back, by banning use of foreign currency names in contrats. People created “artifical units”, and everybody knows that any “artificial unit” in a contract = 1 USD. So one could increase price by printing money obly in small extent, as it undermines the believe of agents in your currency, and they will stop to use it.