After years of reading econblogs, I now understand that the Federal Reserve is not creating enough money.
I can see why inflation can be good for a smallish economy, but the US dollar is widely used as a reserve currency by foreigners, and if they no longer trusted it to stay hard they’d probably switch to gold or Swiss francs or bitcoins or whatnot and… I dunno what would happen, but I kinda doubt it would be nice. (I hardly know anything about macroeconomics, so I’m very likely missing something.)
Nice example of metacontrarianism, BTW: “why don’t they just print more money” is something uneducated people often come up with, and most literate people realize there are problems with that, but that doesn’t necessarily mean it’s wrong.
After years of reading econblogs, I now understand that the Federal Reserve is not creating enough money.
I can see why inflation can be good for a smallish economy, but [...] (I hardly know anything about macroeconomics, so I’m very likely missing something.)
I think the missing bits here are that (1) creating money needn’t necessarily raise inflation, and (2) modest increases in US inflation are unlikely to trigger a mass flight from the US dollar.
I can see why inflation can be good for a smallish economy, but the US dollar is widely used as a reserve currency by foreigners, and if they no longer trusted it to stay hard they’d probably switch to gold or Swiss francs or bitcoins or whatnot and… I dunno what would happen, but I kinda doubt it would be nice. (I hardly know anything about macroeconomics, so I’m very likely missing something.)
Nice example of metacontrarianism, BTW: “why don’t they just print more money” is something uneducated people often come up with, and most literate people realize there are problems with that, but that doesn’t necessarily mean it’s wrong.
I think the missing bits here are that (1) creating money needn’t necessarily raise inflation, and (2) modest increases in US inflation are unlikely to trigger a mass flight from the US dollar.