Thursday, January 21, 2021

Tag: How All That Extra Stimulus Money Could Lead to Price Inflation

How All That Extra Stimulus Money Could Lead to Price Inflation

from Silver Doctors:

The central bank is heavily increasing the quantity of money while economic output contracts—Isn’t that inflationary?

by Thorsten Polleit via Mises

In an effort to “fight” the consequences of the politically orchestrated “lockdown,” the Fed pumps vast amounts of money into the economy. It injects base money into the banking system. It also monetizes outstanding debt and finances the US administration’s deficit spending policy by issuing new money. This not only increases “excess reserves” in the banking system, but also ramps up the money stock in the hands of firms and consumers.