A Black Hole In Economics: Money Creation And Its Consequences, Session Seven: "The Disease And The Cure"
How will politicians try to cure the problems caused by printing too much money? By printing even more money, of course!
In Lesson Six, “Uncle Sam’s Unpayable Debt,” I argued that the US government’s current debt and future financial obligations are so extensive that they cannot be paid in today’s money, that is, in money of today’s purchasing power.
Dealing with the federal debt burden is becoming urgent, so our politicians must act soon. But exactly what actions will they take? What will central banks do? The financial regulators? The legislatures? The commercial banks? What are their realistic options?
Their most likely actions will at first appear to be a paradox. Money creation in the hands of the government is a significant cause of our debt problems. Ironically, money creation will also be the government’s proposed solution to this problem. Money creation is the disease, and it will be the proposed cure.
This lesson is in three parts:
Part One: A summary of why inflation (excessive money creation) causes governments to accumulate unpayable debt.
Part Two: Why does the government see its unpayable debt as a mere cash flow problem, why does it have only a few options to solve it, and why will it choose financial repression?
Part Three: What will financial repression look like in practice?
The video is 80 minutes long, but you can enjoy it at 1.25x. As usual, there is a PDF of my lecture notes.
Thanks for reading and watching.
HardmoneyJim
January 21, 2024
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I agree. It is most likely that the money manipulation problem carries with it a money manipulation solution. That can is showing a lot of dents from being forever kicked down the road. Trouble is, I wonder if I can see the end of the road from where I stand.
For curiosity, have you had any input from both people I admire on hard currency, George Reisman or for that matter Judy Shelton? I know it would be a harsh solution but wouldn't immediately allowing a free exchange of gold for dollars crater the manipulation of money as well?
The grave trouble that I see is there are so few that understand the problem and even fewer that honestly want to solve the problem. Tragically, it is the money system that is broken while we live in a time of unimaginable productive wealth that only impoverishes us by way of larky environmental restrictions.