Money creation, good and bad
Sound money, like reliable energy, is essential for human flourishing
I recorded this podcast on April 28, 2023, on the Ayn Rand Centre (UK) youtube network. As usual, an “approximate” transcript is also included.
The discussion centered on the enduring inflation, troubles in the American regional banks, and financial repression.
To open the discussion, we first made the case that sound money, like reliable energy, is crucial for human flourishing,
We then parsed the proper definition of inflation to get a good understanding of its cause and its consequences. We emphasized that, contrary to most contemporary economists and pundits, inflation should not be defined as increased consumer prices. It is much more than that. Consumer prices are just one important symptom of inflation, but others are equally or more important.
Using Quantitative Easing as an example, we demonstrated that a correct understanding of inflation can help you anticipate movements in both asset and consumer prices.
Next, we briefly updated the regional banking crisis in the USA, where depositors continue to pull their money out of the banks to invest in higher-yielding, government-related investments. We believe the real economic risk related to deposit flight from the banks is loss of bank reserves and the potential knock-on effect on productive money creation.
Due to time constraints, we had to stop the video there, but the attached “thinking notes” contain bonus material on financial repression and gold that you will find interesting.
As usual, your comments and questions are welcome. If you enjoy my Stack, please smash the “like” button and send a link to your friends!
HardmoneyJim, April 29, 2023