The government
really doesn’t “print
money” in any meaningful
sense. Most of the money in our monetary
system exists because banks created it through the loan creation
process. The only money the government really creates is due to the
process of notes and coin creation. These forms of money, however,
exist to facilitate the use of bank accounts. That is, they’re not
issued directly to consumers, but rather are distributed through the
banking system as bank customers need these forms of money. The entire
concept of the government “printing money” is generally a misportrayal
by the mainstream media.
[I don't get it. So what this about hyperinflation and precious metals?]
So to "create" money, the government
buys bonds (from banks?). So the government gives cash to banks in exchange for a promise to pay it back with interest. So where does the cash come from? Haven't they run out of cash yet to buy bonds with?
So how does inflation occur? I always thought it was because there was more and more money in circulation, causing the value of money to go down (so prices go up).
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