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“Consumers don't produce inflation. Producers don't produce inflation. Inflation is produced only by too much government spending and too much government creation of money, and nothing else.”
— Milton Friedman
— Milton Friedman
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DoomPosting
“Consumers don't produce inflation. Producers don't produce inflation. Inflation is produced only by too much government spending and too much government creation of money, and nothing else.” — Milton Friedman
“Inflation is produced only by too much government spending and too much government creation of money, and nothing else.”
Well, “too much” doing a lot of the work here.
Missing a huge source of money creation, the QUALITY of which, and not only the QUANTITY of which, massively determines inflation deflation
= LOANS
Loans, in excess of reserves, which is virtually always the case — are one of the biggest sources of money printing
What determines the degree to which a loan is inflation-creating or deflation-creating, and to what degree?
= the loan’s QUALITY
The quantity affects the degree to which this inflationary or deflationary effect effects the wider market, but quantity is NOT what determines if a particular loan is inflationary or deflationary, quality is.
More concretely, quality of a loan can be seen as:
Quality = degree to which the net future discounted cumulative value created by whatever the loan is used for exceeds or does not exceed the value of the dollars spent on the loan (value measured in eg utility not dollars), in combination with the currency’s ability to capture that value (e.g. by people somehow being forced or persuaded to use the currency for everything).
I.e., very roughly:
Loan quality = utility ROI * capturability
Note that we are NOT taking about financial ROI returned to the originator of the loan, but rather capturable value creation, not just money. Nothing to do with whether the loanee pays it back, and indeed in many cases they don’t even have to in order for value to be captured in other ways.
So,
+ Very low quality loan, like when corrupt governments just loan insiders billions at zero interest = massively inflationary
+ Very high-quality loan, which gets invested in value creating tech that legitimately creates big value for the whole economy in a way the currency can capture = massively deflationary (and indeed such technological advancements are a classic example of a major cause of currency deflation)
What’s the point of pointing out that loan QUALITY, not just loan QUANTITY has a massive effect on inflation?
— Because the left has continued to absolutely TANK the quality of loans over the years, while dramatically increasing their quantity.
E.g.
+ Government forcing guaranteed massive school loans for all, skyrocketing tuition, while university quality tanks and ROI of going to university as a whole tanks = super inflationary
+ Government forcing home loan approval for everyone at extremely low rates = super inflationary
Etc.
Drop in quality of loans,
= hugest unspoken cause of inflation.
Not spoken about, because the people are highly complicit, forced to take out these huge loans to not get crushed.
But ultimately, yes, hugely the fault of the governments.
No coincidence that loans & social credit scores, in combination with elimination of private investment as a substitute for loans — are a key feature of communist regimes since the start of time.
Beware governments forcing dropping of loan quality, governments forcing huge loans whose value vastly outstrips the value of the things the loans are forced to be used for
= enormous fake money printer that most don’t even realize.
He who rules the loans rules the future.
Well, “too much” doing a lot of the work here.
Missing a huge source of money creation, the QUALITY of which, and not only the QUANTITY of which, massively determines inflation deflation
= LOANS
Loans, in excess of reserves, which is virtually always the case — are one of the biggest sources of money printing
What determines the degree to which a loan is inflation-creating or deflation-creating, and to what degree?
= the loan’s QUALITY
The quantity affects the degree to which this inflationary or deflationary effect effects the wider market, but quantity is NOT what determines if a particular loan is inflationary or deflationary, quality is.
More concretely, quality of a loan can be seen as:
Quality = degree to which the net future discounted cumulative value created by whatever the loan is used for exceeds or does not exceed the value of the dollars spent on the loan (value measured in eg utility not dollars), in combination with the currency’s ability to capture that value (e.g. by people somehow being forced or persuaded to use the currency for everything).
I.e., very roughly:
Loan quality = utility ROI * capturability
Note that we are NOT taking about financial ROI returned to the originator of the loan, but rather capturable value creation, not just money. Nothing to do with whether the loanee pays it back, and indeed in many cases they don’t even have to in order for value to be captured in other ways.
So,
+ Very low quality loan, like when corrupt governments just loan insiders billions at zero interest = massively inflationary
+ Very high-quality loan, which gets invested in value creating tech that legitimately creates big value for the whole economy in a way the currency can capture = massively deflationary (and indeed such technological advancements are a classic example of a major cause of currency deflation)
What’s the point of pointing out that loan QUALITY, not just loan QUANTITY has a massive effect on inflation?
— Because the left has continued to absolutely TANK the quality of loans over the years, while dramatically increasing their quantity.
E.g.
+ Government forcing guaranteed massive school loans for all, skyrocketing tuition, while university quality tanks and ROI of going to university as a whole tanks = super inflationary
+ Government forcing home loan approval for everyone at extremely low rates = super inflationary
Etc.
Drop in quality of loans,
= hugest unspoken cause of inflation.
Not spoken about, because the people are highly complicit, forced to take out these huge loans to not get crushed.
But ultimately, yes, hugely the fault of the governments.
No coincidence that loans & social credit scores, in combination with elimination of private investment as a substitute for loans — are a key feature of communist regimes since the start of time.
Beware governments forcing dropping of loan quality, governments forcing huge loans whose value vastly outstrips the value of the things the loans are forced to be used for
= enormous fake money printer that most don’t even realize.
He who rules the loans rules the future.
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Throwback: day Biden took power,
January 20th, 2021
January 20th, 2021
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