thegreatdivide wrote on Dec 15^th, 2024 at 4:48pm:



poor FD, making a habit of (or suffering from short term memory loss) of denying what he said a few post back...oh dear. 

Unless he was referring to the RBA not creating inflation, as opposed your assertion re the RBA printing money.

Regarding which, note this from the MMT thread (#1032):

How to Avoid Hyperinflation

Alarmed economists contend that a Weimar-style hyperinflation is the inevitable outcome of government-issued money. But as Michael Hudson points out, “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”

Issuing the money directly will not inflate prices if the funds are used to increase the domestic supply of goods and services. Supply and demand will then go up together, keeping prices stable. This has been illustrated historically, perhaps most dramatically in China. The People’s Bank of China manages the money supply by a variety of means including just printing currency . In 28 years, from 1996 to 2024, China’s money supply (M2) grew by 52 times or 5,200%, yet hyperinflation did not result. Prices remained stable because the funds went into increasing GDP, which went up along with the money supply.

Hopefully China DID print some of that vast increase in money supply, as asserted above,  othwise interest on government debt will cripple the economy - which Western economists have  been forecastig for two decades,  incorrectly. 

Bobby. wrote on Dec 15^th, 2024 at 5:08pm:


Sorry to inform you bobby, the RBA didn't cause ALL of Oz's inflation by printing money (just like the PBofC money printing hasn't  caused inflation in China in the last 3 decades).

Yes the RBA sold and repurchased "printed" bonds (explained previously... "it's complicated") to raise funds to support laid-off workers in the covid locked-down economy; some of these funds  were badly directed into increasing the purchasing power of people who didn't need the funds (eg Harvey Norman...) which resulted in excess demand when the pandemic ended.

But the main source of the inflation wasn't the RBA, rather it was war; and  broken supply chains and reductions in the available workforce due to the lingering effects of the pamdemic.

FD has his own version for the causes of the post pandemic inflation, beyond the Reverse Bank; he blamed it on workers who couldn't restrain their spending. 

Bobby. wrote on Dec 15^th, 2024 at 5:47pm:


If the RBA had refused to print money at the start of the pandemic, then locked-down workers and benefits recipients without bank savings  would have starved to death in their homes.

Quote:


No, just more dead bodies....

Re nflation(from MMT #1032Bobby. wrote on Dec 16^th, 2024 at 1:24pm:


[Hopefully you agree the government HAD to print money during the pandemic.]

In normal times, governments "borrow money" by selling bonds to dealers and private institutions (and banks)  in the primary market, who on-sell the bonds  to private citizens via the secondary market, in order to avoid raising taxes. (It's all an entirely unnecessary ruse).

Provided the bond-issuance program funds productive activity (in the public or private sector) - and the nation's productive capacity meets demand, then inflation won't eventuate because  there will be no upward pressure on prices, given sufficient supply. 

The greater problem is the demand for government to 'balance the budget', which results in long term market failure like houses being 'priced out of the market' in the absence of sufficient public sector housing.

Re inflation and money printing, see #1032 in the MMT thread:

Issuing the money directly (ie printing it)  will not inflate prices if the funds are used to increase the domestic supply of goods and services. Supply and demand will then go up together, keeping prices stable. This has been illustrated historically, perhaps most dramatically in China. The People’s Bank of China manages the money supply by a variety of means including just printing currency. In 28 years, from 1996 to 2024, China’s money supply (M2) grew by 52 times or 5,200%, yet hyperinflation did not result. Prices remained stable because the funds went into increasing GDP, which went up along with the money supply.

In fact the problem in China currently is DE-flation, happening because timid PBofC economists are frightened to increase government debt, and can't raise taxes on the middle class whose wealth is evaporating in a housing-as-private-investment price slump, meaning private consumption in China is currenty weak despite the so-called "overcapacity"** of Chinese industry.

**The West can't compete with this "overcapacity" eg with more competitve Chinese PVs and EVs, and so the EU and US  are raising barriers to Chinese imports.

   

TGD,
Quote:


So you say -
it's more likely that the RBA buys those Govt. Bonds as no one else wants them.

Bobby. wrote on Dec 14^th, 2024 at 7:21pm:


Yes Bobby. Can you tell the difference between the two statements?

Bobby. wrote on Dec 17^th, 2024 at 11:34am:


Can you explain why the RBA always seems to be "printing" more money when inflation is at its lowest? And the least when inflation is highest?

Or is that the extent of your understanding?