1/ The most relevant measure of real-economy & (perhaps) inflationary form of money is not M2
It’s the amount of bank deposits held by the non-financial private sector
By you
Bank lending and government deficits (not offset by private sector deleveraging) “create money”, not QE
It’s the amount of bank deposits held by the non-financial private sector
By you
Bank lending and government deficits (not offset by private sector deleveraging) “create money”, not QE
2/ QE exchanges bonds (asset for the pvt sector) into reserves or bank deposits (assets for the pvt financial sector)
Just an asset swap
You as private person don’t have more bank deposits. At best, few pension funds and asset managers have more bank deposits
Not CPI relevant
Just an asset swap
You as private person don’t have more bank deposits. At best, few pension funds and asset managers have more bank deposits
Not CPI relevant
3/ When you get a loan or the govt sends you money w/o asking for taxes back…
You have more bank deposits.
Potentially, you could spend them (inflationary form of money)
If it’s a loan, that’s very likely as nobody forces you to take a loan. You chose to
Watch lending data
You have more bank deposits.
Potentially, you could spend them (inflationary form of money)
If it’s a loan, that’s very likely as nobody forces you to take a loan. You chose to
Watch lending data
4/4 If it’s a government check, you still have more bank deposits
Potentially inflationary if you spend it
But as you didn’t ask for it, you might want to just use it as a saving buffer or pay back debt
If you go for the latter, you destroy that money
Not inflationary
Potentially inflationary if you spend it
But as you didn’t ask for it, you might want to just use it as a saving buffer or pay back debt
If you go for the latter, you destroy that money
Not inflationary
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