First, let’s be clear we’re not printing lots of money to stay afloat. It is true that the Bank of England has created £435 billion of new money using quantitative easing since 2009. Despite this UK broad money supply (M4, as it is called) has fallen since then. To say that printing money is creating excess money supply is just wrong as a result.
Butchering the jargon a bit broad money is MV. Base money times velocity of circulation. We’ve done the QE because V fell hugely, massively increasing (like 10x) the M thus makes sure that MV doesn’t fall. He’s just entirely missed the very reason we did all of this.
To say that’s we’re heavily in debt is also wrong. I refer to the evidence here. The Bank of England would say we owe 89 per cent of GDP in national debt at present. This, however, ignores the fact that the Bank of England actually owns one quarter of that debt. The true figure for national debt actually owing to third parties (which is what matters) is, then, 67 per cent of GDP, which is historically an incredibly low rate.
And as V recovers then we’re going to have to reverse that QE to get the excess M out of the economy or we will have significant inflation.
Nor is inflation a concern. Inflation is running at just over two per cent now. There is not a hint (barring adjustments caused by Brexit) of more to come. To talk of hyperinflation is absurd.
Why then are the Fed and BoE discussing when they’re going to be reversing QE?
And in that case of all these things are taken into account let’s then be clear that the exchange rate cannot be imperilled by money printing. In fact, again the exact opposite is likely to be true because money printing will boost the economy towards full employment, will encourage investment and will boost productivity, all of which improve the exchange rate. So once more the prediction made is wrong.
Depends how much you print. What’s the value of the Z $ these days?
And isn’t it odd that someone attempting to describe a part of economics seems entirely unaware of effects at the margin? Where, you know, all economics happens?