August 23 2020 at 5:20 pm
OK, so what happens if the government prints £1.5trn or so of new money to pay ooff all it’s debt, then pays not interest on those reserves.
The broad money supply is about £2.5trn at the moment, so will have instantly increased it by 60%. The base money supply is only £100bn.
What do you think happens to the value of the Pound and to inflation if you dramatically increase the money supply by over 50% overnight?
I’ll wait for your response before making some other points.
Richard Murphy says:
August 23 2020 at 7:16 pm
Nothing at all
Gilts and NSI are effectively already in money supply as they are liquid
So as I say, nothing changes
M0, M3 and M4 and all the rest are different things. With different effects upon inflation. Something which anyone – unlike Snippa – commenting upon debt and money should know.