Posted on 04/27/2025 10:28:46 PM PDT by Angelino97
“Government money printing not bank lending is the problem.”
Government printing is shorthand for bank lending. When the government wants to print money they lower interest rates, banks loan more, and every loan is printed money.
Quantitative easing is the Fed buying treasuries.
And “stimulus” is the government deficit spending.
All three of these can be bad when done at the wrong time, like right now.
The government doesn’t need a bank loan when it wants to spend money it just does it and sends Treasury an IOU.
This is why inflation got so heated under Biden, although Trump’s response to Covid likely got the ball rolling.
Inflation stayed elevated even after interest rates where sharply increased because (again) government kept spending.
Reducing the cost of capital is NOT inflationary and is exactly what’s needed in 2025.
“Reducing the cost of capital is NOT inflationary”
Inflation is caused by increased money supply. The whole point of lowering the cost of capital is so business and people take loans. Every loan is inflationary because money is printed to make the loan. Every dollar of every loan is increased money supply.
Loans = new money created = inflation.
Lowering the cost of something does NOT cause inflation, and that includes lowering the cost of capital for businesses and individuals.
Lowering the cost of a $400K mortgage from $2400 to $2000 is NOT inflationary.
Government spending trillions of dollars it doesn’t have IS inflationary.
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