Some Thoughts on Government Debts and Money Printing

An particular argument that urks me is when people assert that when inflation occurs due to more money being produced than goods to tie it to, that this is “just inflationary”. And, it is, sure.

But the implicit assumption here is one of near-instantaneous equilibrium of the money supply, as if “things pretty much just go up together, proportionally”; or at least, that and similar explanations are issued at moderators to contentions raised.

But the truth is that inflation, at least as I have perceived and experienced it, is rarely, if ever, uniform.
No, instead, new inflation is grossly non-uniform, with the new money inflating certain parts of the economy more than others, and, typically it is in things that people “need”, as opposed to just what people “want”.
In my honest opinion, this is one of the real vs theoretical issues of monetary theory that is not often considered, especially when large government deficits and their general “okayness” is being considered, and how they are not constrained to “normal” – dare I say, rational – financial considerations.

In that sense, governments, are morally negligent when they print new money to “just” pay for their debts, and “just” create some inflation – for whatever “justified” reasons there may be.

And, in my opinion, it is unwise to use government debt as a coverall for “problems”, as if the expression of said problems was the worst possible outcome. It may well be – and often is the case – that the “problems” are, unfortunately, well-deserved for past mistakes, and that government intervention “to save XXXXX from this and that” does more to ingrain the problems into the systems further, rather than allowing them to express, and allow people and govts alike to actually fully appreciate the consequences of certain beliefs, thoughts and actions.

Truly, it is a problem with fallen human nature, but we – both individually and collectively – too often seek to escape the consequences of our actions, whilst simultaneously saying the problem(s) is “something else”.
In my honest opinion, skyrocketing governments debts and the printing (effectively) of new money to pay said debts, are just examples of trying to “fix” (escape) problems, instead of appreciating them more fully, and learning from them.

Again, in my opinion, theorising that largely justifies such actions fails to appreciate the dynamics and non-equilibrium, non-uniform nature of such systems, and treats them as if they are not much more than push-and-pull mechanical systems – such theorising is found to be wanting in its practical, theoretical and moral application.

So, government debts, like private debts, are not inherently bad, but differentiating government debt from private debt on the basis that “it doesn’t need to be paid back” and, effectively, “money can just be printed with some (not-bad) inflation (maybe) to repay debts (or even to ‘stimulate’ economies”” is unsound, and even dangerous.

Generally, we would benefit from stepping back and appreciating the bigger picture: that we are, more often than not, trying to individually and collectively escape the consequences of our actions; and that, in the long run, we might be better off with greater financial, technical, ethical and moral accountability with respects to the way we create, manage and repay both debt-money and real money.

I hope you enjoyed the thoughts.

Regards,

Stewart

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