The US Federal Reserve (Fed) recently announced that it could inject an infinite amount of money into the economy. This statement of the Fed was interpreted as the USA can print an infinite amount of money.
The reason for the Fed to inject money into the economy is to keep markets under control and provide liquidity. The Fed thus prevents a possible liquidity crisis and contributes to people affected by the coronavirus. So why can’t we do the same when the US prints dollars according to his head?
Of course, everybody knows that a central bank cannot print money randomly today. More precisely, central banks have the power to do this kind of thing, but they prefer not to do such a thing.
At this point, of course, concepts such as inflation are included. Perhaps one of the simplest lessons of the capitalist economy is that inflation will increase with the increase in the amount of money in the economy.
Altuğ Öztürk, one of the well-known names of the domestic crypto money industry, says that this course may not always be correct. “Is Inflation Inflated By Money Pressure?” According to Ozturk, which is based on his article, countries may have to print money especially in times of crisis (such as Fed injecting money because of coronavirus). In other words, scenarios are experienced from time to time so that central banks have to print money according to their heads.
Printing money under normal conditions causes inflation, this part of the job is in the pocket. But money could press it comfortably in moments of crisis in the US they can not cause countries like Turkey?
Erkan Öz started his response by saying that if the amount of money in an economy increases, inflation will increase. According to Öz, the fact that this rule does not work, that inflation does not increase while the amount of money increases, is not a success, but a problem.
Crypto Wisdom, who we know from the local crypto money world, also made a comment and answered this question by giving an example that crypto followers will understand.
With this response, Crypto Wisdom emphasized that the dollar is actually a reserve currency, and reminded that there are serious differences between the USA’s currency and other countries’ currency.
In the meantime, another social media user stated in his reply to Öztürk that “the USA did not issue money” and “used bonds” in return for the money it issued.
The rigid Mahfi of Turkey’s leading economists responding to a statement made by that user and the US press said that the money actually hardly be mutual.
Unlike cryptocurrencies, the supply of fiat currencies is unlimited, so central banks have the power to print unlimited amounts of money. The Fed clearly shows that it has this authority. Depending on the head of the Fed or a different central bank may cause an increase in inflation as well as a major debt crisis.
How the central banks’ monetary policies affect / will affect the economy is a big debate. There seems to be no clear answer to this question, as there are so many factors in the middle.
At this point, “Should central banks be able to print unlimited money?” comes the question. Perhaps, as Erkan Öz points out, states will turn back to limited money over time.