Skip to main content

Printing Money Does Not Cause Inflation

Printing Money Does Not Cause Inflation

Principle Observation

Inflation does not happen just because more money is brought into circulation, so long as the following 2 conditions are met in the use of that new money:
  1. The new money does not get spent - If nobody spends the money, how can it possibly signal the market is demanding a new price?
  2. The new money is used to buy streams of economic rent, mainly real estate, mostly through mortgages. The increasing price of real estate has no costs of production to its investor. So how can it possibly affect the price of goods and services?

The Testimony of Recent History

The 2020 pandemic is a perfect exposition of this principle. Central bank money to the value of the nations GDP was created to bail out business and individuals for the effects of the government interventions. Pundits were immediately wailing about inflation. Yet it did not appear on the scene at all. But house prices boomed when half the nation stopped working and stayed at home! I ran a back  of a fag packet calculation and, order of magnitude, the total covid money created was about the same as the total rise in residential house prices. So called 'inflation' only appeared in 2023 following the curious Ukraine war where huge price rises, not inflation, were injected into all economies because the supplies of cheap goods and services were cut off by our government policies for the war.

Look to any 'money printing' period and if you look carefully, free from any ideological informant, free from any urge to save the planet, you will see the effects are always the same. Why would they not be. This is a natural force. Water always settles at the lowest level during a flood, theres nothing you can do about it, except to interfere and force nature to intensify the flood.

Why Does Nobody Speak About This?

This, and 2) in particular, will come as almost totally impossible to understand for most people, even the financial experts, and with special peculiarity to activists claiming to be saving us from the banks. Because it is never taught and it is virtually forbidden from public discourse, by civil society itself. It's a bit like during the pandemic pleading with people that wearing masks does not work and actually is a greater risk to ones health. A collective and unconscious narrative is fully in control of how the great masse of people have freely chosen to think about it. 

And why do we forbid ourselves from speaking about it? Well, because we are all balls deep in real estate. Or if not, aspire to it one day. And yes, that means the poor too my friends. Everybody lies. So a psychological barrier must be adopted by the collective, to escape from the disgraceful reality of it, sending the entire matter, conveniently to the deep. 

Economic Rent - The Unconsciously Hidden Element

For more detail about the most difficult of the two activities to absorb and observe objectively - what this means is an asset of economic rent will rise in price, without needing any further inputs of the legal owners hard work, skill and enterprise nor their savings in capital. Obviously this is the ideal asset to acquire. No additional investment is required to receive an income from your asset. It rises in value through economic activity elsewhere - somebody else pays you for it, so its a form of indirect slavery. This value is known as an obligation to pay called economic rent. Location values by far being the biggest form. Whats more the total stock of economic rents, mostly location value, are by far the biggest of all assets, which are estimated to be worth more than $500 trillion. Far more than all money of all kinds, in circulation. 

Don't get me wrong here. I'm not saying this kind of investment is right or wrong, or that people doing it are evil or good. I am just pointing at it. In case you're serious about this kind of thing, this will give you an additional angle on what's really happening.

Consequences and Summary

The consequence of nations persisting with this latent fundamental policy must mean there will be inevitable systemic shock across the entire economy. A small child knows that if you take more out of an economy than is being put it in, it can only stay temporarily above water. And this policy persists over centuries, and tends to cycle roughly every 20 years.

So 'Printing Money Does not Cause Inflation', so long as either of these two conditions are met.
  1. The new money does not get spent
  2. The new money is invested in economic rent - to all intents and purposes: real estate