Deficit Spending Ama Money Printing Madness!!!!

I am not very schooled in economics but niko na swali. If the world keeps printing money like it is going out of fashion… 2021 si itakua mwisho wa global economy? Or how does this Economy thing work?

Ingia hapo google and read about quantitative easing,inflation then urudi hapa.

Years ago…[ATTACH=full]305562[/ATTACH]

First what is money?

Money is a medium of exchange. Acceptable medium of exchange. - How can you buy a car in Japan na huko Nairobi? The guy has to receive something to release the car. Money it is. Yet you don’t know that guy.

So Money essentially is nothing, but just a medium of exchange. So if money becomes more in the system inflation arises, money paper amount loses value as many people have it yet goods and services remain the same.

So theoretically, if money piles up in form of debts, sijui grants, it means people have to WORK HARD because goods and services are same but people are “rich” in money amount. For you to eat you will need more money paper amount.
Check Zimbabwe case.

So let me ask. Niliona that America has a 5 trillion dollar deficit this year alone. And it is facing an economic downturn of approximately 15% meaning Government revenue will take a hit even as spending rises. So wacha niulize tena. If the American Govt needs to borrow in such an environment won’t lenders ask for higher interest? And won’t that be a problem?

Crazy times…

ECONOMY
[SIZE=7]NY Fed President Williams says U.S. is not ‘anywhere near’ its limits to run up debt[/SIZE]

KEY POINTS
[ul]
[li]New York Fed President John Williams said he’s not worried now about the swelling U.S. debt and deficits as it’s more important to help the economy during the coronavirus pandemic.[/li][li]The total government IOU is now $25.6 trillion and the deficit is expected to breach $3 trillion in fiscal 2020.[/li][/ul]
[ATTACH=full]305573[/ATTACH]

Burgeoning levels of government debt are not posing a broader threat and have been necessary to battle the coronavirus pandemic, New York Fed President John Williams said Thursday.

Even with the federal IOU at $25.6 trillion and counting, the central bank official said there’s still plenty of room to spend more.

“I don’t think we’re anywhere near the limit to that,” Williams said during a webinar presented by Stony Brook University in Long Island. “The U.S. government is issuing a lot of debt right now, and global investors are gobbling it up.”

Total government debt has jumped $2.2 trillion since just before the crisis began, an increase of 9.4%, thanks in good part to the CARES Act that provides more than $2 trillion in rescue funds for an economy that could contract more than 40% in the second quarter.

Congress has been debating additional stimulus that could run to $3 trillion as states begin a tentative reopening of their shuttered economies.

The U.S. already had been on its way to a budget deficit in excess of $1 trillion that now likely will be closer to $3 trillion, according to recent Congressional Budget Office estimates.

All of that has resulted in $310.5 billion in interest payments in fiscal 2020, a total held in relative check by record-low interest rates for government debt as the Fed has sent its benchmark borrowing rate to near zero. While central bank officials have expressed a commitment to keep rates low for an extended period of time, Williams said he doesn’t see the need for negative rates.

He added that he does not see the trillions in lending and liquidity programs that the Fed has initiated will lead to troublesome inflation.

“I don’t see any problems right now in terms of deficits,” Williams said. “Obviously, in the long run we have to make sure that the fiscal policy in the federal government is on a sustainable path.”

He added that he’s more concerned now with making sure money gets to the right places, particularly the state and local governments that had to lay off workers during the financial crisis.

https://www.cnbc.com/2020/05/28/ny-fed-president-williams-says-us-is-not-anywhere-near-its-limits-to-run-up-debt.html

We are bombarded with all theory in an economics class. However the best indicator of a thriving economy is your neighbors! It is you. What can you afford?

Peg in your income and back pedal time-wise. Look at the Consumer Price Index( CPI); tells you whether your money has less value etc. What level of comfort does your money afford you? Beyond that get a slightly broader view and gauge yourself against the neighbors in order to see whether there is relative or absolute wealth/poverty.

If they just print money, then you will need more money to buy the same items in similar or less quantities. If your “neighbors” don’t print money too, then you gain, coz you simple cross over into their territory and buy cheap from them. That is what the US does to the rest of the world. They print extra dollars, so life is real “expensive” in the US as compared to Africa,but the citizens can afford coz they are given as much money to create the leverage.

There are more in-depth finance and economy metrics beyond GDP. Most fail to capture the real wealth of 80% of the population. The metrics are used by entities who look at a country, not the common man. Some will talk of Quantitative Easing etc. Let them ease your budget and afford you more comfort, and that is how the economy grows. The US is a better economy coz the poor have food stamps, feeding centers, affordable housing etc. On the other end of the money spectrum, the rich have their expansive homes in the expensive cities! Countries with better economies than the US can afford to pay the jobless a salary.

This is lunacy. Something has to give. If the large employers like restaurants and retail are coming apart… I think there will be an issue. Something is going to give. Whether is Geo politically/Natural Disaster/New(mutated) Pandemic…the world is on too fine an edge… This Economy will fall… And when it does it shall not return in its current format. My crystal ball says so. But I add the disclaimer that it is sometimes foggy :D:D

Too much money in circulation than needed, it will lose value.