[quote=FlyerInHi]CAr, how does your deflation part relate to the reflation part in the video?
If you don’t print money, and you keep on contracting credit, how does the economy recover?[/quote]
It’s not so much about the pros and cons of printing money as it is about how the printed money is spent. I don’t think that ever-increasing asset prices are an inherently good thing — it depends very much on how assets are allocated in an economy.
I also don’t think that “growth for the sake of growth” is a good thing. IMHO, you can have no growth, but a fully functioning and sustainable economy. You can also have “growth” in an economy where assets and resources are allocated in a very undesirable and unsustainable way…a way that will ending up causing much more damage than whatever good that “growth” caused on the upside.
If you allow a bubble to fully deflate*, I think the economy can get to a point where prices, incomes, debt burdens, and wage/income gaps reach sustainable levels…and this can lead to real, healthy growth.
*When I say that bubbles should fully deflate, that does not necessarily mean that money printing can’t happen at the same time. In an ideal scenario, the printed money goes toward productive investments like infrastructure and R&D that will offer long-term social and economic benefits that will enable truly productive growth to thrive going forward. Asset price (re)-inflation should never be the policy goal when the economy is repairing itself (deflating) from the misallocation of capital.
Also, if the money printing happens the way it does in the video (primarily buying Treasuries), taxes should be increased (preferably on profits from speculation) to offset the additional debt that is being taken on by the government, IMO.
Finally, taxes on speculative trading should NEVER be lower than taxes on productivity/labor. That is one of the most insane tax policies out there.
