economic chatter

[oof_suits_you]

the news online atm is talking about the possibility of printing more money to deal with the recession. now, my questions on this are

Comments

[oml404]

Printing money would be designed to counter deflation caused by plummeting interest rates. Deflation can be as serious as inflation for the economy since it reduces economic activity.

Money would be made available to banks in this instance is my understanding, allowing them to loan it out to regular people and thus increasing the amount of money in circulation. Complicated financial weirdness means that banks are allowed to loan out significantly more than the money they are given and the more banks that do this the more money enters circulation and the bigger the inflation.

[olithered]

The government has to borrow money to fund VAT cuts and bank bailouts.

It can print money to pay off these debts/bonds easier - making them worth less as well as devaluing everyones savings.

[feanelwa]

And to keep us 1:1 with the Euro for long enough that some of the economic responsibility can be palmed off on the EU.