Also Japan has a debt to GDP much, much greater than the US, and still seems to function fine as a country, so how do they do things differently?
Japan has essentially been doing this (the mechanics are a bit more complicated, but the effect is essentially the same), and they've been able to get away with it because inflation has been low for the last three decades due to external factors such as globalisation.
Now inflation is starting to rise even in Japan, so they may have some issues in the not too distant future.
Additionally some experts say that the inflation was bigger in Europe because the governments didn't do investments with new debt.
The definition was changed only because economists decided inflating the money supply was a brilliant economic policy and the old definition became inconvenient.
When you realize they changed the definition only for better optics it's easier to question the underlying principles.
That probably isn't true, both because it isn't that obvious that the economists thought it was a good idea or that they were the ones who changed the definition. "Economists" don't have any power over anything and the consensus position seems to tend towards disagreement with government policy.
Inflation is one of those topics where there seems to be a dearth of actual economic evidence bought to the conversation. The policy justification in the public discourse tends towards just-so stories.
This is a good overview of the history of the term "inflation."
Ideally people would specify which inflation they're referring to, like monetary Inflation or price inflation. Short of that though, until we started moving to full fiat currencies inflation without any qualifier was inflation of the money supply. After the move to fiat they repurposed the braod term to mean price inflation, presumably because monetary inflation isn't meaningful when your system is based entirely on manipulating the money supply.
In fact, in those situations it’s necessary to increase the money supply to avoid deflation and other issues, as the existing folks with money/resources otherwise just have to sit on their hands and squeeze everyone else to get rich.
In an actual growth environment, Printing more money keeps everyone roughly the same level of poor/rich overall.
The issue is when population is decreasing or actual economic output is decreasing, but rather than withdrawing money to compensate, more money is printed to try to keep the graph going up and to the right.
IMO that has been an ever increasing trend since around the 90’s in the US.
Monetary inflation = money creation by definition. Whether that makes everyone poorer depends on other factors though, like how the money enters the money supply and what current market dynamics are.
Price inflation doesn't equal money creation though. Printing money can cause price inflation, but other things can as well. Printing money too slowly relative to the economy could actually not keep up, prices can fall even though the money supply increase. There may be a corner case or two, but I do pretty much agree though that price inflation makes everyone poorer.
Then we'd expect to see deflation when the supply chain crisis is resolved - which seems unlikely but I suppose it cannot yet be ruled out. I doubt anyone will be held accountable if that deflation doesn't materialise though.
It is an interesting question where CPI inflation is supposed to be coming from if not inflation in the money supply.
I mean you’d have to be completely stupid to believe that what they did had no impact on inflation.
If tripling the amount of base money has no effect then logically destroying 70% of the base money would also have no effect, but I never see people advocating that
Its one thing when outside parties offer debt to a government, its effectively a show of faith in the government to pay its liabilitirs and still exist long enough to do so. Buy what does it even mean for a government to extend debt to itself?
You may be interested in reading about Modern Monetary Theory (MMT).
I'm not an economist, but had a mild interest in macroeconomy some years ago and found MMT eye opening.
What I was trying to ask there is what does it mean for debt to exist when there is no relative risk?
When a third party extends debt in good faith, it says something about their estimation of risk.
When a government extends debt to itself it literally means nothing, if one party fails they both do. More importantly, there's no recourse if the debtor defaults. The debt there exists purely as smoke and mirrors, it is created only so they can claim money wasn't made out of thin air.
I get where you are coming from. If I'm not mistaken, and according to MMT, a government buying its own debt induces future inflation and a decrease to interest rates.
All money nowadays is fiat (i.e. created out of thin air by a few actors), so it's not like any form of money creation and destruction means much more than changes to the inflation rate, interest rate and the derived swings to the economic cycle.
When you peak behind the curtain and see how an MMT system actually works, it's pretty clear that the whole thing is just for a game and, at best, a benign one.
As long as it isn't hurting anyone, I can see it being plenty useful given what we can do with it even if the system is just a game. As soon as the system starts harming people though, say because they can't access basic goods or live a happy life, simply because of how the game works then it skips right past being an entertaining game and into the realm of being a dangerous, arguably evil, weapon.
You get the market rate for your highly fungible regulated market instrument.
Investors are not emotional they can sell that shit and buy anything else from Silver to TSMC shares in a heartbeat. What makes it shit? Being a penny more expensive than the quant's model.
They can borrow from the FED real cheap using QE. But the only free lunch is the big bang! Printing money causes inflation especially in asset prices and causes bubbles.