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44 votes

Why can't a country print its own money to spend it only abroad?

This wouldn't work - for the money to have any value abroad, it has to find its way back to the source country. Consider an example; the President of Ruritania wants a Swiss watch. He prints a ...
Oscar Bravo's user avatar
44 votes
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If no one knew about inflation, would inflation take place?

In this case, I think it is best explained without any economics jargon. If your thought experiment is taken to the extreme and no one knows about the money, it would literally imply that the money ...
AKdemy's user avatar
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40 votes
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Why can't a country print its own money to spend it only abroad?

In order for one country to spend in another, it needs to exchange its currency for the currency of the other nation. This is done through something called the foreign exchange market. Like most ...
Sam's user avatar
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39 votes
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Are there historical cases of country A printing the currency of country B for the main purpose of economic warfare?

Very obscure historical example: From 1287 to 1295, the Danish nobleman Stig Andersen Hvide was leading a band of outlaws from the island of Hjelm supported by the king of Norway against the king of ...
Ole Krarup's user avatar
37 votes

Could eliminating all taxes and only creating new money theoretically work?

It would not work. Historically speaking, governments that try to fund their operations primarily via the printing press experience not just inflation but hyper-inflation. Why? Well, one explanation ...
Topher Brennan's user avatar
32 votes

Did real incomes drop significantly since the 1950s?

Most of the US real earnings data which go only as far as mid 60s. According to the statista data presented in this article by world economic forum the evolution of real hourly earnings in the US for ...
1muflon1's user avatar
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28 votes

Are there historical cases of country A printing the currency of country B for the main purpose of economic warfare?

https://en.wikipedia.org/wiki/Operation_Bernhard (an exercise by Nazi Germany to forge British bank notes. The initial plan was to drop the notes over Britain to bring about a collapse of the British ...
KarmaPeasant's user avatar
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23 votes

If no one knew about inflation, would inflation take place?

Yes and there is a real-world historical example. Inflation is the term given to a natural phenomena where an overabundance of resources in human societies leads to the devaluation of such a resource ...
slebetman's user avatar
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22 votes

Did real incomes drop significantly since the 1950s?

Average standard of living is massively higher today compared to the 1950s, primarly due to technological progress. Even a cheap low end car today is much better than the big cars of the 1950s, it is ...
quarague's user avatar
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21 votes

Car prices haven't changed in 20 years, no inflation?

Inflation is measured against a basket of goods. It's a symptom of what's going on in markets. Some products go up in price over time. Some go down in time. Some stay the same price, but change their ...
410 gone's user avatar
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18 votes

Could eliminating all taxes and only creating new money theoretically work?

tl;dr this would not work in either closed or open economy unless your proposal would include very large cuts to current social and welfare spending as only arguably small part of those could be ...
1muflon1's user avatar
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18 votes
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Is there a “runaway” threshold for Debt-to-GDP Ratio in the U.S.?

Is there a threshold we can pass in terms of debt-to-GDP that will cause a runaway sort of effect? No there is no threshold or magic number (at least not one we know of). Few years ago there was an ...
1muflon1's user avatar
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15 votes

Did real incomes drop significantly since the 1950s?

The book “The Two Income Trap” (2003) by Elizabeth Warren (recent Democratic presidential candidate) and Amelia Warren Tyagi discussed this. They looked at spending breakdowns in the 1970s and when ...
Brian Romanchuk's user avatar
15 votes
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What happens to the economy if a country simply ban inflation?

That would lead to shortages, loss of output and deadweight loss as people would waste time in getting ahead in zero-sum rationing game so it would lead to deadweight loss. When inflation occurs all ...
1muflon1's user avatar
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14 votes

Why doesn't the government create money, spend it for free without interest, and recollect it with taxes?

Why doesn't the government create money, spend it for free without interest, and recollect it with taxes, you ask. Well, it does. That's exactly what public investment & spending, and the taxation ...
410 gone's user avatar
  • 8,168
14 votes

Car prices haven't changed in 20 years, no inflation?

You also didn't look at car prices in general but rather just the Toyota Camry. For example a 2001 BMW M3 was ~\$46,000 while a 2018 BMW M3 is ~\$66,000. Most cars have increased in price over the ...
Jayson's user avatar
  • 249
14 votes
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Will printing more money during COVID cause hyperinflation?

Will printing more money during COVID cause hyperinflation? Likely not for several reasons. First, the article from economicshelp.org you mention is oversimplifying the economics, which is ...
1muflon1's user avatar
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13 votes

Are there historical cases of country A printing the currency of country B for the main purpose of economic warfare?

David Petruccelli writes in "Banknotes from the Underground: Counterfeiting and the International Order in Interwar Europe" In December 1925, a group of Hungarian nationalists were caught ...
Giskard's user avatar
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12 votes
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Is an "arms race" between wages and inflation inevitable?

How true is the original assertion? The original assertion is poorly worded and not generally valid even if we ignore the wording. The assertion (at least a corrected version of it) can be true under ...
1muflon1's user avatar
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10 votes
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The Printing of Money for Paying Debt

Printing money causes inflation because someone (or some institution) will get the money and will spend it somehow. This increases demand for goods, but the number of goods, the supply was not ...
Giskard's user avatar
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10 votes

What are the causes of negative real interest rates?

If there is inflation, what is your alternative? If you do not lend, your money loses even more of its value. A numerical example: If inflation is 5% and you can lend at 2% nominal interest rate, you ...
Giskard's user avatar
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9 votes

Can inflation occur in a positive-sum game currency system such as the Stack Exchange reputation system?

No, there is no inflation. Inflation is caused by a relative increase in the amount of currency, relative to the amount of scarce goods and services available. As you note, there is a continuous ...
410 gone's user avatar
  • 8,168
9 votes

Can inflation occur in a positive-sum game currency system such as the Stack Exchange reputation system?

Yes, there is inflation. StackExchange was created in 2008. Anybody who had 5,000 (arbitrary value) reputation points in 2009 would have been perceived as an outstanding member. Now, having ...
Frank from Frankfurt's user avatar
8 votes

Car prices haven't changed in 20 years, no inflation?

Specifically treating car prices, well, the prices are determined globally and not necessarily in dollars In the last 20 years: Car manufacturers move factories across borders to save costs, China ...
Guy Louzon's user avatar
8 votes
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Why does the inflation not follow the money supply?

This is because classical economic theory absolutely does not say that: inflation occurs when the money supply is increased faster than the economic growth. Even in most basic 101 models inflation ...
1muflon1's user avatar
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8 votes
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What are the reasons for Russian Ruble to strengthen in the past few days?

It’s likely combination of several factors. Some of it it’s because Russia has instituted capital controls (see Reuters). That means that Russians are limited or in some cases even prevented from ...
1muflon1's user avatar
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7 votes
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How does tariff increase inflation?

Foreign produced goods will see price increases directly as a result of the tariff, which adds to the prices of these goods. The full tariff may not be passed through, as these higher prices will ...
Henry's user avatar
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