When money does not represent work or time, what does it represent
We have been a long season (at least since 2008), since the emergence of the current economic crisis in which the fundamental measure to solve the crisis is the application of the expansionary monetary policy in its different versions: money issuance, loan to the bank to a low rate, purchase of debt securities, etc.
The fundamental idea has been to guarantee the financing at a low cost to the States and at the same time guarantee benefits to the Bank so that it can leave its situation of technical bankruptcy. There has also been talk that it is about getting credit to families and solvent companies. I do not really understand the latter since I suppose that the bank is not going to reject any client that proves it is solvent. On the other hand, I imagine that it does not mean that credit is given again irresponsibly and without a minimum risk analysis.
The measure could be understood if it was used in an extraordinary way
The problem is that we have gone from using the measure in an extraordinary way to making frequent use as soon as the risk premium rises, there is deflation or the exchange rate is high. I have the impression that neither the bank nor many European states could Survive or finance at a reasonable cost without the use of the money maker.
In two words, monetary policy is being used in an abusive manner and to such an extent that it does not have the effect that it is supposed to, but has led us to a reduction in risk premiums without actually improving the solvency of the States. Or do you think it can be a more solvent state with a 26% unemployment rate and a growing public debt? And the little job created is precarious.
The use of the expansionary monetary policy makes sense in a timely manner and when real production is increasing, so that there is a more or less close relationship between money in circulation and real production.
Should there be or not a relationship between real production and money?
Does the money issued have to have a real livelihood such as gold or another type of real asset or does it only have to be fiduciary in a way that does not represent work or time?
If we continue to accept that the money issued does not represent accumulated work and we let the Daisy Banks use the money making machine at will , what do you think can happen in a short time.
The money that comes from nowhere is like a tax for money that is in circulation, so that over time it has less and less real value.
When they hear that taxes collected in Spain, for example, represent 35% of GDP, they know that the issuance of money by the corresponding Daisy Bank is not taken into account.
So, if the money that is issued today does not represent work or time, what does it represent. I’m going to tell you: it represents more taxes .