Tag: credit growth

Rewarding Non-Productive Activities with New Money Leads to Price Inflation

Rewarding Non-Productive Activities with New Money Leads to Price Inflation

The punchline is that a significant percentage of new money creation over the past year was allocated to non-productive use cases. "Helicopter" money to individuals and non-performing firms are two examples. When capital is deployed for non-productive use (acquiring cryptocurrencies for example), that capital invariably bids up prices causing asset price inflation. Conversely, recipients that … Continue reading Rewarding Non-Productive Activities with New Money Leads to Price Inflation