zlacker

>>qqqqqu+(OP)
Macroeconomics. Central banks are "creating" a trillion here, a trillion there, like nobody's business. But what are the consequences? What is the thought process that central bankers have gone through to make these decisions?

Also why, exactly, are they buying the exact assets that they are buying (govt. debt, high-yield bonds, etc..) and why not others (e.g. stocks or put money into startups)? And then, what happens if a debtor pays back its debt? Is that money consequently getting "erased" again (just like it's been created)? What happens if a debtor defaults on its debt? Does that money then just stay in the economy, impossible to drain out? What is the general expectation of the central banks? What percentage of the debt is expected to default and how much is expected to be paid back?

And specifically in the case of central banks buying govt. debt: Are central banks considered "easier" creditors than the public? What would happen if a country defaults on a loan given by a central bank? Would the central bank then go ahead and seize and liquidate assets of the country under a bankruptcy procedure to pay off the debt (like it would be standard procedure for individuals and companies)?

>>rsp198+im1
One approach is reductio ad absurdum:

If Central Banks can create money without negative effects, then

- why tax people?

- why even work? Can't we just print enough money for everyone and live happily ever after?

I realize these questions are quite provocative and their answering only explains if it will work but not how or when it will fail.

>>dmichu+Gw1
The gold standard ended in 1975. Since then, we have "virtual money", which are effectively made out of thin air at the time a bank borrows them to someone. Once they started this system there is probably no way back. But what effects has that done, are them all positive? I don't know. Some say it helps prevent the situation when rich would buy all the gold supply - banks can make more money for others. But - rich people can use stock markets and funds too. And look at one thing - the Appollo program started 1961 and completed 1975. I was quite shocked to see from the documentaries what technology they developed and had during the Apollo era. What US built during cold war. UNIX development started in 1970, right? So many awesome airplanes and technology around. It looks like what we have today is mosty (a great) improvement of many inventions developed before or around the end of Apollo and the end of gold standard. Now, that money is virtual, it looks like there won't be any major stock market crashes as they can intervene relatively easily. But why the space program basically died? NASA has just been talking about SLS for many years... Is it because politicians or bankers don't want that to continue? They could print money for it in minutes, couldn't they? Or would it be far more expensive than we think? Would printing so much money skyrocket the inflaction and bring the whole economy to its knees? Isn't by chance the "real value of work" now much higher than what inflation suggests? I read here about a year ago that some smart people are not working in scientific R&D but instead making AI to improve marketing for online e-shops selling products people don't really need. Despite many startups claiming breakthroughs daily in the news, I don't feel it that way. Those are small pieces one by one. It looks to me big human progress has stagnated somehow. Maybe the smart people are not motivated enough to do the real big things, or maybe it is because there is no need to compete with Russia anymore. But hey, there have been talks about helicopter money recently - giving people money for no reason. Does that look like a great way to improve things? We live in peace - thanks for that - but it seems to me that somehow there is no motivation to do big things anymore. It seems better to just pour the money in the stock market, consume goods and services, watch Netflix and play games. Consume gas and limited Earth resources with virtual unlimited paper money. Taxation probably doesn't make sense anymore, it is there just for historical reasons, from the time bank notes were backed by gold.