Friday, February 13, 2015

Creating Savings from Printing More Money: Is It Possible?

The Status quo thinks printing more currency leads to economic growth. Does it? This article, "You Cant Create More Savings by Printing More Money" discusses this. However, I will submit one extra item for mindful consideration. Consider the law of marginal diminishing utility. It states simply the following: As more of the item is used, the utility, need for the item declines. Recall from the prior blog entry, this law is the foundation of the downward sloping demand curve.

Money, more specifically, currency, can be considered a commodity. As more money is printed, as per the law of marginal diminishing utility, each additional unit printed does not hold the same utility as the prior unit printed.  The end result of printing or expanding the money supply is that the currency is debased.