alt Hacker NewsAccording to monetarist theory these two things are one and the same.
The main source of "money printing" is banks making loans. And this is what the Fed targets when it raises interest rates.
I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.
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>I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.
They won't absorb the new costs. That has not happened in the history of capitalism as far as I am aware. Higher costs will inevitably equate to higher prices without an offset somewhere.
Investors don't like unpredictability, which Trump has already shown to be very unpredictable in regards to tariffs (the whole on again off again stance changes for example).
Higher prices also lead to less buying activity. History has proven this out too.
> The main source of "money printing" is banks making loan
Sounds like a similar mechanism as the UK. I'm not aware if the system is exactly the same or not.
It was apparently so poorly understood in the UK that the bank of England wrote a paper (Money creation the Modern Economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...) in 2014 to clarify where new money comes from. There's a good summary here https://positivemoney.org/uk-global/archive/proof-that-banks....
It's not something I was aware of until recently, but I was surprised that it was not more under the control of the government and central bank (in the UK, anyway, if it turns out it's different in the US).