Why Can’t Governments Print an Unlimited Amount of Money? – Jonathan Smith

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      Lesson summary:

      The COVID-19 pandemic in 2020 caused widespread economic damage, with many people losing their jobs and businesses struggling to survive. Governments responded with large economic relief packages, such as the $2.2 trillion spent by the United States. This money came from central banks, which manage the money supply and are independent from the government to prevent political interference. Central banks can’t simply increase the money supply, but they can implement economic policies like decreasing taxes and creating jobs through public infrastructure projects. In recent decades, central banks have used an approach called quantitative easing to infuse the economy with cash while maintaining a low risk of severe inflation. This approach involves buying bonds from corporations or governments, which creates cash that didn’t exist before. This helps the economy in the short term by providing cash for relief efforts and in the long term by encouraging lending to companies of all sizes, which can boost the economy over time.

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