Money Is Losing Its Meaning
Bloomberg Jared Dillian, Bloomberg 14 hours ago
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(Bloomberg Opinion) -- Doing “whatever it takes” to save the
global economy from the coronavirus pandemic is going to cost a lot of money.
The U.S. government alone is spending a few trillion dollars, and the Federal
Reserve is creating another few trillion dollars to keep the financial system
from collapsing. A custom Bloomberg index measuring M2 figures for 12 major
economies including the U.S., China, euro zone and Japan shows their aggregate
money supply had already more than doubled to $80 trillion from before the
2008-2009 financial crisis.
These numbers are so large that they
no longer have any meaning; they are simply abstractions. It’s been some time
since people thought about the concept of money and its purpose. The broad idea
is that money has value, but that value is not arbitrary. Former Fed Chairman
Paul Volcker once said in an interview that “it is a governmental
responsibility to maintain the value of the currency they issue. And when they
fail to do that, it is something that undermines an essential trust in
government.”
The dollar has no real intrinsic
value, backed only by the full faith and credit of the U.S. government. Under a
fiat currency system, the government says that a dollar is a dollar. Its value
relative to things such as other currencies and gold is determined on global
markets. Gold is considered to be an objective store of value, and the metal’s
rise in dollar terms can be expressed another way, which is that the dollar
fell in gold terms. That implies the market has rendered a decision on the
value, or rather, the purchasing power of the dollar.
The three main functions of a currency are as a unit of
account, a medium of exchange and a store of value. It is that last function
that is most important. Ideally, a central bank would want its currency to
retain its value over time. The era of flexible monetary standards, however,
allow central banks to manipulate a currency’s value to help fight recessions
as well as smooth out and lengthen business cycles at the expense of inflation.
But even low inflation, say on the order of
2%, will greatly erode the purchasing power of a currency over time.
And if there are too many dollars in
circulation, the monetarists would say that the value of those dollars has
diminished, eventually leading to higher prices for things. That theory hasn’t
worked too well in the last decade, because inflation has been low and stable,
but it is too soon to declare it discredited. The transmission mechanism that
results in inflation is not well understood, even 45 years after the last great
period of inflation.
It took a while, but it seems as though the U.S. government
has decided that it has no constraints on its spending, as long as the Fed
continues to monetize government borrowing by purchasing the debt issued to
finance expenditures. It’s not crazy to think government spending may reach $10
trillion – for just one year! And the numbers will go up from there.
Nobody really knows how this is going
to turn out. In smaller economies, runaway government spending has resulted in
hyperinflation and social unrest, such as well-documented cases in Venezuela
and Zimbabwe. Many think that wouldn’t be possible in the U.S. given the
dollar’s role as the world’s primary reserve currency. Perhaps, but it’s not one
of those questions we’d really want to experiment with.
If all this money that’s being created does spark inflation,
or at least boost inflation expectations, it will be difficult - if not
impossible - to reverse. Inflation rates soared in 1979, but that was during a
time, unlike now, when most government officials believed that balanced budgets
and careful spending were important. A blistering series of interest-rate hikes
pummeled inflation expectations, but the result was a hurricane-force recession.
Argentina, which has more or less been practicing MMT for some time, proves
that it’s hard to put the inflation genie back in the bottle. Argentines have
been hoarding dollars—the only practical store of value, other than gold—for
decades. They probably view recent events in the U.S. with some trepidation.
The counterexample to all this is Japan, which historically
has had the most debt relative to the size of its economy and the most radical
monetary policy, and yet has a peaceful, productive society with scant
inflation. Demographics explain a lot about inflation and inflation
expectations, and Japan’s steadily declining and aging population has put
downward pressure on prices for years in spite of all the printing. Economists
and central banks generally fear deflation more than inflation because it can
hinder investment. History has shown that persistently high inflation rips
societies apart; in deflation, people band together.
Throughout Venezuela’s economic
crisis, we saw images of ordinary Venezuelans tossing their useless bolivars in
the streets.
That is what happens when money has lost all meaning; it is in jeopardy of
becoming a commodity when it is supposed to be a scarce resource. There are a
million reasons why the U.S. will never meet the same fate as Venezuela, but
you still don’t want to tamper with people’s perception of the value of money.
After you throw a few trillion dollars around, people start to believe that it’s all a
big joke.
Translation
（彭博社觀點）-
採取一切措施使全球經濟擺脫冠狀病毒大流行將花費大量金錢。僅美國政府就已花費數万億美元，美聯儲又創造數万億美元，以防止金融體系崩潰。一項慣用的彭博指數衡量了美國，中國，歐元區和日本等12個主要經濟體的M2數據，顯示其總貨幣供應量已比2008-2009年金融危機之前翻了一番以上，達到80萬億美元。
這些數字太大，以至於不再具有任何意義。它們只是抽象概念。人們已有一段時間考慮金錢的概念及其目的。廣泛的想法是，金錢具有價值，但這種價值並非随意定出来。美聯儲前主席沃爾克（Paul
Volcker）在一次採訪中曾表示：“維持發行貨幣的價值是政府責任。當他們不能做到這一點時，就會破壞對政府的基本信任。”
美元沒有真正的內在價值，只是由美國政府的充分信心和信譽提供支持。在法定貨幣制度下，政府說一美元就是一美元。它相對於其他貨幣和黃金的價值取決於全球市場。黃金被認為是客觀的價值存儲，而黃金以美元計價上漲可以用另一種方式表示，即美元对黃金價下跌。這意味著市場已經對美元的價值或其購買力做出了決定。
貨幣的三個主要功能是:
作為帳戶單位，交換媒介及價值存儲。最重要的是最後一個功能。在理想情況下，中央銀行希望其貨幣隨着時間保持其價值。但是，靈活貨幣標準時代允許中央銀行操縱貨幣的價值，以幫助對抗衰退，並以通貨膨脹為代價來緩解和延長商業周期。但是，即使通貨膨脹率低至2％左右，也会隨著時間的流逝大大削弱貨幣的購買力。
如果流通的美元過多，貨幣主義者會說這些美元的價值已經減少，最終導致物價上漲。在過去的十年中，該理論並不太奏效，因為通貨膨脹率一直處於低位和穩定狀態，但現在宣布此理論不可相信還為時過早。即使在上次的大通貨膨脹時期之後的45年，人們還是不太了解導致通貨膨脹的傳遞機制。
一段時間花費了，但似乎美國政府已決定對其支出不作出限制，只要美聯儲繼續通過購買為融資支出而發行的債務來使政府借款貨幣化。僅僅一年的時間，政府支出就可能達到10萬億美元，這並不奇怪！數字並且將從那裡上升。
沒人真的知道什麼事会出現。在較小的經濟體中，政府支出失控導致惡性通貨膨脹和社會動盪，例如委內瑞拉和津巴布韋是有據可查的個案。許多人認為，鑑於美元是世界主要儲備貨幣，在美國這是不可能的。也許吧，但這不是我們真正想嘗試驗証的問題之一。
如果所有這些被製造的資金確實引發了通貨膨脹，或者至少提高了通貨膨脹預期，那麼將很難（甚至不是不可能）扭轉這種情況。通貨膨脹率在1979年猛升，但是那段時間與現在不同，當時大多數政府官員認為平衡的預算和謹慎的支出很重要。一系列激增的利率打擊了通脹預期，但結果卻是颶風力度的经济衰退。多少年來一直在實行MMT的阿根廷證明，很難將通貨膨脹精靈重新塞回瓶中。幾十年來，阿根廷人一直在積存美元，一個除黃金以外可行存儲價值方法。他們看到美國最近發生的事情可能會有些不安。
與這一切相反的是日本，相對於該國歷來經濟規模和極端激進的貨幣政策,
它擁有最多債務，但同時擁有一個平靜，有生產力, 但低通貨膨脹率的社會。人口統計資料對通貨膨脹和通貨膨脹預期做出了很多解釋，儘管有印發鈔票, 日本人口的持續下降和老齡化對物價多年來壓低了物價。與通貨膨脹相比，經濟學家和中央銀行通常更擔心通縮，因為通縮會阻礙投資。歷史表明，持續的高通貨膨脹使社會分裂。在通縮中，人們團結在一起。
在整個委內瑞拉的經濟危機中，我們看到了普通委內瑞拉人在街上扔掉無購買力的玻利瓦爾幣。 當金錢失去了所有意義時，就會發生這種情況。 當它被當作是稀有的資源時，它就將有成為一件商品的危險。 美國有100萬個理由永遠不會遇到與委內瑞拉相同的命運，但美國仍然不想破壞人們對貨幣價值的看法。 在美國投入數万億美元之後，人們開始相信這是個大笑話。
The impact
on the global economy generated by the seemingly unlimited supply of money from major countries has yet to been seen. I am interested to
know whether it will create inflation or deflation, regionally or globally. I think one of the
factors that could affect the outcome would be how will we successfully
deal with this pandemic.
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