Money printing is always inflationary. Either it causes CPI inflation immediately or it's stored up for later. When money printing does not cause immediate CPI inflation, surplus money is stored in scarce assets which creates asset price inflation and increasing fragility which will inevitably lead to CPI inflation later.
The fact that new money is mostly backed by debt is irrelevant because those who own a lot of capital assets know that they will always be able to use their assets as collateral to take increasingly large loans in the future... Wealthy capital holders can always take new, bigger loans to pay off old smaller loans.
Those who value growth above independence must enslave themselves to banks in order to guarantee that they can keep borrowing in perpetuity. If you know that you can borrow in perpetuity to buyback your stock and make repayments on your old loans, then you can rest assured that debt is never going to be a problem for you. You can just do what the government does with treasury bonds; issue new bonds to pay off your old bonds; the government is not the only institution which can do this.
>You can just do what the government does with treasury bonds; issue new bonds to pay off your old bonds
The problem is that there is a limit to how much treasuries you can sell to the market. For a long time US government was able to exploit internal and foreign markets to run deficits, but the "free lunch" has ended. No one wants to buy those treasuries at the proposed rates and volumes anymore. So what did the US government do? If we remove the extra steps, it effectively coerced the Fed to print money and give it to the government. If it's a one time thing, economy may handle it, but there is a strong temptation for politicians to keep doing so, which can only end in disaster.
"The problem is that there is a limit to how much treasuries you can sell to the market."
Why is there? Given that Federal spending puts the reserves in place with which Treasuries are purchased, how can there be a limit?
It's just an asset exchange.
"No one wants to buy those treasuries at the proposed rates and volumes anymore."
(i) What is the bid cover on the latest auctions
(ii) Why do you think that matters anyway? The Fed can just leave the bank reserves in place - as it is doing by QE.
Because there is no perpetuum mobile. By issuing treasuries a government loans economic power from markets in addition to what it gets from taxes. In a limit everyone will work for a government, so the system effectively degenerates to a centralized planned economy. Of course, in a capitalist society people will loose their trust in a government long before that.
In a well working system this additional power is used to accelerate economic growth, so interest rate is compensated by additional taxes, otherwise government has to allocate bigger ratio of collected taxes to service its debt or loan more and more. The first option is not popular with politicians for obvious reasons, while the second one can not continue indefinitely. More you try to loan from market, higher rate will be required (i.e. market will trust a government less), higher the rate, more difficult it will be to service the acquired debt (i.e. a government will have to be either really efficient with its spendings, or otherwise we return to the step 1).
Arguably market trust in the US government has already passed level of sustainability, so it has chosen to loan from the non-market source, which I believe in the end degrades trust put into the whole dollar-based economy. Granted, the level of trust is really high, so assuming the current QE is a one time thing, this should not be fatal, but if such harmful policy continues...
No, but there is an oil sump in an engine, and that stops it seizing up.
"By issuing treasuries a government loans economic power from markets"
OK. Let's test that. Let's say Scotland issues a new currency. Let's say the Scottish government believes it has to get money from markets to spend.
Where are 'the markets' going to get the Scottish currency from to buy the bonds?
Now do you see how you have the monetary operations backwards.
Bonds are a reserve drain. You can't do a reserve drain until you do a reserve add.
"More you try to loan from market, higher rate will be required"
There is no operational mechanism for that to happen. For rates to go up prices have to go down. If prices go down then the Fed simply QE's the Treasury out of circulation and forces the price back up.
The Fed has complete control of the yield curve all the way up the maturity. You get to play in the Treasury market on the whim of the Fed, and under no other conditions.
Wealthy entities in those countries must be accumulating surplus fiat currency at a loss to themselves in order to suppress CPI inflation (maybe to artificially prevent the economy from crashing). But that's temporary. Whoever these entities are will eventually realize that this loss in value is not going to be recoverable and they will be forced to dump their fiat eventually. All the stored up CPI inflation will be released in a very short amount of time.
You can't increase the supply of a currency (or anything else) without it losing value unless the supply of goods can keep up with the supply of currency but that doesn't appear to be the case these days. The best you can do is hide the surplus currency from the markets as long as possible. But eventually, something will happen which will force the hidden currency to enter the markets.
Also, there is a myth that technology is causing exponential growth in efficiency but the reality of the last 10 years is that everything has been getting more bureaucratic and less efficient (I'm a software engineer so I've seen this first hand).
> Money printing is always inflationary. Either it causes CPI inflation immediately or it's stored up for later. When money printing does not cause immediate CPI inflation, surplus money is stored in scarce assets which creates asset price inflation and increasing fragility which will inevitably lead to CPI inflation later.
You are assuming full employment in these scenarios... why?
The fact that new money is mostly backed by debt is irrelevant because those who own a lot of capital assets know that they will always be able to use their assets as collateral to take increasingly large loans in the future... Wealthy capital holders can always take new, bigger loans to pay off old smaller loans.
Those who value growth above independence must enslave themselves to banks in order to guarantee that they can keep borrowing in perpetuity. If you know that you can borrow in perpetuity to buyback your stock and make repayments on your old loans, then you can rest assured that debt is never going to be a problem for you. You can just do what the government does with treasury bonds; issue new bonds to pay off your old bonds; the government is not the only institution which can do this.