Anthropic raises $13B Series F

No that's what low interest rates does

This comment seems like a rebuttal which is confusing to me because they are deeply related.

No that's what PRINTING fiat money does. Low or high interest rates, they print $trillions

Who's "they"?

Governments, CBs and investment banks. "They" do it and work together to print more.

Every dollar that's printed gets multiplied based on the interest rate

Maybe, but interest rates among other bad banking practices is how we got here in the first place.

In a centrally banked economy, retail and commercial banks create money when you take out loans. The government doesn't create money except during QE which only happened twice in the US, 2009-2014 and 2020-2021. That's why I was curious what you meant by "they." The Fed has been actively destroying money for the last 4 years.

Now explain why government raise the debt limit? other than allowing printing to get fiat money?

The amount of money banks create is determined by the appetite for credit which is determined by the interest rate. The fed has not been actively destroying money, they are at most slowing the rate of the increase of money.

Ah yeah, that's a common misconception.

Deficit spending doesn't create new money. Deficit spending borrows existing money from the population and institutions in exchange for a promise of future government revenues. The Fed does not participate in treasury primary auctions and does not monetize the debt as a means of funding government operations.

If you printed new money to pay for the government, you wouldn't have a debt. That's double-counting. Not to mention the debt is twice as large as the entire money supply so what you're suggesting isn't even physically possible. It would be inflationary to simply print new money to finance spending, which is exactly why it's not done.

[edit] Also the debt limit is a stupid concept that's likely unconstitutional. Congress authorizes spending, meaningful debate over paying for it by adjusting the debt limit likely falls afoul of the 14th amendment's public debt clause. But yeah I mean the debt limit goes up because the government spends more money than it takes in, so it needs to borrow more each year.

They influence creation of money by adjusting the short-term interest rate which influences the demand for borrowing at commercial and retail banks. It's not that direct or straight-forward though, because they only have control over the short end of the yield curve not the long end. The long end of the yield curve has interest rates defined mostly by inflation expectations. If they dropped rates to 0% overnight it probably wouldn't move the 30Y yield all that much -- it might even raise it because of the expectation lower short-end yields would raise inflation.

The Fed doesn't have nearly as much control as folks think.

The Fed directly created money during QE and they are directly destroying it during QT. There's a net add, but that's mostly because the economy is growing, which creates new demand for money as expressed by demand for debt.

The money supply staying fixed or shrinking is a non-goal anyways. It's irrelevant. What matters is inflation as measured from the change in actual prices.

The government creates money every time it spends more than it taxes. AFAIK, the US has been doing that nonstop since the turn of the century.

That new money is different from the new money the central bank creates to push interest rates down. That later one the US has been destroying. But both do many of the same things (but not all).

they lie about real inflation, everywhere

They really don't. You can run the numbers yourself. All the prices that it's computed from are public, the methodology is public and it's dead easy to backtest. Dead. Easy. (1 + (Inflation / 100)) ^ (Years). Inflation would be the dumbest possible thing to lie about because it's so damn easy to check.

The conversation always goes like this.

You: "The government is lying about inflation!"

Me: "Ok, what rate do you think it's actually been?"

You: "10%!"

Me: "So you're telling me inflation over the last 30 years was 1700%? So prices are now 17X higher than in 1995? You sure?"

Then we look up historical prices like this.

https://www.tasteofhome.com/collection/this-is-what-grocerie...

In 1995 ground beef was $1.49/lb.

Bread was $.89/loaf.

Eggs were $0.92/doz.

Milk was $2.50/gal.

idk if you're shopping at Erewhon but where I shop ground beef isn't $25/lb, bread isn't $15/loaf, eggs, well, you got me there lol, and milk isn't $42.50/gal.

Unless the conspiracy is far bigger than we think, or "they" are everywhere, whoever "they" are, I think it's safe to assume that inflation numbers have been pretty accurate.

No, it doesn't. Deficit spending does not create new money. Deficit spending borrows existing money from people in the economy who already have it, and gives it out in exchange for a share of future revenues. The Fed does not participate in Treasury primary auctions and does not monetize the debt as a means of funding government operations.

Think about it this way: if money were just created to fund the deficit why would we have a debt? That's double-counting. You can invalidate your hypothesis very easily: the M2 money supply is about half the size of the debt. It's not possible to square that circle unless deficit spending was re-pledging existing money.