Global Money Printing Continues With Debt Monetization

Global Money Printing Continues With Debt Monetization


As the global economy plunged into recession due to the novel coronavirus pandemic, central banks globally stepped into action.

Expansionary monetary and fiscal policies have followed. 

Ever wondered where is the government getting the money from?

The latest report from the International Monetary Fund has an answer. 

The chart below gives the central bank purchases of government debt since February 2020. 

Global Money Printing

The Japanese central bank has purchased 75% government debt issued since February 2020. The European central bank is not far behind with 71% purchase of government debt. 

The simple explanation is that the government issues debt and the central bank purchases the debt. An equivalent amount of money is printed in the process. 

Clearly, aggressive money printing is ongoing and fiat money will continue to lose value. As a matter of fact, the dollar has lost 96% of its value since the Federal Reserve was created in 1913. 

Further, as money printing continues, inflation is likely to trend higher in the coming years. 

This is good news for gold and silver. 

It's also good news for cryptocurrency. 

Why?

Fiat money is purely based on trust. Money printing will reduce the trust in fiat money over time. Alternative currencies stand to gain. 

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faisalhk786
faisalhk786

I am a financial analyst with interest in global financial markets and macro economy. I write for various publications providing short-term and long-term investment ideas among different asset classes.


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