Michael Connolly: Printing Inflationary Evil

Posted by admin on Tuesday, January 26, 2016

Michael Connolly Money Quotation saying governments that are tempted to print money during financial crises are playing with Seigniorage fire. Michael Connolly said:
 

 

“Seigniorage finance of fiscal deficits is often known as ‘the printing press.’ In a sense, money is the root of all inflationary evil. It helps to understand why inflation bursts out here and there periodically” — Michael Connolly

 

 

Michael Connolly is explaining how governments can fuel inflation through deficit spending and money creation. The quote suggests that when governments fund budget shortfalls by essentially “printing” new money through seigniorage (profits from minting currency), this amounts to using the “printing press” to pay bills.

Connolly asserts that money itself is the underlying cause of inflation, as too much money in circulation relative to available goods will bid up prices. He’s saying periodic inflation outbreaks occur because governments will periodically resort to deficit monetization as a way to finance expenditures without raising taxes.

The overall interpretation is that Connolly views money creation as the root driver of inflation, and sees deficit spending paid for via seigniorage as a primary method by which inflation periodically emerges in various economies.