Direct Monetary Financing, Quantitative Easing and Inflation

Democracy 4 General Discussion
21

It is odd that it is currently possible to hand out money to citizens, but not to use it for public spending

Probably because it’s not something that central banks are willing to do.

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22

Probably because it’s not something that central banks are willing to do.

Canada and France have both used it previously. And during covid in particular, many countries seriously considered it.

I’d wager it’s been used more frequently than helicopter money.

Besides, there are several policies in the game that are not something any countries have ever done, but that’s part of what makes a game fun.

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23

ask yourself why? they do not aim to profit from their investment, at least not directly, keep in mind that most of the US debt will probably never be paid, or if it does get paid then it will be at a lower interest rate and negotiated down, these investors seek power and influence, not to directly make money, but to instead gain favor with the ruling party and use that favor to make money.

money may not even be the reason they want influence, maybe they have ideological motives?
you have to think about this within the context of the current political situation, not from a purely economic perspective.

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24

If my country has a strong government and economy, why should my interest ever be high? Or why can’t I just issue local debt?

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25

Because game design :relieved:

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26

Can I just add my voice to support what @Maphylius said in this thread that QE should reduce interest rates (as also argued for separately in this thread: Quantitative Easing Suggestion).

If it doesn’t already, then for balance interest rates could increase inflation (& it makes sense for inflation to be a major economic factor that the player should need to keep an eye on - as in real life - which means benefits as well as costs.)

If @cliffski feels more of a downside is needed, then QE could cost more political capital and could severely reduce happiness of socialists and middle income (because of the opportunity cost of not doing helicopter money & so putting more cash in people’s pockets). Any chance of looking again at this?

Also agree that DMF makes sense as a policy: if you can print money for citizens then you can do so for the treasury too.

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