Tag Archives: zero interest rate

“Debt-Free Money” and “ZIRP Forever”

By Scott Fullwiler

I wrote a while back about how neoclassical economists don’t realize their view that interest on reserves (IOR) stops “printing money” from being inflationary also means that it’s impossible to create inflation by “printing money.”  See here.

I’m not 100% sure on this one (and please feel free to correct me if you know better than I do) because I admittedly haven’t given the literature a thorough read, but from what I can tell, it appears “debt-free money” advocates may not realize they are similarly overlooking the actual operations of the monetary system.  So, apologies in advance if I’ve misinterpreted.

From what I’ve seen, “debt-free money” (DFM) advocates want a world in which the government spends via cash (i.e., paper money).  They are against government issuing bonds or any interest on the debt, since that would suggest the government’s money isn’t “debt free” (again, please correct me if I’m wrong in this description).

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