This interesting history lesson makes me wonder: Has there ever been a (not-thoroughly corrupt and dictatorial) government that literally printed money to solve their problems?
It's a common metaphor, but it's just a simpleminded metaphor. The US Treasury printing has literally nothing to do with inflation (if it's printing adequate amounts of replacement bills). No US government account is paid with fresh bills, hot from the Treasury presses. Those unwrinkled notes are sent to replace damaged bills returned from banks at a strict 1:1 rate.
Instead, money is created by issuing bonds (via the interest paid). The possibility of creating inflation is still present, but no printing presses are involved (Treasury nor otherwise).
Premodern states would do this all the time. A ruler would find themselves strapped on cash, debase the (metal content based) currency, people slowly find out, raise their prices, rinse and repeat. Gresham's law (https://en.wikipedia.org/wiki/Gresham%27s_law) states that when 'pure' and 'impure' coins are both in circulation, the impure currency takes over.
In medieval Europe they would do "recoinage". They would declare all the old coinage no longer legal tender (also outlaw hoarding and transacting with it or foreign currency). The mint would take all your old coins off your hands and give you back 75% as many new coins.
The most famous historical example is Weimar Germany in 1923. To pay off massive World War I debts and striking workers, the government simply printed more money. Another classic example is Zimbabwe in 2008...
I mean, once a government starts literally printing money to solve their problems are they not then thoroughly corrupt and dictatorial? You kinda qualified your question into pointlessness ;)
Also, the exact process by which governments create money out of nothing (directly printing it, issuing bonds, changing the materials used for coins, changing numbers in a database, etc.) doesn't really matter, does it?
My point is: The printing of physical (fiat) bills are completely independent of increasing monetary supply. Always true in the US; probably always true in most instances.
(2017)
>Dismissed by some as Monopoly or plastic money, the new £5 and £10 notes in particular have come in for heavy criticism.
This interesting history lesson makes me wonder: Has there ever been a (not-thoroughly corrupt and dictatorial) government that literally printed money to solve their problems?
It's a common metaphor, but it's just a simpleminded metaphor. The US Treasury printing has literally nothing to do with inflation (if it's printing adequate amounts of replacement bills). No US government account is paid with fresh bills, hot from the Treasury presses. Those unwrinkled notes are sent to replace damaged bills returned from banks at a strict 1:1 rate.
Instead, money is created by issuing bonds (via the interest paid). The possibility of creating inflation is still present, but no printing presses are involved (Treasury nor otherwise).
Premodern states would do this all the time. A ruler would find themselves strapped on cash, debase the (metal content based) currency, people slowly find out, raise their prices, rinse and repeat. Gresham's law (https://en.wikipedia.org/wiki/Gresham%27s_law) states that when 'pure' and 'impure' coins are both in circulation, the impure currency takes over.
In medieval Europe they would do "recoinage". They would declare all the old coinage no longer legal tender (also outlaw hoarding and transacting with it or foreign currency). The mint would take all your old coins off your hands and give you back 75% as many new coins.
You could argue the Romans tried to by debasing their coins with inferior minerals to mint more of them at lower costs.
The most famous historical example is Weimar Germany in 1923. To pay off massive World War I debts and striking workers, the government simply printed more money. Another classic example is Zimbabwe in 2008...
I mean, once a government starts literally printing money to solve their problems are they not then thoroughly corrupt and dictatorial? You kinda qualified your question into pointlessness ;)
Also, the exact process by which governments create money out of nothing (directly printing it, issuing bonds, changing the materials used for coins, changing numbers in a database, etc.) doesn't really matter, does it?
Ray Dalio explains this history in his books "How Countries Go Broke" and "Big Debt Crises".
His theory is that governments have a debt cycle, and printing money is just one point in that cycle.
You're just parroting the phrase "printing money". I'm asking if governments ever literally do (except in extremely defective examples).
Yes, they do.
The first part of "Wealth of Nations" by Adam Smith gives many historical examples.
And in Ray Dalio's book, he explains how the US government did it in the past, and will need to do it again in the future.
Why does interest on bonds need to be paid by printing money? Can’t it be paid from tax revenue?
Certainly, and I didn't mean to imply otherwise.
My point is: The printing of physical (fiat) bills are completely independent of increasing monetary supply. Always true in the US; probably always true in most instances.