Stop printing money

 Cheming Yang

In October, the food price went up 10% in China. The international futures prices for wheat and soybeans were 44.5 percent and 25.3 percent higher in October than in the same period last year. The UK Consumer Prices Index (CPI) inflation rate rose unexpectedly to 3.2% in October on the back of higher fuel prices.

Not just the prices of commodities increase. Housing prices are hiking again. A luxury flat in the center of Taipei was foreclosed at the end of November. Final price of the foreclosure reached record high of NT$624,242 per square meter. However, when the premier of Taiwanese cabinet was asked about whether he planned to raise the salary of government employees which has been frozen for five years, his answer was the government is still in a lot of debt and it is not time yet.

When the salary of government employees does not change, most private sectors remain stationary as well. Every thing has become more expensive and the average salary level of the general public stays the same. When you put these two things together, it does not take a rocket scientist to figure out inflation is here.

The governments around the world try to tell their people that the financial crisis is over. How did they solve this crisis? They printed money, a lot of money. When the rhetoric of too big too fail is the proverb in the time of economic downturn, printing money becomes the only solution and inflation is the consequence we all have to bear.

The argument of too big to fail never sounds convincing to me. It is only an excuse for the speculators to get away with impunity. The crisis was caused by high leverage and risky investment manipulated by speculators. But when the deals go sour, government start printing money to support the speculators. The analogy is if you are a small time hooligan, you go to jail; but if you are big time bad guy, the government will bail you out. As a result, those who are supposed to go bankrupt continue to make money. With more papers in the market, our money depreciates.

Why couldn’t we let speculators go belly up? Because if we don’t, just like what is happening now, we are paying their debts by depreciation and inflation. So please stop printing money. Let those who should be punished by the invisible hand of a free market receive the punishment they deserve. And the ordinary people are fed up with needing to save and scrimp on their food to pay for the luxurious houses of the guilty ones.

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