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The banking authorities, whether central or not, "monetize" the deficit, printing money to pay for the government's efforts to survive. The hyperinflation under the Chinese Nationalists from 1939 to 1945 is a classic example of a government printing money to pay civil war costs. By the end, currency was flown in over the Himalayas, and then old ...
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The shortfall was largely addressed by printing more money. [29] The government's reliance on printing money to fund the war effort led to hyperinflation, with wholesale prices in Shanghai increasing fivefold from September 1945 to February 1946, and then thirtyfold the following year.
The debt problem was exacerbated by printing money without any economic resources to back it. [1] John Maynard Keynes characterised the inflationary policies of various wartime governments in his 1919 book The Economic Consequences of the Peace as follows: The inflationism of the currency systems of Europe has proceeded to extraordinary lengths.
In Germany between the two world wars, inflation rose to such a point in the early '20s that a loaf of bread cost a million or more marks. Cities and townships printed their own money in a ...
We just can't keep printing more money to pay it off. And that's really the problem. We just keep printing money to solve our problems, but we can't go on much longer,” he cautioned.
Inflation has been a feature of history during the entire period when money has been used as a means of payment. One of the earliest documented inflations occurred in Alexander the Great's empire 330 BCE. [26] Historically, when commodity money was used, periods of inflation and deflation would alternate depending on the condition of the ...
Debt monetization or monetary financing is the practice of a government borrowing money from the central bank to finance public spending instead of selling bonds to private investors or raising taxes. The central banks who buy government debt, are essentially creating new money in the process to do so.