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I've been pondering why in the 21st Century central banks printing money has not caused inflation while mining gold and silver in Potosí caused inflation in Spain that spread to all of Europe, factoid that I picked up from one of the above mentioned authors. ;) I'm thinking that 21st Century technology is excessively deflationary to the point that pushing on a wet noodle no longer works. The inflation during the Spanish empire is explained by too much money chasing too few goods. The European economy was incapable of producing sufficient goods to absorb all that money. The 21st. Century is capable of producing all the goods that money can buy. The problem with printing money in the 21st. Century is its distribution. Giving it to banks is no good. As much as I hate to admit it, Universal Basic Income might actually work but we will need to revise our code of ethics which was developed for a time of scare productivity.

Could well be something to that, but as I've mentioned before the lack of inflation shouldn't be much of a mystery. The reason is that although central banks create money out of thin air, that amount is dwarfed by the amount that private banks create. During the financial crisis, banks stopped lending, hence they stopped creating money.

You can see from the slope of the line that after the financial crisis passed, the money supply began expanding again, but at slower rate. Based on that result we would expect to see lower than typical inflation, and indeed that is exactly what we are seeing.
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