Getting rid of deflation is not an easy process, and printing money directly to solve deflation is not a viable option. While many countries have responded to deflation over the past few decades by issuing large amounts of money, this approach has not always yielded the desired results and can have a range of negative effects.
First, printing money can lead to inflation. When the central bank prints money on a large scale and the supply increases rapidly, if the market's expectation of a decline in the value of the currency increases, people may accelerate consumption, leading to prices**, thus forming inflation. This is the case with inflation in the late recession mentioned above.
Second, printing money can also trigger financial risks. When there is too much money, it may lead to excessive asset bubbles and even a financial crisis. Too much money often triggers the rapid development of assets, such as the property market, etc., which leads to asset bubbles and instability.
In addition, printing money can reduce people's confidence in the currency. Monetary stability is the foundation of economic operation, and if the central bank issues money indiscriminately, people may question the purchasing power and value of the currency, thereby losing confidence in the currency, further exacerbating the dilemma of deflation.
Therefore, tackling deflation requires a comprehensive consideration of other instruments and policies, such as fiscal policy and structural reforms. Fiscal policy can stimulate demand and promote economic recovery by increasing spending, cutting taxes, etc. Structural reforms can alleviate deflationary pressures by increasing economic potential by improving the economic environment, increasing labor market flexibility, and more.
In summary, getting rid of deflation is not just a solution that can be solved by printing money, but requires a combination of policies and measures to promote economic recovery and stability. Printing money may play a positive role at some point, but relying too much on printing money can have negative effects and needs to be used with caution. February** Dynamic Incentive Program