With 4 trillion traded a day, and some popular majors trading 500 billion or so a day:
1) Why can't the government/Central Bank (lets say the UK), print 100 billion pounds, and just sell it on the market? It wouldn't make much of a dent really, the market can easily absorb this. 100 billion would cover the budget deficit for a year. Going further, why not slowly reduce the overall debt? For UK about 4 trillion or so.
I realise printing large amounts of money causes a devaluation of the currency, and inflation etc, but we already have quite a bit of inflation (despite what official figures might suggest), and the key thing is that the debt compounds which is far more of a danger, and one of the reasons why things have become so bad.
2) Why can't central banks trade for profit? Is there some agreement they have with investment banks or other central banks not to do this?
1) Why can't the government/Central Bank (lets say the UK), print 100 billion pounds, and just sell it on the market? It wouldn't make much of a dent really, the market can easily absorb this. 100 billion would cover the budget deficit for a year. Going further, why not slowly reduce the overall debt? For UK about 4 trillion or so.
I realise printing large amounts of money causes a devaluation of the currency, and inflation etc, but we already have quite a bit of inflation (despite what official figures might suggest), and the key thing is that the debt compounds which is far more of a danger, and one of the reasons why things have become so bad.
2) Why can't central banks trade for profit? Is there some agreement they have with investment banks or other central banks not to do this?