First, if you just hand money to individuals, it's very hard to remove that money from the economy later. If the central bank injects money by buying an asset, like a government bond, they can just sell it later to (approximately) remove the same amount of money as they previously injected.
> If the central bank printed an equivalent amount per capita, more of it would be invested (into both productive and unproductive assets).
What makes you think so?
Btw, 'money' doesn't really get invested, at least not on the level of the whole economy. If someone invests money by eg buying stock, that same amount of money is now in the seller's hand.
> On the other hand that wouldn't increase consumer good inflation as much.
And if you have an inflation target, you just print more money, until you hit it.
> First, if you just hand money to individuals, it's very hard to remove that money from the economy later
I'm not really arguing that that would be a better option (outside of exceptional circumstances) though.
> What makes you think so?
Because lower income households generally have low saving rates.
> Btw, 'money' doesn't really get invested, at least not on the level of the whole economy. If someone invests money by eg buying stock, that same amount of money is now in the seller's hand.
Which drives up the stock price a bit which makes it cheaper for the company to pay its workers, allows them to issue more stock/ borrow more/acquire other companies/etc.
> And if you have an inflation target, you just print more money, until you hit it.
You can't control where that money goes to though. So you are not unlikely to end up with bubbles in specific sectors while overall CPI remains low.
Bubbles don't really exist as a meaningful empiric concept. Especially not when you have a robust short selling system so that speculators can pop 'bubbles'.
Ok, higher inflation in certain sectors. e.g. "free" money resulted in housing prices growing at a much faster pace than goods and services for an extended period of time (something similar also applies to education in the US for instance)
> short selling system so that speculators can pop 'bubbles'.
Like in real estate? I mean technically, yeah it's not even really bubble in most places (obviously not China for instance). But I'm pretty sure you understand what I'm trying to say (or should, anyway)
First, if you just hand money to individuals, it's very hard to remove that money from the economy later. If the central bank injects money by buying an asset, like a government bond, they can just sell it later to (approximately) remove the same amount of money as they previously injected.
> If the central bank printed an equivalent amount per capita, more of it would be invested (into both productive and unproductive assets).
What makes you think so?
Btw, 'money' doesn't really get invested, at least not on the level of the whole economy. If someone invests money by eg buying stock, that same amount of money is now in the seller's hand.
> On the other hand that wouldn't increase consumer good inflation as much.
And if you have an inflation target, you just print more money, until you hit it.