Hello,
I’ve become quite keen on Jeffrey Rogers Hummel views on inflation.
https://fee.org/articles/governments-diminishing-benefits-from-inflation/
That governments don’t get as much cash money as they used to from Seigniorage(money printing)…becuase of some details of the modern banking system.
Hummels view is that the US Gov is more likely to actually default on it’s bonds than print it’s way out of it’s financial problems as so many of us libertairans often predict.
Any way…. how are people actually calculating the revenue states are getting from seigniorage? There is constant mention to specific statistics in his works on what revenue governments make from printing money…but how are economists attempting to calculate this so exactly?
“Almost none of the developed countries could boast seigniorage amounting to more than 1 percent of GDP, despite the fact that the study incorporated the inflationary years of the 1970s. Joseph H. Haslag’s smaller sample of 67 countries over a longer period, 1965 to 1994, finds that seigniorage averaged about 2 percent of total output for the entire sample, ranging from as low as 0.25 percent to as high as 9.98 percent (for Ghana).”
However, I’m not smart enough to figure out how this is being calculated?
When I Google — I see Seignoarge defined as the cost to money vs what the money is worth. (if it costs 1cent to print a dollar bill than Seigorage is 99cents). Pennies have negative seigniorage — cost the Gov more to mint than 1 cent.) But for the point Hummel is making it seems like a more sophisticated calculation? How did people figure out that for example in WW2 seignorage was 6%?
Perhaps this is rather obvious?
Thanks!
–Luke
