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Frances Coppola, a CoinDesk columnist, is a freelance writer and speaker on banking, finance and economics. Her book “” explains how modern money creation and quantitative easing work, and advocates “helicopter money” to help economies out of recession.
There’s a widespread belief that the exorbitant quantity of money the Federal Reserve is pouring into the U.S. economy must eventually mean the return of high inflation. After all, if there’s lots more money but no more stuff to buy, prices must rise, mustn’t they? So the prospect of – known for her support of the gold standard – joining the Fed’s Board of Governors is raising the hopes of those who want the Fed to be stripped of its money creation powers.
But the Fed’s mandate is price stability. And, as I shall explain, if the Fed can’t vary the quantity of money in circulation in response to economic circumstances, it can’t stabilize the price of a dollar.