[coliveira]

If giving money for business development ever created inflation, the US would not have enough machines to cut the zeros from its currency. Please understand that creating money for productive purposes cannot generate inflation, this is essentially what banks have been doing since they were ever invented.

[underdown]

Adding money to the supply of money causes inflation regardless of the "productive purpose" for which it is used.

[coliveira]

Banks add money to the money supply daily. Money that didn't exist before a loan is approved suddenly appears out of thin air, due to the fractional reserve system. Billions of dollars in loans are created every single day in this way, and even before they are paid, more is created. Where is the inflation? Instead, we live in a deflationary world. Countries, through their development banks do exactly the same. No inflation is created because of this, stop believing in what has been proven untrue.

[wahern]

Not necessarily disputing your point, but part of the reason that there's deflation (or at least lack of inflation) is because banks _aren't_ investing in production capacity. Corporate debt is at an all time high, yes, but AFAIU mostly because corporations are swapping current earnings for debt because in the current environment it's [presumably] marginally more efficient.

Capital investments largely are coming from equity markets, VC firms, etc. There's so much free cash floating around globally that there's little need to leverage fractional reserve banking. That's why banks so vociferously oppose margin controls--they're having to compete with all the cheap money.