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He thinks paper money is problematic no matter who holds it because cash restricts monetary policy.
Conventional monetary policy operates by changing the supply of monetary base, which is a unique, uniquely liquid asset.
The monetary base has more than tripled; trillion-dollar deficits have gone on for years.
Central banks can expand the monetary base, but this may not lead to broad money accelerating.
Markets reacted positively to the BoJ's decision to double Japan's monetary base.
This would require backing the monetary base with reserves of foreign exchange.
The combined effect of these actions was that the monetary base more than tripled in size.
And there has, indeed, been a huge expansion of the monetary base.
What's more, there are no close substitutes for monetary base.
Even very large increases in the monetary base will have no effect if seen as temporary.
A tripling of the monetary base would not cause runaway inflation.
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