Inurrieta: central banks can create unlimited money, but at what cost

Inurrieta: central banks can create unlimited money, but at what cost

Economist Alejandro Inurrieta has claimed that central banks have an unlimited capacity to create money. The statement, picked up in economic circles, reopens the debate on the real limits of monetary policy and its consequences. Is it true that they can print without restraint, or is it a dangerous half-truth?

The technical capacity argument

Inurrieta argues that, technically, a central bank can issue as much currency as it wishes. There is no physical constraint: they can create money out of nothing. This idea, linked to Modern Monetary Theory (MMT), holds that the real limit is not the amount of banknotes but the inflation generated by excess liquidity. MMT advocates argue that as long as the economy has idle capacity, money creation need not be inflationary.

The sceptics strike back

Critics respond bluntly: an unlimited capacity to issue money does not equal wealth. Purchasing power is diluted when money is injected without productive backing. History is full of examples, from Mugabe's Zimbabwe to the German hyperinflation of 1923. In the eurozone, controlling inflation has been the ECB's priority, but the debate resonates strongly in a context where governments such as Spain's accumulate deficit and debt. Some analysts see these statements as an attempt to prepare public opinion for a massive monetisation of debt, which would erode citizens' savings.

Hidden interests behind the theory?

Behind Inurrieta's claim lies a suspicion: that the official narrative seeks to normalise money creation in order to sustain unsustainable public spending. While some see it as a legitimate tool to avoid fiscal collapse, others interpret it as a scam that will be paid for by the usual victims: savers. The tension between economic theory and political practice has never been so evident.

Some paint a grim scenario: if the capacity to create money is unlimited and used without control, the real value of money tends towards zero. But if it is not used, the financial system collapses. Caught between a rock and a hard place, central banks will keep printing. What nobody knows is how long the currency's credibility will hold.